By topic: Home
Tax Planning to Winter in Florida and Summer in Massachusetts
You can plan your tax-deductible business life to avoid cold winters and hot summers. To do this, you need to know what a tax home is and where your tax home is located. The good news is that you have just one tax home, unless you are one of those rare individuals who have no physical home.
Know the 15 Exceptions to the 10 Percent Penalty on Early IRA Withdrawals
Early IRA withdrawals—those that occur before age 59 1/2—are generally subject to a 10 percent penalty tax, but 15 exceptions exist to avoid this penalty. The exceptions include withdrawals for substantially equal periodic payments, certain medical expenses, higher education costs, first-time home purchases, and specific emergencies or life events such as disability or terminal illness.
Q&A: Deducting a Loss from an Airbnb Bedroom Rental
When you rent a bedroom in your home and that rental unit creates a tax loss, can you deduct the loss?
Tax-Free Income from 14-Day Augusta Rule for S Corporation Owners
The Augusta rule gets its name from the Masters Golf Tournament where some members and others who live in the area receive tax-free rent by renting their homes for a week or two. You don’t have to live in Augusta to benefit from this rule, as this article shows.
Want to Leave the U.S.? You May Have to Pay These Taxes
Planning on leaving the U.S.? If so, you have two choices from a tax perspective, but neither is painless. The tax law that applies to foreign living and expatriation can be tricky, so it’s essential that you depart the country correctly.
Tax Primer for the U.S. Citizen Living and Working Abroad
If you are a U.S. citizen living and working abroad, you need to think about taxes, both those in the United States and those in the country where you are living and working. This article will steer you in the right direction.
The Cleaning Lady and Your Home-Office Deduction
Do you have a tax-deductible office in your home? Do you have a cleaning lady who cleans not only your home but also your office? If so, is the cleaning lady an independent contractor or a W-2 employee?
PDF Download: The Five Most-Read Articles of 2022
Of the dozens and dozens of tax-saving articles published by the Bradford Tax Institute in 2022, there were five that stuck out. Download this PDF to capture the five articles in one document.
Download this PDF for the Already Enacted 2023 Tax Law Changes
As a subscriber, you likely know you are going to see some big tax changes this year. Some are already in place. To help you remember what they are, and to have them available for a quick look anytime you like, download this PDF.
Tax Consequences of a Short Sale of Your Principal Residence
Short sales provide a path for underwater homeowners to get out of their mortgages without going through foreclosure. But mortgage debt forgiven following a short sale can be taxable income for the homeowner unless tax law provides a specific exception.
New Law: New and Improved Energy Tax Credits for Homeowners
The Inflation Reduction Act extends and expands tax credits for making your home more energy efficient. These include a healthy 30 percent credit for installing home solar panels; credits for installing energy-efficient windows, doors, and insulation; and even a credit for installing a home electric vehicle charger.
Claiming the $250,000 Exclusion When Your Name Is Not on the Deed
What happens when you sell your personal residence but your name is not on the deed? Does this rob you of the $250,000 exclusion? And who gets the 1099-S? Not you, for sure.
PDF Download: Tax Strategies for Vacation and Second Homes
If you own a second home and have both personal and rental use of that home, the tax code treats it as a tax-defined vacation home regardless of its location in the city or at the beach. Of course, you could use it solely or partly for business lodging and avoid the vacation home rules. With a second home, you have many tax strategies to consider.
Increase Your Tax Deductions Using the Business-Mileage Rule
Pay attention to the rules on what makes a business mile and what makes a personal mile, so you can achieve the best possible vehicle deductions.
Is Now the Time to Transfer Your Home to Your Adult Child?
With today’s home prices and the crazy real estate market, it’s likely difficult for your children to buy a home. And it’s conceivable that you are ready to move on from your existing home. If this is true, this might be the right time to transfer your home to your child, as we explain in this article.
Selling Your Highly Appreciated Vacation Home? What About Taxes?
If you sell a home that you used for both personal and rental purposes, you are selling a tax-code-defined vacation home. Special rules apply to any gain or loss, as you will see in this article.
Tax Issues When Your Vacation Home Is a Rental Property
Under the vacation home rules, your vacation home is classified as either a personal residence or a rental property. This article guides you through the rules that apply to the vacation home that’s classified as a rental property.
Deducting Mortgage Interest When Your Name Is Not on the Deed
What happens if you live in a house and make mortgage payments, but someone else owns the property? Can you still get a tax benefit? Absolutely! By proving that you have legal or equitable title to the property, you can deduct up to 100 percent of the mortgage interest you pay. For Sue Davis, this generated an extra $18,000 per year of deductions she did not know she could claim.
In This PDF Download Find Dozens of Hidden Home Sale Tax Breaks
Tax law gives you the opportunity to legally shelter up to $250,000 of gains ($500,000, if married) when you sell your home. You may know the basic rule on this, but there’s so much more as you find in this PDF download.
