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Moderator: Well the housing market seems to be well along in the road to recovery but
many wages for average Americans are still less than they were before the economic crisis.
That makes keeping your hard-earned cash in your wallet very important. Year with some
year-end tax tips, yes it is that time of the year already, time for tax tips to help
you keep some money in your wallet. So who is here to help us? Shari Olefson with all
the answers. Shari Olefson: Nice to see you as always.
Moderator: Can you believe it is already December? Shari Olefson: It's crazy.
Moderator: Are taxes though one of those things that this time of year it is just an unavoidable
fact of life? Shari Olefson: They are of course but for
homeowners in particular because the government wants to encourage home ownership there are
actually some special opportunities we all should be taking advantage of. So for example,
when you sell your primary residence you don't have to pay tax on the profit up to $250,000
as long as you have lived there 2 of the last 5 years. So a strategy that some folks might
want to think about if your home has appreciated and you are nearing that $250,000 mark is
to sell your home and start all over again because if you paid $100,000 or $150,000 and
you've improved it and you can make money you can continue making that profit if you
continue moving. For rental properties Roxanne you can't do that but what you can do is you
can sell a rental property what is called the 1031 Exchange and buy another one of equal
or greater value and again not pay any of the tax on that profit so you can continue
doing that over time and building your equity. Last if you don't want to buy another rental
property you can use what is called an installment sale where the buyer pays you the profit in
installments over time and that way you don't have to pay the tax on the full profit, you
just pay the tax on little pieces of it as you get paid.
Moderator: Oh, okay, alright. Now what about writing off some of your expenses? What can
you write off and how do you do it? Shari Olefson: Right and again that is the
second part of the tax avoidance or tax deferment equation and real estate has some special
opportunities so if you bought a home this year or like a lot of folks Roxanne interest
rates were so low if you refinanced a lot of those closing costs are write offs. Some
thing you can write off the interest you pay on your home mortgage. Property taxes are
another biggie. A lot of folks wait until the spring to pay their taxes but if you do
that number one you are going to be paying a little bit more, there is a penalty and
number two you are not going to be able to deduct them from what you pay in income taxes
this year. Also the government has incentives. If you install energy-saving windows and doors
there is a $500 credit up until the end of this year and for green improvements so solar
panels and things like that you can actually save 30% of whatever you pay for those in
taxes and that is good until 2016. Moderator: That is pretty good. Alright, now
a lot of the second homes and a lot of the rentals, what are the deals with that? What
kind of tax advantages can you get? Shari Olefson: Well here in South Florida
we have a lot of those rental homes/second homes. Again you can write off the mortgage
interest. One thing you want to be careful of though is if you use a second home for
14 days or more than 10% of the time you rent it, the government may consider it personal
use and you don't' get the benefits of those rental write offs. Also you have to actively
be involved in renting the property. That doesn't mean you have to clean the toilets
but you do have to set the rents and qualify the tenants . Last is something that a lot
of folks are not aware of. Remember when we had the presidential debates here, well if
you had rented your home for that 14-day period before and after that you can actually keep
the rental income from those special events and not pay any tax on that rental income
for up to 14 days. Moderator: Really? Good to know. Not sure
what I'm going to do with a garage but there may be something?
Shari Olefson: Where are you going to go if you need a place to go right?
Moderator: Thanks so much for joining us today.