Real Estate Information Archive


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Write-offs to Remember!!!

by Ashlie DuCros

Great to know for tax season!
Write-offs to Remember

Deductions in the Loan Process
Write-offs are the government's way of rewarding taxpayers when they've done something the government likes. And to judge by the write-offs, the government likes it when people borrow money to buy a house. There are write-offs aplenty, many of which people often forget.

Make sure your clients take advantage of every break the IRS will give. Here are a few they tend to forget:

According to the IRS, origination fees charged as points must be paid for the use of money, (for example, to obtain a lower interest rate) in order to be tax deductible. Origination fees that constitute a "service fee" are not tax deductible. The question must be asked, "Does the fee apply to the use of money, or is it a service charge?"

Pre-payment penalties:
Unforeseen circumstances often cause borrowers to pull out of their mortgages sooner than expected. Fortunately, pre-payment penalties are tax deductible, which helps ease the pain.

Pro-rated real estate taxes:
Even if the seller sent the tax collector the check, chances are the buyer paid a pro-rated portion of the taxes for the year at closing. Be sure they know to deduct their fair share.

Pro-rated mortgage interest:
Depending on when in the month the home sale closes, buyers pay either a hefty or a tiny amount of pro-rated mortgage interest for that month. Big or small, they can write that off. The Final Closing/Settlement Statement will show just how much they're due.

Home construction loan interest:
As long as the construction period doesn't last more than two years before they make the new place their "principal residence," they can write off the interest for that construction loan.

It pays to pay attention—all these write-offs can add up to some serious savings when tax time comes around.

Windsor Team: Jun Lee, Jason Vaughn, Shannon Lehman & Pete de Best
Branch Manager
Windsor Capital Mortgage Corporation
Phone: 714-598-9899
Fax: 714-459-7166


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Windsor Team: Jun Lee, Jason Vaughn, Shannon Lehman & Pete de Best
Windsor Capital Mortgage Corporation
181 S Old Springs Rd
Anaheim Hills, CA 92808

This article is presented by courtesy of Olmsted and Associates Tax Accountant:

Welcome to the month of March, there is still time to contact our office regarding your 2008 tax needs. Additionally we want to continue  providing you with articles, tips, and tools to keep you informed throughout the year.  For more in depth information and articles please feel free to visit our website at .  

American Recovery and Reinvestment Act
On February 17, 2009 President Obama signed the American Recovery and Reinvestment Act of 2009 into law. The bill contains approximately $287 billion in tax cuts for families and businesses. The tax cuts include a $400-per-worker tax credit known as Making Work Pay Credit and will put cash in the hands of America's working families in the upcoming months. In addition, there is a one-time $250 payment to seniors, veterans, and retirees. The new law temporarily excludes up to $2,400 of unemployment compensation from a recipient's gross income for 2009. The new law also includes an alternative minimum tax (AMT) patch for 2009. The AMT patch for 2009 raises exemption amounts slightly above 2008 patch levels. There is also a New Car Deduction, which allows purchasers of new vehicles for the rest of 2009 an above-the-line deduction for state and local sales taxes or excise taxes paid on the purchase (there are limitations to the deduction). There is a First-Time Homebuyer Tax Credit up to $8,000 for purchases made through November 30, 2009 (will have an explanation below on this Credit). The new law also includes enhancements of the Education, Child Tax Credit and Earned Income Credit. There are also energy incentives including the Residential Energy Property Credit and Energy Efficient Property Credit and Plug-in electric Vehicles.
The new law extends the 50-percent first-year bonus depreciation and section 179 expensing allowed under the 2008 Economic Stimulus Act of 2008 through December 31, 2009.  The code section 179 expensing remains at $250,000 maximum and the reduction threshold also remains at $800,000. The new law provides a five-year carryback of 2008 NOLs for qualified small businesses with average gross receipts of $15 million or less. It also gives the businesses a choice of carrying back NOLs to three, four or five years. This applies to only 2008. Other business incentives in the new bill are for Qualified Small business stock, S Corp Built-In Gain period, estimated taxes and Cobra benefits.
First-Time Homebuyer Tax Credit:
Under the new law the First-Time Homebuyer Tax Credit is extended through purchases made by November 30, 2009. The new law also increases the credit from $7,500 to $8,000 ($4,000 for married filing separate). The recapture rule is waived for qualifying home purchases occurring during the period January 1, 2009 through Nov. 30, 2009, so long as the property remains the taxpayer's principle residence for 36 months after purchase.. This change transforms the credit from an interest-free loan to direct financial assistance. The credit begins to phase-out for taxpayers with Adjusted-Gross-Income of $75,000 single ($150,000 joint filers). In addition, there is an election to treat the purchase of a home in 2009 as made by December 31, 2008 (i.e. can use the credit with the filing of your 2008 tax return).

