This Summer It’s Important to Work Through Your 2018 Tax Projection

The end of 2017 saw the passing of the Tax Cuts and Jobs Act of 2017 (TCJA).? This new tax law is considered to be the largest tax reform in 30 years and we anticipate that most individual taxpayers will be impacted beginning with the 2018 tax year.

The new legislation brings a variety of changes to this year’s tax planning.? Some concerns you may have with the new tax law include:

  • How will the new tax law impact my mortgage interest deduction?
  • Can I still deduct my charitable contributions?
  • How will I be affected by the new AMT thresholds?
  • Will I be itemizing my deductions given the new SALT (State and Local Taxes) limitation?
  • Do I qualify for the new pass-through deduction available to Sole Proprietors, S-Corp Shareholders, and LLC Members?
  • Are my tax withholdings on my paystub properly adjusted for the new tax rates?

We strongly believe that tax planning is not just a year-end activity.? Given the recently passed TCJA, tax planning should be given a higher consideration and provided at an earlier point in the calendar year than in past years.

There are numerous planning opportunities and recommendations available to you now to address these new rules before the end of the year. Some areas of focus with your 2018 planning include: setting up a donor advised fund for your future charitable donations, maximizing retirement plan contributions, adjusting tax withholdings, installing solar panels, in addition to other planning moves to consider.

To help you strategize and consider your best planning options, try to work through your tax projection by the end of the summer. Start by reaching out to your CPA or tax preparer to set up an initial phone call.? If you aren’t currently working with a tax professional, please check out our Directory of MDTAXES CPAs and consider contacting the CPA that has an office closest to you.? Investing some time now might pay real dividends with tax savings down the road

Planning For The Rising Cost of College

On March 27th, my firm held the fourth live webinar in our Financial Boot Camp series titled?“Planning for the Rising Cost of College”?which was recorded and is now online.

Alex Oliver from First National Corporation?a?discussed a variety of topics. Did you know that for a child born today, four years at UMass Amherst will cost them a projected $260,000?? Whether you are hoping for financial aid or have already begun saving, you should view the webinar to hear Alex’s tips for not only putting money away, but also guiding your child to a college that will get you the best bank for your buck.

Please view the webinar and skip to the topics most relevant to you:

00:00: Introduction

04:01: Overview

04:48: Is College Worth the Cost?

07:50: Hyperinflation of College Expenses

09:14: How the Average Family Pays for College

10:37: Scholarships and Financial Aid

15:52: Savings and the Advantage of Starting Early

18:01: Investment Options for College Savings

18:50: 529 Prepaid Tuition Plans and 529 Savings Plans

25:20: How Much Should I Save Per Year?

27:22: Ways to Reduce Costs

30:06: Kiplinger’s Best College Values

Fannie Mae Announces Changes That Can Lower Interest Rate for Many Condo Owners

As you may have already heard, effective June 5, 2018, Fannie Mae announced many updates to their condo?approval guidelines that will now loosen the requirements for “warrantable” condos.? Effectively, these changes will allow many condos that would otherwise be considered “non-warrantable” with higher interest rates to now be “warrantable” and approved with lower interest rates.?And lower interest rates equate to smaller monthly mortgage payments.

Highlights are as follows:

Single Entity Ownership

  • 2-4 unit projects – no max or restrictions.
  • 4-21 unit projects – single entity ownership remains at 2 units max (no change in this segment.)
  • 21+ unit projects – single entity ownership is capped at 20% (increased from 10%.)
  • Also note that single entity ownership can go up to 49% in cases when an investor unit is being purchased by an owner occupant.

Commercial Space?

  • Increase commercial space to 35% (up from 25%.)

?Investment Property Transactions

?Allow investor transactions to be eligible for “Limited Review” when a 25% down payment is made on the unit.

  • A Limited Review condo approval simplifies the review and eliminates the need to have 51% owner occupied. Hence, an association could be considered 100% owner occupied if investors are putting down 25% or more.
  • A limited review also eliminates the need to review budget and reserves.

Two- to Four-Unit Condo Projects?

?Waive project review requirements, with the exception of some basic requirements that still apply.

  • No project review means no owner occupancy or single entity ownership requirements AT ALL.? This even applies to a 4 unit project that is 100% investment owned and with one entity owning 3 out of the 4 units. Crazy!
  • No “gut/non-gut conversion” requirements will apply on 2-4 unit projects, hence no engineer/architect reports, etc.
  • The “basic requirements” that all 2-4 units projects?must adhere are straight forward.?Basically, it must not be?a houseboat, condotel, timeshare, etc.

This is big news! Please reach out to Bob with whatever questions you may?have about these recent changes and what he can do to help with these favorable new rules for people purchasing condominiums.

Bob Cahill
Sr Mortgage Banker
Leader Bank, N.A.
50 Mall Road, Suite 110
Burlington, MA 01803

Cell: 781-589-8756

July 2018 Tax and Financial Planning Calendar

Month Income Taxes Saving and Investing
  • If you changed jobs, give one of our CPAs a call to discuss filling out new W-4 Forms
  • Now’s the time to work through your 2018 income tax projection, especially to figure out how things look due to the recent tax law changes
  • If you have working kids who will earn less than $12k this year, make sure they claim Exempt on their W4?to avoid needing to file a tax return for them next winter to have their withholding taxes refunded
  • If your Keogh or Solo 401(k) accounts are worth more than $250,000, or if you have employees in your plan, Form 5500-EZ due by 7/31/18
  • Review, update or create your healthcare proxy.