Taxes, Taxes, Taxes...

Not a fun topic for most of us but we thought we would try to give you a laugh and some good advice at the same time. We have compiled some links here that ought to make you think twice and keep you entertained.

Have you ever calculated all the taxes you pay?  From property, income and sales taxes it may add up to more than you realize - This site calculates the average taxes paid in the 10 highest taxing states

Property taxes can eat up a big chunk of your income be wary of these 10 states - Luckily California is not on the list thanks to prop 13 which caps property taxes at 1% of purchase price. Another reason to look at homes for sale in Palm Springs CA!

Perhaps you just want to move to one of the top ten states with the lowest tax burden.

Surely when you retire the tax burden will be at the top of your list. If so check out the best places for low taxes on retirees.

Have a crazy idea that you can deduct something unusual? Check out these 13 crazy tax deductions.

No question about it though home ownership can provide a nice range of tax breaks see this link for a refresher on what they are.

So sharpen that pencil and get ready to crunch the numbers.  Don't forget any improvements you made to your property last year as those can increase your basis in the property.

A final reminder second half property tax payment installments are due no later than April 10th 2015. You can pay Riverside County taxes on line at:  https://taxpayments.co.riverside.ca.us/taxpayments/
While they take credit and debit cards there is a convenience fee added on so best to have your checking account information handy beforehand.

If we can help answer any property ownership questions you have please don't hesitate to call or text us at 760-408-5300.

Is There Really A New Tax On Real Estate Sales?

Well in a word - YES. But wait don't panic it may not even apply to you. The Medicare tax, which goes into effect on January 1, 2013, will impose a 3.8% tax on the net investment income of joint filers with adjusted gross income over $250,000, and single filers with adjusted gross income over $200,000.

So you can stop reading right here if you are not grossing over that $200/250K mark. However, if you are going to be selling Real Estate and are going to make a profit over the exclusion, currently $250k if single or $250K married on your primary residence it will add to your gross income, see below. Remember there is no exclusion for second homes or investment properties. Thinking of selling an investment property soon you may want to close before 2013.

If you do fall into the above $200/250K gross income the new Medicare tax will apply. You figure it on the adjusted gross income (this is the figure on the bottom of the front page of IRS Form 1040), which includes interest, dividends, capital gains, wages, retirement income and income from partnerships and small businesses. According to the IRS site it appears the tax will also apply to dividends, rents, royalties, interest (except municipal bond interest), short and long-term capital gains, the taxable portion of annuity payments, income from the sale of a principal residence above the $250,000/$500,000 exclusion, gain from the sale of an investment property or a second home, and passive income from real estate and investments in which the taxpayer does not materially participate.

Each tax situation can be a little different and it is always advisable to seek professional help. We Recommend Greg Barton CPA use the link to their site or call them at 760-969-6499.

This Month In Real Estate Canada Edition

Going, Going, Gone..... Before You Knew It!

California has come up with a new tax credit of up to $10,000 for first time home buyers as well as on new homes or homes never previously lived in. The program does not officially start ...and you can't even apply for it until May 1, 2010 but rumours are swirling that all the funds in the program maybe gone before the month is out.

The total tax credit allocation for all taxpayers is $100 million for first-time homebuyers and $100 million for new homes, both on a first-come, first-served basis. Needless to say if you want your share of these funds the time to act is May 1st. Call your lender now and be prepared to take advantage of this very generous incentive plan.

If you need A lender recommendation please see California Lenders

Claiming Your First Time Home Buyer Tax Credit

If you are ready to claim your first time home buyer tax credit you will need to us the recently released Form 5405 from the IRS. Using this form first-Time Home buyer Credit and Repayment of the Credit, and the related instructions, eligible home buyers can now start to file their 2009 tax returns. Because of the late addition of this credit taxpayers claiming the home buyer credit must file a paper tax return due to the added documentation requirements.

The IRS expects to start processing 2009 tax returns claiming the home buyer credit in mid-February after it completes the updating and testing of systems to meet the law’s new requirements.

If you are one of the early taxpayers claiming the home buyer credit you may see tax refunds take an additional two to three weeks.

In addition to filling out a Form 5405, all eligible home buyers

must include

with their 2009 tax returns one of the following documents in order to receive the credit:

* A copy of the settlement statement showing all parties' names and signatures, property address, sales price, and date of purchase. Normally, this is the properly executed Form HUD-1, Settlement Statement.
* For mobile home purchasers who are unable to get a settlement statement, a copy of the executed retail sales contract showing all parties' names and signatures, property address, purchase price and date of purchase.
* For a newly constructed home where a settlement statement is not available, a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.

Your Realtor or closing officer should be able to help you obtain these documents easily.

Don't forget that the new law allows a long-time resident of the same principal residence to claim the home buyer credit if they purchase a new principal residence. The qualification standard is using a home as a principal residence for a five-consecutive-year period during the eight-year period ending on the purchase date of the new home. The IRS has stepped up compliance checks involving the home buyer credit, and it encouraged home buyers claiming this part of the credit to avoid refund delays by attaching documentation covering the five-consecutive-year period:

* Form 1098, Mortgage Interest Statement, or substitute mortgage interest statements,
* Property tax records or
* Homeowner’s insurance records.

With these new documentation requirements this mean that taxpayers claiming the credit cannot file electronically and must file paper returns. Don't forget that the tax credit is set to expire and you must be in contract on a home before April 30, 2010 and close before the end of June 2010.

Find out more using this link Yes, the IRS has You Tube videos! Who knew!