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One of the greatest tax gifts is the principle residence rules for capital gains on the sale of your home. So great is the principle residence tax exclusion that even married couples filing jointly are benefited to the same, if not greater, extent as single taxpayers. Now, some people may argue that there have been, are and will be greater gifts, but not much beats the simplicity of this rule. The basics of it are immensely easy to grasp: you own a house, you live in it for at least two years, you sell it and you don’t pay any taxes on the gain. Gone are the days when the young homeowner (not wishing to sell and upgrade) had to save every receipt for every upgrade, every repair, every minor item bought at the hardware store. If you have lived in your own home for two years, you probably don’t have to worry.

Of course, there are some technicalities associated with the general rule. They are pretty simple so first I will bullet-point the main ones:

o If you are single your capital gains exclusion is limited to $250,000.00

o If you are married your capital gains exclusion is limited to $500,000.00

o You have to own the home and it has to be your “primary residence” for two of the previous five years

What is your “primary residence”? Basically, it is a home that you personally live in the majority of the year. If you have a house in Palm Beach and one in Lake Tahoe and you spend 8 months of the year at the Tahoe home than that is your primary residence. But, keep in mind the 2 out of 5 part of the rule. Let’s say that the next year you spend 7 months at the Palm Beach house. Then the Palm Beach home is your primary that year. See where I am going with this? You can primary more than one home at once over a five year period so long as each is your main home for at least two years during that five year period. Temporary absences are also counted as periods of use – even if you rent the property during those absences (but talk to your accountant about recapturing any rental depreciation).

Now don’t let the five year requirement confuse you – it only takes two years to achieve the tax exclusion. The five year part is a bonus, allowing you some freedom. You don’t have to personally use the home as your primary residence for two consecutive years or for the two years immediately before you sell, you just have to use it is your primary residence for two of the previous five years. But, it is also a limitation, you cannot live in a house for two years and then rent it for four years and then get the exclusion. You could live in it for two years and then rent it for three years and then sell it (so long as it is sold within the five year mark from when you first lived in it as your primary residence).

Also, bear in mind that married couples do not have to live together. So long as one spouse lives in the primary residence for the two years than the couple can take advantage of the $500,000.00 exclusion. But, they cannot primary two homes at once and get the $500,000.00 exclusion on both. If they live apart during the two year period and each sell their primary then they are each limited to the single taxpayer exclusion of $250,000.00 for each house.

If you have a home office or rental as part of your primary residence or run a business out of a portion of your property, your ability to maximize your capital gains exclusion largely depends upon whether the home office, business or rental was part of your home (in the same dwelling unit) or a separate part of your property (a separate building or apartment). If the business use of your home was contained within your dwelling unit then upon sale you will need to recapture any depreciation taken for that part of the home. But you will not lose any of the allowable capital gains exclusion ($250,000.00 for single taxpayers and $500,000.00 for married filing jointly). If the business use of your home was not a part of your dwelling unit then you need to bifurcate the sale by allocating the basis of the property and the amount realized upon its sale between the business or rental part and the part used as a home.

Remember, only one home can be sold in any two year period unless you and your spouse live apart, and even then you can each only take the single payer exclusion of up to $250,000.00. But what if you need to sell a home that you have not lived in for the full two years? The IRS tells us that in special circumstances you can sell a home before you reach the two year mark and get a pro-rated exclusion. An example of a pro-rated exclusion is, for example, if you are a single taxpayer and have to sell your primary residence for a qualified reason after living in it only one year than you could exclude up to $125,000.00. In other words, you lived in the home 50% of the requisite time so you can take 50% of the allowable exclusion. The special circumstances that qualify you for this safe harbor and allow you to take the pro-rated exclusion have to do with health (yours and certain qualified individuals such as close relatives), change of employment or what the IRS calls “unforeseen circumstances” (examples include death, natural or man-made disasters, multiple births form the same pregnancy, divorce) These circumstances also have to cause you to sell your home. Factors used by the IRS to determine causation include:

o Your sale and the circumstances causing it were close in time,

o The circumstances causing your sale occurred during the time you owned and used the property as your main home,

o The circumstances causing your sale were not reasonably foreseeable when you began using the property as your main home,

o Your financial ability to maintain your home materially changed, and

o The suitability of your property as a home materially changed.

1031 Exchanges and the Primary Residence Rule

What happens if you do a like kind tax deferred exchange (also known as a 1031 exchange) of rental property or other property held for investment and then later decide to live in the property that was purchased? It is crucial to your 1031 exchange that both the property sold and the property purchased are held for investment. The property purchased must undergo a holding period before it is resold or converted into non-investment property. That holding period should be a year and a day to avoid audit. After you have complied with the “held for investment” requirement by, for example, renting the property if it is rental property, then what? Well, you could sell the property and pay your taxes on that sale and all previous sales that were perhaps in a series of exchanges or exchange and defer the tax once again, OR you could live in the house as your primary residence. If you have a had a series of gains that you have deferred this is a way to extinguish your tax debt forever – all you have to do is move into your investment property once the holding period for it qualifying as an investment is over.

