Real estate taxes are ad
Ad valorem means:
According to Value
• Why Taxes?
• Who is
• How taxes are
• How we file a
Exempt from Property Taxes
• Public Schools
• Charitable Organizations
• Grave yards
• Non Profit hospitals
• Government Agencies
• Special Tax reductions for
–Veterans- Widow of same
• Tax Sale
• Assessed value – Market
Tax math Problem
• Market value of property is $292,300. the
applicable assessment ratio is 85%. If the
tax rate is $2.15 per hundred dollars of
assessed valuation, what will the annual
taxes of the homeowner be?
• Tax Foreclosure Sale
• Married couple exemption: $500,000
• Single persons $250,000
• Up to $10,000 from IRA as down
payment for first time home buyers
Sellers Net problem
• The seller wants to net $50,000 from the
sale of her home after paying: $126,000
Mtg, $1,560 in repairs, closing costs of
$2,015 and paying the broker a 7%
• Question: How much should the home sell
The Gain on the sale
The difference between the amount realized
and the basis i.e.
Buy home for $90,000; closing costs $500 basis: $90,000
Add Landscaping and fencing for $3500 “ $94000
Remodel Kitchen for $15,000 “ $109,000
Sell home for $125,000; sales comm and c.costs $8000
Amount realized $117,000
Calculation of gain: Amt realized. less basis $109,000
= Gain $8,000
• All interest deductible on purchase
of primary and or second home up
to $1 Million.
• Real Estate property taxes are
• Both of above even more attractive
to those in high Tax brackets
There are income tax savings for
those that invest in income producing
Tax credits can help to lower federal
income taxes ie repair of Historical
homes, buying and repairing low
income housing and buying credits
from your stock broker.. Note: all
must qualify by IRS standards
Tax Credits for 1st time real estate
New Tax credit for 1st time home buyers is: $8000.
A tax credit is dollar for dollar reduction is what ever a tax payer owes
on his tax return.
A deduction is subtracted from the amount of income that is taxed.
Credits are worth more than deductions
Credit must not exceed 10% of purchase price of the home.
Limits on Gross income apply (married/single) If residing in home for at
least 36 Mos. None of above amount needs to be paid back. Credit can
be claimed on either 08 or 09 return. Depends on which year is
Deductions and Tax Credits
The tax code allows for certain expenses to be
deducted from income .
Ie A Business loses money, the owner may
deduct the loss.
On the other hand a tax credits are
subtracted, dollar for dollar, from the amount
owed. IE if Tax return shows $7500 Taxes
owed…The credit is
taken from this amount and the tax payer then
owes no taxes.