Taxes Archives - Page 2 of 3 - Metro Atlanta Homes

How Much Do You Know About Taxes?

As we turn the calendar on yet another year, it's time to start thinking about income taxes once again. How much do you know about taxes? Take this pop quiz and see if you do as well as the guy interviewed on the street in Times Square…

We'll have more tips for you when it comes to taxes as we move closer and closer to that dreaded date of April 15th. But we have more tips for you at the Taxes link to your right under Atlanta Real Estate Categories.

And don't forget, we also post tips daily on Twitter and Facebook, sometimes pertaining to taxes. Find us there as well.

Should Mortgage Debt Forgiveness Relief Act Be Extended?

Until the Mortgage Debt Forgiveness relief act was created in 2007, a person who short sold his home had to pay the IRS income tax and the mortgage debt forgiven in a short sale or mortgage term work out on his home. Clearly that made short selling and certain modifications impossible for many.

If distressed homeowners had to pay tax on the phantom income from mortgage debt forgiveness, many may have no choice but to go into foreclosure.

The Mortgage Debt Forgiveness act was created so that homeowners and banks and affected communities could utilize alternatives and avoid the negative impact of a foreclosure. But congress allowed the act to expire at the end of 2013…

The address again to email your questions or responses to is: mailto:asktheexpert@shariolefson.com

Check out our other articles and tips on taxes that affect Metro Atlanta homeowners by clicking on the Taxes link to your right under Atlanta Real Estate Categories.

Deducting Mortgage Points on Your Tax Return

If you bought a home or refinanced your home in 2013, mortgage points you paid on the new loan are tax deductible. But depending on whether you purchased a home last year, or simply refinanced the one you already had, when you can deduct the mortgage points varies, as explained in this brief video…

Check out our other articles and tips pertaining to Mortgage points and mortgages in general by clicking on the Atlanta Mortgage Info link to your right under Atlanta Real Estate Categories.

Tax Breaks Metro Atlanta Homeowners May Lose

Tax breaks Metro Atlanta homeowners may lose if Congress fails to reinstate them Dozens of tax breaks expired on January 1st. Metro Atlanta homeowners may have to do without some of these when they prepare their taxes next year, unless some or all of these deductions and breaks are retroactively extended by Congress. No one can confidently predict what will happen with restoring some or all of these deductions. The situation is further complicated by the fact that Congress and the Obama administration want to accomplish major tax reform in 2014.

Expiring Tax Provisions of Most Importance to Metro Atlanta Homeowners

Mortgage Insurance Premiums Deduction: Since 2007, qualifying Metro Atlanta homeowners have been able to deduct premiums for mortgage insurance provided by the Department of Veterans Affairs, the Federal Housing Administration, the Rural Housing Service, and private mortgage insurance. Metro Atlanta homeowners whose incomes are not too high can treat such payments the same as mortgage interest payments. Unless the law is extended, no deduction will be allowed for amounts paid or accrued after Dec. 31, 2013.

Discharge of Indebtedness on Principal Residence: Since 2008, Metro Atlanta homeowners have been allowed to exclude from their taxable income up to $2 million of debt forgiven on their principal residence by a lender in a short sale, mortgage restructuring, or forgiven in a foreclosure. Unless this provision is extended, the exclusion will not apply to indebtedness discharged after 2013. If this provision does expire, the impact will vary from state to state.

Tax Credit for Qualified Energy Efficiency Improvements: Metro Atlanta homeowners have been able to claim a maximum lifetime tax credit of up to $500 for installing energy efficiency improvements in their main homes, including the cost of insulation, windows, doors and roofs. The credit expired at the end of 2013.

Credit for Construction of New Energy-Efficient Homes: Since 2006, certain contractors have been allowed an efficient-home credit of $1,000 or $2,000 for constructing or manufacturing qualifying energy-efficient homes. Like the other energy efficiency deductions, this expired at the end of 2013.

Many of these provisions are quite popular and likely will be extended by Congress. Exactly when or how lawmakers will get around to doing this is unclear.

Check out our other articles and tips on taxes that affect you as a Metro Atlanta homeowner by clicking on the Taxes link to your right under Atlanta Real Estate Categories.

Metro Atlanta Real Estate News – November 2013

In our Metro Atlanta Real Estate News for November 2013:

No Mortgage Limit Changes Before Spring

Housing Inventory Fell In September

IRS Delays Start of Tax Filing Season (Again)

No Mortgage Limit Changes Before Spring

No Mortgage Limit Changes Before Spring Mortgage lenders will get at least six months' notice before the government reduces the limit on the size of loans that taxpayer-owned Fannie Mae and Freddie Mac can back.

