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Archive for Capital Gains

TRUST—Tax Heads to Keep in Mind at FAE Level

Claire McNamara

Income Tax

 

The tax residence of the trustees is what determines the extent of their liability to Irish income tax. When reading an exam question, always pay attention to the residency of the individuals named as trustees. If you are told that all the trustees in the exam question are Irish resident then they are liable to Irish income tax on the worldwide income of the trust from all sources.

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Paying Too Much CGT? Pravin Gordhan’s Tax Rate Reprieve

Hugo van Zyl

During February 2016 the beleaguered South African Minister of Finance, Minister Pravin Gordhan, made a serious attempt to balance government’s books.

Gordhan was called back after Minister Nene was removed from his position, by President Zuma early December 2015. The true reason for this politically motivated musical chairs, appointing three ministers in less than 4 days, remains a mystery. Point is Nene was removed and Gordhan had to step in and rescue the cash flow and ensure the country did not face junk status.

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Exposure To UK CGT For Non-Residents

When faced with a large tax bill and the administrative burden of having to file Tax Returns in two jurisdictions, people always regret not getting professional taxation advice BEFORE they completed the transaction.

Over the past number of years I’ve been contacted by several Irish citizens returning home from the UK where they’ve lived and worked for a number of years.

In the majority of cases, these individuals have had difficulty selling their UK homes and, as a result, may have rented them out for a number of years until a suitable buyer was found.

Their main question they asked was “Do I have an Irish and a UK Capital Gains Tax Read more

The Problem of #Americansabroad And Ownership of Non-U.S. Real Estate

Prologue:  Tweet by Citizenship Lawyer – @expatriationLaw – Video:  Carrick Talks Money: The tax issues facing Americans who sell Canadian homes fw.to/qZwKS8i – No tax free capital gain

If (U.S. Person) then (Mr. #FBAR Ms. #PFIC and Uncle #FATCA) = Few investment and financial planning opportunities).

Yes, it’s true. There are only three things that Americans abroad can “invest in” that do not Read more

Installment Sale – A Useful Tool To Minimize Taxes

Selling a property one has owned for a long period of time will frequently result in a large capital gain, and reporting all of the gain in one year will generally expose the gain to higher than normal capital gains rates and subject the gain to the 3.8% surtax on net investment income added by Obamacare.

Capital gains rates: Long-term capital gains can be taxed at 0%, 15%, or 20% depending upon the taxpayer’s regular tax bracket for the year. At the low end, if your regular tax bracket is 15% or less, the capital gains rate is zero. If your regular tax bracket is 25% to 35%, then the top capital gains rate is 15%. However, if your regular tax bracket is 39.6%, the capital gains rate is 20%. As you can see, larger gains push the taxpayer into higher capital gains rates. Read more

German Church Tax Update

Last fall we wrote about the increased enforcement of the German Church Tax (German Church Tax Causes Controversy), in particular the enforcement of this tax on capital gains. The tax is levied by the state at 8-9% of the regular income tax for members of certain mainline churches – primarily Catholic and Lutheran church members. This tax is then passed on to the churches for use in their operations and charitable activities. The tax is only levied against registered members of Catholic, Protestant, or Jewish churches. The system does not rely on self-reporting as some churches have gotten rather aggressive against those who are alleged members of the Church but do not report being a member of a church.

As enforcement of the tax has increased, more and more church members are Read more

Using The Home Sale Gain Exclusion For More Than Just Your Home

With careful planning, and provided the rules are followed, the tax code allows the home sale gain exclusion every two years.

Let’s assume you own a home, perhaps a second (vacation) home, or maybe are even thinking about buying a fixer-upper and flipping it. With careful planning, it is possible to apply the full home sale exclusion to all three of the properties.

Here is how it works. The tax code allows you to exclude up to $250,000 ($500,000 for married couples) of gain from the sale of your primary residence if you have lived in it and owned it for two of the five years immediately preceding Read more

Postponing Paying Capital Gains Taxes on Like-Kind Exchanges (Section 1031)

Whenever you sell business or investment property and you have a gain, you generally have to pay tax on the gain at the time of sale. Under Section 1031 of the IRC, however, if you reinvest the proceeds from the sale in similar property as part of a qualifying like-kind exchange, the tax code provides an exception, and allows you to postpone paying tax on the gain. It is very important to note that the gain from a like-kind exchange is not tax-free; it is only tax-deferred. You will eventually pay the tax on the gain if and when you dispose of the new property acquired in the exchange.

To qualify under the Section 1031 nontaxable exchange, a trade must meet all six of the following conditions: Read more

Tax Break for Sales of Inherited Homes

Article Highlights:

• Inherited Basis
• Certified Appraisals
• Loss On Sale
• Potential Law Change

People who inherit property are often concerned about the taxes they will owe on any gain from that property’s sale. After all, the property may have been purchased years ago at a low cost by a deceased relative but may now have vastly appreciated in value. The usual question is: “Won’t the taxes at sale be horrendous?” Read more

Should You Keep Home Improvement Records?

Article Highlights:

• Keeping home improvement records
• Home gain exclusion amounts
• Records may be required to avoid tax

Many taxpayers don’t feel the need to keep home improvement records, thinking the potential gain will never exceed the amount of the exclusion for home gains ($250,000 or $500,000 if both filer and spouse qualify) if they meet the 2-out-of-5-year use and ownership tests. Here are some situations when having home improvement records could save taxes: Read more

Tax Advantages of Investing In Real Estate

As the economy shows signs of improvement, with the stock market rebounding and unemployment falling steadily, it is only reasonable to believe, all thing being equal, that the housing market will also rebound, and will once again become a very viable investment vehicle. There are a number of distinct tax advantages to be derived from investing in real estate, and this article will look at some of these advantages. For both middle and high-income individuals alike, the tax advantages of investing in real estate can be substantial. Some of the advantages are as follows:

Depreciation:

The IRS allows investors to depreciate (deduct from rental income) the cost of a residential rental building over a period of 27.5 years, and 39 years for nonresidential Read more

The Senate Finance Committee Outlines Tax Reform Principles

On Thursday, January 29th the Democrats on the Senate Finance Committee (hereinafter “the Committee”) issued a letter to the Republican Chairman, Orrin Hatch, R-Utah, outlining their main principles for tax reform that emphasizes first that the tax reform process should go through “regular order” and not the budget reconciliation process. “Reconciliation imposes tight restrictions, such as the Byrd rule, that could inhibit our work by forcing us to focus on procedural intricacies rather than good tax policy,” said the Senate Democrats in their letter. “Using, or even the implicit threat of using, the reconciliation process for tax reform would destroy the necessary bipartisanship that made the 1986 reform effort so successful.” Other principles cited by Senate Democrats include making reforms more progressive than current tax policy, and reducing the Read more