Disaster Extensions for those affected by Hurricane Sandy
If you are in the unfortunate situation of being affected by a PRESIDENTIALLY declared disaster, please contact your 1031 CORP. Exchange Officer immediately. Under Revenue Procedure 2005-27, you may qualify for an extension to your 45-day identification and 180-day exchange period deadlines. Extensions are not automatic and they do not apply to state or local states of emergency or all federal disasters. IRS issues a Notice or News Release listing the affected areas. A list of affected areas can be found on Tax Relief in Disaster Situation page on the IRS website.
Extensions apply to reverse and delayed exchanges and provide the greater of either a 120 day extension or until the specific deadline date provided in the extension.
Note that it is imperative that you notify your Exchange Officer if you are affected by a PRESIDENTIALLY declared disaster because it is impossible for us know, especially if the disaster area is not where your exchange properties are located.
The IRS disaster help line is 1-866-662-5227.
Are you an affected taxpayer?
For more information sign up for our 1031 Exchanges & Disaster Extensions Webinar on Monday, November 19, 2012, 12:00PM - 1:00PM ET. Register Now!
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Summary of Obama Administration Tax Policies
Following is a brief summary of where tax rates are now and where they are headed if we go over the "Fiscal Cliff." We have also included President Obama's tax policy on each issue.
Individual Taxes
Tax Rates
The top income tax rate for individuals is currently 35%. Without action, it will increase to 39.6% in 2013 but President Obama only wants to increase the rate for higher-income individuals. Higher income individuals are those single taxpayers earning $200,000 and married couples earning $250,000.
Dividends/Capital Gains
Currently dividends are treated the same as capital gains with a maximum tax rate of 15%. President Obama would like to increase the maximum capital gains tax rate to 20% for higher income taxpayers and keep it at 15% for everyone else. Dividends would be treated as ordinary income under the plan.
Estate Tax
There is currently a $5,120,000 exemption from estate and gift taxes. The estate and gift tax rate is currently 35%. Under President Obama's plan, the exemption would be reduced to $3,500,000 and the estate and gift tax rate increase to 45%. In no action is taken, the rate would go back to 55% with a $1,000,000 exemption.
AMT
Index Alternative Minimum Tax (AMT) with inflation. He has also endorsed the "Buffett Rule," which would require households making more than $1,000,000 a year to pay at least 30% of their income in taxes.
Mortgage Interest and Itemized Deductions
Temporarily repeal itemized deduction limits and limit mortgage interest deductions in the future for certain taxpayers.
Corporate Taxes
Tax Rates
Reduce the top corporate tax from 35% to 28%.
Bonus Depreciation
Extend 100% bonus depreciation through the end of 2012. The 100% bonus depreciation ended at the end of 2011 and it is currently 50% bonus depreciation.
1031 CORP. will certainly keep you posted.
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1031 CORP. Offers Wealth Building Webinar Series
 Join us for our complementary Wealth Building Webinar Series designed to help you build and preserve wealth.
Thu, Nov 29, 2012 12:00 PM - 12:45 PM ET
Advanced 1031 Exchange Topics
Thu, Dec 6, 2012 12:00 PM - 12:45 PM ET
1031 Exchanges Made Easy
Thu, Dec 13, 2012 12:00 PM - 12:45 PM ET
Real Estate Professionals: Use 1031 Exchanges to Grow your Business in 2013
Thu, Dec 20, 2012 12:00 PM - 12:45 PM ET
Thu, Dec 27, 2012 12:00 PM - 12:45 PM ET
Capital Gain Misconceptions & their Unexpected Tax Bill
View Full Schedule and Register Now!
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3.8% Tax on Capital Gains & Other Unearned Income Starts 1/1/13
Included in The Health Care and Education Reconciliation Act of 2010 signed into law on March 30, 2010 is an "Unearned Income Medicare Contribution" that imposes a 3.8% tax on all unearned income, including any profit on the sale of real estate. It is not a real estate sales tax or national transfer tax. Depending on your income level, the new tax will apply to all unearned income you have regardless of whether or not it is related to real estate.
As part of the new health care reform law, the new Medicare Tax will go into effect on January 1, 2013 and will require high income households to pay 3.8% on all investment income. Generally, this tax will affect individuals with a gross annual income exceeding $200,000 and married couples exceeding $250,000. Some examples of investment income subject to this new tax include capital gains, interest, annuities, royalties and rents.