Using a Reverse Mortgage as a Tax Planning Tool
When you think of the reverse mortgage, you may not think of using it as a tax planning tool. But as you learn in this article, the reverse mortgage can save you a boatload of taxes when used in the right circumstances.
Two Answers about Selling Your Home to Your S Corporation
This article answers two questions: First, if a married couple sells their home to their S corporation to be a rental property, can the owners be the renters? Second, where does the S corporation obtain S corporation basis in this transaction?
Don’t Rob Yourself of the Home Internet Deduction
If you do some work at home, you’re probably using your home internet connection. Are your monthly internet expenses deductible? Maybe. Home internet expenses can be deducted by business owners in the same way as home utility costs. But a lack of good records can booby-trap this deduction.
Know This If You Have Rental and Personal Use of a Vacation Home
When you use a home for both rental and personal use, regardless of that home’s location at the beach or in the city, you run into the tax code’s vacation home rules which make that home either a residence or a rental property. There’s much to know here. In this article, we deal with the vacation home-defined residence classification and make that journey easier.
Little-Known Rule Can Reduce Your Principal Residence Tax Break
The tax code has rules that have changed over the years and that can affect how much you pay in taxes when you sell your principal residence. In this article, we focus on helping you with the least-known of these rules.
Be Sure to Know the Tax-Home Rule
When you travel out of town overnight, you need to know the tax-home rule. The IRS defines your tax home, and it’s not necessarily in the same town where you have your personal residence.
Refresher: Principal Residence Gain Exclusion Break (Part 2 of 3)
Part 2 of our three-part refresher course offers more good news about the principal residence gain exclusion of up to $250,000 ($500,000, if married). In this article, you will find liberal rules that give you a prorated exclusion when you or other qualified individuals experience a change in place of employment, health issues, or unforeseen circumstances. You also will learn how business or rental use affects the exclusion and how to treat vacant land that is part of your personal residence.
Refresher: Principal Residence Gain Exclusion Break (Part 1 of 3)
The $250,000 ($500,000, if married) home sale gain exclusion break is one of the great tax-saving opportunities. Although the tax code contains many rules on this tax break, most of them are easily understood, especially as we explain them in this article.
Deducting Disaster Losses for Individuals
If personal non-business property such as your home, personal belongings, or personal car is damaged or destroyed in a disaster, you may qualify for a tax deduction for casualty losses. But during 2018-2025, you may deduct only personal casualty losses caused by federal disasters. And your deduction is whittled down by insurance recoveries and particular casualty loss limitations.
Lawmakers Extend the Tax Extenders with the COVID-19 Relief Law
The Taxpayer Certainty and Disaster Tax Relief Act of 2020 deals with the annual tax extenders. Congress made some of them permanent, while others got short- or long-term extensions. We’ll go through each and tell you how it fared in the legislation.
Handling Key Non-Tax Financial Issues When a Loved One Passes Away, Part 3
In this part 3 of this three-part series, learn how to handle key non-tax issues when a loved one passes away. There is much to know and to consider, from a simple matter such as how many “original” death certificates you should obtain to how you deal with the revocable trust that’s now irrevocable because of the death.
Working at Home? Don’t Overlook These Deductions
Do you work from home? Whether or not you have a deductible office in the home, the assets such as desks and chairs that you use for business are deductible—and are often overlooked as business deductions. For example, what happens when you convert a personal asset to a business asset? Does the personal taint last forever? You will like the answers you find in this article.
Does Renting My Home for Two Months Kill the $500,000 Exclusion?
Learn how renting out your home while you take a two-month vacation interacts with your ability to use the $500,000 home-sale exclusion ($250,000 if single). Remember, you have to use the home as a home for two of the five years before sale to qualify for the home-sale exclusion.
Congress Reinstates Expired Tax Provisions—Some Back to 2018
Every year, we wonder whether Congress will renew various expiring tax breaks, many of which are known as “extenders.” Many extenders died on December 31, 2017, and Congress let them remain dead for all of 2018. Now Congress has brought them back from the dead—and retroactively to January 1, 2018, meaning an amended return may be in your future.
Converting Your Residence into a Rental Property: Tax Issues
The simple maneuver of converting your personal residence to a rental property brings with it myriad tax rules, mostly good when you know how they work. For example, your rental net income can create the Section 199A deduction if the rental rises to the level of a trade or business (most do).
Q&A: Claim 30% Tax Credit for a New Roof to Hold Solar Panels
You’re eligible for a generous 30 percent residential tax credit when you install solar equipment on a residence and have it in use before midnight on December 31, 2019. The IRS instructions for claiming the credit are not as clear as you would like. But nicely, the tax code reveals the answer.
