The Federal Tax Credits Blog

Posts Tagged ‘california’

Question: Can you write-off or deduct the convenience fee charged for paying property tax bills via credit card?

I live in Orange County, California. The tax assessor’s office is offering the ability to pay my property tax bill by credit card (thus earnings me miles) through a third party vendor who charges a “convenience fee” of 2.5%. If I can deduct the fee, then it is a good deal for me. However, I’m not sure if I can.

Answer: I doubt it. It’s not a tax and isn’t part of your property taxes. The county reports how much your taxes are.

Alliance California Municipal Income Fund Releases Monthly Portfolio Update

Alliance California Municipal Income Fund, Inc. today released its monthly portfolio update as of November 30, 2009.

Take Advantage of California’s $10,000 Tax Credit for Hom…

The Flow of personal loans declines 0.1 per cent in the year to October 2009.

The reduction of credit norms for unsecured loans is showing. According to statistics, flow of personal loans declined 0.1 per cent in the year up to October 2009, as against a 15 per cent rise a year ago. The Reserve bank of India’s (RBI’s) explanation of personal loans includes loans for housing, credit card outstanding, and consumer durables finance by banks, education loans and advances against fixed deposits. Over the last five years, this segment, termed as retail lending by banks, was the main growth driver for most entities.

While lower unsecured lending was part of the strategy adopted by banks following the credit crisis, the demand for housing loans dropped over the last 18 months as buyers deferred purchases due to high real estate prices and uncertainty over income.

While RBI India has not disclosed the latest numbers for credit cards and consumer durable loans, Deputy Governor Mr. Gopinath said the contraction in these segments was continued. When RBI had last released the disaggregated data, in the year up to August 2009, credit card outstanding was lower by 14.3 per cent. Similarly, consumer durables loans had declined 16.7 per cent. During the year up to August 2009, the personal loan segment had seen a 2.3 per cent rise.

According to statistics published in the RBI Bulletin, at the end of October, the credit card base had dropped 21 per cent to 21.1 million, as against 26.7 million a year ago. The outstanding had declined by 12.13 per cent to Rs 5,660 crore at the end of October 2009, from 6,442 crore a year ago.

In the year to October, the overall bank loan growth slowed to 9.9 per cent from 29.4 per cent in the previous year, when demand had peaked as the credit crisis intensified. Gopinath said that credit flow (y-o-y) to agriculture grew 19.9 per cent (23.4 per cent during the year ended October 2008), followed by industry (14.8 per cent as against 37.4 per cent) and services sector (6.3 per cent as against 35.5 per cent).

But two sectors on which RBI maintains a close vigil were not as severely impacted by the overall credit slowdown. Loans to real estate and non-banking finance companies continued to record a high growth of 21.2 per cent (44.2 per cent in October 2008) and 20.8 per cent (60.5 per cent), respectively,

Indian companies had funded a large part of their investment in the on-going long capital expenditure cycle from retained earnings. RBI data showed that during the year ended October 2009, of the incremental non-food credit, 61.2 per cent was absorbed by industry, while 15.8 per cent went to the services sector (compared with 28.4 per cent a year ago).

There was a 0.2 per cent decline in incremental flow towards personal loans as banks were culling credit cards and stopped financing consumer durables.

Within industry, a bulk of incremental credit was absorbed by infrastructure (70.6 per cent), basic metal and metal products (16.9 per cent), textiles (4.1 per cent) and construction (2.9 per cent). The shares of infrastructure, basic metal and metal products, beverages and tobacco and paper and paper products in total incremental credit to industry increased in October 2009 from its level a year ago.

Bad year for biofuel ends on a dour note

An alternative fuel for diesel engines is off to a shaky start this year though it emits fewer pollutants and cuts down on petroleum use because it’s made from environmentally friendly waste and vegetable oil. A federal tax credit that provided makers of… Biofuel – Alternative fuel – Vegetable fats and oils – Diesel engine – Energy

Rep. Welch calls for extension of First-time Homebuyer Tax Credit

Regardless if you already own a home or are looking to make a purchase, the timing of your VA loan is critical. Let’s examine WHEN you need to go to your local bank and apply for financing.

60 days is a good rule of thumb.

