Outraged Over Property Taxes

Originally posted 2009-03-23 09:20:57. Republished by Blog Post Promoter

Why isn’t the Indiana property tax assessment making front page news?  I am sure it is making front page news with all the citizens of Porter County who on March 27 is going to have to pay higher property taxes.

I am appalled that the local paper has given little attention to the plight of Porter County’s property tax over-assessment.

Is it that the County Assessor John Scott does not see a problem with the higher taxes?

The assessor simply said, “let the appeal process determine if the taxes are too high.”

Why is it that the Local Government Finance Office care more about the citizens outrage over property taxes than the assessor?

Even local real estate brokers have had increase calls from outraged citizens about recent market values.  

Business owners believe that property taxes have went up 100 percent. 

Do not let yourself be taxed out of your home or business without a fight.  The assessor is not going to fight for you.  You can file an appeal.  You have until April 13 to file that appeal.  Visit www.in.gov/dlgf to get the forms needed to file that appeal.

I have include some helpful video to help with the process, as well.  See the links below:

Good Indication That You Need to File a Property Tax Appeal

Property Tax Appeal Review Video 1 of Section 1

Evaluation of Property Tax Appeal Findings

Indiana Property Tax Appeal (Part 2)

Indiana Property Tax Appeal

What is Assessed Value and How Does it Influenced My Property Taxes

Lack of Property Taxes Tops News in Northwest Indiana

Seniors Deadline Quickly Approaching

Effective Anti-Recession Tips for Your Taxes

Tips for Effective Tax and Personal Anti-Recession Steps

Ask an economist to define recession for you and chances are, they’ll tell you that it is a state of the economy where it declines for at least 6 months.  But that’s just a pretty, picture-book definition.  Recession can affect not just cities and countries, it can also affect individuals and families on a more personal level.  To help you implement tax and personal anti-recession steps, here are things you can do:

Start saving.  Now.

If you have a nest egg stashed somewhere, good for you.  Boost it with more savings.  If you don’t, it’s time to start immediately.  Implement tax and personal savings steps in order to fight the effects of recession.

Cut back on spending immediately.

If you think you need everything you buy, gather your last few weeks’ worth of receipts and rate each item according to necessity.  Chances are, there are a few things there that you’ll realize now that you didn’t really have to buy.

If you see the same pattern in most of your receipts, that’s a sign that you ought to cut back on your expenses and seriously implement a budget or spending plan.  You could, for example, cancel gym memberships and take up running or home exercises instead, buy items on sale instead of at regular prices and put off any large purchases – cars, TVs, video equipment, furniture, etc.

Take big chunks out of your debt.

Your debt can get you down and it will not hesitate to do the same thing to your credit score.  During a recession, a bad credit rating is just not something you want to have.  If you have debts in some form (loans, credit cards, mortgage, etc.), try to pay off as much of your debt as possible.  The earlier you do this, the better it will be for your finances.

Clearing your debts is an excellent anti-recession step because it helps save you money in terms of interest.  It will also give you peace of mind and the personal satisfaction of being in charge.

Consider investing?  Ask a professional.

An experienced financial adviser can help you understand the kind of options you have, given your own resources and the type of risks you are willing to take.  Recession can make investing much more of a challenge, particularly for the uninitiated.  That is why you’ll need all the help you can get in order to find the best places where to put your money in.

Know your deductibles.

Review your tax code for the types of items that you can include in your deductibles.  Remember that not all expenses can be used as deductions.  Only if you can prove them ‘ordinary and necessary’ will the tax man consider them.

Keep all receipts for deductions.

Audit or no audit, it pays to have documents that support your tax claims, especially if they refer to deductions.  Get organized regarding your files, particularly those that pertain to your business or work.  Keep things where you can readily access them and use for reference later.

Consider leasing your business vehicle.

If you want to give yourself better tax performance, a good anti-recession tip to follow is to lease that car of yours.  This will help get you better deductions compared to what you’ll receive if you purchased the vehicle.

When in doubt, always refer to a professional.

The personal anti-recession tips you obtain will usually work seamlessly but some steps involving taxes might have certain limitations.  Before implementing these steps, you might want to consult a basic taxation guide or see an accountant or bookkeeper.  They can guide you on what you can and should do based on your own unique circumstances.

Related articles

• Simple Ways to Recession Proof Your Home (taylorbrownrealestatetalks.com)
• How to Write Off Sales Taxes (turbotax.intuit.com)
• Four Tax Tips to Reduce Your 2006 Taxes (turbotax.intuit.com)
• Video: Federal Tax Deductions for Home Renovation (turbotax.intuit.com)

Real Estate Investor, Beware

Originally posted 2009-01-01 22:53:35. Republished by Blog Post Promoter

The IRS made changes to the tax that will affect 2007 tax returns if the investor claims a loss. In addition, just reporting a loss may cause your taxes to be audited.

