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Wednesday, April 1, 2009

Don't Miss This Real Estate Tax Deduction

Bob Brinker has never mentioned the real estate tax deduction that is available this year, even though he sometimes does give tax advice.

Last weekend, when a caller asked about rolling a traditional IRA into a Roth IRA, Brinker talked at length about why this is not a good idea for those in high tax brackets.

That call (which you can read in the March 28th Moneytalk Summary) led to some interesting discussions about the tax consequences between using IRA money to pay Roth IRA transfer taxes and rolling the whole thing over and paying the taxes out of other funds. You can read these posts in the comments section of the March 28th Summary.

We now know that there is no penalty for transferring from traditional to Roth IRA before age 59, but if anyone knows the definitive answer on penalties for using IRA money to pay the tax under age 59, please send the answer. ["Taxman," do you know?]

Here is the real estate tax tip that DanG wrote:

"Thanks, Ms Honey, but perhaps "tax expert" is too strong a word, though I do try to keep up. With all the changes, that's a big task. For instance, there's one change for 2008 that kind of "snuck through" that allows those who take the standard deduction to add to that their property taxes even though they don't itemize. Now for some, that's a pretty sizeable amount, though maybe not for us "grandfathered" Prop 13 beneficiaries!"

Another poster added this:

".....but for those who might want a reference it would be, 1040 instructions, page 34, (instructions for line 39c) or for those with a pub 17, page 139 (top of page 1st column)."

Dixiegeezer sent this picture:


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