Creating More Business Meal Tax Deductions After the TCJA
If you have been looking for some good news on tax-deductible business meals, you will find it in this article. And along with the good news, you will find clarity as to what post-Tax Cuts and Jobs Act rules currently apply to your tax-deductible business meals.
Personal Use of Your Rental Triggers Ugly Vacation Home Rules
When you have both personal and rental use of a dwelling, you trigger some tricky tax code rules you need to know. With both personal and rental use, you create the possibility of tax-free rent, rental property deductions, and additional personal residence deductions.
Secrets to Pocketing Cash by Renting a Bedroom in Your Home
If you want to rent one, two, or 20 bedrooms in your home, you need to know five sections of the tax law to obtain your rightful tax benefits. This is an area where tax knowledge is power. Without the knowledge, you could create a very unsatisfactory tax result.
Tax-Saving Double Play: Combine Home Sale with the 1031 Exchange
You don’t often get the opportunity to even consider making a tax-saving double play. But your personal residence combined with a desire for a rental property can provide just such an opportunity, as you learn in this article.
Taxpayer Saved 15 Hours of Paperwork, Lost $35,000 to the IRS
How much per hour do you collect in tax savings when you keep the right tax records? We don’t know for sure, but it’s a lot of money. We estimate that with the right records, the taxpayer in this court case would have earned about $2,333 an hour. And the thing is, the records this taxpayer needed in this case are very easy to keep.
Q&A: Deducting a Swimming Pool as a Medical Expense
You could qualify to use your swimming pool as a medical expense deduction just as Herbert Cherry did. Cherry deducted the cost of the pool to the extent it exceeded the increase in the value of his home. He also deducted the yearly cost of heating and insuring the pool, electricity for the pool room, and repairs for the pool room walls that suffered mildew damage.
Entertainment Facilities after the TCJA Tax Reform
The Tax Cuts and Jobs Act (TCJA) tax reform crushed a big chunk of business entertainment tax deductions. Fortunately, your business entertainment facility escaped the mayhem and continues as a 100 percent tax-deductible facility. If you want such a business facility, make sure to review the rules in this article.
For You: New Downloadable Home-Office Deduction Topic Guide
For most business owners, the home office not only produces business deductions for a percentage of personal home expenses but also can create a substantial increase in business vehicle deductions.
Q&A: New Home-Office Tax-Deduction Creation Guide
Obtain access to this new, handy 28-page guide to creating the home-office tax deduction. Inside the guide you’ll learn how the administrative office gives you the tax-favored principal office. This is the same tax code–defined “principal office” that you get when you make the cash register ring from your home office (Soliman case).
How the TCJA Tax Reforms Hammer Personal Casualty Loss Deductions
The Tax Cuts and Jobs Act makes claiming a tax deduction for a personal casualty loss more difficult. And when you do qualify to deduct a personal casualty loss, you face a number of rules that add to your misery by making the loss deduction difficult. In select circumstances, you can use a safe harbor, which makes things a little easier.
Q&A: Did Tax Reform Take Away My Boat Deductions?
The taxpayer in this question-and-answer bought a boat. Tax reform did him considerable damage on two of his tax deductions. Learn what the Tax Cuts and Jobs Act (TCJA) tax reform did to this boat.
Q&A: 10 Proven Strategies to Lower S Corporation Taxes
Here’s a link to a resource that gives you 10 proven strategies to lower S corporation taxes.
Does Non-Home Use of Your Home Damage Your $250,000 Exclusion?
The days when you could convert your rental property or vacation home to a principal residence and then use the full $250,000/$500,000 home-sale exclusion to avoid taxes are gone. Today’s law requires an allocation that keeps part of your rental as a rental so you have to pay taxes on that rental part.
Tax Planning to Winter in Florida and Summer in Massachusetts
You can plan your tax-deductible business life to avoid cold winters and hot summers. To do this, you need to know what a tax home is and where your tax home is located. The good news is that you have just one tax home unless you are one of those rare individuals who has no physical home.
Danger: Your Personal Home Is Not Your Tax Home
Depending on how you operate your business and where it’s located, the federal income tax terms “personal home” and “tax home” can have a big impact on your business vehicle deductions. And then there’s the difference between the federal income tax terms “business travel” and “business transportation” and how one very beneficial rule applies when you are inside the area of your tax home.
Tax Reform Attacks Home Mortgage Interest Deductions
The home mortgage interest deduction rules did not fare well in the recent tax reform. First, a chunk of your home equity mortgage interest is no longer deductible. Second, you now face a new lower ceiling on mortgages that can qualify for the home mortgage interest deduction.
Shedding Doubts about Selling Your Home to Your S Corporation
If you want to convert your home to a rental property, don’t. Instead, sell your home to your S corporation and then have the S corporation make the property a rental property. We have written about this previously, and we received some questions that we address in this article.
