Acc553 Week 4 You Decide Project

In summary, the only tax advantage of selling the old house is that a larger deduction of mortgage interest on the new home. Paying off a mortgage associated with a primary residence has no impact on calculation of gain or loss, it simply reduces the otherwise deductible mortgage interest. You should have mentioned that under IRC 163 the $1M principal balance limitation to fully deducting interest and that they can deduct interest on their primary residence and one other residence.

You will be able to deduct your new home mortgage interest and property tax but there is no tax benefit if you pay off your existing mortgage.

a. What are the different tax consequences between paying down the mortgage (debt) and assuming a new mortgage (debt) for Federal income tax

What are the different tax consequences between paying down the mortgage (debt) and assuming a new mortgage (debt)?

After reviewing John and Jane Smith’s points of view, it will be your turn as a tax professional to decide on the best course of action from a tax

§ 1.61-1(a) - GI means all income from whatever source derived, unless excluded by law. GI includes income realized in any form, whether in money, property or services.

Under Internal Revenue Code (IRC) 61, section (a) subsection (1) gross income is defined as “Compensation for services, including fees, commissions, fringe benefits, and similar items.” This section of the tax code is very comprehensive (with 15 descriptive subsections) to almost all forms of income with very few exceptions. This has also been held up by the supreme court in numerous cases including the land mark Eisner v. Macomber, 1 USTC p32,252 U.S. 189, 40 S.CT 189 (1920).

(a) What are the different tax consequences between paying down the mortgage debt and assuming a new mortgage debt for federal income tax purposes?

“When you rent, you write your monthly check and that money is gone forever. But when you own your home, you can deduct the cost of your mortgage loan interest from federal income taxes, and usually from your state taxes” (Home Buyers Guide, p4). Buying a home can be alarming, if you are not prepared, whether for the first time or even for the fifth time. If you take time before going into the process to gain the knowledge needed, one might see that

As a friendly reminder, the 2015 tax season will soon be here, which means it will be time to formally submit tax returns to the Internal Revenue Service (IRS). We have realized that in many cases, by the time our clients’ contact us to formally file their tax returns for the current tax year, a third of the way into the following tax year in when this occurs. Understand, it does not have to be doom and gloom though. For all of you that are our existing clients and those of you that will be our future clients, we want you all to know that The Dynamic Tax Services, LLC is here to help along the way. As you will find attached the early 2015 tax year flyer, we ask that you please share this flyer with your family, friends,

This strategy essentially converts tax obligations into home equity (assuming market growth in real estate values, a generally safe bet over any long-term period) that you can cash out at any time.

To calculate straight-line depreciation when you buy a building or equipment for your business, you calculate the useful life of the asset. Find the useful life of your asset, and then determine the salvage value at the end of the asset’s useful life. Subtract the salvage value from the original cost. Divide that figure by the number of years it will last. You can write off that figure each year on your taxes. The IRS publishes a

Gross income is all income from all sources, whether taxable or non-taxable, before any deductions for business expenses, or adjustments, exemptions, or other deductions.1. WIth a Series EE bond, the person has the option to include the interest every year, starting with the first year, or to wait until the bond is redeemed or stops earning interest. Once the decision is made, it cannot be changed. If she included interest from this bond, ever, then she must continue to do so. If she received interest from it in any earlier year and did not include it for that year, then she cannot include any until she redeems the bond or it stops earning interest.

By selling you current residence in retirement, you should net approximately $500,000. We advise that you purchase a new primary residence for no more than $600,000 at that time.

If you applied for a mortgage and were offered a larger sum than your house costs, or you have been paying on your house for years, you may be eligible to roll your credit card debt into your house payment, lowering your interest rates by up to 15% in some cases.