The Federal Housing Finance Agency, which has already said it was considering lowering the cap to wean the housing finance system off its dependence on the government, said any change would be phased in to avoid economic disruptions.

The housing finance industry had expected officials to lower the limits on Fannie Mae and Freddie Mac-backed loans on January 1, 2014. While it will get more time to prepare for any changes, a decision on whether to lower the limits, and by how much, would still be made later this month (November).

Currently, Fannie and Freddie cannot back loans of more than $417,000 in most markets, although the cap ranges as high as $625,500 in some pricier areas – and up to $721,050 in Hawaii.

Lowering the caps, which were raised in 2008 to help keep the mortgage market liquid during the financial crisis, could make it harder for Americans to obtain home loans and drive up mortgage costs, unless the private market steps in to fill the void.

The two firms do not directly make loans. They purchase mortgages from lenders, which they either keep on their books or bundle into securities that they offer to investors with a guarantee. Those investors pay Fannie and Freddie a "guarantee fee" when they buy the securities.

Some in the industry and lawmakers have tried to challenge the FHFA's legal authority to reduce the loan limits. In addition, a bipartisan group of lawmakers in the House of Representatives have called on the agency to drop its plans to change them altogether. We'll keep you posted on any changes, whatever they may be, right here at this website. Stay tuned!

Housing Inventory Fell in September

Housing Inventory Fell in September The number of homes listed for sale dropped slightly in September but a growing number of housing markets are witnessing higher levels of for-sale inventory compared with one year ago.

Nationwide, there were 1.94 million homes listed for sale in September, down by 1.7% from August but still the third highest level this year, according to a report from Realtor.com. Listings were down by 2% from one year earlier, but nine of the top 30 metro areas saw year-over-year increases in the number of homes for sale.

The housing market has seen brisk sales through the third quarter of this year, but there are signs that severe inventory crunches from earlier this year are slowly beginning to ease as rising prices give more sellers the incentive to test the market.

Home listings tend to slow in September as the school year begins, and the drop in listings last month was lower than normal.

The National Association of Realtors estimated recently that housing inventory stood at 2.21 million units in September, which was unchanged from August but up by 1.8% from last year's levels. That marks the first time in more than 2 and 1/2 years that the Realtors group has reported year-over-year gains in unsold home inventories.

IRS Delays Start of Tax-Filing Season (Again)

IRS Delays Start of Tax-Filing Season (Again) The IRS announced recently that it will delay the start of tax-filing season by up to two weeks because of the government shutdown. However, taxpayers will still be responsible for turning in their 2013 returns by April 15. (Did you really expect a delay there too?)

This will be the second year that the IRS has delayed accepting tax returns due to legislative matters. Just after Jan. 1 this year, Congress approved a fiscal deal that adjusted tax rates and caused the IRS to push the start of tax-filing season from January 22nd to January 30th. Some taxpayers even had to wait until February or March to file.

The IRS says it will begin accepting tax returns between January 28th and February 4th. The agency plans to announce in December a final date for when the filing season will officially kick off. We'll update you here when that final date is announced.

Easy Tax Mistakes Made By Metro Atlanta Home Owners

Even though we're still six months or so away from that dreaded tax filing season, we wanted to bring to your attention some easy tax mistakes Metro Atlanta home owners often make and end up paying more than necessary to Uncle Sam. Making any one of these tax mistakes as they relate to your Metro Atlanta home can cost you money, or worse, draw the IRS to your doorstep for an audit.

Tax Mistakes #1 – Property Taxes in the Wrong Year

You take a tax deduction for property taxes in the year you (or the holder of your escrow account) actually paid them. Some tax jurisdictions bill a year behind — in other words, you don't get billed for 2013 property taxes until 2014. This doesn't really concern the IRS. Be sure to enter on your federal tax forms what you actually paid in 2013 regardless of the date of the bill. Don't claim the wrong amount based on dates.

Tax Mistakes #2 – Deducting the Wrong Tax Amount

Most people have an escrow fund held by their mortgage lender to pay your property taxes. Don't deduct the amount escrowed, deduct the amount the escrow service pays the taxing authority. The amount you regularly pay into your escrow account each month to cover property taxes is more than likely more, or may be a little less than your actual property tax bill.

