Real Estate - Market, Mortgage, Buying Homes, Selling Property » Taxes

Real Estate Tax Incentives

admin — Thu, 18 Dec 2008 17:17:49 +0000

Lower Your Taxes

Tax incentives for real estate investors can often make the difference in your tax rates. Deductions for rental property can often be used to offset wage income. Tax breaks can often enable investors to turn a loss into a profit.

For which items can investors get tax breaks? You could claim deductions for actual costs you incur for financing, managing and operating the rental property. This includes mortgage interest payments, real estate taxes, insurance, maintenance, repairs, property management fees, travel, advertising, and utilities (assuming the tenant doesn’t pay them). These expenses can be subtracted from your adjusted gross income when determining your personal income taxes. Of course, these deductions cannot exceed the amount of real estate income you receive. In addition to deductions for operating costs, you can also receive breaks for depreciation. Buildings naturally deteriorate over time, and these “losses” can be deducted regardless of the actual market value of the property. Because depreciation is a non-cash expense — you are not actually spending any money — the tax code can get a bit tricky. For more information about depreciation and various tax alternatives, ask your tax advisor about Section 1031 of the U.S. Tax Code.

Have a Positive Cash Flow

There are two kinds of positive cash flows: pre-tax and after-tax. A pre-tax positive cash flow occurs when income received is greater than expenses incurred. This sort of situation is difficult to find, but they are usually a strong and safe investment. An after-tax positive cash flow may have expenses that outweigh collected income, but various tax breaks allow for a positive cash flow. This is more common, but it is generally not as strong or safe as a pre-tax positive cash flow.
Regardless of what kind of real estate you choose to invest in, timely collections from your tenants is absolutely necessary. A positive cash flow — whether it be pre-tax or after-tax — requires rental income. Be sure to find quality tenants; a thorough credit and employment check is probably a good idea.

Use Leverage

One of the most important factors in determining a solid investment is the amount of equity you are purchasing. Equity is the difference between the actual worth of the property and the balanced owed on the mortgage.

Benefit from Growing Equity

While investing in real estate is relatively complex, it is often worth the extra work. When compared to other financial investments, like bonds or CD’s, the return on investment for real estate purchases can often be greater.

The key to real estate investing is equity. Determine an amount of equity that you want to achieve. When you reach your goal, it’s time to sell or refinance. Determining the proper amount of equity may require the assistance of a real estate professional.

Neda Dabestani-Ryba is a licensed Realtor in Maryland. She is a member of the President’s Circle of Top Real Estate Professionals. She can be reached at (800) 536-3806 or visit her website for more information: http://neda.dabestani.pcragent.com/ Prudential Carruthers REALTORS is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential Financial company. Equal Housing Opportunity

Real Estate Tax For Property

admin — Mon, 10 Nov 2008 17:50:46 +0000

Anytime you have a home or property you will pay real estate tax. Real estate tax is estimated based on your home value. For instance, if you purchase a home and the property is worth $10,000 but you pay $20,000 for the home, thus this additional balance is your equity.

In some areas, you pay taxes in the winter and spring months. Some cities charge city taxes and state taxes for property. In addition, the real estate tax estimate is based on the current market price also. For this reason, you want to find deductibles to save money on home taxes.

If you purchased a home and lived there a couple of years, you have an invested property. The interest that you pay toward the property will not qualify you for interest deduction on your real estate tax. On the other hand, you may have tax deductibles under the itemized returns.

The purpose of bringing this up is to let you know that you may have real estate tax options available to you for saving money. Many people do not realize this. Renters get money back from the government all the time for paying rent each month. Thus, like renters homeowners have return options also. Check these options carefully.

Moreover, check your options, since you may have deductible choices on your equity interest dues. Check under the itemized deduction options to learn more.

You will find that you may have options for taking out loans over home improvement. If you recently were accepted for a line of credit or a home improvement loan, look under the itemized deductions to see if you have options for tax returns. Tax options are available for second mortgages, etc. You can also find help for particular issues. For instance, if you recently lost your home because of flood, fire, or your home was damaged, thus you may have an option to file claims. You may find a big real estate tax relief by searching through the theft, fire, and disaster category on your tax forms. Usually, you will need tax form 1040X.

To learn more about real estate tax visit the real estate sites online. Here you will find helpful information, calculators and other valuable tools to help you save money. Many sites post information about real estate tax deductibles, so see what you qualify for by visiting now.

