Tax Notification Scam
Don't fall for the latest email scam that tries to bait you into thinking you're due a refund from the IRS! It looks something like this:
Internal Revenue Service (IRS)
United States Department of the Treasury
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After the last annual calculations of your fiscal activity we have determined that you are eligible to receive a tax refund of $134.80.
Please submit the tax refund request and allow us 6-9 days in order to process it.
A refund can be delayed for a variety of reasons. For example submitting invalid records or applying after the deadline.
To access the form for your tax refund, click here (with a link to a bogus website that LOOKS very authentic designed to suck your personal information (social security number, credit card and your ATM Pin number right out of you!)
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Regards,
Internal Revenue Service
Document Reference: (92054568).
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This message has been scanned for viruses and dangerous content by MailScanner, and is believed to be clean.
Remember, the IRS will NEVER use email to notify you of a refund, or an audit for that matter.
Phantom Income Bll Update:
In a move to relieve some of the burden that faces homeowners filing for foreclosure, the US House of Representatives voted to remove a tax penalty known as "phantom income" tax.
Under present rules, if a lender or creditor forgives all or part of a debt due to a foreclosure or short sale , the amount forgiven is seen as income by the IRS, which is taxable. The IRS requires lenders to send a Form 1099 reporting they cancelled the debt to any homeowners that foreclose or participate in a short sale. The IRS turns around and taxes the homeowner on the "phantom income."
Another portion of the new bill would extend mortgage insurance deductibility through 2014. The current version of this bill is only effective for homeowners who bought in 2007. The guidelines on the current law for PMI deductibility will remain the same - the home must be a new purchase and the homeowner's adjusted gross income must be less than $110,000 annually to deduct the mortgage insurance premium paid.
The new bill will now move to the Senate, where a similar bill is in the works. The White House supports the bill, but wants to limit the tax relief to three years, whereas the current proposed bill would be permanent.
Another positive side of the bill is that it is retroactive to January 1, 2007. Homeowners who fell behind or have foreclosed this year will be able to avoid the phantom income tax under the bill as it currently stands. There is no proposed relief for homeowners who foreclosed in 2006 and earlier.
Understanding Property Taxes
Property tax increases are a popular method used by municipal and county governments to raise revenue, but they can also have a big impact on the local real estate market.
In most cases property taxes are levied as a percentage of a home's value, or an acceptable representation of the home's value. Governments generally assess homes at 100 per cent or less of their estimated market value in an attempt to keep taxes affordable. By this method, local real estate trends are kept at arm's length, and property owners don't have to worry as much if a neighboring home sells for $10 million. Property taxes often generate the majority of a city or county's annual operating budget for hospitals, school systems, waterworks, parks, libraries, police, and other expenses.
Some property taxes are limited to a certain cross section of homes, or homes above a certain market value, in order to protect affordable real estate. One such example of this was seen this summer 2007 in Ulster County, New York, where a proposed real estate transfer tax was only meant to apply to homes above the median sale value for the area. Values there were destined to shift as buyers searched out properties below the median price range.
Every property tax change is a new opportunity for real estate buyers. The trick is knowing what to expect from different tax strategies, and how long those effects will last.
If you havea any specific tax questions about the Myrtle Beach market, please don't hesistate to contact us. We'll be happy to answer any questions you may have.
Why Some Sellers May Get a Break From the IRS
Most people who sell their home after having owned it for at least two years don't have to pay federal taxes on their gain. A sale in less than two years after the purchase, however, often triggers some sort of tax hit. But even owners who need to sell in less than two years may qualify for special relief if they had to sell because of "unforeseen circumstances," according to a 1997 law.
The general rule is that you can exclude a gain of as much as $500,000 if filing a joint return with your spouse, or as much as $250,000 if single or filing separately, under certain circumstances. To be eligible for this full exclusion, you typically must have owned your home, and lived in it as your primary residence, for at least two of the five years prior to the sale. This rule applies only to a main residence, not a vacation home.
Even if you can't meet the two-year tests, you still may be eligible for a reduced exclusion if you had to sell because of "a change in place of employment," health reasons or "unforeseen circumstances." An IRS publication offers a general definition of unforeseen circumstances as "the occurrence of an event that you could not reasonably have anticipated before buying and occupying your main home."
Talk to your tax accountant or advisor to see whether you might qualify under the "unforeseen circumstances" ruling, or see the IRS Publication 523 for more information.
Think you might qualify for such an exception? Post your comment here and we'll try to get an answer for you.
Paying Too Much in Property Taxes?
More than half of homeowners pay too much because their property has been wrongly assessed.
Property-tax increases are based largely on rising home values, not the increase of taxes by local governments. Different formulas are used to figure property taxes, but it all depends on a home's assessed value. Some jurisdictions use a home's actual market value, while others use a percentage of a property's worth.
The National Taxpayers Union estimates that as much as 60% of taxable property in the United States is overassessed. But only half of homeowners protest their assessments. This means many may be paying more in property taxes than necessary. Many taxpayers don't fight it because they don't understand the process, or because they can't stomach doing the research and providing evidence to prove the assessment is wrong.
If you really don't have the time or desire, hire a property-tax consultant or attorney to do the work. Many of these consultants charge on a contingency basis, meaning they'll take a percentage of the tax savings if they succeed in lowering your assessment.
Mistakes happen more often than you think. Many assessors don't even come onto your property to inspect it. They simply compare a written description of your home with that of similar properties in your neighborhood. Appraisers also may use historical information that's wrong. A home's square footage, for example, might have been incorrectly calculated on original construction documents.
Here are additional tips to help you in the appeals process:
