Archive for Real Estate
No More Tax On Forgiveness Of Debt In California
Posted by: | CommentsNO MORE STATE TAX ON FORGIVEN DEBT
Distressed homeowners no longer have to pay California state income tax on debt forgiven in a short sale, foreclosure, or loan modification. Enacted into law yesterday, Senate Bill 401 generally aligns California’s tax treatment of mortgage debt relief income with federal law. For debt forgiven on a loan secured by a “qualified principal residence,” borrowers will now be exempt from both federal and state income tax consequences. The existing federal exemption is for indebtedness up to $2 million, whereas the new California exemption is for indebtedness up to $800,000 and forgiven debt up to $500,000.
“Qualified principal residence” indebtedness is defined as debt incurred in acquiring, constructing, or substantially improving a principal residence. It includes both first and second trust deeds. It also includes a refinance loan to the extent the funds were used to payoff a previous loan that would have qualified.
The tax breaks apply to debts discharged from 2009 through 2012. Californians who have already filed their 2009 tax returns may claim the exemption by filing a Form 540X amendment.
Taxpayers who do not qualify for the above exemptions (e.g., second home or rental property) may nevertheless be exempt under other provisions. Most notably, taxpayers who are bankrupt are exempt from debt relief income tax. Also, taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets.
For more information about mortgage forgiveness tax consequences, go to California Franchise Tax Board’s Mortgage Forgiveness Debt Relief Extended webpage and the Internal Revenue Service’s Mortgage Forgiveness Debt Relief Act and Debt Cancellation webpage. The full text of Senate Bill 401 is available at www.leginfo.ca.gov.
Brought to you by the California Association Of Realtors
Leon C. Williams Certified Foreclosure Specialist Pre-Foreclosure Coach leon@williamslandmark.com Leonsblog Sacramento Short Sale Guru Sacramento Pre-foreclosure Workshop Williams Landmark Real Estate
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Part II: Why You Should Start A Personal Business; The Nitty Gritty On Tax Advantages
Posted by: | CommentsWar On Wealth Series – Taxes
In my previous post “Why You Should Start A Personal Business”, I made the statement that obtaining Financial Independence and becoming Wealthy is simply the process of continually increasing the gap between the amount of money that comes in and the amount that goes out. The greater the gap the faster your wealth pot grows and multiplies. The goal is to learn how to optimize what you currently have by learning how to keep less of your money from going out. The next step is to learn how to bring more money into the pot. Starting your own personal business is such an efficient weapon against ‘The war on Wealth” that in my opinion absolutely every one should have one. I also want to reiterate the fact that it is not necessary to plunk down $100,000 to start a printing shop. You can get started for as little as a few hundred dollars and a lot of sweat equity in any number of things that are available to you. The only thing that I would suggest is to find something that you love or can get passionate about. However for our purposes neither one of those is necessary. I just believe if I am going to spend my time doing anything, I am going to be passionate about and love everything about my life. I am also not concentrating on the earning of income in this post as I am going to assume that whatever you choose it is with the intent of making money. What I am going to dive right into is how you can keep more of the money that comes into your pot just by having a “personal Business”. Read More→
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War On Wealth Series – Taxes
Taxes, taxes, taxes, we are taxed on everything. You paid a “whop” for the house, didn’t include escrows in your closing costs so you were able to come to the closing table with less money and now that $5,000 annual tax bill on that $400,000 purchase price is making you teeter on the edge of financial catastrophe, and you have no idea where the next payment is going to come from. So you ask, if my house in this market is worth half as much, why does my tax bill not follow suit? HA! Welcome to the new economy. As I told you before, we are fighting a “War On Wealth” like never before. Money is scarce all around us. Cities, Counties, States, and our entire Country is thinking of new and creative ways to pay their bills on “YOUR BACK”! Even if you had included the taxes in your escrow, imagine what $200 of that $416.67 a month tax bill (In Sacramento County) would do going into your investment account earning 6% interest compounding annually. In 10 years you would have $16,765.97. In 15 years, $29,607.03. What if you took the almost $17,000 in 10 years and leveraged it on a small rental property with positive cash flow, then sold it 10 years later for a nice gain. At that point you could take that money and put it into some asset protected, capital gains protected trust for maximum leverage. Wow! The possibilities are endless. Imagine if you instead paid $2 million for the house with a monthly tax bill of $2,083.33 (in Sacramento County), and you could put a $1,000 per month into that same investment account. In 10 years you would have $167,659.71, in 15 years $296,070.34. But I guess it’s really moot, because its all allocated to the “Tax Man” who is just going to foolishly waste your tax dollars and misappropriate as much as possible for good measure.
Don’t Despair
Luckily there are provisions in your county to remedy the situation. Every county is a little different, but here are the 9 basic steps that you are going to have to take to get your tax bill reduced. Read More→
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How Owning Real Estate Can Help Me Save On Taxes
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There are several ways Real Estate can reduce the amount of tax you pay Uncle Sam? Here is a list of the most common methods to use as a tax saving tool and thus a Wealth Building and Wealth preservation tool. Read More→
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Understanding Condos And PUD Ownership
Posted by: | CommentsUnderstanding Condominum and PUD Ownership
California’s builders, in an effort to combat the dual problem of an increasing population and a declining availability of prime land, are increasingly turning to common interest developments (CIDs) as a means to maximize land use and offer homebuyers convenient, affordable housing.
The two most common forms of common interest developments in California are Condominiums and Planned Developments, often referred to as PUDs. The essential characteristics shared by these two forms of ownership are:
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How To Not To Turn $20 Into A $75,000 Disaster!
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War On Wealth Series – Wealth Preservation
This is What Happens When You Don’t Use “Total Asset Optimization Principles”
Anyone With A Job Can Build A Nest Egg On “Steroids”
Whether your financial status is considered lower income, middle income, upper income, or super rich you have the ability to grow a nest egg on “steroids”. It’s the system that you put in place that determines if you will be the “robbing Peter to pay Paul” person in life or the “everything seems to fall in your lap” person. The choice is yours.
Root of All Evil
To understand how “NOT” to turn $20 into a $75,000 disaster I have to first lay some ground work on this “thing” called “Total Asset Optimization”. Let’s begin this discussion by emphatically stating, I Believe the lack of “Total Asset Optimization” is one of the largest contributors to strife in American Society. I believe passionately that the lack of knowledge and ability to grow in our financial lives causes many “ills” for the American people. Gang Violence, hatred and intolerance, divorce and the subsequent breakup of the family unit, road rage, jealously and a host of problems stems from our inability to prosper not only financially, but in all areas of our lives, and is rooted in our self-worth or lack thereof.
“Get Your Financial House In Order And Save The World”
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