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REAL ESTATE TAX ARTICLES

Lose Vacant Lot if Don't Pay Property Taxes or HOA Fees

By Christopher Combs | October 23, 2017

Lose Vacant Lot if Don’t Pay Property Taxes or HOA Fees   Question: Twenty years ago my husband and I purchased a lot in northern Arizona. Although there were promises by the developer about development of the entire area, no development has occurred, and no development is anticipated. Every year we pay the property taxes and property management fees related to the development. We are retired, and want to reduce our expenses. Is there anything that we can do with the lot that would not harm our credit rating?   Answer: If you fail to pay the property taxes you…

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Adverse possession won't help man keep building

By Christopher Combs | July 30, 2017

Adverse possession won’t help man keep building   Question:  I recently read in the newspaper about a gentleman who had owned a building for many years in a Maricopa County “island” near Tempe.  The gentleman lost the building because he technically never had title to the land under the building.  Didn’t the gentleman acquire title to the land under the building by adverse possession against Maricopa County?  If not, would there have been a different result if he had paid property taxes for all of those years?   Answer:  First, the law of adverse possession generally does not apply to…

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Lower Taxes If Senior Citizen Owns the Home

By Christopher Combs | June 11, 2017

Lower Taxes If Senior Citizen Owns Home   Question: My husband and I purchased a home in Surprise from a senior citizen who was moving to an assisted living facility. During the escrow period we saw the amount of the property taxes on our home. This year we were surprised to see a significant increase in our property taxes although home values in the Surprise area have been relatively stable. When we complained to the County Assessor’s office, they said that the increase in property taxes was because a senior citizen no longer owned the home. Is that correct?  …

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Avoiding Capital Gains Tax on Stock Profits Used to Buy Home

By Christopher Combs | March 15, 2017

Avoiding Capital Gains Tax on Stock Profits Used to Buy Home   Question: We have made a significant amount of money in the stock market. We would like to “cash out” our investments in the stock market and use this money to buy a second home in Flagstaff. If we use the money from the sale of our investments in the stock market to buy this second home will we have to pay tax on the capital gains that we have made on our investments in the stock market? In other words, can we do a “1031 tax-free exchange” of our…

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Mortgage Debt Forgiveness Law Expired in 2016

By Christopher Combs | January 18, 2017

Mortgage Debt Forgiveness Law Expired in 2016   Question: Last summer we did a short sale of our home in Peoria.  Our lender agreed to the short sale and reduced the amount of the mortgage loan by $100,000 in order to close the sale of our home.  Although we never thought of any income tax consequences, our accountant said that we may have income tax liability for this debt forgiveness of $100,000.  Is that possible?   Answer: The general rule is that any debt forgiveness by a lender has income tax liability to the borrower.  In light of the numerous foreclosures…

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Converting Rental Property to Principal Residence

By Christopher Combs | June 6, 2016

Converting Rental Property to Principal Residence   Question: In a recent article you said that IRS income tax law was changed to limit the tax benefits when the owner of a rental home moves into that rental home–which then becomes the owner’s “principal residence.” My husband and I are considering converting rental property to our personal residence. We have owned a rental home in Paradise Valley, Arizona for eight years. The appreciation on that home is approximately $500,000. We are planning on retiring to Utah, but don’t want to pay tax on this $500,000 in appreciation. We are willing to move into…

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Tax Exclusion Also Available for Family Revocable Living Trust

By Christopher Combs | February 22, 2016

 Tax Exclusion also Available for Family Revocable Living Trust   Question: My wife and I have owned our Flagstaff home for more than twenty years. Several years ago we transferred the home to our family revocable living trust. We are co-trustees of this revocable living trust. If we sell our Flagstaff home we should have a capital gain of at least $350,000. Will we still qualify for the $500,000 exclusion from capital gains on the sale of our home, even though the home has been transferred to our revocable living trust?   Answer: Yes. Even though the home is titled now…

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No Income Tax on Short Sale or Foreclosure — For Now

By Christopher Combs | January 20, 2016

 No Income Tax on Short Sale or Foreclosure — For Now   Question: We bought our Mesa home ten years ago. The purchase price was $320,000. Our mortgage was $300,000, interest only, payments for ten years, and then amortized over the next fifteen years. Our home is only worth $240,000 today. Although we have been able to make the mortgage payments for the last ten years, our new mortgage payments will now almost double. We cannot afford to make these new mortgage payments. Our real estate agent is trying to help us with a short sale but, if we can’t do…

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