Gaining the primary residence exclusion for property that was 1031 property isn’t as easy as the simpler primary residence rules talked about above, but it does allow you to take advantage of two loopholes at once! The main difference when primary residencing a 1031 exchanged property is that you actually have to hold the property for 5 years. The five year part here is a substantive rule, you cannot sell after only 2 years of ownership as you can if you were simply primary residencing a home that was not exchanged into. But that first year that you had to hold onto the home for investment goes towards the five year calculation. So, you rent it for two years and live in it for three, or vice-versa, so long as you kick the whole thing off with a one year rental period and live in it two of the remaining four years.

In this way, you can exclude up to a total of $500,000.00 worth of gain (if you are married filing jointly or $250,000.00 worth of gain if you are a single taxpayer) from the combined gains of the sale of the home you ended up living in as your primary residence, and any of the gains that you had previously 1031 exchanged. For example, say you purchased a duplex in May of 2000 for $150,000.00 and then in June of 2001 you 1031 exchanged the duplex (now worth $200,000.00) into a commercial building worth $200,000.00 (thus deferring $50,000.00 worth of gain). A few years later the commercial building is worth $300,000.00 and you do another exchange, this time into a nice single family home worth $350,000.00 (you have to put in an additional $50,000.00 to complete the purchase). You have now deferred a total of $150,000.00 worth of gain. Let’s say you then choose to rent the home for the first two years that you own it and then you later decide to move into the home. You then live in the house for three years at which point it is now worth $700,000.00 and you sell it for this amount. You and your spouse have now effectively wiped out not only the $350,000.00 gain from the sale of your primary residence, but the previous $150,000.00 worth of gain as well.

The raging fires of the debate as to whether term life insurance is superior to permanent life insurance have cooled somewhat even though some so called experts hold fast to their beliefs. There are some, even though they have no real qualifications in insurance who hold to to the idea that term is better. There are others who claim to be investment experts who also agree. Has anyone ever bothered to ask the actuaries who have spent hours designing these products what their opinion is? Has anyone asked the consumer? The desire for permanent life insurance never died but on the other hand term life insurance is more popular than it used to be.

There are strong arguments that term life insurance is pure life insurance but is it really? There are the contenders who claim that the difference between the inexpensive term policies and the more costly whole life insurance if invested would yield humongous profits but will it? Is that money invested anyway? Americans are enjoying more prosperity today than they ever had. Can a part of their prosperity be attributed to the fact that they are investing more money? Is the money saved or invested a result of the fact that they buy more term insurance and therefore have more money to put away? I don’t think so.

Americans earn more money today than they ever have and they are more conscious of the possibilities of true prosperity if they invest their money. The fact is that buying term life insurance as against whole life has nothing to do with their upward financial movement.

Term life insurance is good insurance simply because it provides cash or income to our loved ones if we should die while they still need to depend on us. The cost is minimal, depending on the type of term policy you buy. The truth is that whole life insurance does the same thing. Your outlay is more but whole life provides many options that term does not consider.

Whole life has cash values that can be left to accumulate with the life insurance company. Your whole life policy can also earn a dividend. The amount will depend on how well the company performs. Dividends are not guaranteed. The dividend can be left to accumulate interest, can be used to reduce premiums or may be used to purchase paid up additions which are small single premium policies of the same type as the base policy. These additions also accumulate interest.

I think these so called experts should refrain from trying to tell people what type of life insurance to purchase and give them the option of looking at both types. These people are quite capable of making their own decisions as to whether the superiority of term life insurance is a myth or is in fact a truth that all intelligent people should accept.

For details on term life insurance go here:
http://www.lifeinsurancehub.net/termlifeinsurancequotes.html


For details on whole life insurance go here:
http://www.lifeinsurancehub.net/whole-life-insurance.html

Whether you own a commercial property, or are looking to invest in one, now is a great time to shop. The economy may be down, but exciting new prospects are one way that it is going to recover, and with commercial property costs at an all-time low, there has never been a better opportunity to invest.

Buying a Commercial Property

The idea of buying a commercial property is to turn a profit from it. Therefore, you want to invest, not collect. Don’t buy something that you don’t have a plan for, as it will just sit around unused, costing you money.

However, if you see a good deal on a commercial property and think you can make something of it, now is a great time to purchase that building. Some things to keep in mind if you have a plan for a business is to scope out the area for how similar business are faring, set aside money for any problems that might arise, and have a back-up plan for the future. Decide what you will do if, in a year, the investment is just not making any profitable returns.

Shop online. There are literally hundreds of websites available at your disposal. Compile all of the listings that interest you, and being researching them. Try to find as much information as you can about the buildings, including what they were used for and what the area is like. Then, you can contact their listing agents for a showing.

