2010: the year of no estate tax?
Today’s Real Estate News
2010: the year of no estate tax?
Today’s Real Estate New
Provided by Inman News
Inherit property next year and save
Ilyce Glink
Inman News
Several weeks ago, a reader read what seemed like conflicting advice in the same real estate section. In an answer to a reader, I wrote that it’s generally better to inherit property, because you get a “step-up” in the cost basis. In other words, you inherit the property at the current market value on the day of the owner’s death. So, if you turn around and sell it for the price that is the current market value, you wouldn’t owe any taxes on the property.
Another columnist wrote that the stepped-up-basis tax law will expire in 2010, and that you would inherit property at the owner’s current basis. If you sold the property, you would then pay capital gains tax on the difference between the decedent’s cost basis and the current market value.
Confused? According to Chet Burgess, an enrolled agent who owns Brookwood Tax Service in Atlanta, “As the law currently stands, the basis step-up would expire with the estate tax, which is also set to expire in 2010. However, President Obama has already made it clear he will not allow the estate tax to expire, and is proposing to hold the estate tax exemption and tax rates at or close to their current amounts. If he succeeds in that effort, he generally is expected to maintain the basis step-up.”
President Obama has indicated that he would support freezing the current estate tax exemption at $3.5 million per person, or $7 million for a married couple. Next year, the estate tax exemption is scheduled to fall to zero, meaning you can inherit any amount estate tax-free. The exemption is currently expected to resume at $1 million in 2011.
Burgess said that since an extension of the current estate tax laws has not yet been brought up for a vote in either house, figuring out what will happen “would be pure speculation at this point.”
Q: I have a credit card that is my second-oldest, but it is a subprime card that charges a monthly maintenance fee of $6.95. I’ve had this card for three years.
I use this card only for small amounts each month and to continue the account history. Will closing this account hurt my score? I have eight other cards that are not subprime.
A: I don’t think closing a subprime card that is costing you nearly $7 per month (or about $94 per year) is going to hurt your credit history or score that much, if at all. I think you’ll find the effect on your credit history is small to none simply because the card isn’t that old yet, and you have at least one other credit account that is older.
If you told me that you were thinking of closing a credit card that has been active for 10 or 15 years, and you didn’t have any other credit accounts that were nearly that old, it might be a different story.
You should strive to maintain your oldest credit accounts. But if your oldest accounts are just two or three years old, and you have several that are about the same age, you should be fine with cancelling this one and saving the monthly fee.
While your credit-card company may not have a replacement card that suits your needs, before you cancel the card you might want to investigate whether you can transfer the card you currently have to a different card that does not charge a monthly fee.
If that option is available to you, you might ask if transferring the card simply transfers your credit history from the old card to the new card. You could consider that option if it’s available to you. Otherwise, if it cancels the old card and creates a new account and doesn’t transfer your history, you’ll be better off canceling that card and then choosing a card that you really would want and need.
Q: After reading about how to get a “free copy of your credit report,” I went online and without my knowledge was directed to FreeCredit.com. They thanked me in an e-mail for my membership to Triple Advantage Monitoring. I am so upset that this company has all of my important personal information, along with my credit-card information. Please inform all of your readers of this unbelievable scam.
A: You’re not the only one to be fooled by a Web site purporting to offer “free” credit reports and scores. However, there are a couple of places to get a truly free copy of your credit report online: AnnualCreditReport.com and CreditKarma.com.
AnnualCreditReport.com is a Web site sponsored by the three main credit reporting bureaus: Equifax, TransUnion and Experian. It will not ask for your credit-card information (that should have been a red flag for you) unless you purchase a credit score.
Credit Karma is a Web site that offers a TransUnion credit score. When I signed up, it did not require me to input a credit card at all. Credit Karma works by offering you credit cards that match your credit profile. But you’re under no obligation to apply for any of the deals you’re offered.
Any Web site that purports to give you a “free credit score” or a “free credit report” but which asks for a credit-card number to generate your “free” score or report should be avoided.
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