Q&A: Tax Deductions for Nine Months of Out-of-Town Travel
How does the tax code define a temporary assignment that qualifies you for tax deductions during a full period of stay, such as nine full months? In this article, you learn how federal per diem rates interact with some actual expenses and what you need in place to achieve deductions for a temporary out-of-town work assignment.
Beat the Recapture Tax on Your Home Office
Learn how this IRS revenue procedure allows you to avoid taxes on the sale of a personal residence in which you had a home office or that you used as a rental property. The procedure lays out the methodology, which includes using the $250,000 ($500,000 if married) home-sale exclusion in unison with a 1031 tax-deferred exchange to avoid the taxes and enhance your deductions on the replacement home.
Q&A: Store S Corporation Vehicle in Owner’s Personal Garage?
Six Answers to Tax-Free Rental of Your Home to Your Corporation
This article answers six questions about the big tax benefits to the sole owner of the C or S corporation who rents a personal residence to his or her solely owned C or S corporation for 14 days or less. The answers deal with (1) the need for a 1099, (2) how to report the 1099 on the 1040, (3) multiple corporations, (4) events for independent contractors, (5) events for employees, and (6) proof of fair rent.
Tax-Free Income from Rental of Home to C or S Corporation
Do you operate your business as an S or C corporation? If so, have you considered renting your home to your corporation for corporate meetings and perhaps the annual holiday party for employees? You should. Why? If you do the rental right, the corporation deducts the rent, and you receive the rental income tax-free.
Do New Rules Allow You to Double Your Mortgage Interest Deductions?
Home mortgage interest deductions make homes more affordable and save taxpayers thousands of tax dollars each year. Now, if you are single, a new IRS decision creates the possibility for added savings—perhaps double—if you co-own a home or vacation property.
Use the Foreign Tax Credit to Minimize U.S. Taxes When You Work Abroad
The tax law offers several ways to reduce or eliminate U.S. income taxes or foreign-sourced earned income. Picking the correct tax-reduction strategy based on your situation is the key to minimizing your U.S. income tax liability. In this article, you see common scenarios and options that show you how to pay the least amount of U.S. income tax on your foreign-sourced earned income.
Want to Leave the U.S.? You May Have to Pay These Taxes
Planning on leaving the U.S.? If so, you have two choices from a tax perspective, but neither is painless. The tax law that applies to foreign living and expatriation can be tricky, so it’s essential that you depart the country correctly.
Learn a Simple Strategy for 100 Percent Tax-Free Rental Income
The government taxes rental income just like any other income. However, a little-known loophole in the tax law may allow you to completely exclude some rental income from your income taxes. The requirements to qualify are simple, but there are some issues that could complicate your ability to use this loophole.
Secrets of Collecting Residential Solar Tax Credits from the IRS
Your government offers a very generous subsidy, a 30 percent tax credit, if you install solar equipment at one or more of your residences. And if you live in the right area of the country, you can come out well ahead on this deal. But this is tax law, and as you would expect, there are some tricky rules that you need to follow to qualify for the credit.
Q&A: Misguided Complaint about Selling Home to the S Corporation
Q&A: Where Does the S Corporation Get the Money to Buy the House?
Sell Home to S Corporation and Then Make It Rental Property
Take advantage of the government’s tax-free $250,000 home-sale-profit exclusion ($500,000 if married) by selling your home to an S corporation that you establish. This gives you two things: (1) tax-free income and (2) a step-up in basis for the rental house.
How to Deduct Your Business Motor Home
Your business motor home is either a lodging facility, like a hotel, or a transportation vehicle. As a vehicle, it can qualify for Section 179 expensing, but you likely want to avoid that and take the easy road with MACRS depreciation.
2016 Tax Guide for Debtors on Foreclosure of a Home
Few things can rock your world like the prospect of losing your home. In a foreclosure, the lender sends you one or two Form 1099s that will worry you too. The 1099s could show that you have cancellation of debt income (that’s taxable income). And then, just to pile on, the foreclosure that took away your home might trigger a taxable gain. That’s all bad news. But when you know the rules, you’ll see that you can make some or all of the bad-news tax problems go away.
Tax Trick When Repossessing a Home You Sold with Seller Financing
If you sold your home using seller financing, you likely don’t look forward to your buyer defaulting on your loan. Here’s a twist: It may not be a bad thing in the end. Under the right circumstances, you could walk away with more cash in your pocket—and you could make some or all of that cash tax-free! But there’s one big trap that you need to avoid.
Secrets to Pocketing Cash by Renting a Bedroom in Your Home
If you want to rent one, two, or twenty bedrooms in your home, you need to avoid one big trap and navigate two sets of rules to obtain the tax benefits you likely were hoping for when you thought of this rental activity. This is an area where tax knowledge is power. Without the knowledge, you could create a very unsatisfactory tax result.
