Depreciation - What you need to know... Of all the benefits of owning investment real estate, one of the least understood is the benefit of depreciation. Depreciation is a method for matching the costs of acquiring property over the properties estimated economic life. Some key things to remember:
Using the straight-line method, residential income properties, four units or less, are depreciated over 27.5 years. Commercial property, or 5 units or more, are depreciated over 39 years.
Land is not depreciable.
Depreciation is an "intangible expense" that reduces the taxable rental income produced by a property.
Selling a property will result in a 25% depreciation recapture tax.
The depreciation recapture tax can be deferred via a 1031 Exchange.
For more detailed information about depreciation and how it works, please click here.
All in the family... You can't choose your family, but you can choose if you want to pay taxes or not when dealing with your family. Some key things to keep in mind regarding intra-family real estate dealings:
Adding a family member (or anyone for that matter) to title may result in a gift tax. Don't ever add your son/daugther/mother/daugther/etc. to title without speaking with your tax advisor.
Renting a 1031 Exchange property to a family member is allowed; just make sure the family member is paying market rents.
Selling a 1031 Exchange property to a family member is allowed, provided the family member then owns the property for at least two years.
Buying replacement property from a family member is usually not allowed. There are some exceptions. Contact Asset Exchange Company as soon as possible if you are considering acquiring replacement property from a family member.
Asset Exchange Company
Asset Exchange Company leads the industry by offering:
$499 Exchange - With Asset Exchange Company there are never any hidden fees, layered costs or miscellaneous service charges.
Attorney Guarantee - Asset Exchange Company is the only firm in the industry that guarantees that all exchange documents are prepared and reviewed by a licensed attorney.
Funds Security - Exchange funds are deposited into FDIC insured trust accounts with leading financial institutions. Client exchange funds are never commingled with operating funds and Asset Exchange Company also carries substantial Errors and Omissions insurance and maintains a Fidelity Bond for added protection.
Thursday, March 8, 2007
Wednesday, February 28, 2007
Great News Out of Washington for Homebuyers
If lawmakers get their way, Private Mortgage Insurance (PMI) will become tax-deductible for home loans originated after January 1, 2007. PMI is a requirement for most home loans in which borrowers make a down payment of less than 20%.
The bill has already been passed by Congress and awaits the President's signature before it becomes law.
While the new deduction is restricted to homebuyers whose annual household income does not exceed $100,000, the legislation could impact nearly 50% of all homebuyers, according to a SMR Research study of homes financed in 2005.
Up until now, many homebuyers have used "piggyback" loans in order to avoid paying PMI. A piggyback loan is where the homebuyer obtains two mortgages, a first mortgage for 80% of the purchase price, and a second mortgage for the remaining funds required, outside of the down payment.
Since many homebuyers have chosen a Home Equity Line of Credit (HELOC) as their second mortgage, their required monthly payments have increased significantly as a result of the actions of the Federal Reserve. Today, many homebuyers with a HELOC are now paying more than they would have if they had chosen PMI with their original mortgage.
What does this legislation mean to you?
Under the law, homebuyers will have more financing options available that offer greater tax deductibility and lower monthly payments. This means a homebuyer could potentially afford a more expensive home! In addition, homebuyers could qualify for traditional mortgages rather than the more expensive options they were forced to pursue in the past.
Contact me immediately to determine how you can put this information to use, and get off to a great start in 2007!
If lawmakers get their way, Private Mortgage Insurance (PMI) will become tax-deductible for home loans originated after January 1, 2007. PMI is a requirement for most home loans in which borrowers make a down payment of less than 20%.
The bill has already been passed by Congress and awaits the President's signature before it becomes law.
While the new deduction is restricted to homebuyers whose annual household income does not exceed $100,000, the legislation could impact nearly 50% of all homebuyers, according to a SMR Research study of homes financed in 2005.
Up until now, many homebuyers have used "piggyback" loans in order to avoid paying PMI. A piggyback loan is where the homebuyer obtains two mortgages, a first mortgage for 80% of the purchase price, and a second mortgage for the remaining funds required, outside of the down payment.
Since many homebuyers have chosen a Home Equity Line of Credit (HELOC) as their second mortgage, their required monthly payments have increased significantly as a result of the actions of the Federal Reserve. Today, many homebuyers with a HELOC are now paying more than they would have if they had chosen PMI with their original mortgage.
What does this legislation mean to you?
Under the law, homebuyers will have more financing options available that offer greater tax deductibility and lower monthly payments. This means a homebuyer could potentially afford a more expensive home! In addition, homebuyers could qualify for traditional mortgages rather than the more expensive options they were forced to pursue in the past.
Contact me immediately to determine how you can put this information to use, and get off to a great start in 2007!
Saturday, February 24, 2007
Oron Maher
Oron Maher
Sales Associate| San Francisco, Presidio One Letterman Drive Building C, Suite 300 San Francisco, CA 94129 Phone: 415-929-7100 Fax: 415-929-0427 |
| Email: | omaher@pacunion.com |
| Phone: | 415-345-3173 |
| Fax: | 415-929-0427 |
| Web Profile: | http://www.pacunion.com/OronMaher |
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