Alex also talks with Gerald Celente, trend forecaster, author, and CEO of The Trends Research Institute. Celente predicts economic depression, tax rebellions, and food riots. prisonplanet.tv www.trendsresearch.com

Many homeowners do not understand much about real estate taxes and for this reason can end up in the position of losing their homes. Real estate taxes or property tax is normally calculated on the land value, the location, the county laws, and other factors. Real estate taxes are utilized for the upkeep of roads and other public services like emergency services and other municipal services enjoyed by the local residents. Real estate taxes are also in one way limited to the United States alone but for almost every country worldwide as well. Other names used for real estate taxes are rates and land levies and every homeowner will have to pay them.

How Much in Real estate taxes must I pay?

Real estate taxes are assed according to the sale value of your land or home. Rates are likely to be reassessed each year and normal inflationary increases and land values mean that your real estate taxes will increase with them. There are strict laws in place to ensure that these real estate taxes are paid and if you fall behind you are likely to even lose your home. The bill of rights requires that your property tax bill shows your assessment value of the property and the percentage of the how the figure has been arrived at. Real estate taxes can change according to the local municipal needs and area upgrades that need financing so your real estate taxes can change at any time in relation to municipal budgets.

Do I benefit from Real estate taxes?

Everyone benefits from real estate taxes because this money is used to the good all of all residents. In addition to this there are certain IRS benefits for real homeowners as well. Homeowner, are entitled to deduct payments of real estate taxes that they are paying on their property if you claimed for  itemized  deductions on your tax return.  The IRS allows you to deduct real estate taxes on your main home as well as on any other homes and real estate you own. There are no also limits on the dollar amount of real estate taxes you can deduct either so this is certainly beneficial. For real estate investors with multiple properties and homes, there are also no limits on the number of these houses or properties for which deductions can be claimed for in real estate taxes.

How is Real estate Taxes paid?

When you pay monthly mortgage payment to a bank or financial institution holding your mortgage then the amount generally includes the real estate taxes that have to be paid on your property. The bank or mortgage holder pays these real estate taxes to the proper taxing county authority on their due dates. When your real estate taxes are included in your mortgage payments then you may claim an IRS deduction only in the tax year you actually pay your real estate taxes.  You will find the real estate taxes paid for the year on the statement than the bank or mortgage lender gives you on the end of the year mortgage statements.  

Buying Cheap real estate land and Homes with Tax Liens

Knowing the Ps and Qs or real estate taxes and tax lien foreclosures can make investing in real estate very lucrative. As mentioned above real estate taxes are tax deductible from the IRS no matter how many homes you own. If you have the right knowledge it is possible to purchase homes at a fraction of their prices for back real estate taxes but realtors and property investors in the know will rather prefer to keep this knowledge secret. It is possible to purchase luxury dream homes of your own or buy and sell property to make handsome returns if you know where to get your hands on this valuable information. You will find that the investment in information of this nature can also help you save money on your own property as well

 Learn More About Real Estate and Tax Lien Properties

Florida’s real estate tax laws can be tricky to understand. There are several factors which affect the size of your property tax bill, so if you’re buying property in Florida or are relocating, it’s important to understand how taxes are calculated.

Property values are in constant flux just as the real estate market is, so getting an accurate, current assessment is important. The assessed value of the property you buy may change dramatically when it changes hands, so it’s good to be aware of the factors that might influence how much tax you pay.

As well as market rates your real estate tax bill will also depend on the tax rate for different local government bodies. The property you buy will be subject to taxes from several different bodies, including county and city government, the school board, hospital district, and water district. There may be additional taxes if you live in a masterplanned community.

On the other side of the coin, homestead exemptions and the “Save our Homes” amendment help limit the amount of your property tax bill.

County Taxes

The amount you pay in county property taxes will, of course, vary depending on the value of your property. However, they’ll also vary depending on the tax rate in your county, and where in the county you live. This is because within a county, some regions are incorporated and some are unincorporated, and unincorporated regions tend to have lower property taxes. If you live in Temple Terrace, some areas of New Tampa or the City of Tampa, for example, you’ll likely be paying more in property taxes than someone living in Lutz or some portions of New Tampa, as the former locations are incorporated and the latter are not. Unincorporated areas generally are lower because they do not have “city” taxes.