Use Business Travel to Create Tax-Free Income for Friends and Family
Stay with family and friends when traveling for business. And then create tax deductions by paying them for your business lodging. You have a choice: deduct the cost of staying at the big hotel downtown, or deduct the cost of staying with your friends or family. Either way, the choice of location does not change the fact that you are on a tax-deductible business trip. The side benefit is that doing this right creates tax-free income for your friends and relatives.
Tap Your Roth IRA the Right Way—Tax-Free and Penalty-Free
A Roth IRA is not your average retirement plan. It’s a retirement savings, boondoggle savings, down payment savings, college savings, and emergency savings plan all wrapped into one. But to realize the benefits, you need to know how to avoid taxes and penalties when you take the money out. The good news: do this right and you can tap that Roth IRA and pay ZERO taxes and ZERO penalties.
Silver Lining for a Loss on the Sale of Your Home? Deduct Your Home-Office Loss—and Slash Your Taxes
How to Deduct Mortgage Interest When You Need Someone Else’s Name on the Deed
Use This Forgotten Tax Technique to Increase Deductions on Your Vacation or Other Home
Twenty years after the Tax Court approved a strategy that grants you extra deductions for your second home, the IRS would like you to forget it ever happened. Even though the case remains current law, you won’t find any mention of this strategy in IRS guidance to taxpayers. Unless you just happened to know old cases—or read this article—you might never have known how you could save thousands in taxes on your second home.
How to Deduct Your Swimming Pool and Other Home Improvements as Medical Expenses—All Legal If You Do It Right
If your doctor recommends that you buy equipment for your health, pay attention. First of all, you should follow your doctor’s orders. But just as important, you may be able to deduct some or all of the cost. This article explains how the one-owner businessperson is in the best possible position to deduct the cost of medical equipment.
Make the IRS Pay You When You Sell Your Home
You normally would not expect to have more money in your pocket after you pay your tax bill. However, with this new ruling from the IRS, you could end up with just that—a negative tax on the sale of your home! Read this article to find out how a taxpayer sold her home for a $100,000 before-tax profit and turned that into a $110,000 after-tax value.
When You Can (and Can’t) Deduct Mortgage Insurance
When you buy a house with less than 20 percent down, your lender will almost always force you to buy mortgage insurance. This protects the lender in case you default. Tax law used to help a lot people with the cost of mortgage insurance by allowing a deduction to certain taxpayers. That selective help on personal homes expired in 2013, but there’s hope for an extension, and existing deductions continue for your rentals and office in the home.
How to Lease-Option the Sale of Your Home or Investment House
If you are looking for creative ways to get rid of a house that won’t sell, consider the lease-option. This strategy only works with the right tenant and your correct use. But get this right and it’s a nice deal for everyone involved. Make sure you avoid the traps that blow up the deal and add extra taxes to your tax bill. After all, your real purpose with the lease-option is to increase your cash flow and keep your taxes to a minimum.
Merciful IRS Lowers Tax on Home Sales during Tough Times
When a situation outside of your control forces you to sell your house, you will have a lot of things on your plate, not the least of which are tax concerns about the sale. Fortunately, there is a friend you can turn to—the IRS. In one of its rare moments of sympathy, the IRS may lend you a helping hand and lower your tax burden if you can show that you are in a difficult situation.
Don’t Rely on the Government for a Tax-Free Home Sale
You may not expect to sell your current home or vacation property any time soon, but you should take these (easy) steps right now to prepare for—or better yet, avoid—the tax burden when that day ultimately comes. If you plan to rely on the home sale gain exclusion to shield all of your profit, don’t do that. We’ll tell you why not in this article. We’ll also show you how certain records can substantially reduce the taxes you owe on the sale of your home.
Surprise Tax Deductions for Built-In Desk
Tax law treats the built-in desk as either personal or real property depending on where you locate the desk. The personal location, such as your home, can make the built-in desk real property whereas the commercial location, such as your home office, makes the built-in desk personal property. In business, you want the personal property classification so that you can get the vastly quicker write-offs.
Repair That Vacation Home
Do you have a vacation home rental? Do you use it for both rental and personal purposes? If so, you need to know the rules on what makes a repair day. Why? Repair days do not count as either personal or rental days. And that’s only part of the story.
Danger: Your Personal Home Is Not Your Tax Home
Depending on how you operate your business and where it’s located, the federal income tax terms “personal home” and “tax home” can have a big impact on your business vehicle deductions. And then there’s the difference between the federal income tax terms “business travel” and “business transportation” and how one rule applies when you are inside the area of your tax home.
Tax-Free Rental of Personal Home to Owner’s S Corp., Q&A
This article answers six questions about the big tax benefits to the sole owner of the S corporation who rents his personal residence to his solely owned S corporation for 14 days or less. The answers deal with (1) the need for a 1099, (2) how to report the 1099 on the 1040, (3) multiple corporations, (4) events for independent contractors, (5) events for employees, and (6) proof of fair rent.
