From time to time we will provide you with some tax news which may be helpful to you!

IRS Circular 230 Disclosure

Pursuant to U.S. Treasury Department Regulations, we are now required to advise you that any federal tax advice contained in this communication, including attachments and enclosures, is not intended by the Sender, Alan Berg, CPA, to constitute a covered opinion pursuant to regulation section 10.35 or to be used for the purpose of (i)avoiding tax-related penalties under Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction and tax-related matter that is contained in this document.

First-Time Homebuyer Tax Credit 

 The housing act gives first-time home-buyers nationwide a temporary refund-able tax credit equal to 10 percent of the purchase price of a home, up to $7,500 ($3,750 for married individuals filing separately)  The credit begins to pahase out for taxpayers with adjusted gross income in excess of $75,000($150,000 in the case of a joint return).  The credit is effective for homes purchased on or after April 9, 2008, and before July 1, 2009.  Unlike other credits, however, the first-time homebuyer credit must be repaid in equal installments over 15 years, essentially making it an interest-free loan from the government for most qualifying homeowners.

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Property Tax Deduction For Non-Itemizers

Currently, only individuals who itemize deductions may deduct real property taxes imposed by state and local governments.  The new law give non-itemizers a limited deduction for state and local real property taxes by increasing the amount of their stand deduction by the lesser of: (1) The amount of real property taxes paid during the year, or (2) $500 ($1000 for a married couple filing jointly).  This temporary deduction is available only for 2008.

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Reduced Home Sale Exclusion

Gain from the sale of a principal residence home will no longer be excluded from gross income under Code Sec. 121 for periods that the home was not used as the principal residence ("non-qualifying use").  This new income includsion rule applies to home sales after December 31, 2008, and, under a generous transition rule, is based only on nonqualified use periods that begin on or after January 1, 2009.

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Thinking of Selling your Principle Residence that was once a home office or rental.

Just remember your section 1250 depreciation will most likely have to be recaptured!  Even if you qualify for the 250K/500K exclusion on your personal principle residence any depreciation allowed or allowable in the past will need to be recaptured.  The rate on this is up to 25% !

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ROTH IRAs

Generally contributions for 2008 are limited to the lesser of $5000 or your taxable compensation for the year.  If you are age 50 or older before 2009 the contribution limit is generally the lesser of $6000 or your taxable compensation for the year.  If your modified adjusted gross income is above certain limits your contribution limit will either be reduced or phased out completely.

Consider setting up a spousal IRA. Even if your spouse has zero earned income they may be able to make a contribution.

Remember contributions must be made by the due of your return not including extensions.

Tip:  Taxable Alimony is considered compensation for ROTH IRA contributions!

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