Community Development District Tax

People living in a Florida masterplanned community or community development district will likely have additional taxes to pay. These extra taxes are what enable the developers of these communities to add extra amenities to enhance the lives of residents. By sharing the cost of community and land development among residents, additional facilities such as recreation centers, parks, walking trails, and sports facilities can be added.

Depending on the community, the tax may have two separate parts. One is a fixed amount that is payable for a fixed amount of time (usually no more than twenty years) – the bond portion. The second amount can vary from year to year depending on the needs and budget of the community. If you’re interested in relocating to one of these communities it’s important to find out how much residents are expected to pay each year, as the total varies widely depending on the community, the different villages within the community and the types of facilities and services the master planned community provides as a whole.

Note that the responsibility for paying these taxes is tied to the property, not to the owner. If the property changes hands, payment of community fees and taxes becomes the responsibility of the new owner. An owner does have to option to pay off the bond portion of the CDD for their property, thus reducing the amount owed yearly to only include the working capital needed to maintain the community.

Property Tax Homestead Exemption

Under the homestead exemption, all legal residents of Florida can deduct $25,000 from the assessed value of their primary residence. This essentially reduces the taxable value of the property, and reduces how much eligible Florida residents pay in property tax. Certain groups of homeowners, such as senior citizens, veterans, and the blind, may qualify for other exemptions.

The $25,000 homestead exemption is not granted automatically, however. To be eligible in any given year you must take possession of the homestead by December 31, and then apply for exemption no later than March 31 of the next year.

Since January 9, 2008, eligible Florida homeowners can gain a further $25,000 exemption under Amendment 1. This exemption is received automatically by any homeowner who applies and is approved for the original homestead exemption.

The second exemption is calculated as follows:

The first $25,000 value of the home is the original exemption.

The second $25,000 is fully taxable. This is necessary to allow Florida towns and cities where assessed property values are low to continue collecting the revenue they need to run local government.

The third $25,000 is the new Amendment 1 exemption. It is exempt from all taxes except for school tax. This allows schools to continue receiving the funding they need (if this third portion was totally exempt, schools wouldn’t receive enough funding for their schools).

 

The “Save Our Homes” Amendment

The Save our Homes (SOH) amendment prevents annual property assessments increasing more than 3% or the percentage increase in the Consumer Price Index (whichever is lower). This guarantees any homeowner who receives a homestead exemption that the assessed (taxable) value of their property will not increase more than 3% per year.

SOH protects existing Florida homeowners, but if you’re buying Florida property and you are not a Florida resident and it is not your primary residence, SOH won’t apply to your purchase. The assessed value cap is lifted automatically when the property changes hands. It is important for new home buyers to rely on the current market value and not on the previous owners tax assessment as it is likely that the home will have an artificially low assessed value, especially if it’s been owned by the same person for a number of years.

Once you buy a home, you can apply for homestead exemption, and receive automatic SOH protection once the exemption is approved for the next tax year.

What does that mean? If you buy your home prior to December 31, 2008, you will have the benefit of whatever the prior homestead status is for your bill that tax year. Once the new year begins and providing you have applied by March 31, your new Homestead exemptions will be reflected in the following November’s 2009 tax bill. Remember taxes are paid in arrears.

“Save Our Homes” Portability

Amendment 1 has also changed the way SOH works. Under Amendment 1, SOH protection now has “portability,” meaning you can transfer a portion of your SOH benefit to a new homestead, if you meet the qualifying criteria.

 

Under the old pre-Amendment 1 system, a homeowner who had lived in the same homestead for several years had a substantial property tax benefit, as their home’s assessed value was capped. However, while they would enjoy lower property taxes, they were also more or less trapped in that home, as moving to a new homestead would mean a sharp increase in property taxes (as they would not be protected by SOH).

Amendment 1 has changed that by allowing Florida homeowners who receive SOH protection to transfer that protection to a new homestead. They must, however, apply for SOH within two years of purchasing the new property to be eligible to transfer the accumulated tax benefit to the new home. For example, a homeowner who gave up their old homestead after January 1, 2007, would have to claim for their new homestead by March 3, 2008 to be eligible for SOH portability.

The protection isn’t limited only to people who purchase new property. A Florida homeowner with multiple properties can transfer homestead status and SOH protection from one property to the other. However, because these protections only apply to a primary residence, they must also be willing to change their primary residence. There are stiff penalties for claiming homestead status on a property that is not your primary residence.

