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Division of Property in a Divorce

In a divorce, the court is required to make a “just and equitable division of the marital property” of the parties without regard to marital misconduct. Although this does not require the court to split the parties’ marital property 50/50, in practice most courts will do so. Marital misconduct such as domestic abuse or adultery cannot be considered by the court in dividing property.Marital vs Non-marital PropertyMarital property is all real property and personal property, including vested pension plan benefits, acquired by either spouse during the marriage. Regardless of how title to the property is held, all property acquired by either spouse during the marriage is presumed to be marital.Each party is entitled to keep his or her own “nonmarital” property. Nonmarital property includes all real property and personal property which is acquired before the marriage, is excluded by valid antenuptial (prenuptial) contract, or is acquired as a gift, bequest, devise, or inheritance made by a third party to one spouse but not the other spouse. Because non-marital property includes property acquired before the marriage, getting married does not give your spouse a claim to your previously-owned property, which is a common misconception.Since all property acquired by either spouse during the marriage is presumed to be marital property, the spouse claiming that an item of property is nonmarital must show by a preponderance of the evidence (more likely than not) that the item is non-marital. In determining whether a gift was made to one spouse but not the other, the most important factor is the donor’s intent. An example of this is when an inheritance by one spouse is deposited into the parties’ regularly used joint checking account.Other Division of Property ConsiderationsThere are a few other things to note. One, in addition to dividing property, the court may order that the parties’ marital property be sold if the court finds it is necessary to preserve the parties’ assets. For example, when neither party can afford to pay the cost of the parties’ home on his or her own, the court may order the home to be sold. Two, if the court finds a spouse’s resources or portion of marital property are so inadequate as to work an unfair hardship, the court may divide up to one-half of nonmarital property to prevent the unfair hardship. In practice, however, such an action by the court is rare. Three, the parties cannot dispose of marital assets in contemplation of or during a divorce proceeding except in the usual course of business or for necessities. A party intending to file for divorce may open an individual bank account with marital funds or remove marital property from the home before filing for divorce. Such actions can be taken into consideration by the court when dividing property. Lastly, the appreciation in value of nonmarital property is considered to be marital property if it was the result of marital funds or efforts. An example would be a lakehome owned by a party before the marriage that is then remodeled with the parties’ joint funds or labor. The increase in value to the property as a result of these joint actions is considered to be marital property.Such as with child custody, child support, and spousal maintenance issues, determining what type of property is in question can be one of the many potentially complicated issues in a divorce. As a result, it is important to have an experienced family law attorney represent you in a divorce proceeding.

Investment Property Mortgages – Are UK Rising Interest Rates Pushing Investors Out Of The Market?

Investment property mortgages are often referred to as buy to let mortgages. Investment property mortgages are used where an investor is purchasing an investment property with the intention of renting it out to tenants in return for a monthly rental income.Many people are now involved in buying and selling investment property and as a result, the range of investment property buy to let mortgages has significantly grown. The investment property mortgages have become more widely available with some lenders offering buy to let mortgage products with up to 90% loan to value. If you can purchase investment property by using just 10% of your own capital this can result in the landlord being able to buy more investment property than before when the industry standard for buy to let mortgages was 15%.Investment Property – Do your ResearchWith more sophisticated products available for investment property and the demand for rental property continuing, landlords are tirelessly looking for ideal investment property for sale. Finding investment property for sale can be a time consuming exercise but the most successful investors will constantly be on the look out for the best deals on discounted investment property. An established investor will always be researching areas identified as property hotspots where they can be the first to invest in an investment property. Investment property in regeneration areas can be equally as good but remember it can take time before these investment properties deliver a substantial return on your investment. Investment property in good areas, with strong rental demand will always be a winner if you are looking at good investment property potential.Investment Property – Flat or HouseShould you buy a flat or a house as an investment property? A question often asked but there is no right or wrong reason. Property investors buy investment property for different reasons. Some may buy investment property in their local areas whereas others may buy investment property further afield. A house as an investment property may present a wider choice of tenants. For example a house bought as an investment property could appeal to a single person, a small family, professional couple, elderly couple etc. A house is more likely to be freehold so avoiding annual service charges. A flat bought as an investment property is more likely to appeal to professionals who don’t necessarily have time to maintain gardens or have children. So for these reasons it is important to identify the best investment properties in the area and where the biggest demand for tenants is.Investment Property – Student LetIf you are looking to buy an investment property in a university town, then a house could present a good return on investment for student lets. Plus, there are now many more buy to let mortgages available for investment property that is being let to students.

