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The Future of Tax & Legal – Embracing Change with Confidence

Businessperson Calculating Invoice

Tax and legal professionals today face increasing complexity, risk, and ambiguity as technology, regulatory and business transformation converge. It’s easy to feel overwhelmed by the change and the infinite number of strategic options. But embracing this change is manageable with the right tools and the right partner.

Deloitte is helping clients navigate this increasingly complex, digital world by leveraging the combined strength of our technology capabilities from our Consulting and Tax & Legal practices, and by placing a continued emphasis on technology investment and skills development to prepare talent to meet the evolving needs of the business.

Harnessing Technology to Adapt to Change

Businesses in all sectors and regions are experiencing the opportunities and challenges that come with the immense changes of the Fourth Industrial Revolution. Even the most traditional business areas, such as tax and legal, are not immune. Technologies are disrupting business as we know it and in response, global tax and legal systems must transform and adapt to keep pace with these new business concepts and models. And organizations need to invest in their tax and legal departments to ensure they can operate confidently and effectively while minimizing risk.

Tax departments are tasked with executing flawlessly at a fundamental level: Ensure compliance, know the regulations and their implications, be precise, account for all the data, stay ahead of risk, and predict outcomes. And they are asked to do it all in an environment of exponential increases in data, added responsibility within the business, and new mandates from regulators.

As a result, tax professionals are moving to automate and apply analytics to help account for more data and to achieve greater precision. Technologies such as robotic process automation (RPA), natural language processing (NLP) and artificial intelligence (AI) give tax professionals the ability to work with all the information available in massive data sets.

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To not only see what has happened, but to more confidently predict what will happen. To be insightful and focus on implications and outcomes rather than being consumed by ensuring the accuracy of the numbers and on-time filing. And to do all this while meeting the increased transparency demands of regulators – who themselves are likely to use robotics and AI to collect and analyze companies’ tax data.

Likewise, technology has become a critical tool to help legal departments support rapidly evolving demands from the business and manage regulatory change.

Using Deloitte Tax and Legal professionals as an example, when the European Union’s General Data Protection Regulation (“GDPR”) came into force in 2018 along with the UK Data Protection Act, Deloitte UK’s Tax group engaged Deloitte Legal to assess the scope, and remediate where necessary, approximately 45,000 engagement contracts.

In the past this would have required a very lengthy manual assessment which would have been inefficient and prone to error as contract negotiations are typically buried in emails and hard to track. Instead Deloitte exercised a combined approach using dTrax, a proprietary artificial intelligence-enabled contract lifecycle management technology, with the support of skilled Deloitte Legal resources to simplify, automate, and streamline the contracting process.

The tool allowed Deloitte Tax client relationship owners to provide details about their engagements, which were then assessed by dTrax to determine whether the corresponding engagement contract required remediation. Where remediation was required, dTrax automatically generated a letter varying the Data Protection clause, which was sent directly to the client.

If negotiation of the Data Protection clause wording was required, Deloitte Legal resources were able to negotiate by reference to playbooks built into dTrax. This approach drove consistency while keeping contract negotiations managed and recorded within a single platform.

By combining technology with skilled resources, Deloitte UK’s Tax team was able to alter the business model, allowing for up to a 50 percent reduction in the number of required legal resources, a 40 percent reduction in the delivery turnaround time per variation letter, and an up to 60 percent reduction in the overall costs. Ultimately, the team gained greater visibility and insights into their contract terms and conditions, which increased their overall compliance and reduced risk.

Fueling Talent with Technology

While digital transformation is a tech-enabled shift, it requires a collaborative effort to change mindsets and embrace and advance transformation. A successful digital transformation demands a cultural change with a focus on continuous learning and embedding technology into the way we work.

