Real estate

Real estate is a term that is related to the land, such as buying, doing some sort of improvements on the land that is of fixed type. It consists of a body of a code under a type of law. Real estate is doing boom in this era and is regarded to be the best; More...

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Mortgage loan

A home buyer or builder can obtain financing "a loan" either to purchase or secure against the property from a financial institution, such as a bank, either directly or indirectly through intermediaries. Features of mortgage loans such as the size of the loan, maturity of the loan, interest rate, method of paying off the loan, and other characteristics can vary considerably More...

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Net lease

is a requires the tenant to pay, in addition to rent, some or all of the property expenses which normally would be paid by the property owner known as the "landlord" or "lessor". It include expenses such as real estate taxes, insurance, maintenance, repairs, utilities and other items. More...

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Thursday, September 15, 2011

The Home Office Trap

The Home Office Trap The Home Office Trap The previous section pointed out that any depreciation taken on investment property would not be shielded by the primary residence exemption. The examples used so far have all been about rental or investment property converted to a primary residence. Depreciation, however, is taken not just on rental pr
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Thursday, September 15, 2011

What is Recapture of Depreciation

What is Recapture of Depreciation The What is Recapture of Depreciation As we saw in the previous example, it is possible to convert investment property to a primary residence. That example was, however, uncharacteristically perfect because the facts left no doubt that the taxpayers could increase the fair market value while at the same time dec
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Thursday, September 15, 2011

Investment Property Converted to a Primary Residence

Investment Property Converted to a Primary Residence The Investment Property Converted to a Primary Residence One question that always comes up is whether a taxpayer can “convert” or “recharacterize” an investment property to a primary residence and thereby qualify for the primary residence exemption. The answer is clearly yes. But the owner an
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Thursday, September 15, 2011

Fractional Exemption Use For Investment Property

Fractional Exemption Use For Investment Property Fractional Exemption Use For Investment Property Although the primary residence exclusion is normally associated with single family homes, it does apply to other types of living arrangements. Resident-owners of apartment buildings can qualify on a percentage basis. If the resident-owners meet bot
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Thursday, September 15, 2011

Exceptions to the Two-Year Requirements

Exceptions to the Two-Year Requirements The Exceptions to the Two-Year Requirements Because the general rule requiring a taxpayer to have owned and lived in a home for two of the last five years is firm but not set in stone, exceptions to the rule do exist. Likewise, there are exceptions to the rule that you not take the primary residence exempt
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Thursday, September 15, 2011

How The Required Two-Year Period is Calculated

How The Required Two-Year Period is Calculated How The Required Two-Year Period is Calculated One of the commonly misunderstood areas of the primary home exemption is how the periods are calculated to meet the ownership and use tests. For the average person who has owned and lived in his or her home for the past two or more consecutive years, th
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Thursday, September 15, 2011

Property that Qualifies as a Primary Residence

Property that Qualifies as a Primary Residence The Property that Qualifies as a Primary Residence There are two tests to determine whether a property qualifies for the $250,000/$500,000 primary residence exemption. To be entitled to the exclusion you must have: 1. Owned the home for at least two years of the last five years. 2. Lived in the hom
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Thursday, September 15, 2011

What is the Primary Residence Exclusion?

What is the Primary Residence Exclusion? What is the Primary Residence Exclusion? There is a significant difference between the tax liability on the sale of investment property and the tax liability on the sale of a primary residence. The main reason for this difference is a capital gain exclusion/ exemption created by the Taxpayer Relief Act of
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Thursday, September 15, 2011

Get it Done

Get it Done The Get it Done is A step-up in basis does not happen automatically, so you have to file the appropriate paperwork with the IRS. As mentioned earlier, if you inherited a property or a portion of a property some time ago, you can still file for the stepped-up basis. You need to establish the value of the property at the time you inhe
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Thursday, September 15, 2011

Problems with Exaggerating the Value

Problems with Exaggerating the Value The Problems with Exaggerating the Value Generally speaking, it is usually to your advantage to establish the highest possible value for stepped-up basis purposes, but there are times when a high date-of-death valuation is not to your advantage. Case in point: an optimistic or exaggerated value will hurt you
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Thursday, September 15, 2011

Obtaining the Highest Step-Up Possible

Obtaining the Highest Step-Up Possible The Obtaining the Highest Step-Up Possible Even if the above IRS valuation requirements sound extensive and burdensome, they really are not. Almost all of the requirements are traditionally included in a standard professional property appraisal, and in most cases that is all you need to support your request
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Thursday, September 15, 2011

Using Fair Market Value to Your Advantage

Using Fair Market Value to Your Advantage The Using Fair Market Value to Your Advantage As you can see, obtaining a stepped-up basis on a property can have a significant effect on your taxes when the property is eventually sold. Just as important as obtaining a stepped-up basis is making sure you get the most favorable stepped-up basis. From th
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Thursday, September 15, 2011

Filing For a Step-Up in Basis

Filing For a Step-Up in Basis The Filing For a Step-Up in Basis A step-up in basis does not have to happen immediately. If you inherited property in the past as a joint owner, you may still file for a stepup. You will have to establish the value of the property at the time you inherited it, but the effort and expense are usually well worthwhile
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Thursday, September 15, 2011

Community Property

Community Property The Community Property If you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin) and are married, you have the ability to hold property with your spouse as community property. Certain distinct tax advantages adhere in doing this. Unlike the other form
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Thursday, September 15, 2011

Joint Tenancy

Joint Tenancy The concept of joint tenancy is a little hard for some to understand. Joint tenancy is commonly defined as a vesting in which each joint tenant owns an equal and undivided interest in the whole property. Joint tenancy is most commonly used in family situations, usually between husband and wife or parents and children. The step-up
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Thursday, September 15, 2011

What is a Stepped-up Basis?

What is a Stepped-up Basis? What is a Stepped-up Basis? The term stepped-up basis refers to an adjustment or reallocation made to the basis of an inherited property. The concept of a steppedup basis is fairly important because it directly impacts the amount of taxes you will face on the sale of inherited property and indirectly impacts the taxes
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Thursday, September 15, 2011

Estimating Your Tax Liability

Estimating Your Tax Liability The Estimating Your Tax Liability It doesn’t take a CPA to estimate the potential tax liability on the sale of real estate. The math is fairly straightforward, but you have to know the three key factors previously described: the adjusted basis, the total depreciation taken, and the expected net sales price. From the
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