 Offset Education Costs
Education tax credits can help offset the costs of higher education for yourself or a dependent.  The Hope Credit and the Lifetime Learning Credit are two education credits available which may benefit you.   Because they are credits rather than deductions, you may be able to subtract them in full, dollar for dollar, from your federal income tax.
The Hope Credit
·         The credit applies for the first two years of post-secondary education, such as college or vocational school.  It does not apply to the third, fourth, or higher years of undergraduate programs, to graduate programs, or to professional level programs. 
·         It can be worth up to $1,800 ($3,600 if a student in a Midwestern disaster area) per eligible student, per year.
·         You're allowed a credit of 100% of the first $1,200 ($2,400 if a student in a Midwestern disaster area) of qualified tuition and related fees paid during the tax year, plus 50% of the next $1,200 ($2,400 if a student in a Midwestern disaster area)
·         Each student must be enrolled at least half-time for at least one academic period which began during the year.
·         The student must be free of any federal or state felony conviction for possessing or distributing a controlled substance as of the end of the tax year.
The Lifetime Learning Credit
·         The credit applies to undergraduate,  graduate and professional degree courses, including instruction to acquire or improve job skills, regardless of the number of years in the program.
·         If you qualify, your credit equals 20% (40% if a student in a Midwestern disaster area) of the first $10,000 of post-secondary tuition and fees you pay during the year, for a maximum credit of $2,000 ($4,000 if a student in a Midwestern disaster area) per tax return.
You cannot claim both the Hope and Lifetime Learning Credit for the same student in the same year. You also cannot claim either credit if you claim a tuition and fees deduction for the same student in the same year. To qualify for either credit, you must pay post-secondary tuition and certain related expenses for yourself, your spouse or your dependent. The credit may be claimed by the parent or the student, but not by both. Students who are claimed as a dependent cannot claim the credit.
These credits are phased out for Modified Adjusted Gross Income over $48,000 ($96,000 for married filing jointly) and eliminated completely for Modified Adjusted Gross Income of $58,000 or more ($116,000 for married filing jointly). If the taxpayer is married, the credit may be claimed only on a joint return.
If you would like more information regarding the Hope Credit or Lifetime Learning Credit please do not hesitate to contact our office.
Seven Facts to Help You Understand the Alternative Minimum Tax
Tax laws provide tax benefits for certain kinds of income and allow special deductions and credits for certain expenses.  These benefits can drastically reduce some taxpayers' tax obligations.  The Alternative Minimum tax attempts to ensure that anyone who benefits from these tax advantages pays at least a minimum amount of tax.
Congress created the AMT in 1969, targeting a small number of high-income taxpayers who claimed so many deductions they owed little or no income tax. 
Because the AMT is not indexed for inflation, a growing number of middle-income taxpayers are discovering they are subject to the AMT.
You may have to pay the AMT if your taxable income for regular tax purposes plus any adjustments and preference items that apply to you are more than the AMT exemption amount.
The AMT exemption amounts are set by law for each filling status.
For tax-year 2008, Congress raised the alternative minimum tax exemption to the following levels
$69,950 for married couple filing a joint return and qualifying widows and widowers.
$46,200 for singles and heads of household.
$34,975 for married person filing separately.
Taxpayers may find more information about the Alternative Minimum Tax and how it impacts them by referring to IRS Form 6251, Alternative Minimum Tax Individuals, available on, or by contacting our office and one of our accountants will be more than happy to give you more details.

If you have any questions regarding this article, please contact us at 714-743-9778, and we will be more than happy to assist you.


Thank you,


Ashlie DuCros

Ashlie Ducros and Associates


by Ashlie DuCros


Rate Watch!!! 

Existing Home Sales Show Promise:
Existing Home Sales were released last week by the National Association of Realtors.  Their figures show that December's numbers were down 5.3% for the month and that when you compare January 2009 to January 2008 it was a difference of -8.6%.  Both of these numbers received a lot of media attention that used the data to continue to paint a negative picture of the housing industry.

But buried in the report was some news that is very encouraging: Inventories fell to a 2 year low!  They reported that the existing home inventory fell to 9.6 months.  This is very important because economists believe that once we get close to a 6 month level it will signal the bottom of the housing market.  Each month we get closer and closer to that goal.  When we get to that level home prices will stabilize and begin to increase.  This means that buyers should take advantage of the temporarily low price levels now.  Remember you make money when you buy the home not when you sell it.

What happened to rates last week?
Last week 30 year fixed interest rates went up to our highest levels in the past two months, hovering at 5.125% for conforming conventional and FHA loans and around 5.625% for conforming conventional and FHA for loan amounts over $417,000.

The slide in interest rates is largely due to the mortgage backed securities market's fear and concern about the proposed "Cram Down" legislation that could potentially give federal bankruptcy judges the ability to unilaterally lower interest rates and principal balances on existing mortgage contracts.

This could cause mortgage holders to lose large sums of money.  To offset that potential loss, mortgage rates must rise.

 What to watch out for this week:
There are many major economic reports that will hit the market this week. They each have the ability to affect mortgage rates. I will watch these reports closely for you and let you know if there are any big surprises.
Thank you for your business and support of Windsor Capital Mortgage. Call on me anytime for an industry update or to review a loan scenario.
Jun Lee
Windsor Capital Mortgage Corp.
714-322-9642 Cell

Displaying blog entries 1-3 of 3




Contact Information

Ashlie DuCros & Associates
Coldwell Banker Previews Global Luxury
21580 Yorba Linda Blvd.
Yorba Linda CA 92887
Fax: 714-849-5489