To apply for SOH portability you must apply for a new homestead exemption and also make a separate application to transfer the SOH benefit to your new homestead. You’ll need DR-501T and DR-501R application forms, which you can obtain from the Florida Department of Revenue web site and turn in to office of the county appraiser where your new homestead is located.

How much can you transfer? It depends on whether you’re moving to a house of greater or lesser value than the house in which you currently live. If it a home of greater value, you can transfer up to $500,000 worth of SOH protection from your original homestead. If it’s less in value, you can transfer up to 50% of the new property’s value in SOH protection.

Stay with me here…

For example…

Your current homestead has a value of $300,000 and SOH exemption of $150,000.

If your new property has a value of $500,000 you’ll receive portable benefits of $150,000.

If your new property is valued at $200,000 you’ll receive $100,000 worth of protection (in this case 150,000 of 300,000 is 50% – so you would apply the 50% to the new property value to arrive at your dollar amount of reduction of assessed value).

Assessment Cap for Non-Homesteads

Under Amendment 1, there is now an assessment cap for non-homestead property. This applies a cap of 10% on the assessment of both residential and non-residential property.

As of January 1, 2008, all non-homestead property will be assessed at market value only. However, the assessed increase from year to year is capped at 10%. In addition, the assessed value of the property cannot exceed market value.

Essentially, this means the assessed value of non-homestead property will be equal to market value. If a non-homestead property is appraised at $350,000 in 2008, it will be tax assessed at $350,000. If the property is capped at 10% cap in 2009, its assessed value could not increase above $385,000, regardless of market performance.

Non-homestead property owners can apply for this assessment cap in 2009.

 

Tangible Personal Property Exemption

 

The fourth Amendment 1 change is a $25,000 tangible personal property exemption. To qualify, business owners must file a TPP return by April 1 in the year in which they wish to apply. If you file and your TPP is less than $25,000 in value, there’s no need to file again unless your TPP value increases over that amount. Tangible personal property includes any owned and leased items used by a business.

 

We pay taxes, based on income each and every working years of our lives, but according to Uncle Sam that’s not enough, so we pay taxes on death too. As far as taxes go, the estate tax has always been one of the least accepted forms of taxation. It is a serious revenue generator for the coffers of the US government. There has been much talk in recent years about the repeal of the estate tax, in order to do so we will have to find revenue for another tax source to replace the estate tax. This is easier said than done, so we wait. And we may be waiting for a long time, as there doesn’t seem to be a clear solution.

The estate tax is often referred to as the double tax, as it is a second tax. Essentially the estate tax is a form of double taxation, since it’s taxing money that really has already been taxed. Though it may not seem fair, it’s currently the way it is. The good news is that there are ways to avoid this estate tax, regardless of your tax rate. For the rich, the estate tax is not referred to as the double tax, but rather the volunteer tax. For these individuals who might be classified in the highest tax rate, are often well aware, when it comes to avoiding the estate tax.

All too often, it’s the middle class who aren’t well-versed in estate planning, and that end up footing the estate tax bill. This is common for even those that may be in a lower tax rate. All they need is a little bit of knowledge, and they too can eliminate the estate tax. To touch on a few of the techniques that the ultra rich utilize to avoid the estate tax, they often use rather mundane estate planning practices. This process doesn’t have to be a complicated one. The simplest step to reducing your taxable estate is gifting. You can eliminate large amounts of your estate by simply gifting. Current law allows for a rather large amount of money to be gifted, per individual. So, by gifting to family or predetermined beneficiary such as a charity you can start reducing your estate. And the beauty of gifting is that there is no limit on how many individuals you can give to. Why wait till you die to tax your estate when you can gift it to the same beneficiaries free from the estate tax.

The other popular method to reduce estate taxes is life insurance planning. Life insurance policies are utilized by the rich to find any estate tax bill that may be incurred by future generations. Life insurance can provide a large amount of leverage with a rather small initial outlay. A large estate, with potentially large estate tax consequences can be covered with a rather small life insurance premium. And because life insurance proceeds are not taxable, the life insurance payout is completely free of tax, when set up properly. This is why life insurance has been an integral part of estate planning for years. In fact, life insurance planning is worth taking a closer look at for your estate planning needs. This is not just exclusive to avoiding the estate tax. The synergistic effect, along with the tax advantage of life insurance, makes it an excellent tool for the transfer of wealth.