Tax professionals have traditionally been tied up with compliance and the technical side of tax. Yet in this digital age, a robot can now do the data checking and digital tools can classify line items. So, today’s, and tomorrow’s, tax professional needs to understand the processes behind tax, be able to code, interpret data and make decisions. They have the opportunity to provide far more valuable and strategic input to their organizations, but they must be more adaptable to work with technology to enhance and reinforce their advice.

From the legal perspective, lawyers will need to have a broader range of skills to be ready for the legal landscape of tomorrow. Tomorrow’s digital lawyers will need to think and operate in a different way and they will need significant management, business strategy, technology and consulting capabilities to be able to deliver real value to clients. Adoption of the right tools, such as AI and data analytics, will enable legal teams to maximize efficiencies across multiple functions, standardize and adopt best practices, and help gather insights to support better decision making for the business.

Inspiring Confidence Today and Into Tomorrow with Technology

Deloitte has invested heavily in technology and we are accelerating our efforts in order to help both our own professionals and clients stay ahead. With more than 200 technology solutions in place, including robotics, AI, and machine learning capabilities, Deloitte Tax & Legal is helping clients manage compliance, bridge gaps between countries’ accounting principles, and manage research and development incentives claims. As we navigate the Fourth Industrial Revolution, having a tech-savvy foundation in our people and our processes will help set ourselves and our clients up for success and ensure our ability to work confidently now and far into the future.

Based in London, Philip Mills is the Global Tax & Legal leader at Deloitte. Prior to this, he led the Global Business Tax practice for two years and the UK Business Tax practice for seven years, amongst other roles. Philip also leads the Global Tax & Legal Executive and is a member of the Global Executive Committee. He has a Physics Bachelor of Science degree from Liverpool University, is a member of the Institute of Chartered Accountants in England and Wales and is a member of the Institute of Tax.

For nearly 20 years, Philip focused on M&A tax, particularly on Private Equity, Real Estate and Hedge Funds. He has worked on some of the more significant, large and complex European transactions in recent years as well as supporting the Fund advisers. Most recently, he took on advisory roles to some of Deloitte’s largest multinational corporate clients.

Source: The Future of Tax & Legal – Embracing Change with Confidence

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Man Loses Home After Failing To Pay $8.41 In Property Taxes

$8.41. That was how much 83-year-old Uri Rafaeli, a retired engineer, in Michigan underpaid his property taxes by in 2014. That was all it took for him to lose his house.

Rafaeli bought a 1,500-square-foot Southfield home in 2011. He paid $60,000 for the property, and the deed was recorded by the Oakland County Register of Deeds on January 6, 2012. He put additional money into the home, too, as he intended to use the rental income from the property to fund his retirement.

Rafaeli believed that he was paying his property taxes on time and in full, but in 2012, he received notice that he had underpaid his 2011 tax bill by $496. He paid up in 2013 but made a mistake figuring the interest (interest also accrued while his check was in the mail): He was short by $8.41.

In response, Oakland County seized his property and put it up for sale. The home netted just $24,500 at auction; according to Zillow, the property is now estimated to be worth nearly $130,000.

The County kept the overage from the auction: $24,215 in profits, or 8,496% of the actual tax, penalties, and interest due (the debt had grown to $285 with penalties, interest, and fees).

It was all legal.

Under Act 123 of 1999, Michigan allows its county treasurers a great deal of authority to handle unpaid taxes, including rushing the tax foreclosure process. Under the Act, the property is considered delinquent if taxes aren’t paid in the previous year. If the outstanding taxes, fees and penalties remain unpaid after two years, the County can foreclose on the property; that’s much more quickly than before, when the average timeframe to move a foreclosure was five to seven years. Shortly after foreclosure, the former owner loses the right to buy back the property, and the County becomes the owner. At sale, the funds belong to the County. There’s no requirement to refund any of the proceeds to the owner even if the overage far exceeds the amount owed.

Rafaeli—and his lawyers—think that’s wrong. They took the matter to the U.S. District Court for the Eastern District of Michigan. The court found that Rafaeli—and a similarly situated plaintiff—suffered “a manifest injustice that should find redress under the law” but dismissed the claim for lack of jurisdiction.