Six Tax-Deduction Concerns about Renting My Home to My S Corp.
Last month we explained how an S corporation could rent the sole shareholder’s personal residence for 14 days or less, obtain a tax-deduction for rent, and create tax-free income for the shareholder. An enrolled agent raises six issues that he thinks could negate this free-rent strategy. Learn what the issues are and why the strategy works.
Tax-Free Rental of Home to S Corporation
Do you operate your business as an S or C corporation? If so, have you considered renting your home to your corporation for corporate meetings and perhaps the annual holiday party for employees? You should. Why? If the rental is done right, the corporation deducts the rent, and you receive the rental income tax-free.
Motorhome Tax Deduction Questioned in My IRS Audit
When you use a motorhome for business travel, what tax rules do you trigger? For example, is the motorhome for lodging or transportation? Lodging has one set of rules. Transportation has a different set of rules.
Does the Tax-Home Rule Destroy Your Business Travel and Home-Office Deductions?
The tax law definition of your tax home can jump up and bite you when you have a business operation away from your personal residence. Since tax law does not govern where you live, it treats your decision on where to locate your home as a personal decision that gives you a personal location. When your tax home is not near your personal home, you can lose both (a) overnight business travel deductions and (2) business mileage from an office inside the home to a regular office outside the home.
Finding Tax Deductions for Your Timeshare When You Use It Personally and/or Rent It
Your timeshare can qualify as a second home for the mortgage interest deduction easily if you don’t rent or attempt to rent it. Once you introduce rent into your timeshare equation, you trigger two tough rules: (1) a special mortgage-interest-deduction rule for the personal part of the timeshare and then (2) the dreaded vacation-home rental rules for the rental part.
Taxes You Pay When You Convert Your Rental Property to Your Principal Residence
The days when you could convert your rental property or vacation home to a principal residence and then use the full $250,000/$500,000 home-sale exclusion to avoid taxes are gone. Today’s law requires an allocation that keeps part of your rental as a rental so you have to pay taxes on that allocated part.
Home-Office Depreciation Deductions Can Beat Recapture and Capital Gains Taxes
The home-office deduction lives in the world of false myths. One such myth is depreciation recapture. In most cases, the benefits of depreciation deductions far outweigh the recapture. Further, with a little planning, you can easily defer and even avoid the recapture tax altogether.
Tax Guide to Deducting Your Timeshare Stays as Business Lodging Costs
Could you use your timeshare for business lodging and other business purposes? If so, why should you consider it? Business deductions usually produce better tax benefits than personal deductions do, that’s why. Further, you need to know those special tax rules that can make your timeshare a rental property, personal residence, or business lodging facility.
Avoid Taxes on the Sale of Your Principal Residence That Contained a Home Office
Learn how this IRS Revenue Procedure allows you to avoid taxes on the sale of a personal residence in which you had a home office or that you used as a rental property. The procedure lays out the methodology, which includes using the $250,000 ($500,000 if married) home-sale exclusion in unison with a 1031 tax-deferred exchange to avoid the taxes and enhance your deductions on the replacement home.
How Tax Law Treats the Foreclosure or Short Sale of Your Principal Residence
You likely hate tax-law surprises. Foreclosures, short sales, and mortgage modifications can both reward and punish you, sometimes during the same transaction. You may not have a problem with your home’s value or its mortgage, but you may have a relative, friend, or client who faces this situation. If so, you may want to know how tax law treats the principal residence foreclosure, short sale, or loan modification.
Tax Deductible Home Office in Your Vacation Home
You might qualify for an office downtown, an office in your main home, and an office in your vacation home. Wow! Three offices. And tax law might make all three offices principal offices. (Of course, three principal offices is an oxymoron, but hey, this is tax law, so three principal offices is a true possibility.)
Make Your Home Mortgages Produce Tax-Deductible Interest
You would think that tax law could make deducting mortgage interest straightforward. Perhaps that’s too logical; for certain, it’s not true. The rules on deducting mortgage interest contain a number of twists and turns that you that need to know to make sure your mortgage-interest payments qualify as tax deductions.
Use the Estate Tax Value to Avoid Federal Income Tax on Home
Keeping your home until death has advantages. At death, your estate avoids both capital gains and recapture taxes, and passes the home to your heirs at a stepped-up fair market value basis. This combination triggers a good number of income tax planning strategies.
Create Both Tax-Free Income for Mom and Dad and Business Travel Deductions for You
Stay with your mom and dad on a business trip, and create tax deductions by paying them for business lodging. You have a choice: deduct the cost of staying at the big hotel downtown or deduct the cost of staying with your parents. Either way, the choice of location does not change the fact that you are on a tax-deductible business trip.
