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What is my federal marginal tax rate for 2009? |
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Your federal marginal tax rate is used to estimate the amount of
additional taxes you will pay if your income increases. Example:
If you are single and your Taxable Income is $87,000, you are in a
28% federal tax bracket (check tax table below).
Federal Tax Rates (Brackets) for 2009: |
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Single |
Married - Joint |
Head of Household |
Married - Separate |
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10% |
0 - 8,350 |
0 - 16,700 |
0 - 11,950 |
0 - 8,350 |
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15% |
8,350 - 33,950 |
16,700 - 67,900 |
11,950 - 45,500 |
8,355 - 33,950 |
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25% |
33,950 - 82,250 |
67,900 - 137,050 |
45,500 - 117,450 |
33,950 - 68,525 |
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28% |
82,250 - 171,550 |
137,050 - 208,850 |
117,450 - 190,200 |
68,525 - 104,425 |
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33% |
171,550 - 372,950 |
208,850 - 372,950 |
190,200 - 372,950 |
104,425 - 186,475 |
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35% |
372,950 and Up |
372,950 and Up |
372,950 and Up |
186,475 and Up |
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What value should I use for my Federal Capital gains rate
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Unrecapture Depreciation tax rate? |
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For those of you in a 25% tax bracket or higher, your long term
capital gains rate is 15% for real estate investments held more than
one year. A flat rate of 25% is applied to gains attributable
to depreciation. For example, if you bought a 4 unit
residential income property for $250,000 and over the years you
claimed depreciation deductions of $100,000 and you now sell the
property for $400,000, your adjusted basis becomes $150,000
($250,000 - $100,000 of depreciation). You are left with a
profit of $250,000 ($400,000 - $150,000). Under the new tax
rules, $100,000 would be taxed at 25% and $150,000 would be taxed at
15%. However, if
you are in a 15% or lower marginal tax rate, the capital gains that
you realize from the sale of an income property is added to your
income to determine the capital gains rate that will be applied to
your gain. That portion of your gain which is in a 15% tax
bracket ( after adding the capital gains amount ) will be taxed at
the lower capital gains rate and that portion of your capital gains
that is in a 25 % tax bracket ( after adding the capital gains
amount ) will be taxed at the 15% capital gains rate. Approximately 75% of the tax filing population are
in a 15% tax bracket. This tax change will therefore impact
many real estate investors when they sell income property. If
you are in a 15% tax bracket and are considering selling an income
property, be sure to go over how your gains will be taxed with your
tax adviser. |
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How
is the Initial Investment Amount Calculated? |
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The On Target program calculates the Initial Investment amount based
on the Sales Price, the Loan Amounts, the Points paid on each
mortgage, Personal Property transferred at the time of
purchase, Year 1 Improvements and the
Closing Costs. The calculated Initial Investment amount is
on the Summary of Inputs report. You can adjust your mortgage
amount if you want these items included in the mortgage at closing. |
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Initial Investment Amount = Sales Price + Total Mortgage Points +
Misc. Closing Costs |
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+ Year 1 Personal Property + Year 1 Improvements + - Loan Amounts. |
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| Can I
deduct rental losses? |
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If you are an active participant in an income property investment,
the following rules apply. For Adjusted Gross Incomes (your income
before subtracting itemized deductions, exemptions and rental
losses) under $100,000, a maximum of $25,000 in losses can be
deducted. If your AGI
is between $100,000 and $150,000, the loss allowance is reduced by 50% of
your AGI over $100,000. For example, if your AGI is
$110,000, you can deduct $20,000 in losses ($150,000 - $110,000) / 2.
If your AGI
is $125,000, you can deduct $12,500 in losses ($150,000 - $125,000) / 2.
The "On Target" default is active participant. If you will be
actively involved in the management of the property you are
analyzing, set real estate professional to "N" and passive
participant to "N" ( the default ).
Real Estate Professionals who meet IRS guidelines can deduct all
rental losses. Check IRS guidelines or talk to your tax
consultant if you will be claiming real estate professional.
Passive participants in a real estate investment are not allowed to
deduct any rental losses.
The only time you need to be concerned about the "On Target" tax
settings is when you have a loss or negative income on the Income
statement. If you have a positive income, it doesn't matter if
you are a real estate professional, active participant or passive
participant, you will be taxed the same. |
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What recovery period should I use to depreciate commercial
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residential income property? |
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When analyzing property with the real estate investment model, use
27.5 years for residential properties and 39 years for
commercial properties. |
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How do you determine the Building
Basis for an income property? |
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The building
basis is equal to the Purchase Price minus the value of
the land. If you know approximately what the land
is worth, you can just estimate the building basis.
Building Basis = Purchase Price - Land Value
If you want a better estimate, you can look
at the assessment for the property in
question and create a ratio using the
assessed value of the building and the
assessed value of the land.
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X / Purchase Price =
Building Assessment / (Building Assessment + Land Assessment)
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X = Purchase Price *
(Building Assessment / (Building Assessment + Land Assessment) ) |
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Where X equals the Building Basis |
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(c) Copyright 2000 - 2010 Advantage Software LLC |
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