Updates from August, 2011

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• For the More Affluent Home Seller

  MSC Marketing 10:58 am on August 18, 2011 | Comments:0
  Tags: income tax (2), Seller information (37), Tax (4), Tax Credit (9)   Filed under: Consumer news and advice, Income Tax, Seller Info, Tax

  by Dean Hartman on August 18, 2011

  Estate Planning is a boring topic. However, there are few issues more misunderstood that have such tremendous impact on families and the legacy they leave behind. Many people don’t realize that when adding a home to their assets, being a “paper” millionaire isn’t as farfetched as it seems when living paycheck-to-paycheck.

  The federal estate tax exemption has been extended for two years (2011 & 2012). The extension also increased the amount to $5 million ($10 million for couples) and the tax rate has been lowered to 35%. This means that you can leave $5 million to your heirs free of federal estate tax and that most married couples can leave up to $10 million free of federal estate tax.

  For gift tax, the new law changed from the $1 million Lifetime Gift Tax Exclusion in 2010 to a $5 million Unified Gift Tax Credit. The new law creates an important planning opportunity. This means, as of 2011, individuals will be able to make gifts of $5 million ($10 million for a married couple).

  The value of your estate includes all of your assets (ex: cash, investments, your personal residence, other real estate, etc.) generally determined at the fair market value on the date of death. Since the law may revert back to $1 million, serious tax planning is necessary if your assets exceed the $1 million.

  As stated earlier, the provisions are temporary. They are assured for this year and next. If the law is not extended or amended, it will sunset and the Federal estate tax exemption will revert back to $1 million with a maximum tax rate of 55%!

  It is important that you consult an accountant and/or a financial planner to make sure you are minimizing Uncle Sam’s bite from your estate, so that you leave the maximum number of dollars to your loved ones. If you need a referral to a solid advisor, reach out to your loan officer…they should have one on their team.

  http://kcmblog.com/2011/08/18/for-the-more-affluent-home-seller/#more-8800

  
   
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• On the Chopping Block: How Mortgage Deduction Will Affect the Real Estate Industry

  MSC Marketing 8:46 am on December 1, 2010 | Comments:0
  Tags: Buyer info (71), Consumer news and advice (159), Credit (21), economy (67), income tax (2), mortgage (54), second home buyers (19), seller info (63)   Filed under: Buyer Info, Consumer news and advice, Credit, economy, Income Tax, mortgage, Second Home Buyers, Seller Info

  By Alan J. Heavens

  RISMEDIA, December 1, 2010—(MCT)—Long considered a key ingredient of American homeownership, the income-tax deduction for mortgage interest is now on the menu of the commission looking for ways to trim the federal deficit. Among the $3.8 trillion in debt-cutting options being considered by National Commission on Fiscal Responsibility and Reform is a scaled-down tax deduction eliminating second homes, mortgages of more than $500,000, and home-equity loans.

  Reaction to even the hint of a change came quickly—and stridently.

  “For a battered housing industry, which is struggling with a 21 percent unemployment rate among construction workers, this is absolutely the worst time to be considering changes,” said National Association of Home Builders President Bob Jones.

  Diminishing or ending the deduction “would exert further downward pressure on home prices, leaving more homeowners with mortgages larger than the value of their property and fueling even more foreclosures,” he said. (More …)

  
   
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• The Top 5 Tax Perks for Buyers, Sellers and Homeowners - 2009 Tax Edition

  MSC Marketing 9:38 am on March 25, 2010 | Comments:0
  Tags: Consumer news and advice (159), Tax Credit (9), tax deduction (3)   Filed under: Consumer news and advice, Income Tax

  by Tara-Nicholle Nelson
  Trulia’s In-house Consumer Advocate

  It’s tax time, but it doesn’t have to be excruciating, especially if you bought, sold or owned a home in 2009.  While so many of us think of tax time as time to write a check, the Obama Administration’s stimulus package promised to reverse that tradition, effectively writing a check (in tax credit format) to buyers, sellers and even  short sellers and those who lost a home through foreclosure.

  Take this quick list of tax tips to your personal tax guru and cash in your check from Uncle Sam!

