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William Byrnes (Texas A&M) tax & compliance articles

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8 Tax Facts a Home Seller Should Know

Posted by William Byrnes on August 18, 2014

IRS logoIn its 8th tax tip of summer, the IRS revealed that if a taxpayer sells a home for a profit, the gain may not be taxable.  The IRS provided eight tax facts about selling a home in 2014.

1. A capital gain, or a part of it, on the sale of a home may not be taxable.  This rule may apply if the home is owned and used it as the main home for at least two out of the five years before the date of sale.  However, there are exceptions to the “ownership and use” rules. Some exceptions apply to persons with a disability. Some apply to certain members of the military and certain government and Peace Corps workers.

2. Up to $250,000 of gain will not be taxable for an individual, and $500,000 for married, filing a joint return.  The Obama Care Net Investment Income Tax will also not apply to the excluded gain.

3. If the gain is not taxable because it falls beneath the threshold, then the taxpayer may not be required to report the sale to the IRS on the 2014 tax return, filed in 2015.

4. However, a taxpayer must report the sale on the 2014 tax return if part or all of the gain cannot be excluded from tax, or if the taxpayer receives a Form 1099-S, Proceeds From Real Estate Transactions.  The additional Net Investment Income Tax may apply to the gain.

5. Generally, a taxpayer can only exclude the gain from the sale of a main home once every two years.

6.  If a taxpayer has more than one home, then the taxpayer may only exclude the gain on the sale of the main home, which is usually the home lived in most of the time.

7. If a taxpayer claimed the first-time homebuyer credit when purchasing the home, then special rules apply to the sale.

8. A loss on a home sale can not be deducted.

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Report Slams Reverse Mortgages

Posted by William Byrnes on January 13, 2011

Reverse mortgages are facing renewed scrutiny after the December 7 release of the Consumer Union Report, Examining Faulty Foundations in Today’s Reverse Mortgages.  According to the report, reverse mortgages are suitable for only a small slice of low-income seniors, and seniors often enter into the contracts without understanding the financial consequences, including the high fees and interest charges attached to the mortgage products.

“Reverse mortgages are a very risky deal for borrowers who don’t understand the complicated terms of the loan and how quickly fees and interest charges can add up,” said Norma Garcia, an attorney with Consumer Union.  Read this complete article at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

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