The IRS Deductions Blog

Posts Tagged ‘interest’

Question: Is it better to pay off a home loan and save thousands in interest or take advantage of Mortgage Tax Deduction

primary residence 30 yr loan

Answer: it depends upon your cash flow situation and your longer term plans.
how long you plan to stay in the house, the interest rate on the loan, your tax rate and your savings/safe investment rate for the money you would otherwise be putting into the mortgage payment.

do the math…
DL

Items on Amazon Right Now for Tax Deduction Interest Mortgage:

Bill Thomas: Real estate dreams, schemes helped doom economy

When Bill Thomas was chairman of the tax-writing House Ways and Means Committee, he thought too much emphasis was being placed on home ownership. “If you can afford to buy a house, you are rewarded handsomely in a number of financial ways. If you can’t, you are punished because you pay rent. You can’t even subtract rent from your income tax,” said Thomas, who retired in 2006 after representing …

Tax Tips & Advice : How to Deduct Home Mortgage Loan Interest

Hong Kong is a central hub for business in Asia. It is extremely popular for a variety of reasons, including political stability, economic freedom and tax benefits. Hong Kong has one of the lowest tax rates in the world for a developed country, and has an intricate and effective tax system that allows companies to conduct business without being overpowered by their tax liabilities. Indeed, Hong Kong is rated as the world’s 3rd friendliest tax system by Forbes (Tax Misery & Reform Index 2009).

Corporate Tax in Hong Kong

Given the large number of companies that operate in Hong Kong or have an offshore business in Hong Kong, an understanding of Hong Kong tax implications begins with corporate tax.

In Hong Kong, any company conducting business on or offshore can be liable to corporate tax. Profits sourced in Hong Kong are taxed at a low rate of 16.5%, and unincorporated businesses are taxed at 15%. Profits that are sourced overseas, also known as ‘offshore profits’, benefit from a zero tax rate, even when remitted back to Hong Kong. Profits derived from operating ships in Hong Kong are treated as ‘offshore profits’ and are not liable to tax, but profits derived by professional reinsurers for reinsuring offshore risks will be taxed at 8.25% -i.e. half the corporate tax rate.

To note: offshore payments for intellectual property usage are liable to tax at 4.95%, goods sold by Hong Kong consignment agents on behalf of non-residents are also liable to tax on 0.5% of gross proceeds. On the other hand, bank deposit interest, interest on Tax Reserve Certificates, interest income on long-term debt instruments, dividends and capital gains are free from tax.

With the low tax rates there are also other regulations that protect business from unjustified taxes. Hong Kong is fully committed to its double tax agreement with thirty three nations, including PRC, Thailand and Belgium, to relieve companies from having to pay two taxes on one set of profits, as a result of multinational enterprise and multiple jurisdictions. For full details on Hong Kong’s double tax agreements, see the website for the Inland Revenue Department of Hong Kong (IRD).

Companies that conduct business through a branch in Hong Kong or are incorporated in Hong Kong cannot offset losses against the profits of other members in a group of companies –through consolidated accounting systems, however the Hong Kong jurisdiction allows losses to be carried forward indefinitely. Assets are depreciated at authorized prescribed rates of depreciation, for example, computer equipment can be depreciated at 100% in the first year.

The general procedure for corporate taxation after incorporation in Hong Kong is straightforward. Typically a Hong Kong incorporated company will be tracked by the Hong Kong authority and sent a tax return at year end. Even when no tax return is issued to a company, they are responsible for notifying the government of any profits liable to tax. In standard practice, estimated tax assessments will be issued provisionally during the tax year based on historic profit information. A final assessment will then be released after filing of the tax return.

It should be noted that the Hong Kong tax year begins on April 1st. Also, companies liable to tax in Hong Kong are required to fulfill accounting and auditing standards i.e. be audited by a firm of Hong Kong accountants.

Other Taxes
In Hong Kong, people also benefit from zero sales tax, zero value added tax and zero annual net worth taxes.

Melissa Glotzer is a Marketing Assistant at Healy Consultants. She is a graduate of the University of Manchester Business School with a BSc (Honours) in Management with Accounting and Finance.

Items on Amazon Right Now for Tax Deduction Interest:

Claim deduction

I have invested Rs 1 lakh in the Senior Citizen Savings Scheme during the current financial year (2009-10). Can I claim deduction under Section 80C of the Income Tax Act?

Mortgage Interest Tax Deduction

Question: I currently own my home outright with no mortgage. I am considering a mortgage to pay some bills and remodel.?

What Tax Deductions are available to me? Will this be treated as a purchase or refinance? Thank you.

Answer: It will be treated as a refinance. The mortgage interest you pay will be deductible on Schedule A – Itemized Deductions along with any points that you pay for a mortgage, but you will have to itemize to get any benefit out of the mortgage interest.

Items on Amazon Right Now for Tax Deduction Refinance Mortgage:

Deadlines Loom for Consumers

As 2009 winds down amid talk of an economic recovery, government programs designed to help consumers—from mortgages to car loans—will begin to expire, according to a recent update from the California Society of CPAs.

Tax Credit for First Time Home Buyer Mortgage, $8000 Government Assistance Program for Home Finance

Question: If I pay AMT, is mortgage interest for my primary residency deductible?

Are charitable or any other Itemized Deductions allowed under the AMT? Thanks.

Answer: Interest used to buy home: Yes.
Interest from HELOC to do anything else unrelated to the home: No
Charitable Contributions: Yes
State Taxes: No
Property Taxes: No
Peronsal Exemptions: No.

The interest from your primary mortgage and your charitable contributions are still deductible under AMT. The biggies that aren’t are state and local taxes, personal exemptions as well interest on loan not used to buy or improve the home.

Items on Amazon Right Now for Mortgage Deduction Amt:

Hayes explains individual income tax fundamentals

St. Clair County — It’s less than 30 days until tax day. April 15th will be here before we know it, so here are some basic fundamentals you need to know if you’re planning to prepare your own individual income tax return.

Late-breaking Tax Law Changes