Rafaeli tried again. He didn’t argue that he didn’t owe tax, penalties, interest and fees. But he did object to the County taking the excess. The County argued that Rafaeli had no rights to the equity because the General Property Tax Act does not expressly protect it. And that’s the reason that Rafaeli keeps losing: The courts have sympathy for his plight but have found that the law does not prevent the County from keeping it.

He’s not alone. Tens of thousands of properties in Detroit have been subject to the same kind of treatment. Many of those who owe taxes understand that they have a debt, but they don’t necessarily understand how to navigate the process or what the failure to pay on time can mean. As with Rafaeli, even something as simple as miscalculating the interest due, can have serious consequences.

Today, Rafaeli is represented by the Pacific Legal Foundation (PLF). PLF was founded in 1973 by members of then-governor Ronald Reagan’s staff as the first public interest law firm dedicated to the principles of individual rights and limited government. PLF is taking the case to the Michigan Supreme Court, arguing that keeping the funds is an unjust taking. If he wins, Rafaeli—and other landowners in similar situations—may be entitled to compensation.

According to PLF, the entire process, as it is happening now, is nothing more than government-sanctioned theft. “Predatory government foreclosure particularly threatens the elderly, sick, and people in economic distress,” PLF argued on its website. “It could happen to your grandparents. It could happen to you.”

Follow me on Twitter or LinkedIn. Check out my website.

Years ago, I found myself sitting in law school in Moot Court wearing an oversized itchy blue suit. It was a horrible experience. In a desperate attempt to avoid anything like that in the future, I enrolled in a tax course. I loved it. I signed up for another. Before I knew it, in addition to my JD, I earned an LL.M Taxation. While at law school, I interned at the estates attorney division of the IRS. At IRS, I participated in the review and audit of federal estate tax returns. At one such audit, opposing counsel read my report, looked at his file and said, “Gentlemen, she’s exactly right.” I nearly fainted. It was a short jump from there to practicing, teaching, writing and breathing tax. Just like that, Taxgirl® was born.

Source: Man Loses Home After Failing To Pay $8.41 In Property Taxes

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A short video explaining your property taxes and the role of the Assessor’s Office.

IRS Announces New Per Diem Rates For Taxpayers Who Travel For Business

Are you wondering about those updated per diem rates? The new per-diem numbers are now out, effective October 1, 2019. These numbers are to be used for per-diem allowances paid to any employee on or after October 1, 2019, for travel away from home. The new rates include those for the transportation industry; the rate for the incidental expenses; and the rates and list of high-cost localities for purposes of the high-low substantiation method.

I know, that sounds complicated. But it’s intended to keep things simple. The Internal Revenue Service (IRS) allows the use of per diem (that’s Latin meaning “for each day” – remember, lawyers love Latin) rates to make reimbursements easier for employers and employees. Per diem rates are a fixed amount paid to employees to compensate for lodging, meals, and incidental expenses incurred when traveling on business rather than using actual expenses.

Here’s how it typically works: A per diem rate can be used by an employer to reimburse employees for combined lodging and meal costs, or meal costs alone. Per diem payments are not considered part of the employee’s wages for tax purposes so long as the payments are equal to, or less than the federal per diem rate, and the employee provides an expense report. If the employee doesn’t provide a complete expense report, the payments will be taxable to the employee. Similarly, any payments which are more than the per diem rate will also be taxable.

Today In: Money

The reimbursement piece is essential. Remember that for the 2019 tax year, unreimbursed job expenses are not deductible. The Tax Cuts and Jobs Act (TCJA) eliminated unreimbursed job expenses and miscellaneous itemized deductions subject to the 2% floor for the tax years 2018 through 2025. Those expenses include unreimbursed travel and mileage.

