Real Estate companies bank on the land rates to begin with and they have the foresight, strategies and various other aspects come into play before they buy a piece of land.Property rates in India are on a rise as new townships are being developed by different players in this game at umpteen strategic locations.

For example: Greater Noida which was just a piece of land 10 years back. Many Real estate companies invested money in that dead land keeping the strategic location this place and its future prospects. Now that dead piece of land is a Golden Goose for them which are yielding them golden eggs. Now that the property rates are rising normal people cannot buy property on their own and that’s why different banks offer now Home loans.

Home loans in India are now common that can be grant in an easiest manner. Different banks offer loans at different rates for the convenience of common mass. But one has to be really careful while they apply for the loans keeping pros and cons of this loan on their financial stability. Banks too should abstain from giving away the loans at cheaper rates as this can in various ways affect the economy. Home loans paved the way for Home finance companies. We talk about Indian banks then State Bank of India, Punjab National l Bank, ICICI home loans, IDBI home loans, Axis bank, Canara Bank, Standard Chartered Home Loan and many more are there. All these banks and financial institutes constitute wide range of home loan categories like reconstruction of home, buying new land, renovation of already built house; extend of home and many more in order to attract the different segments of the society with different income group.   

Many such companies have carved out the niche for themselves which look into the customer’s financial condition and help dealing them with the situation. They are the one’s with whom people consult with to understand the formalities, positive and negatives sides, and many other aspects of home loans. These companies try to lure the customers with their cheaper rates and different other ways. One has to be wise enough to understand these things before investing or before zeroing on a certain property, home loan rates of home finance company.

In many cases, a carryforward capital loss is extremely large. Taxpayers in this situation are entitled to capture future capital gains without incurring any tax. That is because their paid tax preparers will offset the gains with loss carried forward.

There is another consequence of losses on investment portfolios in recent years.

This is the rise in lawsuits claiming financial mismanagement. Therefore, professionals in the tax preparer business should ready themselves to address the tax impact for individuals receiving legal settlements related to investment losses.

There is considerable support that justifies treating legal settlements to recover investment losses as capital gain. Of course, capital gain treatment benefits the taxpayer. Considering lawsuit proceeds as capital gain is offset for taxation by capital loss carried forward.

Claiming legal awards as capital gain might require some defendable reporting to the IRS. Therefore, taxpayers with lawsuit awards for investment claims could benefit from using enrolled agent tax preparers. These tax practitioners can represent taxpayers before the IRS.

Some taxpayers are tempted to avoid declaring legal recoveries of investment losses as income. They consider the awards as return of their lost capital. Any tax enrolled agent will discourage this approach. The capital has already been recovered by computation of the tax loss. The only problem is that the taxpayer is prevented from fully receiving this recovery method due to the annual limitation on capital losses.

The larger tax preparation issue for the taxpayer is the character of the income from the lawsuit. Strong support exists for treating a legal settlement from an investment suit as a capital gain. This is definitely a factor for enrolled agents to consider when studying their annual tax CPE. The underlying principle is that any recovery of income is taxed in the same manner as would have occurred with the items for which it substitutes. A legal claim regarding improper handling of capital assets led to capital losses. Therefore, any recovery seems appropriately captured as capital gain.

