September Newsletter

Random thoughts and useful information:

Tax talk:

Vacation/Rental Cap gains:

Changes are coming regarding capital gains treatment of Rentals and Vacation homes. Previously if you owned a second home mentioned above and moved in for 2 years to claim it as your personal residence you would qualify for tax free capital gains ($250,000 single / $500,000 for couple).

The new Housing Assistance Act of 2008 changes this by looking at the total period of ownership. Example: you bought a vacation home 10 years ago and next year you move into it and begin claiming it as your primary residence. In 10 years you sell it. The IRS will say that your residency time was 1/2 the total ownership period of 20 years, so your capital gain exclusion is 1/2 of what it would normally be.

For further info google: Housing Assistance Act of 2008 or click on the this link: CCH Tax Briefing

401k/IRA:

Congress is concerned about the retirement savings of Consumers, so be on the lookout for changes in 2009. Some possible items include:

• incentives to get more IRA contributions
• easing Curbs on Simple IRA plans
• tax breaks for small businesses that adopt Retirement plans
• Banning the 401k Debit Cards!
• increasing penalties in early cashouts of 401k/IRA's.

Have you purchased a home since 1983 and paid for an up front Mortgage insurance premium?

FHA refunds are available for consumers. To see if you are on the list of eligible people go to:

www.hud.gov and look for the section titled FHA Refunds, you simply enter your name and see if you are on the list.

Review your phone and credit card bills monthly:

It never ceases to amaze me what individuals will do to make a buck. Most recently I noticed a monthly charge on my phone bill listed as a 3rd party service. Upon a call to this so-called service I was told that someone had signed up online using my phone number and then gave me the persons "name". Turns out I had been getting billed for several months. It's a scam and the phone companies don't care. Everyone assumes that you will just glance at your bill and hop online and pay it.

Same thing happens with credit cards. You would be surprised how little charges can magically appear that the "service" provider hopes you simply overlook. Unless you catch them quickly there is not much hope for a successful resolution with your credit card company or the "service" provider.

Next month we will take a look at the state of the Markets and what's on the horizon. Until then feel free to contact me with questions or suggestions.