Bush Tax Cuts May Expire January 1: Homeowners of $1 M+ Properties Beware
Do you own a home valued over 1 million dollars? Beware! Congress may allow the Bush Tax Cuts to expire on January 1, 2013. What does this mean for homeowners of properties valued over $1,000,000? Capital Gains taxes may rise as high as 20% from the current 15%. CNBC reports that if these go into effect, wealthy home owners could owe millions of dollars more in taxes on their home sales. Because Bush Tax Cuts may expire January 1, Homeowners of $1 M+ Properties are contacting REALTORS across the country, hoping to get their home on the market and sold before January 1.
But don’t panic! Regardless of the rate rise, the $500,000 capital gains exclusion remains in effect. This means that, under the current federal Tax Code, any sales gain of $250,000 or less for single filers and $500,000 or less for married couples filing jointly will still be exempt from capital gains tax. So…is it time to rush right out and sell your $1,000,000+ property? Can you afford to take your time? The best way for you to make that decision is to call The Oetkens! We have our finger on the pulse of the North Idaho Real Estate Market, and we keep a close eye on the news, politics, and other factors that can have a major influence on the Coeur d’Alene Real Estate market. Let’s start by establishing the current market value of your property.
Call us today for a complimentary Comparative Market Analysis.
Once we establish the value of your property, then we can help you determine the wisest course of action based on your specific circumstances. We’re in the business of helping you Own The Lifestyle. We have proven strategies for optimizing your Real Estate Investment Portfolio, and we have the experience, education and expertise you can trust. Call us today! Call
For more information on our local Real Estate Market, visit
Ten Tax Tips for Individuals Selling Their Home
Mortgage Interest Deduction? OF COURSE!
We’re with Lawrence Yun, of the National Association of Realtors:
It’s a common misperception that the mortgage interest deduction benefits primarily the wealthy, as argued in the Washington Post’s January 1 editorial, “Trim the Excessive Tax Subsidy for Real Estate.”
In fact, the MID actually benefits primarily middle- and lower income families. Sixty five percent of families who claim the MID earn less than $100,000 per year, and 91 percent who claim the benefit earn less than $200,000 per year. As a percentage of income, the biggest MID beneficiaries are younger middle-class families.
The MID helps many families become home owners by reducing the carrying costs of owning a home. The ability to deduct the interest paid on a mortgage can mean significant savings at tax time. For example, a family who bought a home last year with a $200,000, 30-year, fixed-rate mortgage, assuming an interest rate of 5 percent, could save nearly $3,500 in federal taxes when they file next year. That’s real money they can use to pay down other debts, save for their children’s college education, or put away for retirement.
It’s no wonder, then, that most Americans support the MID. In fact, in a recent NAR survey by Harris Interactive of 3,000 home owners and renters, nearly three-fourths of home owners and two-thirds of renters said the MID was extremely or very important to them.
Unlike the very rich, much of whose wealth is tied to the stock market, the wealth of most middle-class American families is connected to their home. Millions of these Americans bought their homes with the understanding that mortgage interest is tax-deductible, and many of them have steadily paid down their mortgages to build equity in their home. Eliminating or reducing the MID would destroy part of this hard-earned equity for all home owners, independent of their tax filing status.
Furthermore, we also need to be mindful that home owners already pay 80 percent to 90 percent of U.S. federal income tax, and this share could rise to 95 percent if the MID is eliminated. Proposals that would remove certain tax benefits in return for lower tax rates just may hold for one or two terms of Congress before the tax rates are changed again. Americans are not naïve; they understand the nature of Washington politics.
For people who don’t have hundreds of thousands of dollars in savings to buy a home outright, tax benefits like the MID help them begin building their futures through home ownership…
We’d like to know what YOU think! Take our poll!
Comments are open, and we hope you’ll express your opinion! We’d love to hear from you.
Rental Property Owners have been handed another huge burden for reporting income and expenses in 2011 & 2012.
The Small Business Jobs Act of 2010 and Patient Protection and Affordable Care Act, PL 111-148, signed into law in 2010, both beef up 1099 reporting requirements and pentalties for rental property owners.
Between the two acts, Rental Property owners will be responsible for sending 1099’s to perhaps hundreds of service and retail vendors over the next two years. Corporations are not exempt.
IRS Forms 1099 must be issued by every person in business paying $600 or more during the year for services. If you pay a plumber to unplug the sink in your restaurant 6 times during the year at $100 a visit, you’ve got to issue a form to your plumber and the IRS. If your plumber is incorporated, you don’t have to issue the form. Well, until now. http://blogs.forbes.com/robertwood/2010/11/23/got-irs-forms-1099-more-soon/
Chris Neefus of CNSNews.com explains it this way:
The Patient Protection and Affordable Care Act, President Obama’s health care law, requires that small businesses file a Form 1099-MISC with the IRS for any goods they purchase from an outside vendor valued at over $600.
But the new bill, the Small Business Jobs and Credit Act (H.R. 5297), extends the mandate to private individuals who own property from which they receive rental income. Those people would also now have to fill out paperwork reporting any expenditure they make on that property valued over $600 for the year.
“There’s 10 million people who don’t know that they’re now suddenly going to be required to do this,” Ellis said. “They don’t have to issue them until January 2012 because it’s a 2011 requirement, but they’ve got to start tracking in January (2011). So I hope their internal accounting is good.”
Writing for ATR, Ellis said, “So imagine that you’re renting out your starter condo. You pay a property manager, a plumber, a repairman, a locksmith, a condo association, etc. Imagine having to get a taxpayer identification number, order 1099-MISCs from the IRS, fill them out by hand, keep a copy for yourself, send a copy to each payee (from whom you had to get a tax ID number and other information), and then finally take your legitimate rental deduction. Then the IRS finds some hiccup somewhere, and you get audited — all to placate an insane Congress.”http://www.cnsnews.com/news/article/75911
Quick figuring…At .44 postage per sheet, a ream of paper (which might be required for all those 1099’s) could cost you big. Do the math:
500 Sheets per ream X .44 = $220
How many 1099’s will you be sending?
Not that you could actually PRINT your own 1099’s anyway. You’ll have to order those from the IRS. See page 1 of the IRS 1099msc form, which has been generously made available for downloading. Caveat? You can’t USE the downloadable pdf! It’s not scan-able. Sorry. Enticing though it may be, if you send the downloadable PDF, you may be fined $50!)
And…what in the world does this have to do with HEALTH CARE???
This is our government’s version of assisting Small Business??