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Tag Archive for property tax

Tax Advantages To Owning A Second Home

No matter the location, size, or value of a second home, certain tax advantages are built in. However, your opportunity to benefit from them depends on how you use the property.

Personal Use

Both property taxes and mortgage interest are as deductible for a second home as they are for your primary residence — and are subject to the same limitations. If you file a joint return, you cannot deduct interest on more than $1 million of acquisition debt ($500,000 for married persons filing separately) on one or two homes.

Two tax advantages of homeownership are not available for a second home — the immediate deduction of mortgage points when purchasing and the capital gain exemption when selling. Both tax breaks require the home to be your “principal residence.” However, you can deduct the points on your second home’s mortgage over the loan’s term.

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Determination Of Property’s Taxability For Michigan Sales And Use Tax

In Michigan sales and use tax law determining whether an item of tangible personal property remains tangible personal property or becomes a fixture affixed to real estate can significantly affect the taxability of the item in question. This determination may impact whether the taxpayer is considered a retailer or a contractor.

There are also several exemptions in Michigan sales and use tax law for purchases of tangible personal property that do not apply if the item is instead a fixture. The Michigan sales and use tax exemptions for both the agricultural industry and the industrial processing or manufacturing industry include such language.

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Change In The Use Of Real Estate

In real estate, it is common to change the use of property from income producing to some other purpose such as personal use and vice versa. When a change of use does occur, the property may be deemed disposed of at fair market value. There are different types of changes in use that will be discussed further and their respective tax consequences.

In a partial change in use, a taxpayer is deemed to dispose only a portion of the property. For example, if a property is used 60% for business and 40% for personal and now the property will be used 100% for business, then there will be a capital gain or loss on only 40% of the property at the fair market value. This is under the assumption that the property is personally held. If the corporation owned 100% of the property, then there may not be a capital gain on this partial change of use. However, the individual may have to pay rent at fair market value for their personal use portion.

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Are There Advantages To Owning A Second Home?

Jon Neal, Tax Advisor, Tax Blog, Milwaukee, Wisconsin, USA, TaxConnections

Whatever the location, size, or value of a second home, certain tax advantages are built in. However, your opportunity to benefit from them depends on how you use the property.

Personal Use

Both property taxes and mortgage interest are as deductible for a second home as they are for your primary residence — and are subject to the same limitations. If you file a joint return, you cannot deduct interest on more than $1 million of acquisition debt ($500,000 for married persons filing separately) on one or two homes. Read more

Should I Submit A Residential Property Tax Protest Annually?

Mishkin Santa, Tax Advisor, Tax Blog, Austin, Texas, USA, TaxConnections

If you’re a homeowner, a residential property tax protest should always be on your radar around this time of year – even if you filed one last year and won.

The truth is, property tax calculations are based on a lot of arbitrary data – data you just don’t have control of. Appraisal districts use recent home sales and other market info to create your home valuation, and in today’s market, a good chunk of properties are being over-valued. In the end, that means a higher property tax rate and more money out of your pocket – year after year. Read more

6 Property Tax Protest Tips For Texas 2018 Deadline

Mishkin Santa, Tax Advisor, Tax Blog, Austin, Texas, USA, TaxConnections

Deadlines for property tax protests are quickly approaching, and if you want to lower your appraised value – and subsequently your annual tax burden – the time to act is now. To help you get started (and see success) we’ve pulled together some of our top property tax protest tips below. Use them to your advantage to lower your tax bill – both now and years down the line.

  1. Use a pro. When it comes to property tax protest tips, none is more important than this one. Using a professional to handle your tax protest comes with so many benefits. Most importantly, it gives you an expert, knowledgeable partner who can build your case and boost your chances of success. They know what it takes to win a protest, and they can make it happen. Using a pro also adds convenience for you. There’s no gathering of evidence or tedious forms, meetings or hearings. They do it all for you. It’s easy, simple and hassle-free.

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Important Facts To Know About IRS Levy

Bernell Ward, Tax Advisor, Tax Blog, Bronx, New York, USA, TaxConnections

A levy is a legal seizure of your property to satisfy a tax debt. Refusal to pay the tax will have the following result. The IRS will usually issue a levy after they assess the tax and send a tax bill or a Notice and Demand for Payment.

If you still refuse to pay, then the IRS will issue a Final Notice of Intent to Levy and Notice of Your Right to a Hearing at least 30 days before the levy. The IRS may give you this notice in person, leave it at your home or business, or send it to your last known address by certified or registered mail with return receipt request. Read more

Residential Property Tax Abatements: Are You Overpaying Your Property Taxes?

Thomas Zaino, Tax Blog, Tax Advisor, Columbus, Ohio, USA, TaxConnections

It is no secret that tax incentives are commonly offered to businesses in exchange for job creation and community development. It is lesser known, however, that tax incentives serving a similar purpose are also offered to owners of residential property. Community Reinvestment Areas, or “CRAs,” are designated areas within municipalities or unincorporated county areas that local governments designate as neighborhoods containing housing facilities or structures of historical significance and where “new construction” is discouraged. The underlying goal of establishing a CRA is to revitalize, rehabilitate, and remodel existing structures within the boundary of the CRA. Ohio currently has over 400 cities, townships, and villages with established CRAs. Read more

UK Tax: Capital Gains Tax And Housing Information

Jane Swain, Tax Advisor, Tax Blog, Manchester, United Kingdom, TaxConnections

Your home is exempt from Capital Gains Tax (CGT) when you sell it, In contrast, buy to let properties sold at a profit are liable to CGT. However, in certain circumstances, some or all of the gain on a let property is also tax free. This works best when you let a property which used to be your home, for example you trade up but keep your old house, or a couple move in together and keep both houses, one of which they decide to let. However it can also apply if you acquire a property, let it for a few years and then decide to move into it. Read more

Canada Tax: Capitalization Of Development Cost Under The Income Tax Act

Grant Gilmour, Tax Advisor, Tax Blog, Vancouver, Canada, TaxConnections

During the development phase or period of construction, there are many costs that are incurred. The majority of these expenditures are added to the capital cost of property or to the cost of inventory.

Soft costs do not have to be capitalized once the construction is complete or on the day that the building is substantially (at least 90%) used for its intended purpose. An occupancy certificate or completion certificate issued by the municipal building department is sufficient evidence that construction is complete. Read more

Real Estate Expenses After Acquisition Of Property For Tax Purposes

Grant Gilmour, Tax Advisor, Tax Blog, Vancouver, Canada, TaxConnections

After a property is purchased, there is generally a time period that a property is held before it is developed. Common expenses that are incurred are property taxes and interest. Other expenses incurred can be classified as an operating expense, added to inventory cost or capitalized for tax purposes.

Property taxes and interest on vacant land are generally capitalized or added to the cost of inventory for real estate. These expenses on vacant land can only be deducted in the same tax year if there is property income received and the corporation is not in the business of development. Read more

Gov. Christie Orders NJ Towns To Accept 2018 Property Tax Prepayments

In anticipation of the new tax law, some taxpayers are seeking ways to try to minimize their future tax burden. Due to the incoming $10,000 cap on the state and local tax deduction, this includes prepaying 2018’s property taxes for deduction on their 2017 tax return.

On December 27, 2017, NJ Governor Chris Christie issued an executive order allowing NJ homeowners to prepay property taxes for the first two quarters of 2018. While some towns were already accepting prepayments, this order instructs all municipalities to accept at least partial 2018 prepayments from residents. The prepaid property taxes must be postmarked by the end of the year to be eligible for deduction.  Read more

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