“Nanny Tax” Compliance Avoids Payroll Tax Problems
Learn how to avoid payroll tax problems when you hire a nanny or other household worker. Your best bet is likely a payroll service that specializes in “nanny tax” compliance.
Tax Tip: Don’t Repair Your Home
Repairs to your home give you zero tax benefits. Improvements to your home add to your basis and reduce your taxes. Thus, don’t repair your home. Improve it!
New Revenue Ruling Enhances Alternative Minimum Tax Deduction for Home Mortgage Interest
The IRS has issued a new revenue ruling granting bigger deductions than the courts have granted on home mortgage interest deductions for alternative minimum tax purposes.
Energy Tax Credits for Your Homes
For 2011, you can qualify for the uncapped and unlimited 30 percent tax credit for installing qualified solar, wind, and geothermal in your home, vacation home, or other residence.
Bank Foreclosure Auction
When the bank forecloses on a home, tax law comes into play in some surprising and often beneficial ways, especially this year. Tax law treats recourse and nonrecourse mortgages in completely different ways, but with a personal residence, the end result can be pretty much the same.
Tax Tips for Rental of Ski Cabin
The cabin at the ski hill could be a hotel, a residential rental property, or a personal residence. It depends on your personal use of the property; the length of rental periods; and documentation of your time, others’ time, expenses, and activities.
Tax Tips for Home Ownership
Should you buy or rent your home? What gives you the best quality of life and monetary value? Here is what you need to consider.
First-Time Home Buyers’ Tax Credit Improved—Buy That Home?
Is this the right time to buy a home? Tax credits make the home purchase more appealing. Learn if the home purchase is right for you or your relatives. Use the home analyzer software, free, that’s linked inside this article.
Inheritance Advice for the Family Home
Distributing the assets of an estate needs a tax plan to ensure the favorable results embedded in the tax law.
IRS Loses On Subdivision of Lots
You can be a dealer with respect to some properties and an investor with respect to others. You can also subdivide lots and obtain tax-favored capital gain treatment, but you need the right numbers and a good plan.
Increase Federal Tax Rebates with More Business Mileage
Learn the federal income tax rules on business mileage to increase vehicle deductions. The four questions and answers in this article give you a clear roadmap of the rules along with the strategies you need to pocket more cash from your business.
Deducting Travel to a Second Business in a Second State
If you operate one business with two operations in separate states, you need to know the rules to tax deduct overnight business travel between the two locations. You also need to know these tax deduction rules if you have two businesses in two states.
Deducting the Security System
You may claim a tax deduction for the business portion of your home security system regardless of your qualification for the office in the home deduction.
Home Equity Loans Pros and Cons—Learn How to Avoid Tax Pitfalls
Your home equity loan can give you a full, partial, or no deduction for your interest. If you will get zero or a reduced benefit, make the necessary changes to protect your tax benefits.
How Does a Home Equity Loan Work with a Rental Property LLC?
If you are using home equity loan proceeds for your rental property LLC, you need to pay attention to both the legal and tax aspects of that transaction. The legal part is needed for liability protection. The tax part is needed to ensure your tax deductions.
Big, Unlimited 2009–2016 Tax Credits for Installing Solar, Wind, or Geothermal
This new law gives you 30 percent uncapped and unlimited tax credits for installing qualified solar, wind, or geothermal energy improvements in your home, vacation home, or other residence.
New 2009–2010 Homeowner’s Energy Property Tax Credit
Tax credits are best. They reduce your taxes dollar for dollar.
Now, you can pocket a 30 percent tax credit of up to $1,500 when you install qualifying energy approved windows, doors, HVAC, insulation, water heaters, roofs, and similar property in your principal residence.
Creating a Dependent Care Credit
With net business income less than $115,647, the sole proprietor with two qualifying children and a stay-at-home spouse can hire the spouse and pay a wage of $6,000 to create a $1,200 child care credit with no change in their joint income taxes—other than realization of the $1,200 credit.
Business Furniture in the Home
You do not need a tax deductible office in your home to deduct the cost of business furniture and equipment in your home
About Time! A True Tax Credit for First-Time Home Buyers
Higher inflation could be good for that home you buy today—and if you buy today, you will have today’s low interest rate. That’s a pretty good combination. Then add the 2009 tax credit and get the government to pay you $8,000 for taking the chance. Sounds like you hit the trifecta doesn’t it?
New Housing Rescue Law Destroys Vacation and Rental Home Sales Strategy
Before this new housing rescue law, the savvy taxpayer could convert his old rental or vacation home into a principal residence, live in it for two years, and then sell it to take advantage of the $250,000 and $500,000 exclusion of gain rules. Now, you need to make revisions to that old tax plan to cope with this new law.
New Tax Breaks and Traps in Housing Rescue Law
The new housing rescue law (1) creates a $7,000 tax credit for first-time home buyers; (2) creates up to a $500 property tax deduction for the taxpayer who does not itemize deductions; (3) destroys some or all of the $250,000 tax-free exclusion for sales of vacation homes and rentals converted to principal residences; and establishes 1099-style reporting to the IRS of gross income from credit card receipts.
Home Sale and Easement Proceeds
If you have a land easement on the property you are selling, you can get up to $250,000 tax-free. We show you how to do it with a home sale exclusion
Son Pays the Mortgage Interest
Your son may not deduct the interest on the mortgage payments he makes on your behalf. You need to reconsider and restructure this arrangement.
Defined Destruction of Home Produces Sale for Exclusion Purposes
At what point is a home destroyed so that it is eligible for the “involuntary conversion rules and the $250,000 ($500,000) exclusion of capital gains rules? In this chief counsel advice, the IRS gives some clarity.
Tax Guide for Debtors on Foreclosure of a Home
Tax law treats foreclosure as a sale of your home. If you sell your home, you have a gain or loss. Most gains are taxable. Losses on a foreclosure or other sale of your personal home are not deductible.
Marriage Qualifies for Part of $250,000 Home-Sale Exclusion
The $250,000 home-sale exclusion is a major tax break. To qualify for the exclusion, you must have owned and lived in your home for two of the past five years. You can get out of the “two out of five year” rule by unforeseen circumstances, like, say, marriage.
Your First Home Could Be Your Best Investment Ever
To rent or to buy? That is a question. Use this easy software that comes with this article to find what’s best, after taxes—no guesswork. Identify 12 reasons why renting is best. Identify 11 reasons why buying is best. Consider everything in just a few minutes.
Repairs to Make the Home a Rental
If you make repairs to your home for the purpose of making the home a rental property, you may deduct them, if you do it right. You cannot, for example, deduct repairs made to your home (not rental property). You might also consider filing the improvements as capital expenditures.
Home Ownership Denied
When the seller does not transfer legal title to the buyer, the buyer can still be the owner when the buyer passes the beneficial ownership tests.
Gift of Home
The $250,000 exclusion on the sale of this home is complicated by the mother and daughter owning this home together.
Qualifying for the 1031 Exchange on a Vacation Home
The tax rules make your vacation home either a personal residence or a rental property. When you qualify the vacation home as a rental property, you then may use the Section 1031 rules to defer taxes and build more net worth.
Selling the Home That Contained the Office the Corporation Deducted
When you have your corporation reimburse your home office as an employee business expense, you treat the home as if you had claimed the office-in-the-home deduction personally.
Corporate Reimbursement of Condo Fees and Mortgage Payments
The corporate reimbursement of the owner-employee for office-in-the-home expenses includes condo fees and mortgage payments.
Corporate Reimbursement of Depreciation on an Office in the Home
The corporate reimbursement to you, the employee, for the business use of your home office requires that you recognize the depreciation component of the reimbursement as if you had claimed the office in the home on your personal tax return.
Three New Rulings Where Home-Sale Profits Are Protected by Hardships
Wow! In one day, the IRS released three private letter rulings that provide a roadmap to the $250,000 (single) and $500,000 (married) home-sale profit exclusions for taxpayers who fail, because of hardship, the 2-out-of-5-year tests for ownership and use.
Home Mortgage Interest Deductions Denied
Interest paid on a life insurance loan to buy a home does not count as deductible mortgage interest.
Problem with In-law Suite
To deduct mortgage interest, (1) you must have title, (2) the mortgage must be in your name, (3) the home must secure the mortgage, and (4) you must make the mortgage payments from your money.
Jack Up Your Profits with Tax Credits
Historic rehab tax credits can put you in Donald Trump’s self-proclaimed favorite spot. Tax credits often exceed the cash you invest in the project making the historic rental or office building a “nothing down” deal for you. Add nonrecourse financing to the package and you have no personal risk. None of your cash in the deal and no personal risk—this is Mr. Trump’s favorite spot. You might do as many Congressional leaders do: Donate your personal home’s historic facade to charity so can realize big tax credits.
Proving Basis in the Home
The couple in this court case did not keep the right records to prove the improvements they made to their home. This failure to keep the records probably saved them some personal time, but it cost them taxes on $101,907 of capital gains. What do you suppose the hourly cost of this failure—considering that the time spent to keep these records has to be very few hours? You really do need the right tax records and it takes very little time when you know what to keep.
$500,000 Exclusion
You do not need to be married during the 24 months of residential use to claim the $500,000 exclusion of profits on the sale of your home.
Mortgage Interest
This taxpayer takes out a $4 million mortgage and makes the interest on $1 million of the mortgage deductible as home-mortgage interest and the interest on the remaining $3 million of the mortgage deductible as investment interest.