What is an impound account?
An impound account is a trust account established by the lender to hold money to pay for real estate taxes, and mortgage and homeowners insurance premiums as they are received each month.
What are the rules for mortgage credit certificates?
To qualify for a mortgage credit certificate, both your income and the purchase price of the home must fall within established city guidelines. These guidelines vary by city but generally only permit people who earn an average income or slightly higher than average income.
A limited number of cities have authorized the MCC program. Contact your municipal housing department for more information.
1031 exchanges are specifically structured transactions that join together the sale of an old property and the purchase of a new property for the purpose of deferring taxes.
Exchanges are primarily used for buying and selling investment real estate, but they can also be used for personal property that is used in a business. Examples of qualifying property include bare land, rental property, commercial buildings and homes other than your primary residence.
A 1031 exchange can defer the capital gain taxes that are due when you sell property that has increased in value or been depreciated for tax purposes. These federal and state capital gain taxes can be costly. The rules require that the property must be of ?like kind? however the like kind provision for Real property is quite broad. It includes Land, Rental, and Business property. Any of which, can be exchanged for the other.
The rules also require that the "Exchanger" use a safe harbor to hold the proceeds while the exchange was in progress, and spells out what those safe harbors are.
We are very experienced at shepherding sellers and buyers through the 1031 exchange process. Let us know if we can help you with yours.
Here are a few resources for your 1031 exchange process:
First American Exchange of Skagit County
Mount Vernon, WA
The Internal Revenue Service publishes a number of real estate publications. They are listed by number:
- 521 "Moving Expenses"
- 523 "Selling Your Home"
- 527 "Residential Rental Property"
- 534 "Depreciation"
- 541 "Tax Information on Partnerships"
- 551 " Basis of Assets"
- 555 "Federal Tax Information on Community Property"
- 561 "Determining the Value of Donated Property"
- 590 "Individual Retirement Arrangements"
- 908 "Bankruptcy and Other Debt Cancellation"
- 936 "Home Mortgage Interest Deduction"
Order by calling 1-800-TAX-FORM
Reach the IRS at 1-800-TAX-1040
How do I reach the IRS?
To reach the Internal Revenue Service, call (800) TAX-1040
How do I save on taxes?
Here are some ways to save money on taxes:
- Mortgage interest on loans up to $1 million is completely deductible for the year in which you pay it to buy, build or improve your principal residence plus a second home.
- Points, or loan origination fees, also are deductible no matter who pays them, the buyer or the seller.
- Most homeowners, except the wealthy and those living in high-priced markets, no longer need to worry about capital gains taxes. The exemption has been raised to $500,000 for married couples and $250,000 for single owners. It can be taken every two years. Homeowners should always keep all receipts of permanent home improvements and of mortgage closing costs. If you do have to pay capital gains taxes, these costs can be added to your adjusted cost basis. Consult your tax adviser for more information.
- "Tax Information for First-Time Homeowners," IRS Publication 530,
- "Selling Your Home," IRS Publication 523.
Call (800) TAX-FORM to order.