Tax Law Changes That Impact Homeowners2

By: Tom Wheelwright
What other real estate related benefits are included in the new tax law?

Mortgage Insurance Deduction. The new law extends the mortgage insurance deduction to amounts paid or accrued after December 31, 2007, but only with respect to contracts entered into after December 31, 2006, or prior to January 1, 2011.

Survivor's Home Sale Exclusion The new law extends the time in which a surviving spouse may use the married filing joint $500,000 home sale gain exclusion before being treated as a single individual entitled only to a $250,000 exclusion. Before the new tax law, a surviving spouse was could use the $500,000 exclusion only to the extent he or she could file a joint return with the deceased spouse's estate, which is only in the tax year the spouse dies.

Starting January 1, 2008, the surviving spouse can use the $500,000 gain exclusion up to two years following the date of death of the spouse.

What's the catch? As you have read, this new tax law contains major tax reductions, which are offset by several tax increases included in the new law. These increases include:

An increase in the failure to file penalty for partnerships from $50 to $85 per partner per month, up to 12 months

A new failure to file penalty for S corporations of $85 per S shareholder per month, up to 12 months

Increases in corporate estimated tax payments for corporations with $1 billion-plus assets, by 1.5 percent to 117.25 percent for payments due in July, August and September 2012.

Tom Wheelwright is not only the founder and CEO of Provision, but he is the creative force behind Provision Wealth Strategists. In addition to his management responsibilities, Tom likes to coach clients on wealth, business, and tax strategies. Along with his frequent seminars on these strategies, Tom is an adjunct professor in the Masters of Tax program at Arizona State University. For more information, visit http://www.provisionwealth.com.com .

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