The IRS has commonly applied a doctrine from the Arrowsmith case, which was decided by the Supreme Court. In this case, payments in a future year after a corporate liquidation were treated as part of the original transaction. The payments therefore were part of the capital transaction of liquidation. Just as the IRS has used this ruling to support expenditures as capital losses, it seems reliable for enrolled agents to use in defending recoveries as capital gains.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Linda Neil is a broker/owner of a real estate agency in the La Paz Mexico real estate region, she shares some valuable insight on how to administer your taxes south of the border. There is a lot of misinformation on this subject, such as:?If you become a Mexican citizen you have no tax to pay when you sell your Mexico real estate???or ?With a FM-3 and some receipts, you will be exempt from paying capital gains on the sale of your house in Mexico?Neither scenario is completely correct!Mexican citizens must pay exactly the same tax as any foreigner, whether the property is located in the La Paz Mexico real estate region or whether it is located in Oaxaca, Oaxaca. No exemption is permitted for the sale of a vacation home, no matter what immigration status the seller has. As of January 1, 2007 an exemption is granted on the sale of a primary residence. This exemption applies to Mexican citizens and any foreigner whose TAX RESIDENCE is Mexico.The Law of Tax on Rents (Impuesto Sobre La Renta), Article 109, Fraction XV provides for exemption for the sale of a personal residence. An exemption of 1,500,000 UDIS is permitted, provided other requirements are met. UDIS?.. And what is a UDI???A UDI (Unidad de Inversion) is, in English, an investment unit. This is based upon a price-level adjustment established by the Bank of Mexico in 1995 to assure that loans denominated in UDIs maintain their purchasing power and provide a real rate of return in the local currency of pesos. Because the peso has been quite stable over the past years, the UDI value does not change significantly now. The rate is published daily by the Bank of Mexico. In 2007 the rate went from 3.789867 in January to 3.926066 in December, a change of less than 1%In other words the deduction of 1,500,000. UDIS in December, 2007 is 5,889,099 pesos, or about 5,000. US dollars.Full Exemption: per Article 109, Fracc. XV (Art. 129 RL ISR)When the sales price of the property does not exceed 555,000. USD dollars, the property can be exempt from the capital gain, or income tax, provided all conditions are met.Partial Exemption: (example when the sale price exceeds the deduction) A house sells for 700,000. USDLess 1,500,000 UDIS 555,000 USDTaxable 145,000. USD, less any permitted deductions such as capital improvements. The tax rate is based upon a sliding scale ranging from 3% to 28%. In order to qualify for the deduction, the seller must prove this is his/her principal residence with utility bills, bank account and credit card accounts with the same address, electoral card or immigration document showing permanent residence in the country. Title must be in seller?s name or in spouse?s name. Seller must also sign an affidavit that this is his/her principal residence and the transfer must be made before a notary public.A small house on a large piece of land will take into consideration only the construction (supported by building permits) and the adjoining outbuildings, not the excess of the land.Only one property per annum will be exempt and seller must manifest that this is the first transfer of a personal residence in the calendar year.Please remember, and don?t be misled: an exemption allowing exclusion of capital gains is provided to residents who have lived in a home in Mexico as a primary residence. This exclusion is intended to benefit residents, whether nationals or foreigners, of Mexico, not those who own second homes in the country.In Mexico, the owner?s basis in a property is the value declared in the deed. In the past it was common to declare the appraisal value which could be much lower than the amount actually paid. This is the very important reason to have the price you paid for the property declared in the deed. Be sure, however, that this is a condition of your offer to purchase and is accepted by the seller when you make the offer.By law the amount declared in the deed must be written in Mexican pesos. It should also be declared in US dollars, if that is the currency used in the transaction, at the rate of exchange on the date payment is made.If this important point is overlooked when the property is sold, the capital gain tax can be enormous!

Tax policy can be structured to achieve one or more of these three goals:

To provide government services to citizens;
To direct capital expenditures within the economy;
To redistribute wealth from those who have it to those who don’t.

Democratic candidates for president have not disavowed the trial balloons by Democratic members of Congress to hike tax rates.

What this means

Investors can expect higher tax rates post-2008 should a Democrat become president. None of the Democratic candidates for president has articulated a private sector pro-growth tax policy. Instead, their orientation appears to be toward wealth redistribution via higher tax rates. During the recent debate between Democratic politicians, Obama indicated that he wanted to almost double the maximum tax rate on capital gains from 15% to 28%. Clinton has stated that her maximum tax rate on capital gains would be 20%. Both of these candidates have indicated a willingness to raise taxes on dividends and on income of other categories.

The existing tax rates are history post-2008 should a Democrat win control of the White House in this fall’s election. That message is clear from Democrats on the House Ways and Means Committee who have already released a plan to hike personal tax rates.