Susan Duey represents RateTake Mortgage Loan mortgage marketplace. RateTake matches consumers with multiple lenders offering low Refinance Rates from our network of accredited lenders

Understanding Real Estate Taxes

admin — Tue, 30 Sep 2008 05:10:50 +0000

If you are like many homeowners then you enjoy being a property owner; but along with that enjoyment you also have a responsibility to pay your share of real estate taxes. You may know them as property taxes, but as a refresher keep in mind that real estate taxes are based on an assessed value of a parcel of land and any structures that might be built on it. By using a formula and calculating a variety of factors such as mill rate and assessed rate, a assessor can determine the assessed value of a piece of real estate. After the calculation is completed, a local tax rate is used to determine the amount owed. Tax rates vary from town to town and county to county and are typically owed on an annual basis or paid twice a year.

Real estate taxes are collected by the city or county in which the property is located. The range of taxes will vary widely depending on tax year, mill rate and market values. Be prepared because the taxes can be priced reasonably or can be high. One of the factors that determine your tax bill is based on whether your property is located in a prime location and receives a good amount of revenue from tourism. If you live in those areas you will have higher real estate taxes than unpopulated areas. Public records maintained by the municipality in which you live monitor improvements made to real estate that may have an impact on its value. While you may think that you are being overtaxed, the monies generated from these taxes help support many vital local programs, public services and facilities such as recreational parks, local schools and many other important city services.

Many times homeowners want to raise the market value of their property but neglect to consider that this also means a rise in real estate taxes. Regardless of property taxes, the advantages for the property owner are too numerous to ignore. By simply performing professional landscaping, you can tremendously increase their property’s value. The upside of increasing taxes means that as the taxes increase, so does home equity, meaning the chance for a home equity loan improves. Another advantage is that real estate taxes can be used as legitimate deductions when the time comes to file your income tax return that ultimately put more money back in your pocket. On the other hand when property values decrease, this can also result in lower taxes. When an owner decides to sell the piece of real estate at a lower value it can mean doing so at a loss.

If you take the time to do the research you find many great resources offering advice to property owners on how to lower your real estate taxes. There is some great advice that from moving to a area with lower property taxes to verifying information regarding the currently owned property is accurate and up to date at the tax office. Ultimately, knowing how your local assessor determines property value is also important. Another great source of savings is offered to those who are war veterans or on fixed incomes. You might also qualify for tax breaks if you own structures that use energy saving features.

Chris Rivers offers a FREE tax guide which gives you insider tips and secrets to save you money on every type of tax such as sales tax, income tax, real estate taxes, estate taxes and many more

When you need to refinance your adjustable rate home mortgage into a low and fixed interest rate mortgage use a FHA Mortgage

Get your FREE list of Connecticut mortgage lenders for homeowners with mortgage lates and low, bad or no credit

Property Tax Protest

admin — Tue, 23 Sep 2008 19:52:57 +0000

Americans across the country are seeing real estate values drop, both on the commercial and residential side, yet their real estate taxes are staying the same or continue to go up. More and more owners are actively pursuing a property tax protest.

Bottom line the system is exposed to be fair. No property owner should pay more than what they really owe. Cities are “squealing” that they do not have enough cash to pay for their services. Many Americans are saying: “join the club.” We are expected to operate and live within our means, cities should as well.

Protest Property Taxes

Experts estimate that between 60-70% of ALL property owners are over assessed, while only 2% actually bother to do anything about it. Many don’t know that they can appeal. Others assume the process will be too cumbersome and complicated. And we have heard some people express fear that their cities may raise their taxes (nonsense!). Some claim that they just don’t have time.

In reality, the process is not that difficult to understand and the time needed to investigate and learn how to appeal can be as little as an afternoon. The language and the way that property taxes are calculated are overly complicated. Many industry experts argue that cities do this on purpose to confuse or bore people into not appealing. We tend to agree with this. If you can have the disciple to sit down for a half hour and read how they calculate your property taxes you will be well on your way.

The potential savings can be significant, making it well worth it for the owner to appeal. Many home owners enjoy savings between $200 – $3,000 per year. The savings go on and on, year after years, so an annual savings of $800 could translate into $8,000 over a ten year period. In addition, many owners can qualify for a rebate on taxes that they have over paid in previous years…

Get out there and protest your property taxes! As tax payers face corporate downsizing, weak healthcare programs, a stalling economy and the biggest credit crisis since the great depression we should not have to shoulder the inefficiencies and corruption of our politicians.

