NEW & CURRENT TAX LAWS THAT EFFECT YOU! change, change, change!!! The tax credit available to first time home buyers has been extended until May 2010 and may include homeowners previously unqualified because if they owned a home in the last five years. Donations:
RESIDENCE GAIN EXCLUSION & LIKE-KIND EXCHANGE THE BALANCE!?
Residential real estate tax law changes, which effectively treat non-personal use of your primary residence taxable in the event of a gain begins with use starting in January 2009. This would apply to vacation homes, homes converted from one use to another Regardless, the ability to take the $250,000 individual reduction of gain on the sale of a primary residence may still be combined with a like-kind exchange of the remaining gain if used as a rental or investment property. The new law makes this concept much more attractive to many more taxpayers.
2005 IRS guidance has opened a new door for primary residences with business use. A primary residence which qualifies for both primary residence, (primary two of the last five years), and qualifies for business purpose, (either office in home or rental), may qualify to use both the section 121, capital gain exemption for primary residences, and section 1031, like kind exchange, for the business portion. This is new elaboration on old law and only effective for those properties which meet both criteria. You can plan for it ahead, but previous transactions most likely will not work.
With those taxpayers with losses, foreclosures, short-sales, debt reconstruction and bankruptcy, there is relief for primary residences and in many cases negotiating options available with banks.
Automobile Expense and Depreciation:
Section 179 deduction is limited to $25,000 for SUVs over 6000 pounds, and $250,000 on other business property capital investments for qualified expenses. Restaurants and certain retail establishments are extended another accelerated depreciation on leasehold improvements. The mileage rate for 2010 is 50 cents. The tax law requires mileag logs for both business and personal use to qualify for expense deduction.
Current Income tax rates and capital gain rates good thru 2010? Current tax rates expire this year, 2010 & revert back to pre 2001 rates, (about 5% higher). In addition, there are new taxes applicable beginning in 2013 to cover the health care bill, adding about another 5% to taxpayers with income over $200,000.
Charitable donations must be supported by written detailed receipt. Please see www.salvationarmy.org for guidance on non-cash donation limitations.