That also means that the business standard mileage rate (you’ll find the 2019 rate here) cannot be used to deduct unreimbursed employee travel expenses for the 2018 through 2025 tax years. The IRS has clarified, however, that members of a reserve component of the Armed Forces of the United States, state or local government officials paid on a fee basis, and certain performing artists may still deduct unreimbursed employee travel expenses as an adjustment to income on the front page of the 1040; in other words, those folks can continue to use the business standard mileage rate. For details, you can check out Notice 2018-42 (downloads as a PDF).

What about self-employed taxpayers? The good news is that they can still deduct business-related expenses. However, the per diem rates aren’t as useful for self-employed taxpayers because they can only use the per diem rates for meal costs. Realistically, that means that self-employed taxpayers must continue to keep excellent records and use exact numbers.

As of October 1, 2019, the special meals and incidental expenses (M&IE) per diem rates for taxpayers in the transportation industry are $66 for any locality of travel in the continental United States and $71 for any locality of travel outside the continental United States; those rates are slightly more than they were last year. The per diem rate for meals & incidental expenses (M&IE) includes all meals, room service, laundry, dry cleaning, and pressing of clothing, and fees and tips for persons who provide services, such as food servers and luggage handlers.

The rate for incidental expenses only is $5 per day, no matter the location. Incidental expenses include fees and tips paid at lodging, including porters and hotel staff. It’s worth noting that transportation between where you sleep or work and where you eat, as well as the mailing cost of filing travel vouchers and paying employer-sponsored charge card billings, are no longer included in incidental expenses. If you want to snag a break for those, and you use the per diem rates, you may request that your employer reimburse you.

That’s good advice across the board: If you previously deducted those unreimbursed job expenses and can no longer do so under the TCJA, ask your employer about potential reimbursements. Companies might not have considered the need for specific reimbursement policies before the new tax law, but would likely not want to lose a good employee over a few dollars – especially when those dollars are important to the employee.

Of course, since the cost of travel can vary depending on where – and when – you’re going, there are special rates for certain destinations. For purposes of the high-low substantiation method, the per diem rates are $297 for travel to any high-cost locality and $200 for travel to any other locality within the continental United States. The meals & incidental expenses only per diem for travel to those destinations is $71 for travel to a high-cost locality and $60 for travel to any other locality within the continental United States.

You can find the list of high-cost localities for all or part of the calendar year – including the applicable rates – in the most recent IRS notice. As you can imagine, high cost of living areas like San Francisco, Boston, New York City, and the District of Columbia continue to make the list. There are, however, a few noteworthy changes, including:

  • The following localities have been added to the list of high-cost localities: Mill Valley/San Rafael/Novato, California; Crested Butte/Gunnison, Colorado; Petoskey, Michigan; Big Sky/West Yellowstone/Gardiner, Montana; Carlsbad, New Mexico; Nashville, Tennessee; and Midland/Odessa, Texas.
  • The following localities have been removed from the list of high-cost localities: Los Angeles, California; San Diego, California; Duluth, Minnesota; Moab, Utah; and Virginia Beach, Virginia.
  • The following localities have changed the portion of the year in which they are high-cost localities (meaning that seasonal rates apply): Napa, California; Santa Barbara, California; Denver, Colorado; Vail, Colorado; Washington D.C., District of Columbia; Key West, Florida; Jekyll Island/Brunswick, Georgia; New York City, New York; Portland, Oregon; Philadelphia, Pennsylvania; Pecos, Texas; Vancouver, Washington; and Jackson/Pinedale, Wyoming.

You can find the entire high-cost localities list, together with other per diem information, in Notice 2019-55 (downloads as a PDF). To find the federal government per diem rates by locality name or zip code, head over to the General Services Administration (GSA) website.

Follow me on Twitter or LinkedIn. Check out my website.

