©oncourse learning. all rights reserved.. issues in home ownership ©oncourse learning. all rights...
Post on 03-Jan-2016
216 Views
Preview:
TRANSCRIPT
©OnCourse Learning. All Rights Reserved.
Issues in Home Ownership
©OnCourse Learning. All Rights Reserved.
Chapter 5
©OnCourse Learning. All Rights Reserved.
In This Chapter
You will be introduced to ad valorem taxes, various types of property assessments & insurance.
Property Taxes Ad valorem taxes = according to value
Source of income for local government Appropriation
Tax district appraisers all taxable property Assessment by appraisal district
Tax rate calculation Dollars per hundred Mill ( $0.001) Dollars per thousand
©OnCourse Learning. All Rights Reserved.
Expressing Property Tax Rates
©OnCourse Learning. All Rights Reserved.
Other Taxing Matters Unpaid property taxes Assessment appeal Property tax exemption Property tax variations
©OnCourse Learning. All Rights Reserved.
Special Assessments Improvement District Texas Homestead Exemption Confirmation Bond Issues Apportionment
©OnCourse Learning. All Rights Reserved.
Federal Income TaxBasis is the price originally paid for the home plus any fees paid for closing and any fee or commission paid to help find the property.
©OnCourse Learning. All Rights Reserved.
Capital Gains To calculate the gain you must take the sale
price and subtract the selling expenses; then subtract the basis to determine the gain.
Amount realized – selling price of home less sales expense.
©OnCourse Learning. All Rights Reserved.
Adjusted Sales Price
Selling price of old home
Less selling expenses
Less fix-up costs
Equals adjusted sales price
$250,000
-18,000
-7,000
$225,000
©OnCourse Learning. All Rights Reserved.
Amount Realized Determining taxable gain is to calculate the
amount realized from the sale. Selling price of the home less selling
expenses, which is the adjusted sales price. Selling expenses include brokerage
commissions, advertising, legal fees, title services, escrow or closing fees, & mortgage points paid by the seller.
©OnCourse Learning. All Rights Reserved.
Income Tax Exclusion
Sale of principal residence Married – exclude up to $500,000 gain Single – exclude up to $250,000 gain
©OnCourse Learning. All Rights Reserved.
TAXES ON SALE OF A RESIDENCE A taxpayer can exclude $250,000 of gain from the sale of
the taxpayer’s principal residence. If the taxpayer is married, there is a $500,000 exclusion
for married individuals filing jointly, if: either spouse meets the ownership test, both spouses meet the use test and the taxpayer has resided
there for at least two of the past five years, a husband and wife file a joint return in the year of sale or
exchange, and neither spouse is ineligible for exclusion by virtue of sale or
exchange of the residence within the last two years.
©OnCourse Learning. All Rights Reserved.
Calculation of Gain
©OnCourse Learning. All Rights Reserved.
Long Term Capital Gain Holding period longer than 1 year Tax rates
©OnCourse Learning. All Rights Reserved.
Other Tax Considerations
Installment Sales Property Tax and Interest Deductions Below-Market Interest
©OnCourse Learning. All Rights Reserved.
Agent’s Liability for Tax Advice A real estate practitioner must be aware of
tax laws that affect the properties the practitioner is handling. A real estate agent has a responsibility to alert clients to potential tax consequences, liabilities, and advantages whether they ask for it or not. Lastly, an agent is responsible for the quality and accuracy of tax information given out by the agent.
©OnCourse Learning. All Rights Reserved.
Property Insurance Property Damage Modern Fire Coverage
Endorsements
Public Liability Homeowner Policies
Policy Formats Properties Covered Perils Covered Tenant’s Policy Condominium Policy Loss & Liability Medical Payments
©OnCourse Learning. All Rights Reserved.
New for Old
The question is whether insurance should pay for the full cost of fixing the damage, in effect, replace “new for old,’’ or simply pay the actual cash value of the loss.
if insurance carried is 80% or more of cost to replace, the full cost of repair will be paid.
©OnCourse Learning. All Rights Reserved.
Requirements
Guaranteed Replacement Cost Flood Insurance Landlord Policies Policy Cancelation Policy Takeovers Home buyer’s insurance
©OnCourse Learning. All Rights Reserved.
CLUE Reports
Comprehensive Loss Underwriting Exchange Claims history of the property Claim history of applicant Can property be insured?
©OnCourse Learning. All Rights Reserved.
Key Terms Adjusted sales price Ad valorem taxes Appraisal Review
Board Assessed value Basis Gain
Homeowner policy Installment method Insurance premium Mill rate New for old Public liability Tax lien
©OnCourse Learning. All Rights Reserved.
top related