Capital Gain Tax - Just a Refresher

Hello Friends!

It is tax time again, and as always, you must seek the advice from you local tax professional, tax attorney or accountant to find out what is best for you and your portfolio. Seek professional advice that pertains to your particular circumstances. The tax laws change, it is best to be certain when you have a question.

I spoke with my tax professional about this year taxes, and we discussed the capital gain tax. I thought I would do some research and provide some general information in regard to capital gain tax; Let's get started.

If you sold your main home and made a profit, you may be able to exclude that profit from your taxable income. Here's how it works.

$250,000 Exclusion on the Sale of a Main Home Individuals can exclude up to $250,000 in profit from the sale of a main home (or $500,000 for a married couple) as long as you have owned the home and lived in the home for a minimum of two years. Those two years do not need to be consecutive. In the 5 years prior to the sale of the house, you need to have lived in the house for at least 24 months in that 5-year period. In other words, the home must have been your principal residence.

You can use this 2-out-of-5 year rule to exclude your profits each time you sell or exchange your main home. Generally, you can claim the exclusion only once every two years. Some exceptions do apply.

Exceptions to the 2 out of 5 Year Rule If you lived in your home less than 24 months, you may be able to exclude a portion of the gain. Exceptions are allowed if you sold your house because the location of your job changed, because of health concerns, or for some other unforeseen circumstance.

Change in the Location of Your Job

If you lived in your house for less than two years, you can exclude a part of your gain on the sale of your house if your work location has changed. This exception would apply if you started a new job, or if you are moved to a new location with your employer.

Health Concerns

If you are selling your house for medical or health reasons, be ready to document those reasons with a letter from your physician. Such a letter does not need to be filed with your tax return. Instead, keep the documentation in your personal records just in case the IRS wants further information.

Unforeseen Circumstances

If you are selling your house because of unforeseen circumstances, be ready to document what those reasons are. I RS Publication 523 defines an unforeseen circumstance as "the occurrence of an event that you could not reasonably have anticipated before buying and occupying your main home." The IRS has given specific examples of unforeseen circumstances:

natural disasters, acts of war, acts of terrorism,
change in employment or unemployment that left you unable to meet basic living expenses,
death, divorce, separation, or multiple births from the same pregnancy.

Partial Exclusion

You can exclude a portion of your gain if you are selling your home and lived there less than 2 years and you meet one of the three exceptions. You calculate your partial exclusion based on the amount of time you actually lived in your home. Count the number of months you actually lived in your home. Then divide that number by 24. Then multiply this ratio by $250,000 (if unmarried) or by $500,000 (if married). The result is the amount of gain you can exclude from your taxable income.

For example: you lived in your home for 12 months, and then sold the home because your employer asked you to relocate to a different office. You are an unmarried person. You calculate your partial exclusion: 12 months divided by 24 month (for a ratio of .50) times your maximum exclusion of $250,000. The result: you can exclude up to $125,000 in gain. If your gain is more than $125,000, you include only the amount over $125,000 as taxable income. If your gain is less than $125,000, then your gain can be excluded from your taxable income.

Loss on the Sale of a home

You cannot deduct a loss from the sale of your main home.

Reporting the Gain on the Sale of Your Home Gain on the sale of your home is reported on Schedule D as a capital gain. If you owned your home for one year or less, the gain is reported as a short-term capital gain. If your owned your home for more than one year, the gain is reported as a long-term capital gain.

I have a great tax man I work with, he is Don Bond with Bond Bookkeeping and Tax.

Please contact me for his direct line and address.

Kim Duclos Coldwell Banker Wardley

(888) 949-2890 (702) 521-3939

COFFEE FILTERS - 25 USEFUL TIPS

Coffee filters ..... Who knew! And you can buy them at the 99 cent store for almost nothing even the large ones.

1. Cover bowls or dishes when cooking in the microwave. Coffee filters make excellent covers.

2. Clean windows, mirrors, and chrome... Coffee filters are lint-free so they'll leave windows sparkling.

3. Protect China by separating your good dishes with a coffee filter between each dish.

4. Filter broken cork from wine.. If you break the cork when opening a wine bottle, filter the wine through a coffee filter..

5. Protect a cast-iron skillet. Place a coffee filter in the skillet to absorb moisture and prevent rust.

6. Apply shoe polish. Ball up a lint-free coffee filter.

7. Recycle frying oil. After frying, strain oil through a sieve lined with a coffee filter.

8. Weigh chopped foods. Place chopped ingredients in a coffee filter on a kitchen scale.

9. Hold tacos. Coffee filters make convenient wrappers for messy foods.

10. Stop the soil from leaking out of a plant pot. Line a plant pot with a coffee filter to prevent the soil from going through the drainage holes.

11. Prevent a Popsicle from dripping. Poke one or two holes as needed in a coffee filter.

12. Do you think we used expensive strips to wax eyebrows? Use strips of coffee filters..

13. Put a few in a plate and put your fried bacon, French fries, chicken fingers, etc on them.. It soaks out all the grease.

14. Keep in the bathroom. They make great "razor nick fixers."

15. As a sewing backing. Use a filter as an easy-to-tear backing for embroidering or appliqueing soft fabrics.

16.. Put baking soda into a coffee filter and insert into shoes or a closet to absorb or prevent odors.

17. Use them to strain soup stock and to tie fresh herbs in to put in soups and stews.

18. Use a coffee filter to prevent spilling when you add fluids to your car.

19. Use them as a spoon rest while cooking and clean up small counter spills.

20. Can use to hold dry ingredients when baking or when cutting a piece of fruit or veggies.. Saves on having extra bowls to wash.

21. Use them to wrap Christmas ornaments for storage.

22. Use them to remove fingernail polish when out of cotton balls.

23. Use them to sprout seeds.. Simply dampen the coffee filter, place seeds inside, fold it and place it into a plastic baggie until they sprout.

24. Use coffee filters as blotting paper for pressed flowers. Place the flowers between two coffee filters and put the coffee filters in phone book..

25. Use as a disposable "snack bowl" for popcorn, chips, etc.

HUD's 90-Day Flipping Rule Waiver

HUD’S 90-DAY FLIPPING RULE WAIVER

Effective with purchase contracts accepted by all parties signed and dated on or after February 1, 2010. This waiver will be effective for one year, unless otherwise extended or withdrawn. Please note: due to investor requirements, the requirements for the waiver may change.
In an effort to stabilize home values and improve conditions in communities where foreclosure activity is high, HUD has announced a temporary policy that will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties.
The policy change will permit buyers to us FHA-insured financing to purchase HUD owned properties, bank-owned properties, or properties resold through private sales.
To protect FHA borrowers against predatory practices of "flipping" where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those property sales meeting the following criteria:

1. All transactions must be arm-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.

2. In cases in which the sales prices of the property is 20 percent or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions.

3. The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for mortgage purchase.

Specific conditions to other details of this new temporary policy are in the text of the waiver available on HUD’s website at: http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf

If you have any questions, please feel free to contact either me at any of the telephone numbers below.

Kim Duclos

Coldwell Banker Wardley

http://www.callkim.net/

(888) 949-2890

(702) 521-3939