Real Estate Tax
and Swap - Tax Savings ideas on Selling a Highly Appreciated
Home - Let's say you own a principal residence that has
appreciated tremendously since you purchased it. You would now like
to unload the property and convert your big equity stake into some
sort of income-producing investment. Perhaps you are approaching
retirement age and want to replace earnings from your job or
business. Or you may want to convert your home equity into an asset
that generates positive cash flow.
It's a good idea — but be
careful of the tax bill. Some of the gain will be tax free if you
meet certain qualifications but if the profit on the home is large
enough, some of it will also be taxed.
Sale of your Home - Big Tax
Category: Tax and Taxation Law
Subject: denial of house revaluation by county tax
NJ state certified appraiser hired by the township
never entered the townhouse to revalue the property. This gave rise
to a tax appeal before the county board. Township attorney argued
the new assessment is fair based on the comparative sale submitted
by me to the tax board. All 7 other townhouses were appraised by
walk in and walk around the property - mine was not. I want to
appeal to a higher court based on the fact that the appraiser did
not follow the law with respect to doing an appraisal thereby
declaring the new tax assessment void. Thank
Category: Tax and Taxation Law
Subject: Re: denial of house revaluation by county tax
An actual inspection inside the property is not
necessary for a Municipal Tax Appraisal. The key issue is whether
your property is appraised similarly to the other townhouses in your
development. Unless your appraisal exceeds 115% of the fair market
value, you will not be able to effectively appeal. You should
contact a tax attorney to give you the specific advice you need. For
further information, please check my website www.taxesq.com. 1/06
So you think your $1 million liability insurance
policy is enough to protect you? Not anymore!
A woman who was beaten, raped and robbed at her Marietta,
GA., apartment was awarded $9 million in compensatory damages by a
Fulton County State Court jury. One premises liability expert,
Gilbert H. Deitch, said $9 million was the largest award he had ever
heard for an apartment rape case. The sum also floored the lawyer
representing the apartment owners. "Not to take anything away from
that woman's suffering, but we were shocked at the amount," said
defense attorney Charles Richard "Chip" Carson of Atlanta's Nall
& Miller. "It was nine or 10 times larger than anything we'd
contemplated during trial," added Carson, who made the unusual move
in the middle of the trial of admitting the defendant was liable for
the attack and focused only on arguing over damages.
Law, the plaintiffs counsel, said the circumstances surrounding the
attack -- and testimony concerning the apartment complex's security
and maintenance -- spurred jurors to award the amount he had
recommended during the two-day trial. Even though the attack
occurred in Cobb County, GA., the trial was held in Fulton, GA.,
because the owners and management company are registered there. M.H.
v. EPT Management Company and TVO Hampton Village Partners LLP, No.
CV-02-vs-034714H (Fult. St. Dec. 14, 2005). The victim was leaving
her Hampton Village apartment about 9 p.m. on July 24, 1999, when
she was accosted, said Law. "Two guys stick a gun in her back,
shoved her in the apartment, and one guy robbed the place while the
other one raped her," he said. The two assailants ran away and were
never caught, he said.
The conclusion is that all commercial and
rental buildings should be held in a Limited Liability Company,
Corporation or other limited liability
Converting a Rental Property to a Personal
A client had a rental house that had a passive loss
carryforward of $54,506. They decided to move into the home and
lived in the house for two years before they sold it. Does the
passive loss maintain its status and become a deductible
passive loss carryover in the year the house is sold?
The rental house would be a "former passive activity." If
there is other passive income in the year in which the activity
became a former passive activity the passive loss carryover (from
the current former passive activity) is available to offset such
other passive income after such passive loss carryover is reduced by
any income from the former passive activity in the current year. See
In the case of a rental property converted to a residence,
there would not be any current income from the activity which could
absorb suspended passive losses carried forward to years prior to
the year of sale of the residence.
The suspended losses would be deductible in the year of a
taxable disposition of the former rental property, now residence. A
sale of a residence is a taxable disposition, even though there
would be a gain exclusion if it is a principal residence.
Any excess loss on the disposition of a former passive activity
is treated as active not passive.
See IRC Sec. 469(f) and
Is a Forfeited Deposit Ordinary Income
or Capital Gain for Tax Purposes?
Question: Client was involved a project that
realized $75,000 of income due to the forfeiture of earnest money on
a failed land sales transaction. Client kept the deposit when
the buyer failed to follow through with the acquisition.
The land was long term capital property and not inventory. Is this
Long Term Capital Gain or Ordinary Income?
Answer: A seller who retains both the down
payment and the property must treat the forfeited amount as
ordinary income. -
Binns, Josephine v. U.S.,
(1967, CA6) 20 AFTR 2d 5715 , 385 F2d 159 , 67-2
USTC ¶9720 ;
Smith, Harold S., (1968) 50 TC 273 , affd(1969, CA9) 24 AFTR
69-6020 , 418 F2d 573 , 70-1 USTC ¶9110 ; Mittleman, Meyer, (1971)
TC 171 , affd(1972, CA3) 30 AFTR 2d 72-5574 , 464 F2d 1393 ,
¶9679 ; Greenleaf, Aaron, (1950) PH TCM ¶50275 , 9 CCH
TCM 1024 ; Boatman,
Ralph, (1959) 32 TC 1188 ; Mechanic, Morris,
(1960) TC Memo 1960-126 , PH
TCM ¶60126 , 19 CCH TCM 667 ;
Melone, Gerald, (1966) 45 TC 501 ;
Handelman, Philip v. Com.,
(1975, CA2) 35 AFTR 2d 75-637 , 509 F2d 1067 ,
75-1 USTC ¶9208 ,
revg(1973) TC Memo 1973-57 , PH TCM ¶73057 , 32 CCH TCM
Ailes, Milton, (1983) TC Memo 1983-388 , PH TCM ¶83388 , 46 CCH
Home Sale in a Divorce can cause
unnecessary income tax. Click
here for the full
$500k Home Sale
If you’ve been living in your home for awhile, you're
probably sitting on a tax gold mine. Not only are real estate
prices soaring in many areas, the tax law allows a married couple
filing jointly to pocket up to $500,000 of gain without owing and
federal income taxes from a home sale if they have owned and used
the home as a principal residence for two out the previous five
years. Unmarried or married taxpayers filing separately can pocket a
gain of up to $250,000 without owing any federal income tax.
the full article.
Tax Treatment of the sale of utility
rights of way and easements.
Question: Telephone company
paid owner $13,000 for right of way and
easement through land held for
development. What is the allocation of
basis to such a sale?
of the original land is reduced by sales price
of the easement. If the basis is less than sales price of
easement, the owner has a Schedule D gain on the
difference. If not, there is no gain on sale of
easement. IRS Pub 551
. See Also