Sales tax on title abstracts? N.Y. says "yes" will N.J. follow?

The New York State Department of Taxation and Finance has announced that it has changed its policy on title abstracts – they're now taxable when done by a title agent.

You can read the determination on page 4 of the memorandum TSB-M-10(7)S, Sales Tax, July 19, 2010, Sales and Compensating Use Tax Treatment of Certain Information Services, issued by the Office of Tax Policy Analysis Taxpayer Guidance Division.

My take? Well, if the taxation folks in New York think it will work, then the taxation folks in New Jersey will most likely give it a shot.

If you have questions about what you see here,

contact Stephen M. Flatow

Stephen's Title Agency, LLC

StephensTitle@comcast.net

973-556-1628 Fax

N.J. Home buyer tax credit - will it happen?

Is the N.J. home buyer tax credit in jeopardy? That's the question being asked in a news report from Channel 3 in Philadelphia.

"A bill that some say would reenergize New Jersey's housing market is still sitting on the desk of Governor Chris Christie.

"It's a spend money to make money, create jobs and create commerce initiative."

Patrick Murray, on Newsroom New Jersey, asks a question, what's the bottom line on the bill's effectiveness?

Well, what happens after the credit program is shut down? Do those buyers stay in the market and keep housing demand high? If we look at the experience of the federal credit program, the answer appears to be "No."

The numbers are even more astounding if we look at how the credit will apply to sales of existing homes. According to state figures, more than 110,000 existing houses were resold last year. That translates to about 300 a day. This means the $25 million pot for existing home sales tax credits will be snapped up within a week of the program going into effect. One week!

Considering how lengthy the sales and mortgage process is, a homebuyer's likelihood of closing on their purchase within the seven day window this credit program is available will be more a matter of luck than planning. "Mr. and Mrs. Jones, here are the keys to your house, and congratulations — you just won $15,000!"

The bill is seen as a jump-start, more like a defibrillator, if you ask me, for New Jersey's ailing housing market. The idea is to give home buyers a $15,000 tax credit or get back 5 percent of the price, whichever is less. The money would be paid over three years. You can read the bill here.

We'll keep you posted.

If you have questions about what you see here,
contact Stephen M. Flatow
Stephen's Title Agency, LLC
StephensTitle@comcast.net
973-556-1628 Fax

Selling a vacation home? Tax treatment of furniture can catch you.

Karin Price-Mueller, the BizBrain at the Star-Ledger, fields questions from readers on a variety of matters. Here's one regarding tax treatment of furniture when selling a furnished home. (The question is shown in full.)

Q. When selling a furnished vacation home, can I add to my original basis the replacement costs of the furniture and accessories that came with my condo and that I have replaced over the years, such as TVs, rugs, couches, chairs, drapes and air conditioners? The condo unit was originally purchased for $80,000 plus a $5,000 furniture package, and we sold it furnished for $250,000. While I rented it out at times, I didn’t depreciate it. It was primarily a vacation home.

— Bob

"A. Even though you bought the home furnished all those years ago, you can’t include the furniture as part of your cost basis."

Essentially, you can only add improvements to the cost basis of the home, not furniture.

"Some examples of capital improvements that would qualify as an increase in cost basis include the cost of putting an addition on the home, replacing the whole roof, installing central air-conditioning, paving the driveway or rewiring the home."

"Adding the furniture to the cost basis is only asking for trouble, said Douglas Duerr, a certified financial planner and certified public accountant with U.S. Financial Advisors in Montville. "

Read the full article Furniture sold with home does not count toward cost basis.

And, as always, we recommend you speak to your tax advisor when undertaking any major financial transaction.

If you have questions about what you see here,
contact Stephen M. Flatow
Stephen's Title Agency, LLC
StephensTitle@comcast.net
973-556-1628 Fax

FDIC - 6 more banks closed this past week

In my opinion, one of the quieter aspects of the economy is the FDIC's closing of banks. There's just not a big hoopla when it happens and six more were shuttered this week.

As reported by the Morris County Daily Record's Associated Press Wire,

Regulators on Friday shut down three banks in Florida, two in South Carolina and one in Michigan, bringing to 96 the number of U.S. banks to succumb this year to the recession and mounting loan defaults.

The closures will cost the FDIC about $330 Million. That's not chump change. We're sure more banks will close before this recession is over.

Read the full article here.

If you have questions about what you see here,
contact Stephen M. Flatow
Stephen's Title Agency, LLC
StephensTitle@comcast.net
973-556-1628 Fax

TZQHFNFCRVSP