If you have a lot of investment properties, here is an income and estate tax strategy for you:
Move out of your primary residence and into one of your investment homes, sell off all of your other investment properties before 2010, and plan your death for December 31st, 2010.
Just joking, I won't want you to die. Just sell your houses through me.
The government has a lot of incentives available this year and a half, which will help investors with their estate tax planning strategy. Namely, those who have a lot of capital investments.
The capital gains tax is currently at 15% of net gain proceeds resulting from the sale of capital investments. However, after 2010, the 15% long term capitcal gains rate will increase to 20% as a result of the Tax Reconciliation Act signed into law by President George buth on May 17th, 2006.
To make matters better (or worse), on July 30th, 2008, President Bush signed into law the Housing and Economic Recovery Act of 2008. This was a comprehensive law to address the Subprime mortgage crisis. However, one of the provisions of this new law reduces the amount of tax exclusions one may take on the sale of a primary residence which was previously used as either a second home or rental/investment property.
Also, in 2010, the current estate tax of 45% will be repealed. This means that if you die in the year 2010, your estate will pass to your heirs 100% tax free.
Some supporting articles:
IRS Publication 950:
http://www.irs.gov/publications/p950/ar01.html
Capital gains tax in the United States:
http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States
Summary of the "Housing and Econimic Recovery Act of 2008"
http://banking.senate.gov/public/_files/HousingandEconomicRecoveryActSummary.pdf
Of course, this is just just tongue-and-cheek commentary. As such, seek tax advise from a qualified professional, such as your tax accountant or tax attorney.
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Timothy F. Lee,
BRIO Realty | MTG Finance
Office: 206.774.8639
Cell: 206.696.2664
Fax: 425.427.1734
TimothyFLee@gmail.com
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