The Tax Preparation Blog

Archive for January, 2008

Question: Can anyone give advice on how to buy a house in Southern California (Los Angeles Area) in this crazy market?

My husband and I are trying to buy a house in Southern California. The market here is out of control…too much competition with the tax credit. We’ve put in several offers on some bank owned and short sale properties. All of which were shot down because someone outbid us by a ton of money. We’ve put in offers for up to $30,000 over asking price and still did not get it. We are getting very discouraged and are feeling like we’re not going to be able to buy a home. We’re thinking we need a new bid strategy. We have a VA loan and are willing to pay closing costs, but no money down. Any ideas what we are doing wrong?

Answer: You might try multi offers on various properties that interest you to several banks. Then once you get an acceptance or some acceptance select the one that is best for you.

The banks and lenders are currently using this method, holding all bids until they get one they like.

You might also consider looking in your local paper for “For Sale By Owners” (FSBO) a forgotten market. Your real estate agent will not help you with these type sellers because 95% of them refuse to pay a real estate commission.

I am at a loss as to why you are offering more than the sale price of the property. If the appraised value comes in at or near the asking price you would then be required to come out of pocket for the rest, thus paying more for the house than the appraised value.

If the Appraised value of the house you decide to purchase appraise at $350,000 the house is actually costing you $380,000 with the lender giving you mortgage loan of $350,000. Now add any closing cost to the extra cost you have decided to pay for your new acquisition.

Economically this does not make sense as you are placing yourself in an immediate hole. That is like a stock broker telling you that SZN stock is worth $35.00 per share. Then you in all your wisdom say, “Oh that is ok we will pay $50.00 for the stock. I don’t understand the logic.

There are several things that could happen with the way you are doing business and none are good or in your favor.

#1 Houses are still depreciating in certain areas. Now you have paid $30K more than the asking price. If for some reason the house depreciate in value you have lost all the equity from the appraised value and then for good measure you decided to add another $30K to your depreciated property.

#2 if your house do appreciate in value by 5% you are still behind the curve by $30K because you have decided to throw $30K in as a kicker so you are still losing while those that paid market value see their property appreciating in value you are still not there.

If your real estate agent is recommending this to you, perhaps you should consider getting another real estate agent.

I hope this has been of some benefit to you, good luck.

“FIGHT ON”

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Schwarzenegger to propose spending $500 million for worker training

The funding is part of a five-pronged plan aimed at helping recession-battered California. But legislative Democrats and Republicans may find some parts hard to agree on. Gov. Arnold Schwarzenegger today will lay out plans to spend $500 million on worker training in an effort to create 100,000 jobs, along with other measures to stimulate the economy, as a centerpiece of his policy agenda for his …

East Bay California – Federal New Home Buyer’s Tax Credit Program Ending Soon

Federal government stimulus funds are helping many Tennesseans cope with the recession; the estimated numbers of jobs created by stimulus funds are over 7700 and may continue to rise, particularly in light of the contracts awarded in for building and maintenance with more yet to be awarded.

The federal government has earmarked approximately 5.6 billion dollars in stimulus funds for Tennessee; many stimulus dollars have already been awarded but there are still many, many more contracts that are available for bid.

There have already been many contracts awarded in Tennessee for a variety of endeavours both for new construction and up keeping existing facilities. Many contracts have been and are waiting to be awarded for upgrading the lock system and rehabilitating some of the mechanisms and systems incorporated into them. This upgrading and upkeep is vital to the proper functioning of the lock systems as the youngest lock was completed in 1944.

There are a few contracts for projects of a medical nature that have been awarded in Tennessee as well. Almost six million dollars have been awarded to Vanderbilt University Medical Center to build a collection of centers, while the Gentry Behavioural Health Clinic will be receiving approximately 6.5 million dollars for upgrading and modernization. There was a 9.7 million dollar contract awarded to Sherrick Construction for the planning and construction of a child development center with a capacity for 200 children and a 3.7 million dollar contract awarded for repairs at Womack Army Medical Center.

There have also been a variety of other contracts awarded around the state including power plant upgrades, upgrading for the generator cooling system at the Wolf Creek Dam, and cleaning and maintenance of the navigation channel on the Tennessee Tombigbee Waterway.

If you are looking to maybe place a bid to get some federal stimulus dollars for your company then don’t delay, there are still a few contracts left to be awarded if you hurry but there isn’t much time left to make your bid.

Regardless of who contracts are actually awarded to, the 5.6 billion dollars that the federal government has set aside for Tennessee will help the entire state come through this recession in a bit better place than we would be otherwise. The circulation of more money through the pockets of the people of Tennessee is certain to help business in most every sector.

Missourian Looks Back on Top Stories in Second Half of ’09

This is the second part in a year-end review of the top stories in The Missourian in 2009. The first half ran in the Wednesday edition.

We The People Stimulus Package

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FasTracks funding gap widens

RTD now says it will cost $6.7 billion to build all of FasTracks, but without a doubling of the existing tax this year, the agency will be short about $2.5 billion in revenues needed to complete the massive transit expansion by 2017.

Denver Tax Services – Tax Problems, Wage Garnishments, Back Taxes, Tax Liens, Tax Levy & More.

Question: What is the short term capital gain on sale of property in India after budget 2008 ?

The short term capital gains tax on equity was hiked fro 10 % to 15 %. Is that 15 % applicale for sale of property also ? Or will it be treated as a part of the business income and taxed according to slabs ? Kindly clarify

Answer: The income from Short term capital gains on sale of property will be directly added to the income and will be taxed as per slab rates. No fixed rate of tax for this gains.

STATES

TAMIL NADU: Big ticket investments in container terminals Tamil Nadu has the distinction of being the only State to have three major ports — Chennai, Ennore and Tuticorin. Till now, the three did not compete with each other for cargo, but in future, things are going to be different, with …

Question: can i file 1040A if i took an early withdrawal on my 401k? if so, does it hurt me tax-wise over a 1040EZ?

the standard deduction for a 1040EZ is much bigger than for a 1040A and i have no kids or mortgage interest etc. to deduct. Is the tax table the same for 1040EZ and 1040A?

Answer: You can’t file either Form 1040-A or 1040-EZ with an early withdrawal. You must file Form 1040 and attach Form 5329.

Your tax liability is the same regardless of what form you file, assuming that you can pick and choose. In your case, you can’t pick and choose though; you MUST file Form 1040.

If this was not an early withdrawal you could file Form 1040-A or Form 1040. The tax liability would be the same either way though.

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