Increased Medicare Payroll Deduction May be Coming
Also keep in mind that the Medicare deduction from your paycheck may also increase. Currently, the Medicare payroll tax is 2.9% on all wages with you paying half and your employer paying half. Beginning in 2012, high-income individuals will pay another 0.9% for a total of 2.35%.
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Trending in October/November...
October 2012
Closing on or near the 180th Day
This month we have seen a surprising twist. After seeing the length of time Exchangers take to complete their 1031 exchange decrease to an average of just 43 days, we have seen a good number of exchanges go the full 180-days. These are typically larger transactions and no doubt there is a lot of nail biting as we get closer but so far, our clients and their advisors have been able to make them work.
November 2012
Last Minute Exchanges
In the past, Exchangers have set up their exchanges months in advance but things have changed. Taxpayers are waiting until the last minute until they feel certain that the transaction will go through. While some of this these taxpayers are determining if it is better to simply sell and pay the tax now before rates go up or effect a 1031 exchange while most of the delays are the result of the tougher mortgage underwriting standards while. Don't forget 1031 CORP. can initiate your exchange even if you are at the closing table.
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Message from our President
Dear Friends,
 | | Margo McDonnell & Family |
I'd like to take this opportunity to thank you
for your business and continued support. It is truly our honor and pleasure to work with you. You make it possible for us to do what we love every day and we are grateful.
I would be remiss to not mention our many friends and family members affected by Superstorm Sandy. The devastation is heartbreaking. Please keep them in your thoughts and prayers as they embark on the long road to recovery. If you are in the middle of your exchange and have been affected by Sandy, IRS has granted a number of disaster extensions for NJ, NY and CT. Please contact your 1031 CORP. Exchange Officer for more information.
Sandy definitely put the 1031 CORP. Disaster Preparedness Plan to the test. After Hurricane Irene last summer, we developed a Disaster Preparedness and Business Succession Plan for situations like this. We moved everything to the cloud with multiple layers of redundancy and access from anywhere. Our Voice over Internet Protocol (VOIP) telephone system allows us to access the telephone system remotely and redirect them to our cell phones, an alternative land line or even a "back-up" exchange company on the West Coast. We can access our clients' files even from our cell phones. Sandy encouraged us to make a few tweaks to our plan but all in all, 1031 CORP. never missed a beat. Let's hope we never have to put the plan into action again.
On behalf of our 1031 CORP. family, we wish you and yours a wonderful Thanksgiving and Happy Holiday Season.
Best Regards, 
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About 1031 CORP.
Serving as a nationwide qualified intermediary for 1031 tax-deferred exchanges since 1991, 1031 CORP. strives to provide a superior exchange experience for our customers and their advisors. We provide our customers with enhanced security of funds, knowledgeable exchange professionals and a commitment to keep the exchange process simple for our customers and their advisors. Every member of the exchange team is a Certified Exchange Specialist® and has the experience and expertise to facilitate even the most complex exchange transaction, including reverse, improvement and personal property exchanges. Additional information can be found at www.1031CORP.com. |
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Margo McDonnell, CES®
Certified Exchange Specialist®
President
1.800.828.1031 ext. 212
Mobile: 610.680.6896
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Sue Umstead, CES®
Certified Exchange Specialist®
Senior Vice President
1.800.828.1031 ext. 208
Mobile: 610.755.8520
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Marissa LoCascio, CES®
Certified Exchange Specialist®
Senior Exchange Officer
1.800.828.1031 ext. 210
Mobile: 610.742.4351
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Richard Heller, Esq., CCIM, CES®
Consultant
1.800.734.1031
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Bettye J. Matthews, CPA
Consultant
1.800.680.1031
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Joseph F. Szajnecki, CES®
Consultant
1.800.734.1031 |
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Margo McDonnell, CES® has been selected to present two continuing education courses at Triple Play 2012, the annual conference for the PA, NJ and NY State Associations of REALTORS®.
Her courses include:
Capital Gain Misconceptions & Their Unexpected Tax Bills
1031 Exchanges: What's Trending Now and Anticipated Tomorrow
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Article Exchange
If you have an article you would like to share, please forward it to Margo McDonnell,CES® and we'll include it in next month's reading list.
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