      1.  2009-10 First-time Homebuyer
       Tax Credit

  • Who It Helps: Recent (or current!) homebuyers who had not owned a home in the 3 years prior to buying, but bought one in 2009 or this year (must be in contract on or before April 30, 2010).  Depending on when you bought (or buy! there’s still some time left!) income and purchase price limits may apply.
  • How It Helps: Depending on your income and purchase price, you can receive up to an $8,000 fully refundable tax credit.  (That means if you were already getting a refund, you’ll get a bigger one!) You can claim the credit on your 2009 tax return (the one you file on April 15th), even if you bought in 2010.

  • More Info: http://www.realtor.org/home_buyers_and_sellers/2009_first_time_home_buyer_tax_credit

  • IMPORTANT NOTE: Per the IRS website, “because of the documentation requirements for claiming the credit, taxpayers who claim the credit on their 2009 tax return must file a paper — not electronic — return and attach Form 5405.”

      2.  2009-10 Move-Up Buyer Tax Credit

  • Who It Helps: Current homeowners who have lived in the home they are selling, or have already sold, as their principal residence for five consecutive years of the last eight years who closed escrow between November 7, 2009 and July 1, 2010, so long as they are in contract on or before April 30, 2010.

  • How It Helps: Eligible homeowners can receive a tax credit of as much as $6,500, depending on income. You can claim the credit on your 2009 tax return (the one you file on April 15th), even if you bought in 2010.

  • More Info: http://www.realtor.org/home_buyers_and_sellers/2009_first_time_home_buyer_tax_credit

  • IMPORTANT NOTE: Can’t e-file to collect this one, either – see #1, above.

   

      3.  Energy Efficient Housing Tax Credits

  • Who It Helps: Homeowners who invested in making their homes more energy-efficient in 2009 and 2010.

  • How it helps: Offers them a 30 percent tax credit on qualifying purchases of energy-efficient furnaces, windows and insulation.

   

  • More Info: http://www.realtor.org/government_affairs/gapublic/american_recovery_reinvestment_act_home#energy

   

      4.  Private Mortgage Insurance Deduction

  • Who It Helps: Homeowners who bought a home in 2009, and put less than 20 percent down on their homes. These are the folks whose lenders required them to pay for PMI, or private mortgage insurance.

  • How It Helps: Allows them to deduct the costs – upfront and monthly – of PMI.

   

  • More Info: http://www.irs.gov/pub/irs-pdf/p936.pdf

   

      5.  The Mortgage Forgiveness Debt Relief Act 

  • Who It Helps: Short sellers, owners who lost homes through foreclosures or had their mortgage balance reduced through loan modifications.
  • How It Helps: Normally, when a loan is cancelled or forgiven through, for example, a short sale or foreclosure, the cancelled debt is transformed into taxable income – and the IRS comes looking for their cut.  Under this Act, qualifying mortgage debt forgiven through foreclosure, short sale or loan modification is allowed to be excluded from taxable income.  The forgiven mortgage debt must be a loan on your personal residence, and must be related to the purchase of your home (if you pulled a bunch of cash out and did a short sale on that mortgage, you might not qualify).

   

  • More Info: http://www.irs.gov/individuals/article/0,,id=179414,00.html

  On top of these above-and-beyond tax credits, deductions and exemptions, longtime and brand-new homeowners should also look forward to claiming meaty tax deductions for basic closing costs (origination fees, taxes and points – oh my!), property taxes and mortgage interest deductions.

  As always, talk to your tax preparer to see if you qualify for any of these tax perks.  And don’t delay – the countdown to April 15th is on.

  http://www.trulia.com/blog/taranelson/2010/03/5_top_2009_tax_perks_for_buyers_sellers_and_homeowners

  
   
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• 6 Tax Tips for Real Estate Owners and Investors

  MSC Marketing 9:49 am on February 2, 2010 | Comments:0
  Tags: investors (4), Owners, sellers (35), tax deduction (3)   Filed under: Income Tax, Seller Info

  

  1. Determine if your partnership qualifies for an income deferral for debt reacquisition transactions. Has your business had debt forgiven? There is a tax election available that will allow you to defer cancellation of debt (COD) income until 2014, when it will then be recognized ratably over five years. Carefully consider the options before making this irrevocable election as your COD income could be fully excluded under other provisions.

  2. Color your building green. Take advantage of special deductions and credits for green, or environmentally friendly, buildings.

  3. Determine if you are a dealer or an investor. Do you know if you are a real estate dealer or an investor with regard to taxes? Proper planning will ensure the desired treatment upon disposition of the property.

  (More …)