Years ago, I found myself sitting in law school in Moot Court wearing an oversized itchy blue suit. It was a horrible experience. In a desperate attempt to avoid anything like that in the future, I enrolled in a tax course. I loved it. I signed up for another. Before I knew it, in addition to my JD, I earned an LL.M Taxation. While at law school, I interned at the estates attorney division of the IRS. At IRS, I participated in the review and audit of federal estate tax returns. At one such audit, opposing counsel read my report, looked at his file and said, “Gentlemen, she’s exactly right.” I nearly fainted. It was a short jump from there to practicing, teaching, writing and breathing tax. Just like that, Taxgirl® was born.

Source: IRS Announces New Per Diem Rates For Taxpayers Who Travel For Business

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Per Diem is one of the largest tax deductions available to owner-operator truck drivers. Effective October 1, 2018, the daily rate was increased. In this video, we discuss Per Diem and how it will affect owner-operators.

As Mortgage-Interest Deduction Vanishes, Housing Market Offers a Shrug

The mortgage-interest deduction, a beloved tax break bound tightly to the American dream of homeownership, once seemed politically invincible. Then it nearly vanished in middle-class neighborhoods across the country, and it appears that hardly anyone noticed.

In places like Plainfield, a southwestern outpost in the area known locally as Chicagoland, the housing market is humming. The people selling and buying homes do not seem to care much that President Trump’s signature tax overhaul effectively, although indirectly, vaporized a longtime source of government support for homeowners and housing prices.

The 2017 law nearly doubled the standard deduction — to $24,000 for a couple filing jointly — on federal income taxes, giving millions of households an incentive to stop claiming itemized deductions.

As a result, far fewer families — and, in particular, far fewer middle-class families — are claiming the itemized deduction for mortgage interest. In 2018, about one in five taxpayers claimed the deduction, Internal Revenue Service statistics show. This year, that number fell to less than one in 10. For families earning less than $100,000, the decline was even more stark.

                                    

The benefit, as it remains, is largely for high earners, and more limited than it once was: The 2017 law capped the maximum value of new mortgage debt eligible for the deduction at $750,000, down from $1 million. There has been no audible public outcry, prompting some people in Washington to propose scrapping the tax break entirely.

If the deduction’s decline should be causing a stir anywhere, it is in towns like Plainfield, where the typical family earns about $100,000 a year and the typical home sells for around $300,000. But housing professionals, home buyers and sellers — and detailed statistics about the housing market — show no signs that the drop in the use of the tax break is weighing on prices or activity.

“From the perspective of selling and trying to buy, I don’t see any evidence of that,” said Paul Forsythe, who teaches physical education and coaches football at a high school.

Mr. Forsythe and his wife, Kylie, are selling their four-bedroom, two-bath home on a quarter-acre lot in one of Plainfield’s older developments, which dates to 1997. They are moving with their two daughters to a nearby suburb, closer to the schools where they work. They have owned homes through the ups and downs of the local housing market, which boomed in the early 2000s and crashed in the midst of the financial crisis.

“Right now,” said Ms. Forsythe, a fourth-grade teacher, “people are excited that the market is finally good again.”

Such reactions challenge a longstanding American political consensus. For decades, the mortgage-interest deduction has been alternately hailed as a linchpin of support for homeownership (by the real estate industry) and reviled as a symbol of tax policy gone awry (by economists). What pretty much everyone agreed on, though, was that it was politically untouchable.

Nearly 30 million tax filers wrote off a collective $273 billion in mortgage interest in 2018. Repealing the deduction, the conventional wisdom presumed, would effectively mean raising taxes on millions of middle-class families spread across every congressional district. And if anyone were tempted to try, an army of real estate brokers, home builders and developers — and their lobbyists — were ready to rush to the deduction’s defense.

Now, critics of the deduction feel emboldened.

“The rejoinder was always, ‘Oh, but you’d never be able to get rid of the mortgage-interest deduction,’ but I certainly wouldn’t say never now,” said William G. Gale, an economist at the Brookings Institution and a former adviser to President George H.W. Bush. “It used to be that this was a middle-class birthright or something like that, but it’s kind of hard to argue that when only 8 percent of households are taking the deduction.”