Property Management, Investment Property Tax Deductions, and Strategies for Real Estate Pros

The cost of hiring a property management company to handle investment properties is significantly less than most property owners believe. Investment property owners who manage their own property with the idea that property management costs are too much might be mistaken as to the actual real costs. Additionally, a large percentage of property owners do not take advantage of all of the tax strategies available to them. For example, if a property owner manages their investment portfolio out of their home office there may be some business related items they are not expensing. Interest in all forms including mortgage interest, equity lines of credit interest, and any business loan interest are all expenses which are typically deductible. Losses like casualties, disasters, and thefts are expenses which properly accounted for are deductible. The most overlooked deduction is depreciation on investment properties, and for real estate professionals as defined by IRC 179, an investment property owner can supercharge their depreciation deductions. To maximize one’s return on investment each property owner should educate themselves about tax strategies, and thoroughly evaluate their entire tax planning roadmap with a tax attorney or competent certified public accountant.Combined Tax Bracket Percentage Determines the True Cost of an Expense in Your Investment Property BusinessFirst of all a property owner must fully understand this basic concept. If their annual income from all of their activities placed them into the combined, federal, state, and local tax bracket of 50%, then their ordinary and necessary business expenses are in actuality fifty cents ($.50) for every one dollar ($1.00) spent. It’s simple to think about it this way: If a one dollar ($1.00) is spent on advertising then that one dollar ($1.00) is legally expensed. If a person is in the 50% combined tax bracket then they have actually only spent fifty cents ($.50). This is because the one dollar ($1.00) they spent actually reduces their taxable income by one dollar, thus, reducing their tax liability by fifty cents ($.50). So each ordinary and necessary expense is truly only 50% of the actual cost.Now that you have your mind around that concept if a property manager is charging you $200/month to manage their single-family residence rental property the actual (end of year) cost to the owner is only $100/month because the property management fees are an ordinary and necessary business expense and fully deductible. Now consider that 50% reduction in your perceived cost and maybe property management doesn’t seem so expensive anymore. Add to that the impact on your time, energy, effort you spend managing that property. Add to that the gasoline expense necessary to drive by that property once or twice a month. Finally, add to that the comfort of knowing a professional property manager could in fact be taking care of your property and you wouldn’t have to have all of these expenses, time, energy and effort and maybe, just maybe, you would reconsider using a property manager going forward because you now realize that they really aren’t that expensive for the services they provide.Home Office Deductions are Tricky, but can be LegitimateIf a home office is used 100% for ordinary and necessary business reasons then there is no reason a person shouldn’t be taking advantage of expensing the home office square footage, the equipment, the materials, the supplies and any utilities paid to help operate the office. The problem lies when the home office is used for personal reasons because it is difficult to prove what percentage of the home office is actually an ordinary and necessary business expense. There are many Internal Revenue decisions on this vary issue, and each one shows the difficulty in achieving the correct balance between business and personal expense, and more importantly, being able to prove it in an audit. If you are considering running your property management business out of your home office be careful. Although there are a lot of legitimate expenses which are clearly available to you, there are several that are not.Interest Expense is Sometime OverlookedWhen you are evaluating your interest expenses do not forget to expense any interest from your home equity line of credit as this can be easily overlooked. Also, if you have a small business loan that interest is deductible as well.Disaster, Theft Losses are DeductibleIn the event that a loss occurred during your business cycle those expenses are deductible provided you had a good record of the items that were lost. There would almost always be an offset as well for any insurance reimbursements, but the point here is that losses must be fully evaluated while you are preparing your tax strategies.Depreciation and the Real Estate Professional Internal Revenue CodeWhen planned correctly the “non-cash” expense of depreciating one’s rental property can be the difference in paying taxes or realizing the benefit of a tax-loss. Most residential investment properties are depreciated over 27.5 year period. Commercial property is depreciated over 39 years. However, if a person were to be classified as a “Real Estate Professional” pursuant to Internal Revenue Code 179, then the benefits of owning investment property become much greater. Without going into great detail a real estate professional’s own personal property portfolio is treated differently than a typical investor. If this is enticing enough one should investigate the benefits of this little known exception in the IRC and real estate industry.Contact a Competent Tax Attorney or Certified Public Account to Review All of Your Current Tax Strategies and any Planning Going Forward with Your Investment PropertiesThe information contained in this article is by no means tax advice, but merely some ideas to contemplate the next time you consider your tax situation. Every person who owns a rental property business should consider tax planning and tax strategies with a competent professional specializing in tax. There are numerous legal ways to take full advantage of tax laws and your professional status within the property management context, however these decisions need to be considered carefully with a tax professional.