Monday, July 25, 2011

Home Mortgage Interest Deduction is on the table.

The mortgage interest deduction costs the U.S. Treasury about $100 billion a year. The Obama Administration is now proposing to either reduce the cap to $500,000 and/or to eliminate the deduction on second homes. Eliminating the deduction on second homes would save about $15 billion, and reducing the cap to $500,000 would save another $15 billion, according to economist William Wheaton at MIT. 10.5 percent of existing home sales in June were of homes over $500,000 according to the Mortgage Bankers Association.   
Then there's the idea from the President' bipartisan commission of turning the interest deduction into a 12 percent credit, limited to $500,000 in mortgage debt, only on primary residences. That could save the Treasury $65 billion.
Eliminating the deduction all together will create havoic in the already volitale housing market and economy.
Interesting, in Canada, they don't have a mortgage interest deduction on personal residences, but they do on investment properties; this makes a lot more sense to me, as it is a business expense. It also fosters investment in housing, which is precisely what the U.S. could use more of right now.
  (Exerpts from D. Clark - CNBC Real Estate Reporter)

Tuesday, May 24, 2011

1099 Reporting Requirements have changed

On April 5, 2011, Congress passed the 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011. Of particular importance is the elimination of Form 1099 reporting requirements for businesses and owners of rental properties from issuing Form 1099's to virtually anyone (individuals or corporations) for which payments for goods and/or services exceeded $ 600.00 per year.  This incredibly burdensome requirement was to have been effective January 1, 2012.  The legislation faced fierce opposition from CPA's, State Societies of CPA's, and the American Institute of CPA's.