Latest news with #AdamBrewer
Business News Wales
16-05-2025
- Business
- Business News Wales
UK Farmers 'Have Two-Thirds of their Wealth Tied up in their Farm'
On average UK farmers have two-thirds (66%) of their total wealth tied up in their land, equipment and livestock, new analysis from Rathbones, one of the UK's leading wealth management firms, reveals. For almost a third of farmers (30%) interviewed this rises to over three-quarters of their wealth. The vast majority of farmers see their farm not only as their livelihood, but as their future pension which will provide the bulk of their income when they retire, meaning many will face a significant financial shock in a year's time, when new inheritance tax rules come into effect in April 2026, Rathbones said. Rathbones study reveals nearly all of the farmers interviewed (96%) see their farm as their future pension and over half (52%) believe that they will rely on their farm to finance up to half of their cost-of-living expenditure once they retire. Around a third (32%) say it will provide between half and three-quarters of their retirement income and 16% believe they will be almost wholly reliant on their farm which will fund 75% or more of their living costs once retired. At the moment farmers are almost entirely exempt from inheritance tax, as they can use a combination of Agricultural Property Relief and Business Property Relief to pass on their farmland and other business assets to children or grandchildren tax free. But this is set to change in April 2026, with single farm owners only able to pass on up to £1.5 million of farmland and assets tax free, and those who jointly own a farm only able to pass on up to £3 million tax free. This increase in inheritance tax is a significant worry for farmers, as the Rathbones study reveals that 92% of those interviewed expect the next generation in their family to take over the farm and run it, once the current generation is ready to retire. More than nine in ten (93%) of those interviewed said that they think the next generation will be capable of successfully running the farm – but profit margins for many farms are already very tight and 30% of farms are already loss making. Profit margins are likely to be further affected if the next generation of farmers are saddled with additional taxes to pay. Adam Brewer, Investment Director with Rathbones Group, said: 'Even prior to the IHT change, many families have been forced to utilise their land differently by moving into higher margin sectors like caravan parks to subsidise their traditional farming operations. 'The latest tax change is likely to accelerate this struggle, threatening the continuing viability of smaller farms in the area.' Rathbones highlights some key changes to Agricultural Property Relief and Business Property Relief potentially impacting farmers from April 2026: Rates of Relief: The full 100% relief continues for the first £1 million of qualifying property, after which only 50% is allowed for the excess value. This means estates may incur significant IHT liabilities compared to the current situation where larger estates could claim full relief. The full 100% relief continues for the first £1 million of qualifying property, after which only 50% is allowed for the excess value. This means estates may incur significant IHT liabilities compared to the current situation where larger estates could claim full relief. Trusts: Both individuals and trusts will each have a separate £1 million allowance for qualifying assets. Trusts created before 30 October 2024 will retain their own allowances, while post-Budget trusts will share a single £1 million allowance. Both individuals and trusts will each have a separate £1 million allowance for qualifying assets. Trusts created before 30 October 2024 will retain their own allowances, while post-Budget trusts will share a single £1 million allowance. Lifetime Transfers: For gifts made after 30 October 2024, the new rules will apply if the donor dies after 6 April 2026. Gifts could potentially reduce IHT liability if the donor survives for seven years, allowing family members to pass on substantial assets tax-free. For gifts made after 30 October 2024, the new rules will apply if the donor dies after 6 April 2026. Gifts could potentially reduce IHT liability if the donor survives for seven years, allowing family members to pass on substantial assets tax-free. Instalment Payments: Estates can opt to pay IHT liabilities in equal annual instalments over 10 years interest-free, which provides some flexibility for affected families.
