Improper property taxes?
Calls Grow to Cap Property Taxes – It’s been more than 30 years since the infamous Proposition 13 was passed in California in 1978 to try to hold the line on property tax hikes. It’s about time that more people in other states start fighting back against this immoral tax rather than just bending over and allowing their rulers to continue the fiscal raping of home owners.
While I despise pretty much all taxes, since they are really nothing more than methods for politicians to confiscate money from the public in order to spend on their own pet projects, property taxes are the least voluntary kind there is because you do absolutely nothing and are hit with them. Most taxes are generated by doing things, such as earning income, buying or selling things. Property taxes are new annual levies assessed on assets that you already own, and as many people unfortunately discover, the penalty for not paying them is the loss of the property itself. Older folks who happen to live in appreciating areas are forced to sell their homes because they can’t afford to pay the annual “rent“ on their own property. That is immoral and completely counter to the concept of private property ownership.
The new tax law changes
As always, our rulers in DC have screwed up any attempt at tax simplification with yet another new law changing the rules of the game.
Here are some highlights of the new tax related changes courtesy of one of my favorite reference sources, TaxCoach Software:
On Wednesday, July 30, President Bush signed the "Housing and Economic Recovery Act of 2008." While the bill focuses on protecting lenders and preventing foreclosures, there are three other tax provisions worth noting.
1. The 2008 Housing Act gives “first-time homebuyers” (those who have not owned a primary residence for three years) a tax “credit” equal to 10% of the new home’s purchase price, up to $7,500 ($3,750 for married couples filing separately). This “credit” is available for purchases from April 9, 2008 through June 30, 2009. But, if you take the credit, you have to pay it back, in equal installments, over the next 15 years. So it’s really just an interest-free loan, not a true tax credit. It phases out for incomes between $75,000 and $95,000 ($150,000 and $170,000 for joint filers).
2. The law creates a temporary deduction, for 2008 only, for property taxes for non-itemizers. The deduction is limited to $500 ($1,000 for married couples filing jointly).
3. The law eliminates tax breaks on the sale of your principal residence for periods you don't use it as your principal residence. Under old law, you could take a rental property or vacation home, use it for at least two years as your primary residence (five years if you acquired it in a Section 1031 exchange), then sell it and exclude up to $250,000 of gain from your income ($500,000 for married couples filing jointly). This held true even if most of the gain occurred while you were renting the property or using it as a vacation home. The new law taxes you on any gain after 2008 attributable to periods you don't use it as your primary residence. (There’s no need to appraise the property to determine interim value; the new law determines excluded appreciation on a pro-rata basis, according to how long you own it.)
Tax Relief, Sans Itemizing - Possible limited deduction for property taxes paid by non-itemizers.