NEW & CURRENT  TAX LAWS THAT EFFECT YOU!   

There are at least three new tax legislation bills passed in 2008, The Economic Stimulus Act of 2008, The Housing and Economic Recovery, Housing Assistance Tax Act and the Emergency Economic Stabilization Act of 2008, and several more in 2009.  There are over a thousand pages in these documents and many tax incentives, new and continuations of old law due to expire.  Following are a few highlights and ideas for tax planning.

PRIMARY RESIDENCE GAIN EXCLUSION & LIKE-KIND EXCHANGE THE BALANCE!?
The new law, which effectively treats non-personal use of your primary residence taxable in the event of a gain begins with use starting in January 2009.  Until then, the same law applys.  Regardless, the ability to take the $250,000 individual reduction of gain on the sale of a primary residence may still be combined with a like-kind exchange of the remaining gain if used as a rental or investment property.  The new law makes this concept much more attractive to many more taxpayers.

2005 IRS guidance has opened a new door for primary residences with business use.  A primary residence which qualifies for both primary residence, (primary two of the last five years), and qualifies for business purpose, (either office in home or rental), may qualify to use both the section 121, capital gain exemption for primary residences, and section 1031, like kind exchange, for the business portion.  This is new elaboration on old law and only effective for those properties which meet both criteria.  You can plan for it ahead, but previous transactions most likely will not work. 

The tax credit available to first time home buyers has been extended until May 2010 and may include homeowners previously unqualified because if they owned a home in the last five years.  
 
Automobile Expense and Depreciation:
Section 179 deduction is limited to $25,000 for SUVs over 6000 pounds, and $250,000 on other business property capital investments  for qualified expenses.  Restaurants and certain retail establishments are extended another accelerated depreciation on leasehold improvements.  The mileage rate for 2009 is 58.5 cents.  The tax law requires mileag logs for both business and personal use to qualify for expense deduction. 

Current Income tax rates and capital gain rates good thru 2010? Current tax rates are temporary and will revert back to pre 2001 rates, (about 5% higher), without additional legislation. 

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