CBS News
01-04-2025
- Business
- CBS News
How to qualify for IRS tax forgiveness, according to experts
With the tax filing deadline fast approaching, millions of Americans are rushing to finalize their returns. This time of year can be extra stressful if you have unpaid IRS taxes from previous years and owe more this year. Back taxes often snowball into a financial burden with growing penalties and interest. The IRS can also levy bank accounts, place liens on your property, garnish your Social Security disability check and damage your credit score. These repercussions underscore the importance of tackling this debt promptly. The good news is that several relief programs exist for struggling taxpayers. These could reduce or eliminate what you owe under certain circumstances. So it helps to know the qualifying criteria. Below, we spoke to experts about what to know, specifically. Start tackling your tax debt here now . Tax problems rarely resolve themselves and often compound over time. "In my experience, if you owed last year, then you'll probably owe this [year] and next year," warns Adam Brewer, tax attorney at AB Tax Law. With ongoing tax obligations mounting, many taxpayers need relief options. Joseph Leocata, JD, a certified public accountant and tax controversy advisor with Berkowitz Pollack Brant Advisors + CPAs, says tax forgiveness becomes viable "when the balance becomes insurmountable, when facing financial hardship or if the IRS intensifies collection actions." Below are three tax relief avenues to explore: "An offer in compromise is an agreement with the IRS to settle your tax debt for less than you owe," explains Logan Allec, a certified public accountant and owner of Choice Tax Relief. The IRS accepts offers in compromise through the following approaches: Of the above, "the most common is doubt as to collectibility," Allec says. Applying for it involves these steps: After reviewing your financial information, the IRS calculates your reasonable collection potential. For your offer to succeed, Allec notes that "your offer amount should be at least the amount of your reasonable collection potential." Explore your tax debt forgiveness eligibility here . Penalty abatement offers relief from the additional charges the IRS adds to your tax debt. "In certain circumstances, the IRS may fully or partially abate — that is, forgive — the penalties it has assessed against you," Allec explains. The IRS offers two main types of penalty relief: The IRS has 10 years from the date of assessment to collect a tax. "We've seen millions of our clients' tax debts written off due to the IRS's collection statute expiring," Allec says. Sometimes this happens without effort if the IRS isn't actively pursuing collection. But in many cases, tax professionals help clients enter formal arrangements such as "currently not collectible" status. Though this doesn't get rid of the debt right away, it could delay aggressive collection actions until the statute expires. Tax professionals highlight three qualification criteria for IRS tax relief programs: Tax relief services exist for many financial situations, and your circumstances will determine which option works best. So, consult a professional at a reputable tax relief company . They can assess your situation, help gather required documentation and guide you toward the optimal approach.
CBS News
29-01-2025
- Business
- CBS News
How does the mortgage interest tax deduction work? Experts explain
Tax season is officially here, and millions of Americans are now preparing to file their taxes for the income they earned in 2024. If you own a home, the mortgage interest deduction could reduce your tax liability — which could be especially useful given today's high mortgage interest rates environment. But if you want to take advantage of this opportunity to lower your tax burden, understanding if and how you qualify is key. Recent changes have reshaped how this tax deduction works. So, we asked tax and financial experts to answer common questions about claiming and making the most of it. Here's what they want you to know. Compare your best mortgage loan options online now. How does the mortgage interest tax deduction work? Experts explain "The government is subsidizing the purchase of your home by allowing you to deduct your mortgage interest payments," says Adam Brewer, tax controversy attorney at AB Tax Law. According to Lupe Valdivia, CEO of West Coast Tax Service, you can write off part of your mortgage interest and property taxes. First-time homebuyers can also deduct a portion of closing costs, including pre-paid points and interest paid through escrow. When you file taxes, these itemized deductions are claimed on Schedule A of Form 1040. What is the mortgage interest tax deduction? "The mortgage interest tax deduction is a [tax benefit that] allows you to subtract the interest paid on your home loan from your taxable income," says Jordan Leaman, certified financial planner and branch operations manager at Churchill Mortgage. Lisa Greene-Lewis, certified public accountant and tax expert at TurboTax, notes that under the Tax Cuts and Jobs Act, tax filers can deduct interest based on up to $750,000 in mortgage indebtedness. If you bought or refinanced your home before December 16, 2017, you may be able to deduct interest based on up to $1 million in mortgage indebtedness. Find out more about