On the other side is McCain, who has recently stated his support for extending the present tax-rate structure past 2010. However, McCain voted “no” on both the 2001 and 2003 tax rate reduction bills. So realistically, the likelihood of the 15% dividend tax rate and capital-gains tax rate remaining past 2008 is perhaps less than 50-50 at this point. The Danger

When Bill Clinton signed his big tax increase bill in 1993, the economy had been expanding for more than two years, and was able to power through the negative economic impact of the hikes. In 2009, the United States might be just emerging from a nasty downturn. Based on history, an increase in the capital gains tax would cause a net decrease in tax revenue at the very time when business needs to be stimulated! All candidates must take this into account when considering a tax increase.
Real Estate Investment Impact

Any increase in tax rate means more total dollars in the hands of government and less in the hands of the private sector. In general, this will mean increased challenges to holding onto your hard won wealth. What is your best strategy in this market? For Real Estate investors, Section 1031 of the IRS tax code is one of the last bastions of legal tax reduction. A 1031 exchange allows you to exchange your existing property for another property and defer paying the capital gains tax. As the capital gains tax rate increases, the value of doing a 1031 exchange becomes more valuable to the investor! Tax deferral under section 1031 can mean tax avoidance over time. Think of the tax deferred under a Section 1031 exchange as an interest free loan from the government–just what is needed in these unsettled times!

Embedded in Section 1031 are creative tax planning opportunities. The capital gain tax calculator found at 1031x.com Election Calculator, will let you estimate the possible impact of the increased taxes on a real estate investment and the value of using the Section 1031 exchange. Remember to work with a Qualified Intermediary who is bonded and insured. You can create a winning strategy, regardless of who wins the 2008 Presidential Election!

Best answer:

Answer by Dan
In the US, the answer is “Yes.” But calculating the ‘basis’ of the lots can leave a lot to the imagination, if you catch my drift. You want the basis to be as high as possible since the gain = selling price less basis.
You might want to look into a ‘Like-Kind-Exchnage.” What are you planning to do with the money? If you are investing it, I beleive you can ‘exchnage’ the lots for REIT shares without current tax obligation (its deferred). If you are spending it on home improvements, that might be a like kind exchange as well (consult a tax professional). If you are blowing it on a a vacation or something alomng those lines, then tax deferral is probably not an option.

Give your answer to this question below!

Explaining Capital Gains and Tax Deferment

By Damien Christian

Death and taxes; while both are certain, the sting of capital gains tax can be significantly softened for real estate investors. Although the tax man likes to keep his fingers in the pockets of the American public, we do find precious instances where the IRS cuts us some slack. Most of us have or know something about tax-deferred retirement vehicles such as IRAs and 401Ks. Simply stated, the government won’t tax these savings as long as we do not touch the investment. We can even move capital around without penalty if the money is transferred or rolled-over within a specified period of time. A real estate investor, like a retirement planner, can also enjoy a tax-deferred, “roll-over” benefit of sorts. This lesser known real estate perk is a 1031 exchange.

A 1031 tax-deferred exchange is a real estate transaction where the proceeds of a building or property sale are reinvested into a like-kind asset, i.e. another building or property. Similar to a 401K roll-over, the reinvested funds of a 1031 tax exchange are tax-deferred, and there is no recognized capital gain or loss. Bear in mind that in order to qualify, the replacement like-kind asset must be purchased within 180 days of the sale. Since 1031 exchange properties must be business or investment properties and not personal residences, the benefit is reaped by the businessmen, the landlords, and the entrepreneurs. That’s all the more incentive for the rest of the population to jump in the game.

But how do 1031 tax-deferred exchanges play out in the everyday? Let’s say, for example, that an investor purchased an apartment complex in South Boston during the mid-nineties. The property she bought for 0,000 sells for ,000,000 less than ten years later. A 0,000 appreciation is certainly nothing to scoff at. But what about capital gains tax? If the proceeds of the sale are reinvested into another building (within the 180 day closing period), the investor can potentially avoid a painful tax hit. During a qualified 1031 exchange, capital gains are not taxed.

If you want to complete a 1031 exchange, but don’ want to into a property that will require time and effort to manage, you can also invest in a portion of a professionally managed, commercial grade property along with other investors. This is called a “tenant in common” arrangement. Tenant in common allows you to hold an undivided title of a property and satisfies the 1031 requirement for “like-kind” property exchange.