Kylie and Paul Forsythe outside the Plainfield home they are selling. “People are excited that the market is finally good again,” Ms. Forsythe said.
CreditAlyssa Schukar for The New York Times

Mr. Gale, like most economists on the left and the right, has long argued that the mortgage-interest deduction violated every rule of good policymaking. It was regressive, benefiting wealthy families — who are more likely to own homes, and to have bigger mortgages — more than poorer ones. It distorted the housing market, encouraging Americans to buy the biggest home possible to take maximum advantage of the deduction. Studies repeatedly found that the deduction actually reduced ownership rates by helping to inflate home prices, making homes less affordable to first-time buyers.

But the real estate industry said that scrapping the deduction could undermine the value of what is, for most American families, their most important asset. In the debate over the tax law in 2017, the industry warned that the legislation could cause house prices to fall 10 percent or more in some parts of the country.

Price growth has cooled in many markets, including New York and Seattle, but not nearly as much as the most alarming estimates suggested, and not in a pattern that suggests the loss of the deduction was a primary factor. Places where a large share of middle-class taxpayers took the mortgage-interest deduction, for example, have not seen any meaningful difference in price increases from less-affected areas, according to a New York Times analysis of data from the real estate site Zillow.

Skylar Olsen, an economist at Zillow, said that the slowdown in the housing market probably had little to do with the tax law. Home prices have risen much faster than wages in recent years, creating an affordability crisis in many cities that probably made slower growth in prices inevitable.

“Housing markets were burning so hot at an unsustainable pace and they had to come down,” Ms. Olsen said.

The tax law may have had another impact: It capped deductions for state and local taxes at $10,000, which had a particularly large effect in coastal cities and other places where property taxes and real estate values are both high. Those places did see a slowdown in the growth of home prices after the law took effect, although it is not clear whether the two were linked.

The national real estate industry argues that the two tax changes have together played a role in weakening the housing market.

“Clearly the housing market is underperforming in relation to economic fundamentals of job growth, wage growth and mortgage rates,” said Lawrence Yun, chief economist for the National Association of Realtors.

Economists like Mr. Yun and Ms. Olsen will probably debate the law’s impact for years. It is possible, and even likely, that sophisticated analyses will eventually conclude that limiting the mortgage-interest deduction did lead to somewhat slower price growth.

But for most home buyers and sellers, those subtle effects will be washed away by forces that have a much bigger impact: changes to mortgage rates, construction costs and supply and demand trends that vary from city to city and from neighborhood to neighborhood.

The tax law also rolled back the mortgage-interest deduction in a way that minimized the chance that taxpayers would notice its absence. Congress did not take away the tax break; it just changed the law in a way that meant fewer people would benefit from it — and buried the change in a much broader overhaul to the tax code.

But while Washington think tanks plot the deduction’s demise, the real estate industry is still hoping to restore it in some form. Mr. Yun of the National Association for Realtors said that as the housing market weakened, pressure would mount for Congress to restore some of the tax advantages that homeownership has historically enjoyed, although not necessarily in the same form.

For now, though, real estate agents and developers do not see the erosion of the mortgage deduction playing much of a role.

Plainfield’s housing market has been shaped by abrupt changes over the past 30 years. In 1990, a tornado leveled parts of town, killing more than two dozen people and forcing a huge rebuilding effort. At the turn of the millennium, the town had fewer than 10,000 residents. It has since quadrupled, with more growth on the way.

During the housing craze of the mid-2000s, developers leveled corn fields and sod farms to make way for cul-de-sacs. When the crisis hit, activity in many of the new subdivisions froze, said Ellen Williams, a real estate agent with Coldwell Banker in Plainfield who has sold homes in the area for nearly two decades. Only in the past few years has construction restarted in earnest.