The new law has to do with the real estate investor classification. The investor can be classified as a real estate professional. Under the new law, the investor qualifies as a professional, regardless if licensed real estate agent or broker by working at least 750 hours on real estate activities. The IRS considers real estate activities to be renting, leasing, converting, operating, developing, redeveloping, managing, constructing, and acquiring of real estate.

In addition, as a real estate investor you are limited on your deduction to your passive income in the amount of $25,000. That amount decreases as your passive income increases and tops $100,000. Still yet, the eligibility for the deduction disappears as your income goes over $150,000.

The reason this change came about was due to the increase in number of investors during the market “boom”.

The ramification of these modifications to the tax law hit the investor who works a full time W2 job the hardest. Remember, the losses can only be taken on passive income.

However, under that same law there are two classifications for passive losses. There is material participating passive loss and passive loss.

The material participating rule requires that the investor work on each property for 500 hours. The work can be any or all the qualifying activities listed above. The investor can also opt to combine all properties under one 500 hour block, but the election must be made at the beginning of the tax year.

Another tax law change is that in the designation of a limited partnership’s interest. The properties owned and/or held under this entity is no longer considered material participating, so are not eligible for the deduction if there is a loss.

It is important to note that no longer can research of potential properties that the investor is considering adding to his or her portfolio a valid passive activity.

Keeping accurate records is crucial. The investor needs to keep date, time, location, and activities and in some cases it may be helpful to have photos to show evidence.

The changes mention above came out in December of 2007 and are retroactive to 2007 and may be earlier tax returns. Have your accountant review your current and previous returns to make sure you are in compliance.

Related Real Estate Investing Articles

• Help Offered for Indirect Investors With Madoff (nytimes.com)
• House Flipping Makes a Comeback (online.wsj.com)
• Homebuyer Tax Credit Provides Incentives for Buyers Says Elika Associates (prweb.com)

Lake County to Have Tax Sale

Originally posted 2009-03-21 05:48:30. Republished by Blog Post Promoter

If you are counting on the amnesty bill from the state of Indiana to give you more time to pay your property tax you may be out of luck.  The bill that was developed to help homeowners is stalled in the state General Assembly.    As a result of this stall, Lake County Treasurer John Petalas has scheduled the first property tax sale in two years for July 9.

What does this mean?  It means that if you are behind on your property taxes like 24,000 homeowners are in Lake County you may need to work on getting the money together to pay your back property taxes before then.

Remember, even if your mortgage payment is current, but your property taxes are not you can still lose your home.    The property taxes supersedes the mortgage payment, so most mortgage companies make sure they are paid.  However, if the property is an investment property the latter does not hold true, so if you can pay your property tax before July 9, 2009 do so or you may lose your home to a tax sale.

Tax Time is Here

Originally posted 2009-02-19 08:00:13. Republished by Blog Post Promoter

Tax time is almost here, and I thought some helpful information was needed to help with tax preparation.  Recently, I found an article on The 11 Most Overlooked Tax Deductions.

In these trying times, I do not think any of us want to overlook anything dealing with money so enjoy the article by click the link above.  I do not want my readers to “short change themselves” by not realizing all of their deductions.  According to the article, in 2008 if you turn 65 “you deserve a bigger standard deductions than younger folks”.

The article goes on to state that overlooking these eleven tax deductions may lead to taxpayers paying too much taxes.  The eleven deductions are:

• state sales taxes
• reinvested dividends
• out of pocket charitable contributions
• student loan interest paid by mom & dad
• moving expense to take your first job
• military reservists travel expense
• child care credit
• estate tax on income in respect of a descendent
• state tax paid last spring
• refinancing pints
• jury pay paid to employer

In addition, the article continues on to state four more often missed deductions that will affect your bottom line.

Those deductions are:

• recovery rebate credit
• double hope and lifetime learning credits (big one, see article)
• <a href=”www.taylorbrownrealestatetalks.com”>property taxes</a> deduction for non-itemizers (big one here in Indiana)
• casualty loss deductions for non-itemizers (big one here due to recent storms)

Over the next, couple of weeks I will give more details on the often overlook deductions that I think are heavy hitters to your bottom line, so stay tuned.

Related Articles

Tax Scams on the Rise - Tax scams are on the rise according to the IRS.  Find out which ones are more popular.

Your Bailout May Come In Through Tax Credits - There are numerous tax credits that received a face lift that may be profitable to the taxpayer.