Jeff Rauth is President of Bloomfield Hills based Commercial Finance Advisors. More information on property tax reductions can be found here. property tax reduction or property tax appeal or real estate taxes

4 Basic Principles Of Real Estate Tax Law

admin — Sat, 12 Jul 2008 10:01:37 +0000

Most of the people are nowadays big or small real estate investors. If you own a home then you can be considered as a real estate investor and you need to learn various laws regarding real estate that could be of immense importance to you. Moreover, most of the laws that we should understand are very simple.

However, if you fail to understand these laws then you might suffer huge losses. Some of these basic principles are:

1) Real Estate Taxes Can Be Avoided While Selling Home- According to the law of real estate you would be exempted from profits if you are selling your home for not more than $250,000 if you file your request singly and $500,000 if you are filing it jointly. Such laws are made to safeguard the families and let them own their house or encourage investment in the real estate. What is more? If your profit is more than the specified amount then the tax is levied upon the price exceeding the limit but that home should be your primary residence to avail any such benefits. For qualifying it as your primary residence you should stay there for at least two to five years before selling it.

2) Deductible Mortgage Interest – Most of us get mortgage whenever we buy a home. Mortgage interest proves to be the largest tax deductions one can ever have. What is more? Interest you pay on mortgage for homes other than primary residence is also tax deductible. Even the payments made against your primary mortgages or home equity loans is deductible.

3) Losses Incurred In Real Estate are Tax Deductible- When you file your tax with IRS, you can claim your loss on real estate if the selling price of that real estate is less than what you paid for it. It would be deducted from your tax.

4) Save Taxes By Reinvesting In Real Estate- If the real estate you purchased is not primary residence of yours even then all your capital gains are not calculated in taxes as your profits. You need to reinvest your profits in an another real estate within a period of two years if the property you sold was not your primary residence. This way you can avoid capital gains tax on your property sales.

Therefore, you can understand the importance of understanding the semantics of tax deductions that are required to save a lot of money you would have paid otherwise as your capital gain tax. You should take advice of a good tax professional to avail many such real estate deductions that are there in the law.

Abhishek is a Tax Consultant and he has got some great tips on Filing And Understanding Taxes! Download his FREE 84 Pages Ebook, “Taxes Made Easy!” from his website http://www.Positive-You.com/775/index.htm. Only limited Free Copies available

Real Estate Taxes – Will They Ever Go Down?

admin — Sun, 04 May 2008 11:36:55 +0000

Something seems to have happened to the mind set of state and local government. Property taxes are soaring as the value of the overall aggregate of real estate home values are dropping. Many areas are hard hit by home foreclosures and are running deficits.

Real estate taxes continued to climb even as the average value of a single family home fall. Either the shortfalls need to be addressed by higher property taxes or larger sales tax. Unless government tightens its belt, higher taxes one way or another are inevitable.

The state and local government hiring has accelerated in the last 12 months. Despite the economic slowdown, private firms slashing staff, the public-sector jobs gains have actually sped up.

State and local governments are in a budget crisis. You wouldn’t know it when you looked at the payrolls. 338,000 new jobs have been created in the past 12 months. That’s far more than the 195,000 jobs in the 12 prior months.

Budget cuts could affect aid to cities, towns, communities, villages and counties and affect transportation, mental health, housing and other social services.

With the fall in real estate prices, it pays to scan the horizon to see how your homes valuation noted the assessment notice compares to recently sold homes.

The National Taxpayers Union writes that as many as 60% of all homeowners are over-assessed and not in line with their home value. (“How To Fight Property Taxes” 2004 p.1

The value of residential real estate is estimated by comparing the subject with similar properties that have been sold recently. Look at your neighborhood to find comparable sales or properties in similar neighborhoods that share similar characteristics of lifestyles, income level of residents, surroundings, average age and value of house.

If officials want to make an interior inspection, let them.

In Massachusetts Lawyers Weekly, an article appeared Taxation – Real estate – Abatement – Interior Inspection Published: August 25, 2008 where they judged in favor of the Appellate Tax Board” Where a taxpayer refused to allow an interior inspection of his home, the Appellate Tax Board acted permissibly in refusing his abatement request.”

Although this happened in Massachusetts, it’s a good idea to cooperate with the tax assessor. But when your assessments are out of whack, appeal your property tax!

Nevertheless, real estate tax loopholes allow for serious property tax reductions because of errors in assessments resulting in thousands of dollars of potential. Click http://propertytaxax.com/