IMPORTANT: Read again the above. It is possible to use your $1,500,000 (2005) lifetime exemption during life. You do not have to wait till you die. It may be very beneficial to take a highly appreciating asset out or your estate well before anticipated death. (However, tax is only offset for the first 1,011,000)
One other item. When you gift something, the asset received will normally carry the same basis as it had from the giftor. Sometimes it is not a good idea to gift. For example, if you were 75 years of age and in ill health, gifting an asset worth $10,000 with a $2,000 basis means the recipient, if they sold the asset then, would have long term capital gains on the $8,000 of profit. However, if you died and they received it as a beneficiary, the basis would have been stepped up to the value at the date of death. They would incur NO tax upon a sale at that price. The issue, is of course, timing and when you will die. But it's what you are supposed to think about in order to do good estate planning.
Lastly, there are a couple exceptions to the general rules. If, say, a grandparent pays your hospital expenses of $25,000 DIRECTLY to the hospital, there is not gift per se. If a grandparent pays your son's tuition directly to the University, there is not a gift, per se. Obviously, these are just the main elements and you need to review each tax section carefully to assure that you are not violating some section.
12. Real Estate losses- Most losses on real estate or other activities where there is not active involvement are not (usually) currently deductible against earned income. However, if an investor has an AGI under $100,000 and can be shown to have some form of involvement in the management of a property, then up to $25,000 of losses may be offset against the AGI. The allowance is only available on real estate and is phased out between AGI between $100,000 and $150,000.
Current law also says that passive losses may be deducted directly against ordinary income as long as taxpayers spend at least 50% of their personal services in real estate trades or businesses and spend more than 750 hours during the year performing real property related personal services.
Tricky area- check with a professional
13. $125,000 exemption on home sale- Gone under new tax law. See Number 1
14. new minimum required retirement distribution rules.
15. IRA's: IRA Highlights
16. Points on a loan. If the loan is for the purchase of a home are deductible in the year of sale if:
1. The loan was for a purchase or improvement of and secured by your principal residence
2. The charging of points in your area is a normal practice
3. The amount is computed as a percentage of the stated principal amount of the mortgage.
4. The amount must be paid directly by you and not from the mortgage funds borrowed.
If these requirements are not met, the points are deducted rateably over the period of the loan. If the property is sold before the mortgage is paid off, the remaining points are a deduction that year.
17. Tax Credits
Tax Bracket | Maximum Tax credit per year | Investment required |
15% | 3,750 | 37,000 |
25 | 6,250 | 62,000 |
28 | 7,000 | 70,000 |
33 | 8,250 | 82,000 |
35 | 8,750 | 87,000 |
18. Basis upon gift and death mWww Homeequityloanmorgages Tag Guru Home Equity Loan Morgages 求tax planning的英文文章（最好核心杂志） - 【会计业务综合】 - 财务经理人论坛 - 中国最具影响力的财务经理交流社区！h i Equity cWww Homeequityloanmorgages Tag Guru Home Equity Loan Morgages 求tax planning的英文文章（最好核心杂志） - 【会计业务综合】 - 财务经理人论坛 - 中国最具影响力的财务经理交流社区！d t 1328144966375_R Home Home Equity Loan Morgages