You might have a tax bill for $1,500, but your mortgage lender may have collected $1,600 in escrow during the year as a part of your monthly payment. Only deduct the $1,500 tax bill amount, not 12 months of the escrowed tax amounts you pay with your mortgage payment.

Tax Mistakes #3 – Claiming Too Much Interest Deduction

You can deduct mortgage interest only up to $1 million of mortgage debt. If you have $1.5 million in mortgage debt, deduct only the mortgage interest on the first $1 million.

Tax Mistakes #4 – Deducting Points on a Refi

When you first buy your Metro Atlanta home, you can deduct all points the year you bought it. However, when you refinance a mortgage, you have to deduct points over the life of your new loan, not all the year you refinanced. If you paid $4,000 in points to refinance a 30-year mortgage, your tax deduction is around $133 per year.

Tax Mistakes #5 – Not Keeping Track of Capital Gains

If you sold your Metro Atlanta home last year, don't forget to pay capital gains taxes on any profit. Tax laws allow you to exclude $250,000 (or $500,000 if you're a married couple) of any realized profits from taxes. If your cost basis for your home is $200,000 (what you paid for it plus any improvements) and you sold it for $400,000, your capital gains are $200,000. If you're single, you owe taxes on $150,000 of gains. See IRS Publication 523 for more details on capital gains when selling your Metro Atlanta home.

For more tax related tips and articles as they pertain to your Metro Atlanta home, click over to our Taxes section under Atlanta Real Estate Categories to your right.

Metro Atlanta Real Estate Moves With Surprising Tax Implications

Everyone knows that owning Metro Atlanta real estate offers significant tax advantages. A recent survey of people who had bought homes in 2012 showed 79 percent said the mortgage interest and property tax deductions were "extremely important" factors to their decision to become homeowners in the first place.

These two deductions are just the tip of the iceberg of all the real estate-related tax guidelines, advantages and dis-advantages.

Metro Atlanta Real Estate Moves That Trigger Surprising Tax Issues

Refinancing

Homeowners have been on a refinancing spree this year, spurred by continually low interest rates and a new resurgence in home values and equity. When you refinance into a lower interest rate mortgage than you previously had, the focus tends to be on the fact that your monthly payment is lower or that you can pay your home loan off faster with the same payment every month.

What many fail to calculate for is that the tax deduction based on your mortgage interest is the largest tax perk of home ownership. Most homeowners are eligible to deduct 100% of the interest they pay on a mortgage up to $1 million on their primary residence. So, if you reduce the interest you pay, you also reduce your mortgage interest deduction.

Believe it or not, less than 30 percent of homeowners take their mortgage interest deduction every year. This is thought to be because at lower income and home price levels, the standard deduction is higher than the itemized deductions for which many homeowners would be eligible. If you do itemize every year and/or you have a relatively high (or growing) adjusted gross income, you might be surprised at your tax bill the year after you refinance to a lower interest rate.

Remodeling

When you remodel your home, whatever you do, save your receipts. And this is not a 'save them until tax time' recommendation, it's a 'save them until you sell the place' mandate! The money you invest into improving your home over time gets added to your purchase price, or cost basis, when you sell, bringing down the amount the IRS considers to be profit or gain and reducing your chances of incurring capital gains tax. (Single home owners can realize $250,000 of "gains" above the cost basis of their home tax-free; marrieds, $500,000.)

Many remodeling projects popular with homeowners these days trigger local and state tax credits. If you are remodeling and improving your home's efficiency at the same time, visit your state, county and city websites to see what tax credits or other financial incentives you might qualify for.

Whether or not your remodeling projects are eco-friendly, if you use a home equity line to finance them, chances are good that you can deduct the interest from that loan (up to $100,000) on top of your home mortgage interest deduction.

There are many Metro Atlanta real estate moves that may affect your taxes if you own your own home, so be sure to consult with your accountant or tax attorney, or do a lot of research and study on this topic yourself. The money you save in taxes could blow your mind. But the money you give to Uncle Sam if you don't do your homework, can blow your budget.

Taxes: Preparing for Next Tax Season Now

Now that the April 15th tax deadline has come and gone, it's time to start thinking about taxes for next year.

Most people are so glad to have tax season over with, the last thing they want to think about is taxes again, but now is actually the best time.

For those of you who are industrious and want to get a jump on next year's taxes, we have a lot of tax tips at our site. Just click on the link "Taxes" under the Atlanta Real Estate Categories in the column to your right.