CreditAlyssa Schukar for The New York Times

Ms. Williams helped the Forsythes buy their home several years ago, when the housing crash still weighed on the market and the couple was underwater on a townhouse that had become too small for their growing family. They rent the townhouse out now, which means that they still itemize their deductions, including for mortgage interest. They said the deduction was not a factor in the sale of their home this summer or in their purchase of a new one.

Ms. Williams said that has been the case across the market. “I don’t know that it’s been a huge enough change yet,” she said. “People worry about Illinois taxes more.”

In the Forsythes’ ZIP code, housing prices are up 2 percent from the last year, according to data from the online real estate brokerage Redfin. Homes are selling quickly, Ms. Williams said, as she gave a quick tour of a recently listed four-bedroom house backing up to a pond in a nearby community. The hardwood floors were well kept, the kitchen hardware dated to the mid-1990s and the home was listed for $267,000.

“There’s not a lot available in this subdivision,” Ms. Williams said, “so I anticipate it selling quickly.”

Jim Tankersley covers economic and tax policy. Over more than a decade covering politics and economics in Washington, he has written extensively about the stagnation of the American middle class and the decline of economic opportunity. @jimtankersley

Ben Casselman writes about economics, with a particular focus on stories involving data. He previously reported for FiveThirtyEight and The Wall Street Journal.

 

Source: As Mortgage-Interest Deduction Vanishes, Housing Market Offers a Shrug – The New York Times

Foreign Investment In U.S. Real Estate Plunges

The U.S. housing market has hit another stumbling block, as purchases of homes by foreign buyers dropped a dramatic 36%, according to a report by the National Association of Realtors.

The data comes from an annual survey of residential purchases from international buyers, which found that foreign buyers, led by the Chinese, purchased existing properties with a total value of $77.9 billion from April 2018 through March 2019, compared to properties totaling $121 billion in the preceding 12 months.

Investors from China exited the market most dramatically, with purchases falling 56% to an estimated $13.4 billion worth of residential property.

There are many reasons for the plunge, including less economic growth abroad — growth slowed to 3.6% in 2018 and is on track to slow to 3.3% in 2019 — tighter controls on outside investment by the Chinese government, a stronger U.S. dollar and a low inventory of homes for sale, according to Lawrence Yun, NAR’s chief economist and fellow Forbes.com contributor, who called the magnitude of the decline “quite striking, implying less confidence in owning a property in the U.S.”

Most foreign purchases were in Florida, followed by California, Texas, Arizona, North Carolina and Illinois.

While this is bad news for the overall U.S. market, it won’t make a crucial dent in the New York market, as foreign investment hasn’t been part of the market for some time, those in the industry say.

Leonard Steinberg, a broker in New York City with Compass, referred to the recent high-profile Manhattan purchases billionaire hedge-fund manager Ken Griffin, who closed on a $233 million penthouse earlier this year, and Amazon founder Jeff Bezos, who recently bought three condos for a combined $80 million.

“The reality of it is the Chinese billionaire or Russian oligarch were a small fraction of the market,” Steinberg says. “Your best foreign buyers are American buyers—just from other parts of the country.”

Svetlana Choi, a broker with Warburg Realty, said there is still foreign investment in New York, just not for ultra-luxury properties.

“While there are still Chinese investing, they would prefer to invest in an apartment building in Flushing that can bring a far larger return, than an empty super expensive apartment in New York City,” Choi says.

Noemi Bitterman, also of Warburg Realty, notes that as the market continues to decline, more investors may come through.

“My feeling is that now is definitely a time to buy because current prices reflect fair market value and not inflated prices as we saw six to 12 months ago,” Bitterman says. “The market has adjusted and prices are where they should be.”

Follow me on Twitter or LinkedIn. Check out my website.

