Financial Divorce Professional Newsletter

December 2009

The October Kiplinger Tax Letter wrote about Real Estate Tax Issues

Table of Contents
1. Special tax break for Real Estate agents
2. Home buyer credit
3. Home builders may get audited
4. Appraisers may get penalized
6. Divorce Survival Kit™
6. Free Teleclass
7. Thought for the Day

1. Special tax break for Real Estate agents

If Real Estate agents have rental losses, they can claim a special tax break and their losses are exempt from the passive loss rules. But this exemption only applies to agents who spend more than half of their time and at least 750 hours per year materially involved in real estate.

2. Home buyer credit

First time home buyers don't have to wait until next year to get the tax credit. They can file an amended 2008 return to get credit for their 2009 home purchase. That credit equals 10% of the purchase price up to a maximum of $8,000. This applies to a purchase of a primary home bought before Dec 1, 2009.

If the buyer is amending their return, they should enclose documentation to avoid having the refund delayed. Attach a copy of the HUD-1 form.

3. Home builders may get audited

The IRS is looking for inappropriate income deferrals by builders that use the completed-contract method of accounting, where income isn't reported until the project is finished. The IRS is targeting developers that sell lots and try to defer income until the improvements to the common areas are completed. The IRS is also looking at developers who use separate partnerships to develop land and build houses in a project, with the land partnership claiming the contract isn't done until all homes are built.

4. Appraisers may get penalized

The IRS is also looking at appraisers. If big valuation misstatements are found on audit, the IRS may penalize the appraiser. The penalty is usually the larger of $1,000 or 10% of the tax saved as a result of the improper valuation. However, in no case can the fine exceed 125% of the fee that the appraiser charged. This penalty applies if an asset's value is overstated by 50% or more for income tax deduction purposes or if the valuation is understated by 35% or more on an estate or gift tax return.

5. New Product - Divorce Survival Kit™

The Divorce Survival Kit is the ultimate divorce resource for your clients. To find out more, go to www.DivorceSurvivalStore.com. I personally guarantee that your clients will save thousands of dollars in your divorce as a result of having the information that they receive in the Divorce Survival Kit.

6. Free Teleclass

I will also be hosting a FREE teleclass for your clients who are going through divorce on Wednesday, Jan. 6. It is called "5 Ways to Survive Your Divorce Financially." To enroll, click here.

And in both the Divorce Survival Kit and the Free Teleclass, I promote you, the Financial Divorce Professional!

7. Thought for the Day

We may affirm absolutely that nothing great in the world has ever been
accomplished without passion.
-- Georg Hegel

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