(Flickr photo by The Suss-Man (Mike)
Home equity loans have regained some of their popularity in the wake of the housing crisis.
But borrowers need to be clear about the extent of their tax deductibility — at least until (and if) Washington completes wrangling over the deficit. You’ll find the nitty-gritty in a 16-page PDF published by the IRS, from which I’ll try to furnish just the broadest of strokes.
In essence, you can deduct no more than $100,000. Except. . . Continue reading
(Flickr photo by qwghlm)
Although engaging in any financial dealings with family or business friends can be fraught, it also can be fraud if the transfer of ownership of real estate is not conducted at arm’s length.
I came across a reminder about the danger of selling property to your brother-in-law or best business bud in a recent bankrate.com column by Steve McLinden, who cautions readers that. . . Continue reading
There’s a flurry of activity in the nation’s capital to clamp down on U.S. workers that are misclassified as independent contractors, a category under which all but a tiny minority of real estate agents fall.
According to Realtor magazine, a publication of the National Association of Realtors (NAR), the government says far too many businesses are using incorrect employee classifications to avoid paying Social Security, Medicare and unemployment insurance taxes.
Congress last year started looking into misclassification of employment status in an attempt to get a handle on a problem that the U.S. Department of Labor says is huge – possibly applying to as much as 30 percent of the country’s workforce.
This year, the government’s focus intensified: Continue reading
Flickr photo by Chris_J
You already know that the IRS is drooling over the impending income tax deadline. You’re not alone.
This is the time of year when homebuyers are digging through that shoebox with all their receipts, hoping for a refund, dreading the possibility of draining their savings and . . . postponing their search for a new place to live.
Although the weather may be fine and open houses scheduled in seasonally elevated numbers, taxes and their impact in “normal” times tend to sap the resources, energy and motivation of buyers. (Of course, this is hardly a normal year.) The nascent vigor of the housing market follows.
It’s just as well: Continue reading
After literally decades of campaigning by the Council of New York Cooperatives and Condominiums, as well as others, a limitation on the amount of money that a co-op building can collect in rent from commercial (technically, patronage) operations was changed in December 2007 starting that tax year.
The impact of what was an expanded definition of “cooperative” has yet to be fully realized, though there are isolated instances of occasionally enormous benefits.
Until it was changed, the so-called 80-20 rule prevented cooperatives from enjoying a tax deduction for their expenditures on property taxes and mortgage interest if their income from retail stores, garages and such exceeded their operating budgets by 20 percent.
As a result, many commercial tenants were paying a pittance in rent, including nothing in the case of a few nonprofits such as, say, thrift shops.
With a new, more comprehensive definition of “cooperative” in the revised IRS rule, buildings now can permit the budgetary contribution of commercial rent to go over 20 percent. Continue reading
As independent contractors, good real estate brokers work hard. (Flickr photo by Christolakis.)
A New York Times front-page article on the IRS cracking down on companies that blur the line between independent contractors and employees caught my eye. Some brokerage firms nudge that line all the time. Continue reading
Every year at this time, I pull out my file bulging with receipts for my real estate business to begin the tedious process of separating them into the IRS categories for Schedule C in piles strewn on the floor around my desk.
It dawned on me–how could it have taken so long?–that the pieces of paper were useful only for my calculations and in the dreaded event of an audit. There had to be a better way.
Rather than toting up the numbers in various categories on a legal pad, I belatedly realized that entering the figures on an Excel spread sheet would make sense. Lo and behold, so it did. I finished the task in a couple of hours, and the computations were done when the last number was entered or even changed. Continue reading