Sandy Botkin’s new book “Real Estate Tax Secrets of the Rich” explains tax benefits for homeowners and investors in an easy-to-read, authoritative format. The blessedly short chapters include simple explanations of sometimes-complicated tax rules with lots of examples and “Sandy’s elaborations,” which provide practical implementation advice.
Just in time for the 2007 income tax filing season, Botkin’s new book provides strategies to resolve key tax issues so property owners can legally minimize their tax bills. What is especially valuable about this new book is the author doesn’t just explain real estate taxation, but at the end of each chapter there are citations to the Internal Revenue Code, tax court decisions, recent IRS rulings and other authoritative sources.
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The book includes basic tax explanations on virtually every topic homeowners and investors need to understand. In addition, the author provides advanced tax strategies, such as how to avoid tax if your principal-residence sale results in capital gains exceeding the $250,000 or $500,000 tax exemptions of famous Internal Revenue Code 121.
But this is more than a simple real estate tax book. It provides coverage of important tax topics most people don’t think about but should know about
For example, Botkin explains how to deduct costs of looking for investment property to purchase, including travel expenses. Of course, there are lots of examples showing how the tax law applies differently depending on whether the investor is just starting out or already owns realty investments.
Advanced-level real estate owners will especially profit from tax techniques that are a bit “over the top” but are perfectly legal. To illustrate, for home sellers who rented their homes more than three years during the last five years and lost their $250,000 or $500,000 principal-residence exemptions, the author explains how selling to your “S corporation” can be beneficial taxwise.
The superb graphics, even with cartoons, make the potentially dull topic of taxes especially interesting and easy to comprehend. Occasionally, Botkin even adds a bit of humor, such as his explanation of how increasing your withholding allowance for $33,000 of additional homeowner deductions is “like giving birth to 10 children (a $3,300 exemption each) … but a lot less painful.” I didn’t know CPAs were allowed to have a sense of humor.
Botkin’s explanations of how divorce and death affect homeowner tax benefits are the best and easiest to understand. He even reveals a little-known tax loophole for a surviving-spouse head of household who can file a joint tax return for up to two years after a spouse’s death. The author also simplifies the market value stepped-up-basis rule when inheriting property from a deceased co-owner.
If you thought it was impossible to understand the tax benefits of owning your home and/or investment property, think again after reading this excellent new book. Botkin explains the Internal Revenue Code to make it as understandable as possible.
Chapter topics include “Why You Should Own Your Home”; “Buy a Home or Die in Poverty”; “Tax Basis: The Starting Place for All Deductions”; “IRS Record Keeping Requirements to Bulletproof Your Basis”; “Why Making Improvements to Your Home is Much More Valuable than Making Repairs”; “Maximizing the New Mortgage Interest Rules”; “Excluding Gain When You Sell Your Home”; “Exceptions to the Two-Year Rule”; “Using an S Corporation to Avoid the Two-Year Rule”; “Understanding Depreciation”; “Making Land Deductible”; “Splitting Income by Hiring Family Members”; and “How to Avoid All Gain on the Sale of Investment Property Using Like-Kind Exchanges.”
Not only is this an ultra-complete tax book explaining virtually every topic applicable to homeowners and investors, but it is an easy, enjoyable read. Too bad Botkin didn’t write the tax code because then ordinary people could understand it. On my scale of one to 10, this outstanding new book rates an off-the-chart 12.
“Real Estate Tax Secrets of the Rich,” by Sandy Botkin, CPA, Esq. (McGraw-Hill, New York), 2007, $24.95, 207 pages; available in stock or by special order at local bookstores, public libraries and www.Amazon.com.
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