Last Minute Tax Advice

The April 15th tax deadline is almost here, and even though most Americans have already filed their taxes — especially if they were due a refund — the IRS says 20 to 25 percent of us will wait until the last minute. If you're one of those last minute procrastinators, here's some last minute tax advice to help you muddle through it again this year.

Remember what Stacy said in the video… don't panic and rush through your returns. If you don't have time to do them, follow his tax advice and just file an extension. It won't give you more time to pay (if you owe) but it will give you more time to file and do things right.

We have more tax advice and tips here at our web site. Just click over to the Taxes articles under our Atlanta Real Estate Categories to your right.

Tax Breaks For Atlanta Homeowners

Atlanta Atlanta homeowners get a lot of tax breaks. homeowners will soon be turning the calendar and looking squarely at April 15, the day income taxes are due. If you haven’t already done your taxes, you should be gathering up your W2s, 1099s, bank statements and receipts. If you’re missing anything, you don’t want to wait until April 14th to figure that out.

A few Congressional scares slipped by the cutting block again, at least for this year. Congress did not modify or repeal your right to deduct the mortgage interest you pay for being a Atlanta homeowner. There are, however, some limitations for high-income earners. If you are single and earn more than $400,000 (or more than $450,000 if married), personal exemptions will be phased out and itemized deductions will be limited. If you fall in that category, you should discuss your specific situation with your tax or financial advisers.

Congress did not increase the capital gains tax rate for people who are not high-income earners. If you sold your principal house and lived there for at least two of the five years before it sold, you can exclude up to $250,000 of your gain if you are single (or up to $500,000 if you are married and file a joint tax return).

5 Major Tax Tips For All Atlanta Homeowners This Year

1 – You have to itemize. If you’re looking to get tax deductions for a home you bought, something you did to your home, or something that happened to your home, you’re going to have to itemize your deductions, rather than taking the standard deduction. Fortunately, if you’re filing through TurboTax or another credible online program, you can itemize everything and then see whether or not you’ve topped the standard deduction, saving you a lot of complicated math.

2 – The Interest Deduction. The interest paid on your mortgage for being a Atlanta homeowner might be good for a tax break. If you paid interest on your mortgage in 2012, it may be deductible. Basically, if you are itemizing deductions and you are filing a 1040, and your home loan qualifies, you can write off some or all of the interest you paid.

If you became a new Atlanta homeowner in 2012, on a mortgage of up to $1 million, you can deduct the interest you paid at settlement if you itemize your deductions. This amount should be included in the mortgage interest statement provided by your lender.

If you paid points to obtain your mortgage, these fees are included on the income tax deductions list and can be deducted as long as they are associated with the purchase of the home. If you refinanced your home, these points are still deductible, but it must be done over the life of the mortgage.

3 – Property taxes.� Property taxes are sort of all over the map in the U.S., but a lot of areas offer tax breaks on property taxes as incentives for homeowners. Property tax exemptions vary not just by state, but by jurisdictions within each state. Research and paperwork might require some time, but the effort could lower your tax bill noticeably if you’re a Atlanta homeowner.

4 – Home Office. More and more people are working from home these days (unless you work for Yahoo!). If you use a portion of your home exclusively for the purpose of an office for your small business, you may be able to claim a deduction on your taxes for costs related to insurance, repairs and depreciation. You may only claim this deduction if the space within your home is used exclusively and regularly as either your principal place of business or a place where you meet and deal with customers or patients. You may also be able to take advantage of this deduction if a portion of your home routinely is used for storing items (product samples, inventory, etc.) used in your business.

5 – Home Improvements. As a Atlanta homeowner, if you installed new, energy-efficient appliances, doors, windows, or other systems in your home and haven’t exceeded the consumer energy efficient credit in previous years, you can save up to $500 (or even more), just for going green!

If you’ve taken out a loan to make improvements on your home, you may be able to deduct the interest on this loan. Qualifying loans are those taken out to add “capital improvements” to your home, meaning the improvement must increase your home’s value, adapt it to new uses or extend its life. New carpeting or painting are not considered capital improvements, while adding a garage, installing a water heater or building a deck are all examples of capital improvements.

Obviously there are many more deductions you may qualify for as a�Atlanta homeowner, but these are 5 of the most common. We strongly suggest you consult with an accountant or tax attorney if you’re not familiar with all the laws and changes that may or may not affect you as a Atlanta homeowner.

For more tax tips, hop over to our Taxes Category under the Atlanta Real Estate Categories to your right. We have a lot of additional tax tips for you there.