the mortgage loan options available to you here. Who qualifies for the mortgage interest tax deduction? Qualifying for the mortgage interest tax deduction is straightforward. Unlike some tax benefits, there are no income restrictions, but experts say you'll need to meet these specific conditions to qualify: Have itemized deductions above standard amounts:"You need to itemize deductions on your tax return rather than take the standard deduction," says Leaman. The standard deduction for 2025 is $15,000 for single filers and $30,000 for couples filing jointly. Your combined itemized deductions must exceed these amounts to make the mortgage interest deduction worthwhile. Have a loan secured by your home: The mortgage loan must be legally tied to your property as collateral. This gives your lender the right to claim your property if you default on payments. Live in the mortgaged property: "You [must] live in the home and it has to be a first or second home," says Valdivia. Use the loan for home purposes: Your mortgage must be used to buy, build or improve your home. Who doesn't qualify for the mortgage interest tax deduction? Even if you have a mortgage, certain situations might prevent you from claiming this deduction, including: The standard deduction exceeds the itemized total: If your mortgage interest, along with other itemized deductions, totals less than your standard deduction amount, you'll save more on taxes by skipping this deduction. Your spouse takes a different deduction approach: According to Brewer, married couples filing separately must follow special rules. If one spouse itemizes deductions, the other must also itemize. You can't claim the mortgage interest deduction if your spouse takes the standard deduction. You only own rental property: Rental property owners can't use this deduction. However, Valdivia says you can still benefit by applying mortgage interest as an expense to offset the rental income generated from that property. Mortgage interest tax deduction pros and cons to know Below, Greene-Lewis, Leaman and Valdivia break down what makes this deduction valuable and where it falls short. To start, this tax deduction offers several key advantages, including: It opens up other deductions: When you itemize mortgage interest, you can also claim other deductions such as property taxes, charitable donations and medical expenses. It reduces taxable income: Lowering your taxable income through this deduction can lead to significant tax savings, especially if you have a larger mortgage. Mortgage points are deductible: You can deduct loan origination points as part of your mortgage interest. This gives you an extra tax benefit in the year you buy or refinance. But it comes with some limitations, like: Refinancing restrictions: If you refinance your mortgage loan, you must spread point deductions across the loan's lifetime rather than claiming them all at once. Benefit limitations:"Higher-income homeowners with bigger mortgages tend to get the biggest benefits," says Leaman. Those with smaller loans might find the standard deduction more valuable. Deduction exclusions: You can't deduct large expenses such as down payments, home insurance or immediate repair costs. The bottom line The mortgage interest tax deduction can be beneficial for many homeowners, but it isn't a one-size-fits-all benefit. "I see so many opportunities missed simply because taxpayers followed advice from a friend and [didn't] claim a deduction they were entitled to," says Valdivia. So, it may benefit you to consult a tax professional who can review your finances. They can determine whether itemizing would save you more than the standard deduction and identify other tax advantages you might be missing. Your unique situation — including your loan amount, interest rate and other potential deductions — will determine whether this tax break makes sense.
Yahoo
29-01-2025
- Business
- Yahoo
Tax changes driving retirees to 'low-tax states.' What this means
When retirees opt to downsize, taxes are a critical consideration, especially if relocating to a new state. Adam Brewer, a tax attorney at AB Tax Law, joins Wealth host Brad Smith to explain the complexities retirees face when weighing how to when to downsize or whether it's worth to buy a new home or just rent. "If you're a retiree looking to downsize, don't take the tax side of things lightly. It's a complex mix because we're talking about income tax, we're talking about retirement, we're talking about property tax and we're also looking at inheritance tax," Brewer says. Brewer points out that the Tax Cuts and Jobs Act has accelerated the shift from high-tax states like New York to lower-tax states like Florida. This is mainly due to the law's limit on state and local tax deductions to $10,000. Additionally, Brewer touches on the potential pitfalls of selling a home to family members, warning, "If you sell it to your kids, you have to be careful about what is the fair market value of the home if you sell it. If you gift it... the lifetime gift exemption is so high... most taxpayers aren't going to run into that. But what their heirs may run into is if they ever decide to sell the property, now they could possibly get hit with a massive capital gains [tax]." To watch more expert insights and analysis on the latest market action, check out more Wealth here. This post was written by Josh Lynch
