ARTICLES & NEWS

REAL ESTATE TAX ARTICLES

No Tax on Sale of Principal Residence

By Christopher Combs | December 28, 2015

 No Tax on Sale of Principal Residence   Question: We have lived in our Phoenix home for almost 20 years.  For many years we rented a home that we own in Surprise to a nice elderly couple.  The husband has now died and the wife is moving in with one of her children.  We want to sell this Surprise home rather than find a new tenant because we do not want to be property managers!  If we sell this Surprise home, however, our accountant says that, because of appreciation in the value of the home and the recapture of depreciation…

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Mortgage Debt Relief Act Extended Through December 31, 2016

By Christopher Combs | December 23, 2015

 Mortgage Debt Relief Act Extended Again   The Mortgage Debt Relief Act of 2007 basically provided that no income tax would accrue for the debt relief given to a borrower after a foreclosure or a short sale of a mortgage used to purchase a home or to make improvements on a home. The Act expired December 31, 2014.   Legislation was passed this week to extend the Act again, this time until December 31, 2016. In other words, any deficiency as discussed above will not be taxable income to a borrower if the foreclosure or short sale occurs prior to…

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Seller Liable for Taxes on Capital Gains from Stock Sale

By Christopher Combs | August 23, 2015

  Question: We have made a significant amount of money since we began investing in the stock market in the early 1980’s. We are concerned about the recent volatility of the stock market, however, and we would like to “cash out” our investments at their current high price. We would then use the sale proceeds to buy a small parcel of land in Payson to build our retirement home. Would this transaction be a tax-free exchange, or would we have to pay income tax on the capital gains that we have made on our investments in the stock market?  …

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Prepayment Penalty Often Enforceable

By Christopher Combs | September 28, 2014

  Question:  When we refinanced the $220,000 mortgage loan on our Phoenix home, the mortgage lender charged a 3 percent prepayment penalty of $6,600 to pay off this mortgage loan.  Can a lender charge a prepayment penalty without showing that they lost money or some other reason?  Are we entitled to an income tax deduction of $6,600 for this penalty?   Answer:  The amount of any prepayment penalty is established by a clause in the loan documentation (the “note”), and is generally enforceable.  Most mortgage lenders will enforce a prepayment penalty clause when a borrower refinances the mortgage loan with…

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Judgments Won't Scuttle Loan in Arizona

By Christopher Combs | September 7, 2014

  Question: I have lived in my home in Chandler for more than 10 years and have established good credit. There is another individual in Apache Junction with my exact same name (even the same middle initial) who has caused me problems because he has very bad credit, including several judgments by credit-card companies. I want to purchase a newer home in Chandler, and my mortgage broker said that the credit problems of this other individual with my same name should not be a problem. In other words, I will not have to prove that I am not the individual…

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Exchange Lets You buy, Sell Tax-Free

By Christopher Combs | September 2, 2014

  Question: Our family has owned 40 acres of farmland in Buckeye since the 1940s. The market for farmland in Buckeye is improving and we should make a substantial profit if we sell. We have been told by our CPA that we should sell this land and then buy shopping-center land for long-term development near the football stadium in Glendale. We are concerned, however, about paying a large amount of taxes if we use the money. We also have been told by our CPA that we can sell the Buckeye land and buy the shopping center land in Glendale without…

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Can I swap Pinetop Land for FH Home?

By Christopher Combs | June 29, 2014

  Question:  We originally intended to build a home on 5 acres of vacant land we bought in Pinetop several years ago.  We now want to be closer to our elderly parents who live in Fountain Hills, and we are thinking about buying a home in Fountain Hills.  If we trade the Pinetop land for a home in Fountain Hills will we have to pay capital gains taxes on the profit from the sale of the Pinetop land?  In other words, can we do a 1031 tax-deferred exchange by exchanging the 5 acres of vacant land for a home already…

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Inheritor of Home Owes no Estate Tax

By Christopher Combs | June 8, 2014

  Question:  You frequently mention the benefits of recording a beneficiary deed now for simple inheritance of a home or other real estate.  I know that a beneficiary deed is not effective until death and can be revoked at any time prior to death.  For example, if after recording a beneficiary deed I get angry with my child, I can record a notice of revocation.  I still, however, have one question.  If I record a beneficiary deed of my Sun City home to my daughter, and she inherits my home through the beneficiary deed after I die, will she have…

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