I’ve been working as a journalist in the New York metro area for more than a decade and have developed a specialization in luxury real estate

Source: Foreign Investment In U.S. Real Estate Plunges

IRS Will Offer Free Help For Those Struggling With Withholding Taxes

Businessman opening envelope with paycheck

If the changes to tax rates and withholding over the past year have you scratching your head, help is on the way. The Internal Revenue Service (IRS) is offering a free online information session on how to do a Paycheck Checkup.

Here’s why many taxpayers are confused. The Tax Cuts and Jobs Act (TCJA) introduced many changes beginning in 2018, including caps on state and local tax deductions, a zeroed-out personal exemption amount, and the elimination of reimbursed job expenses. Additionally, new withholding tables were not available to employers until mid-January 2018, and some employees didn’t see a switch in withholding until mid-February 2018.

(You can find out more about updating your form W-4 here.)

The combination of new rules, new withholding tables, and even new tax forms meant that many taxpayers didn’t withhold properly. In January of 2019, the IRS advised that they will waive underpayment penalties so long as withholding and estimated tax payments total at least 85% of the tax shown on the return for the 2018 taxable year. Just a few days ago, the IRS expanded the relief to those whose withholding and estimated tax payments total at least 80% of the tax shown on the return for the 2018 tax year.

To avoid the same kinds of problems next year, the IRS is encouraging taxpayers to plan ahead. By plugging your current tax data into the withholding calculator on the IRS website, you can do a paycheck checkup and avoid any nasty surprises at year end. You should consider a checkup even if you did one in 2018: another review can help make sure you’re withholding the right amount for 2019.

The IRS webinar will walk you through how to use the online IRS Withholding Calculator (you can find out more about the withholding calculator here). Folks who might need a checkup include those taxpayers who had a large tax refund or tax bill for 2018 when they filed their tax return this year, or had a major life change (like a wedding, birth of a child or bought a house) in 2019. Other taxpayers who might need a checkup include two-income families or those taxpayers who have two or more jobs at the same time, or those who claimed refundable tax credits like the Child Tax Credit or Earned Income Tax Credit.

The seminar, scheduled for Thursday, March 28, 2019, will be offered twice: once in English (at 2 p.m. Eastern) and once in Spanish (at 11 a.m. Eastern). There will also be a special Q&A session. To register for the English version, click here. Para inscribirse en la versión en español, haga clic aquí. Closed captioning will also be available.

Want more taxgirl goodness? Pick your poison: follow me on twitter, hang out on Facebook and Google, play on Pinterest or check out my YouTube channel. 

Years ago, I found myself sitting in law school in Moot Court wearing an oversized itchy blue suit. It was a horrible experience. In a desperate attempt to avoid anythin…

Source: IRS Will Offer Free Help For Those Struggling With Withholding Taxes

How To Turn Tax Refunds Into Savings

The ongoing flap over tax refunds has once again highlighted a serious issue: Americans use tax withholding from their paychecks as a major savings tool. They give the government more than they owe in income tax throughout the year just so they can get a check the following spring. For many low-income filers, overwithholding has become their preferred, and perhaps their only, way to save. They ought to have a better option. Traditional economists say deliberately having too much tax withheld throughout the year is, not to put too fine a point on it………..

Source: How To Turn Tax Refunds Into Savings

Why Giving Your Child A Mortgage May Be Better Than Giving Them A House – Timothy K. McCarthy

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As housing prices continue to climb across the nation’s hottest real estate markets, many young families struggle to buy their first home, particularly in their parents’ more expensive neighborhoods. Wanting to keep their children close, parents, with the financial resources to help, often consider gifting a home to their children. While this tactic can help keep kids nearby, providing a home can have significant tax and other associated implications. But there is another option: giving your child a low-interest home loan……

Read more: https://www.forbes.com/sites/whittiertrust/2018/10/05/a-smarter-gift–why-giving-your-child-a-mortgage-may-be-better-than-giving-them-a-house/#2cbc41e37596

 

 

 

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