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Estate tax is a Federal tax levied on a decedent’s distribution of possessions to heirs identified by state law or will. Yet, the percentage of estates which are subject to the tax is very minuscule. The IRS reported that just over 2 percent of people who died in 2001 were subject to the estate tax.

When inaugurated, one of President Bush’s concerns was to phase out the estate tax, which resulted in the 2001 bill, reducing estate taxes. The Economic Growth and Tax Relief Reconciliation Act of 2001 generated a $1.35 trillion tax cut for the wealthy. By 2009, estates exceeding $3.5 million will be taxed phase out completely by 2010. For this reason, some have called the 2001 tax cut the “Paris Hilton Benefit Act.” Yet, Congress’s 2011 decision, whether to continue taxing estates, has become a heated topic in Washington. By analyzing the pros and cons behind repealing the estate tax, as well as a short insight into the gift tax, a better understanding of favoring or neglecting estate tax may be established and clearly evaluated.

Abolishing the estate tax decreases government revenues over ten years by $745 billion after 2011. Over these 10 years, the government will also lose $225 billion of interest from these funds; the total loss to the government is estimated to be $1 trillion. This deficit is catastrophic because it affects not only federal debt, but the funding of services for U.S taxpayers. Thus, tax cuts for multimillion dollar estates places further financial stress on healthcare, education, local homeland security, and Social Security. Another incentive to act in opposition of the repeal involves charities and foundations; such foundations include universities, museums, and churches which benefit from donations and inheritances. This being said, many high-income individuals bypass the estate tax by donating a great deal to charitable groups and nonprofit organizations. Repealing the estate tax would reduce this drive. According to the Congressional Budget Office, the repeal of the estate tax would decrease charitable bequests by 16 to 28 percent.

Small businesses and family owned farms applaud the termination of the tax in order to be tax free when passing down the business to next generations. Another change hurting small businesses is that as the estate tax is phased out, the step-up in basis will disappear as well. The step-up basis is the readjustment, upon inheritance, of the value of an appreciated asset for tax purposes. This change in step-up basis can negatively affect small business owners and farmers because a considerable amount of their wealth is in business asset form.

While discussing matters of the estate tax, it is also important to recognize the estate tax’s brother, the gift tax. The purpose of the gift tax is simple: if gifts were made throughout the entirety of one’s life, it would be possible to escape the estate tax completely. Gift and estate taxes coincide because gift transfers can greatly impact estate taxes. An example of gift taxes influencing estate taxes involves unified transfer tax credits. This tax credit establishes the amount of wealth which can be transferred between parties without incurring tax consequences. The two types of credits include the first which is available for taxable gifts and the second is available for transfers by death. For Federal income tax purposes, the unified tax credit can be exhausted only once (excluding exceptions). This being said, if the unified tax credit is used for gift purposes, it ceases to exist for estate tax purposes and vice versa.

If the estate tax is repealed taxpayers would more than likely see a change in the tax system. For example, Canada repealed its estate tax system in 1971. Today, a Canadian resident is considered to have immediately disposed of his or her assets prior to death. Thus, estates are subject to triggering capital gains tax on such assets at death under Canadian income tax. Compared to the United States, Canada has a significant increase in its capital gains tax, totaling 38.5% tax rate. The reason for such a high capital gains tax rate could be because of the termination of the estate tax. As a result, the United States might see similar capital gains tax consequences if the estate tax is repealed.

Today the estate tax has formed into a moral argument because it moderates the expanding gap between the wealthy and the poor. Revenues from the tax would help present more opportunity for those not inheriting riches. Some politicians want to keep the tax in order to force the rich to pay, while others would like to repeal it to save certain groups (farmers, small businesses owners, etc.) from its hardships. If Congress does not take action on the estate tax in 2010, the tax is kept relevant on January 1, 2011 with $1million exemption and a 55 percent tax rate. However, economic and political conditions will dictate the projections of the estate tax come 2011. Regardless of the debate among politicians, if the estate tax is repealed, another tax will most likely take its place. These pros and cons illustrate the difficultness for the United States government to repeal or sustain the estate tax for the year 2011.