Indiana Property Tax Appeal

Originally posted 2008-12-28 04:11:27. Republished by Blog Post Promoter

On or before May 10 of the year that you feel that you received an unfair tax assessment, you will need to file a written appeal. 

Once the assessor gets notice that a property owner would like to have their property tax re-assessment, the assessor must forward the appeal documentation to the county board of appeals.

The board shall hold a hearing or review of the petition for re-assessment no later than 180 days after the board receives the notice.  The board will mail the notice to the property ownership of the date, time, and location of the hearing on the property owner’s petition.

There will be a series of videos discussing the forms required to file the appeal, and how to fill the form out.  As an added bonus, we will discuss an appeal that was reviewed by the board.  This reviewed appeal will give you insight in to what to do or not to do to get your property re-assessed in your favor. 

To get the forms needed for filing your property tax appeal visit
for Form 130 also called Form 11 CI www.in.gov/icpr/webfile/formsdiv/21513.pdf

For Form 11 RA visit http://www.in.gov/ibtr/files/DavidandPatriciaSullivan.pdf

For Form 113 visit http://www.in.gov/icpr/webfile/formsdiv/46725.pdf

Video 1 (Indiana Property Tax Appeal)

 

Real Estate Investor Related Articles

Protecting Your Investments - This article discusses the business entities that are available that are available for investors to protect their personal assets when buying and holding properties.

 

 

Property Tax Related Articles

Indiana Property Tax Appeal (Part 2) -Filing a property tax appeal can be difficult.  This article gives links to the forms needed to file the appeal and a video tutorial on filling the forms out.

Tax Scams on the Rise

Tax season is over.   However, the IRS is warning consumers about tax scams that could cost them money well into the 2009 tax year.  Those tax scams are:

• phishing
• hiding income offshore
• filing false or misleading forms
• abuse of charitable organizations and deductions
• return preparer fraud
• frivolous arguments
• false claims for refunds and requests for abatement
• abusive retirement plans
• disguised corporate ownership
• zero wages
• misuse of trusts
• fuel tax credit scams

Most of the tax schemes mention here do not affect real estate investors, buyers, or sellers; however, there are several that do affect the individuals mention above so that is why this topic is being covered. 

Phishing is especially important because it has to do with internet tricks used by scam artists to get your most precious commodity, your identity.  Beware of any email that states it is from the IRS or your bank that ask for your personal information.  Remember, the IRS and your bank do not engage in such activity.

Another tax scam that you need to be care of is disgusing of corporate ownership.  Make sure that your ownership is clear and precise when filing your income tax returns.  Have your corporation’s article of organization reviewed by both your attorney and your tax preparer to ensure that you are filing all the appropriate documents.  You will also have to file the articles of organizations, ownership, and register agent information with the state in which your business is incorporated.  The state in which you are incorporate with will ask for updates to the latter information on an annual basis, so ensure this information is accurate and available.

For more information on tax scams, please visit www.irs.gov

Related Articles

Your Bailout May Come in Through Tax Credits - There are numerous tax credit that received a facelift that may be profitable for the taxpayers.

Tax Time is Here - Learn about tax deductions that are often overlooked.

Your Limited Liability Corporation Maybe in Jeopardy

If your limited liability corporation is owned by just you, then you may want to ensure that you filed it appropriately.     The limited liability corporation that you formed is still a good options, but as a single owner the way it was filed may cause a challenge if it was not designated at the time you filed.  Let’s examine.   There was a case that challenged the single owner LLC; the case was Littriello vs.  United States.

The primary reason that a business entity is form is to protect the owners, managers, and/or members from personal liability.  However, the business entity must be structured correctly to accomplish that goal.  Mr. Littriello did not classify his company.  For tax purposes, he needed to check a box to declare his company as an association or corporation.   As a results of Mr. Littriello not checking the appropriate box the IRS treated his company as a sole proprietorship for federal tax purposes.  This reclassification resulted in Mr. Littriello being held personal responsible for the employment taxes for the company he formed.

This is not the end of Mr. Littriello’s dilemma.  Mr. Littriello did not operate the company he had a general manager that did the daily operation of the company.  This general manager embezzled money from the company in 2000 and 2001 that created the dilemma that Mr. Littriello faced with the IRS over the employment taxes. 

The actions of Mr. Littriello’s general manager led to the court proceedings true enough, but the fact that Mr. Littriello did not classify his company as a corporation led to him being held personal responsible for the payment of the employment taxes.     Make sure that you check the appropriate box on the LLC documentation, so that you will not be held personal responsible.    The designation of the LLC is very important if you are a single member and/or manager of the LLC.  Consult an attorney or accountant to make sure that your single owned LLC is set up properly.