In today’s market, closing on a VA mortgage will take somewhere in the neighborhood of 45 to 60 days. While it IS possible to make a closing in 45 days or less, I always suggest to err on the side of caution. Appraisal issues, termites, and slow insurance companies can add to your delay. By staying a step ahead and planning for the worst, you’ll be stress free and sleep soundly.

If you are selling your home AND buying another home

I suggest applying for financing when YOUR home goes under contract. This means you have a rock solid buyer and have collected a cash deposit. With your property under contract and knowledge that your financing will take 60 days, this is now the perfect time to start shopping for your next home. In today’s target rich environment (and by that I mean the market is flooded with homes for sale) you should have no problem finding your next home.

Nobody wants to move twice

When you put your home up for sale, you may find a buyer that wants to close quickly. This could be a problem if you still have not found your NEXT home or the buyer wants to close in less than 60 days. (Remember you need 60 days for YOUR financing.) If this is the case, I suggest you put into your sales contract the right to lease back your home AFTER it sells. This allows you to finalize the transaction but still remain in the home.

Putting your next home under contract

After you locate your new home, try to negotiate for the longest possible close date. This is a DELICATE process of give and take. Make sure you don’t give the seller the impression that you can’t close or that you aren’t serious. Show the seller your VA Loan pre-approval to inspire confidence. After you have the set closing date, say it’s April 1st, 2009, make your contract read, “closing to commence on or before April 1st, 2009.” That way you have the OPTION to close any time up until the final day of April 1st, 2009. I would also suggest putting into the contract the right to extend the contract should you need more time. You may need to offer the seller some cash for the extension rights, but it’s definitely worth having.

In a nutshell- get your VA loan financing started and plan on closing in 60 days. Make all your other arrangements around this time frame and you’ll enjoy a seamless hassle-free closing.

Waterloo Region Event Calendar

Here is a list of things to see and do in the region.

The 1031 exchange is a great instrument for property owners who wish to defer their capital gains tax. However, not all states treat 1031 exchanges equally. California regulations stipulate that any appreciation in property value accrued in California is subject to their state taxes, regardless of whether or not that property was exchanged for one in another state before its sale. This means that CA property owners cannot escape CA state taxes, even if they exchange their property for one in another state.

Most states conform to federal income tax treatment of like kind (1031) exchanges, where all capital gains taxes are deferred until the properties eventual sale. This is generally interpreted to mean that one is only subject to taxes of the state where the property is sold, discounting the state taxes of any state where the property was exchanged from. Meaning that if I owned a property in NV, exchanged it for one in ID and subsequently sold it, I would only be responsible for federal and ID taxes, not those from NV.

California is a notable exception to this. It employs a “claw-back” provision, entitling the state to tax any gain on property that occurs in California, regardless of where the property is eventually sold.

For example:

Say Mr. Newcombe bought a property in CA for $100. After appreciating to $200, he exchanges it for one in ID. While in ID the property further appreciates to $400. Feeling he has had enough of owning property, he sells it for $400, showing a total capital gain of $300. Mr. Newcombe would not only be liable for $300 of capital gains taxes in ID, but $100 of capital gains taxes in CA as well.

Note: The reciprocal of this situation does not come into effect. If Mr. Newcombe owned property in ID and exchanged for property in CA, he would only be subject to CA state taxes, not those of ID.

From the above example it is clear that owning property in California and exchanging it for property in another state leaves one open to double taxation. There is no way to avoid this situation unless one stays out of CA entirely or performs the final sale there. Being taxed in CA would of course be undesirable because it has some of the highest income tax rates, 9.55% and 10.55% for earnings over $47,055 and $1,000,000 respectively.

The claw-back provision really hurts people when they try to exchange out of California’s stringent tax system into a friendlier one such as Texas, which has no income tax. In situations such as this, the “claw-back” provision acts like a hand reaching out of the grave to grab and tax people one last time. Needless to say, before making an investment in CA, ensure it will be worth the high amount of taxes you will eventually pay for it.

Home Sales Surge in Markets across the Country

RISMEDIA, December 28, 2009—(MCT)—November 2009 was a positive month for the real estate industry as home sales surged in a majority of markets across the country. Spurred by low prices and the extended and expanded home buyer tax credit, home sales were up in Las Vegas, Nevada; Ohio, the Midwest; …

California “New Home” Buyer Tax Credit