I've heard of the gift tax before but never really looked into until recently. Did you know you can gift your children up to $10,000 without paying a gift tax on that money? In fact you can gift it to them up 3, 4 or 6 times a year. If that isn't enough, your spouse can do the same thing! WOW! Now go talk to your CPA!
What about Capital gains? How many times have you been asked about this? What answer to you usually give? Do you just say - Ask your CPA? that's a great and correct response in my book, but offering some knowledge first certainly isn't harmful.
The "capital gain" is the difference between the sales price and the basis of the property, after making appropriate adjustments for closing costs, capital improvements and allowable depreciation. A capital gain is considered a long-term gain if the asset is owned for m ore than 12 months.
The Taxpayer Relief Act of 1997 provides for a capital gains rate of 20% for taxpayers in upper brackets and 10% for those in lower brackets. If you hold the property for more that 5 years you may qualify for the lower rate of 18%
What are COMPS anyway?
Yes, they are in fact recently sold or leased properties that are similar to a particular property being questioned. Here's MY best explanation: The more recent the sale and the fewer dissimilarities, the better the comparable - period! Adjustment can and should be made for location but not 7 neighborhoods away! Often you will find what I refer to as "convenient comps." These are the sales that can be used, but shouldn't! Some neighborhoods have a wide range from 220k to say 320k for similar properties! how do you decide what to list your home at?
I prouldly serve all of West & Northwest Houston
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