 

History of Limited Liability Corporation

Wyoming was the first state that created the LLC.  The LLC that Wyoming created had the corporation characteristics, but not the corporation tax structure.  Remember, a corporation’s disadvantage is double taxation.  The creation of the LLC solved that problem.

What To Look For In Income Property?

Determine If Being a Landlord Is Right For You

Once you determine that being a landlord is right for you by understanding the market, learning the climate of the rental community, learning the neighborhood or neighborhoods that the potential income property is in, and understanding your finances to include vacancy rate.  Then, the investor is ready to find an income property.

Know Your Finances

First, we will discuss understanding the investor’s finances.  The goal of the income property is to produce income.   In other words, the property must cash flow.  To determine if a property cash flows, the investor must know the property taxes, the mortgage amount, maintenance cost, insurance cost, the fair market rent, and the repairs needed to make the property livable.

The property taxes,  mortgage amount, insurance and fair market rent can make or break the income potential of a property.  How you ask? The latter items with the exception of fair market rent must be paid by the owner whether the rent is collect from the tenant or not that is why the vacancy rate must be part of the investor’s calculations in determining the income potential of a piece of property.

Let’s look at the math.

As an investor looking at the  math is just as important and in some cases more important than finding the property.

There are options that the investor must consider if he or she is financing the property.  One option that an investor may choose is a hard money lender.

In order to determine if this the right choice for the investor, I found a math calculator that will help with minimizing the risk of this type of loan.  Remember, the interest rate on this type of loan can be very high.  Let’s examine the hard money loan by click on the link. 

There is an advantage to this type of loan.  The advantage of this type of loan is that the investor can get immediate cash or access to the equity of the property.  This loan, however,  is often used if the investor needs to rehab the property after purchasing it. 

At the time of purchase of the property that needs rehabing the investor will need to determine what the after rehab value is for the property.  The reason this is important is that the hard money loan will yield 65% to 70% loan to value for the investor.  For example, let’s say the investor found a property for $35,000 and the after repair value is $90,000.  The loan amount will be $58,500, so the investor will have $23,500 for the rehab.  The available amount for the rehab needs to be determine before purchase, so that the investor can determine if the project will possibly yield the income or value that the investor is expecting after the rehab is complete.

Once the potential amount of funds for the rehab is determined the investor needs to get estimates on the rehab to determine if the amount available is enough to complete the project.

It is important to note that all of this research needs to be completed before purchase.  In an effort, to prevent the prospective property not being sold before the investor completes his or her research, the investor would need to have his or her contractors available at the time the potential property is considered for purchase. 

The contractors would give the investor a rough idea of the amount needed for the rehab.  Of course, most properties that the investor would consider will not have utilities on, so the investor needs to add an additional twenty percent to the final estimated rehab amount to cover possible unknowns.

Once the investor deems that the property is a good investment then the investor purchases the property.  However, to reduce the investor’s financial risk the investor must also determine how long the rehab will take and when the investor will realize an income if the property is an income property or buyer if it is consider a flip property.

The math consideration does not stop at determining the type of financing, the investor also needs to consider the holding cost.  The holding cost is interest, property taxes, insurance, and utilities. 

Another aspect of examining income property is making sure that that the investor is abreast of all the changes to the market, the neighborhood, and the laws. 

Changes in Laws that Affect Investors

Due to the shift of the real estate market it is more important than ever to keep abreast of changes to the financial world, the neighborhood, employment, etc.  There are several changes recently that have affected real estate investors, so it is important to be abreast of the industry.  Please read the articles below:

• Real Estate Investor, Beware
• Breaking News For Investors 
• Types of Real Estate Markets
• Investors Have Options
• Good New Investors
• Thinking of Becoming An Investor
• Great News Investors, You Can Finance 10 Properties Again

Real estate investing can be rewarding, but it is very important to exam the risk.

Get Ready to Move Out of Lake County

The recent action or inaction of Lake County’s officials caused the Governor to take controversial stand against Lake County that may cause the tax payers of Lake County to pay higher property taxes. 

Governor Mitch Daniels is quoted as saying, “the government reforms will move forward, even if it means leaving Lake County behind to face higher property taxes.”

Once again, Lake County is faced with “pulling themselves up by the boot straps” and changing their own destiny.

The officials of Lake County believe that the citizens of the county will not support Kernan-Shepard reforms.  The reforms are discuss in a recent blog at Are the Reforms Governor Daniels Proposed Going to Affect You?

I do not believe that the Lake County officials are “in touch with” the citizens of Lake County.  The citizens of Lake County do not want to pay high taxes, so it may be time to move out of Lake County.  Call Taylor-Brown Real Estate at 219 803 4489 for help with finding your new home in Porter or LaPorte Counties.

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