1031 tax advantages can certainly be favorable, and they have gotten better since 2002, when the IRS expanded the pool of exchange properties with a ruling pertaining to co-owned real estate (CORE) and tenant in common (TIC) structures. With the vast potential upside to a 1031, it is crucial that you the investor seek out experienced tax and exchange professionals to complete your business effectively and safeguard your money. In this way you can execute your exchange efficiently and enjoy the substantial tax benefits you are legally entitled to.

Information from this article was taken from http://www.allstates1031.com

When tax problems occur, it can be difficult to hide from the IRS. We are going to talk about capital gains tax relief and other things that may be important for you to know more info about. Being familiar with these tax problems allow you to recognize them as soon as they occur. Whether you are an individual or a business entity, make sure that you are aware of these common problems regarding taxes.For example with a Capital Gains Tax Relief if you have lived in your home and it has been your only home all the time that you owned it, you will not have to pay Capital Gains Tax on any money you make when you sell it. If you have used any part of it exclusively for business purposes or bought it to sell early for profits then you will be not be able to avoid the capital gains tax relief. An other tax issue you may encounter has something to do with the payroll system in your place of employment or company. They can vary with different underlying issues that may have caused them. Still, remember that the IRS ensures that they can collect your past payment dues or anything that you owe. Therefore, make sure that yours is updated and that you have the correct tax information. The tax lien demonstrates that you have existing back taxes in the IRS. This is one of the tax problems that can involve your personal property like real estate. When that happens, you cannot sell or transfer its ownership if you are unable to pay all your back taxes so the lien can be removed. However, it can be difficult to do so because once you get a lien on your property, it is difficult to apply for a loan that can help you pay off your taxes. Next in the list of tax problems is the IRS levy, a drastic attempt by the IRS to get you to pay your tax debt. This is particularly difficult to handle because levies hinder you from getting the money that you usually get from various sources. Basically, having an IRS levy gives the IRS the authority to take your money from your savings or checking account if you have one. Still, the levy is only effective for a certain day and it is the bank’s job to withdraw the money required by the IRS and send it to them. The levy is also bothersome because it can take money from your wages, which puts your entire paycheck at risk for going to the IRS. IRS seizures, unfiled tax returns, IRS tax audits, and wage garnishments are the other tax problems that you can encounter. Together with other tax-related issues, they can place great burden on your finances and your life in general. Therefore, it is important for you to keep all your tax-related documents just in case you are audited by the IRS. That way, you can give them all the information they need and prevent them from taking any action against you. Still, if you find yourself in a tight and risky situation with the IRS, you can ask for help. There are things that you can do to spare yourself from being contacted by the IRS, facing legal action, or having to deal with those tax problems. For starters, consult with an enrolled agent, a person who is authorized by the US Department of Treasury to provide help to individuals and businesses in dealing with their tax-related issues. So for more info on capital gains tax relief and other issues, Let Mike Habib deal with your tax problems. As an Enrolled Agent, you can count on him to help you solve your tax-related problems. His 16 years of experience in financial advisory and taxation allows him to work well with you and find a possible solution for your problems. All you have to do is call us here at 1-877-78-TAXES for a free consultation. You can also learn more about Mike Habib’s services by exploring this website at http://www.myirstaxrelief.com today.

Entrepreneur’s relief is available to most, including individuals, trustees (in some circumstances), but not to limited companies.

You can claim Entrepreneur’s Relief when you sell all of your business, or even shares in your own company after 5th April 2008. The capital gain, when entrepreneur’s relief is applied, is taxed at an effective rate of 10%, instead of 18% or even 28%.

There are, however, some stiff limitations to entrepreneur’s relief:

You must be selling all, or a material part, of your business, including:
Selling shares in a qualifying company. The shareholder MUST own at least 5% of the ordinary voting shares, as well as having been an officer or employee of said company
Selling the whole of your business
Selling partnership interest

If you sell the assets, without selling the actual business, or ceasing to trade, then this will not qualify for the relief. For example, if an accountant sold part of their practice, entrepreneur’s relief would not apply.