Selling Commercial Property

While it is true that lots of commercial properties and buildings are sitting empty and unused all across the United States, that does not mean that your listing has no chance of selling. In fact, there are lots of things you can do to boost interest in your commercial property and not feel like a dead duck.

The first thing to do is to gather up all of the available information about your property. Know all there is to know about the building including its age, whether repairs or updates have been made, and any problems with it. Include any relevant information that you think will help sell the property.

Get a good agent to help you sell your commercial property. You don’t have to settle on the first one you find. Read online reviews and choose the agent who has the best track record of selling properties that are similar to yours.

Be willing to market your property. A good agent will give you a leg up in this game, but things such as word of mouth and utilizing online listings can help you spread word that your building is for sale. The more people hear about it, the more interest you will generate.

Prepare the building for showings. Clean up anything in the parking lot, sweep and mop floors, and give it a fresh coat of paint. Make the building presentable to potential buyers so that they can focus on the property itself and not all of the little repairs that they will need to do themselves.

Finding the right tenant for your property is crucial. Getting the right tenant has many benefits; the most important being your rent will be paid to you on time, which means the difference between profit and loss for you as a property investor. Choosing the right tenant also means the difference between happiness and anguish as well as sleepless nights and blissful sleeps. Again, and I cannot stress this enough, having a Real Estate Negotiator (REN) on your team is extremely important. Say you own one rental property for 10 years; you may have approximately 8 to 16 tenants in that 10 year. That is not really a lot of experiences in terms of choosing that right tenant. A REN would have screened and chosen the same numbers of tenants for their clients in a week’s time.

Interview your prospective tenants. When you meet your prospective tenant for the first time, do a proper interview. Ask them questions such as where are they working (this will give you an idea if they can afford the rent you are asking), what positions at the company are they holding (this question should be handled delicately and asked discreetly), where are they staying at the moment and why are they looking for a new place. Try to also ask for their current landlord’s contact number as you may want to get further info on your prospective tenant. Ask these questions:

- Did the he pay rent on time and in full?
- Did he give proper notice to vacate per tenancy agreement?
- How long has he lived there?
- Did he keep the place clean?
- Would the landlord rent to the same tenant again?

At the same, do call the prospective tenant’s employer too to check if he really works where they say they work. When speaking to employer, ask these questions:

- Is he a permanent or temporary staff at the company?
- How long has he been an employee at the company?
- Does he reports to work on time?
- What are his prospects for continued and long term employment at the company?

Now that you are comfortable with the prospective tenant, it is time to sign the tenancy agreement. Before signing on the dotted line, ask for an identification document such as ID card or driving license. Once the dotted lines are signed, have the agreement legalized. Good luck on your first tenant.

Many individuals look at the purchase of a diamond engagement ring as a showing of love and affection for another. However, this type of purchase is indeed a financial investment as most diamond engagement rings are expensive due to their preciousness and value. Therefore, when buying a diamond ring for your engagement there are a few tips to keep in mind in order to protect your investment which is the beautiful ring purchased for your loved one.

Appraising Your Diamond Engagement Ring

Some individuals wonder whether it is a good idea to have their engagement ring appraised. This is definitely a wise idea as again, diamond engagement rings are a big investment and valuable items. Therefore, you want to be sure that the item which you are paying for is worth that amount. There are a few different places where you can have your diamond engagement ring appraised. Some of your options include the jewelry store where you are buying the ring, an outside appraiser at a different jeweler or an independent appraiser who works in the personal property arena. Just be certain that the appraiser has been trained in the personal property field, has credentials, and has a minimum of 5 years of appraising in addition to his gemology training that he has.

Insuring the Engagement Ring

In addition to having your engagement ring appraised to ascertain its true value you should also contact insurance agencies regarding insuring the piece of jewelry. Although the sentimental value cannot be replaced should the ring ever be lost or stolen, your financial investment will be safeguarded should loss occur. If you are insuring the engagement ring you will have to have it appraised in order for the policy to accurately reflect its value. There are many different insurance companies which will issue policies on personal property items such as jewelry. The best way to locate an insurance company to insure your diamond engagement ring is to shop around, see which company offers the most competitive premium and consider the other benefits offered by the insurer with regard to policy coverage.

When the insurance policy is issued, it will be based upon not only the diamond gemstone but the setting upon which it is mounted. If a diamond grading report has been completed reference to this document should be contained in the policy as well. You may find that if you have a current homeowners insurance policy you will be able to add your diamond engagement ring to the policy coverage. This makes it easier than having to acquire a completely new insurance policy from a different insurer.

Keeping Your Diamond Engagement Rings Safe and Secure

Once you have had your diamond engagement rings appraised and insured the final step to protecting your investment is keeping the ring safe and secure while in your possession. Make sure that if the ring is not on your finger it is in a safe place where it will not be visible to the outside world. In addition, make certain that the place in which you keep your diamond engagement ring is a spot where it will be safe from being banged around and scratched.