Real Estate

State of the Union 2015

Hopefully you were not waiting until President Obama’s State of the Union address on January 20 to hear about his plans to shake up the tax laws. After all, the details of his tax plan had been leaked days earlier and the entire text of his speech was posted online before the event.

Apparently we have a new State of the Union address tradition. In each of his six previous State of the Union addresses he also proposed tax hikes.

Here are the more significant tax provisions that were proposed.

IL-eagle Assets?

Our estate tax system is quite different from our income tax system. The income tax, as its name implies, focuses on how much money individuals, trusts, and business entities make. The estate tax system, in contrast, focuses on how much assets are worth. Most assets aren't hard to value. Stocks, bonds, mutual funds, and similar assets are valued at their publicly-traded fair market value (FMV) as of the date of death (or the executor can choose an "alternate valuation date" nine months later). But some assets are a little harder. Real estate, for example, is also valued at its FMV — but who's to say what a unique or expensive property is really "worth," especially in today's volatile market? Closely-held businesses can be even harder to appraise. And high-end collectibles, like the kind of art and antiques that usually sell at auction, can be hardest of all.

These issues make estate-tax enforcement a different challenge from income-tax enforcement. For fiscal year 2010, the IRS received 42,366 estate tax returns, and audited 4,288, or 10.1%. But just as income tax audits go up as your income rises, estate-tax audits go up as your assets go up. For that same year, the IRS received 3,013 estate tax returns reporting assets of $10 million or more — and audited 928 of them, or 30.8%!

Ten Facts about Mortgage Debt Forgiveness

Yes, the economy is periodically showing some signs of improvement but it is clear the country has a long slow up hill climb ahead before most of us feel the worst is behind us. This is particularly true for families still struggling with what to do with their real estate mortgages when the value of their property is no where close to what they owe on it.

In these situations more and more property owners are finding it makes more sense to take the hit to their credit reports and walk away from the offending property and let the mortgage holder deal with the loss. Setting aside the ethical discussion surrounding this, if you do have mortgage debt forgiven you walk into a whole new complex tax arena. If you're not careful and plan appropriately

Want your home buyer tax credit? I hope you are patient.

For all of you that are eligible for the home buyer tax credit this filing season I have some news from the IRS administrative front. Don't expect your tax refunds to come quickly. Oh, and you won't be able to file your federal income tax return electronically either. And make sure you have all your closing paperwork at your fingertips.

The Internal Revenue Service today (Jan 15, 2010) released the new form that eligible home buyers need to claim the first-time homebuyer credit this tax season and announced processing of those tax returns will begin in mid-February. The IRS also announced new documentation requirements to deter fraud related to the first-time home buyer credit.

The new form and instructions follow major changes in November to the home buyer credit by the Worker, Homeownership, and Business Assistance Act of 2009. The new law extended the credit to a