You need to have owned the assets/shares for at least a year prior to the sale.
The business must be defined as a trading business, which means that, for example, a property letting business would not qualify. A furnished holiday letting company, however, would.
Entrepreneur’s relief only applies to capital gains made after 6th April 2008. Taxpayers are restricted under certain conditions to claiming this relief on lifetime gains up to £10 million worth of gains (£5 million prior to 6th April 2011, £2 million prior to 23rd June 2010, and £1 million prior to 6th April 2010.) For capital gains realised before 6th April 2010, and exceeding £1 million, no additional relief is given.

It may also be possible to claim relief where gains are deferred as a result of either the Enterprise Investment Scheme, or Venture Capital Trust investments.

When a material disposal relates to the sale of shares, or a partnership share, the person who is disposing is also able to claim relief against any gains made in the disposal of an asset that is used in the business. This later disposal can happen as long as 3 years after the original disposal. However, the relief is restricted if rent is charged on the property.

Chargeable assets includes all forms of property unless it is specifically exempt. The main assets it tends to apply to are land and buildings, shares and business assetsincluding goodwill. CGT can be very complex and the rules are far more detailed that can be explained in this brief blog post, so read the Helpsheet after this post.

How a Capital Gain occurs

A capital gain occurs when the value of an asset at the date it is disposed of is higher than when it was first acquired.

An asset can be disposed of either by sale or by gift. If you give away an asset in an uncommercial transaction, the market value will replace any actual consideration paid.

For assets acquired before 31 March 1982 the cost usually taken to be the value on that day, although actual cost can be used in some circumstances.

The following also reduce the amount of the chargeable gain…

Incidental costs of acquisition
Expenditure to enhance the value of the asset
Incidental costs of disposal, and
Tax reliefs and allowances (see below)

Rate of Tax

From 23 June 2-1- a new CGT rate of 28% was introduced where the total taxable gains and income are above the income tax basic rate band.

Prior to that and below that limit, the rate is 18%. For trustees and personal representatives of deceased persons the rate increased from 18% to 28% on all gains from 23 June 2010.

Tax Reliefs

There are several different tax reliefs which can reduce the chargeable gain, including…

Rollover/holdover relief on replacement of business   assets – allowing you to defer the CGT on a gain of a business asset where this is matched with a replacement of a new business asset in the period commencing one year before and ending three years after the disposal.
Business incorporation relief – available when you transfer your business into a Limited Company in exchange for shares.

This blog post is an extract from our Tax Helpsheet ‘An Introduction To Capital Gains Tax.’ There are a few more tax reliefs explained in more detail in the Helpsheet,including Entrepreneur’s Relief, so if you are interested in learning more about how to reduce your Capital Gains Tax liability, click here.

The last seven years has seen tremendous appreciation in home prices. This brings up the issue of home capital gains tax issues for people when they sell.

Home Appreciation and Capital Gains

Owning home is considered part of the American Dream. Unless you are extremely unlucky, homeownership leads to tremendous wealth building. You simply sit in your home, make the monthly payment and reap the benefits of appreciation and increased equity. A bit of the luster, however, can be lost when it comes time to sell.

Capital gains taxes are the problem. The federal government encourages homeownership, but also wants a chunk of a change when you sell. The capital gains tax is a percentage of the profit you have realized from the home, to wit, the difference between the price you purchased it at and the price it is sold. You can deduct mortgage costs, improvements and so on, but there is still the tax.

Fortunately, there are some large safe harbor exemptions to the home capital gains tax. If you are single, you can exclude the first 0,000 in profit from being taxed. If you are married and filing jointly, you can merge your individual exemptions and protect the first 0,000 from being taxed. In most parts of the country, these exemptions will completely protect you from home capital gains tax. Even if they don’t, the tax savings should be substantial.

To claim the exemptions, you must meet a few requirements. Obviously, you have to actually own the home. You must also have lived in the home two out of the previous five years. It must have been two years since you tried to claim the exemption on any other home. Put another way, you cannot claim the exemptions for investment property or second homes. Still, these healthy exemptions are a windfall for most homeowners.

Americans are notorious for being horrific savers when it comes to financial planning. Homeownership provides a relatively straightforward savings method and the government promotes it as such by providing these large home capital gains tax exemptions. If you can pull it off, buying a home is one of the smartest moves you will ever make.