Q. I am interested in buying a vacation home abroad. Can the property be considered part of a retirement portfolio such as buying it with an IRA. I also want to avoid having the money used to be counted as taxable income. Are there any tax breaks available to finance the purchase such as taking a loan or mortgage? — Dreamer A. There are two issues here. The first is the vacation home abroad. The second is using your IRA to acquire tangible assets. First, the real estate abroad. There are two tax benefits to owning real estate. The first is the home mortgage interest deduction, and the second is the deductibility of real estate taxes. In order to take advantage of these deductions, you have t
Q. Are we Bamboozled when it comes to Social Security taxation? Paychecks are net amounts after various deductions, one of which is for Social Security. Income taxes are based on the gross earnings before Social Security deductions, therefore the money that was deducted for Social Security is being taxed. One could say Social Security contributions are after-tax money. Additionally, many retirees are taxed on 85 percent of their Social Security. Looks like double taxation to me. What do you think? — Tax tired A. It’s a smart observation. Here’s the history. Prior to 1984 Social Security benefits were explicitly excluded from federal income taxation. This changed with the passage of the 1983
Q. I’m a married New Jersey resident who has owned a house for 40 years but five years ago bought a home in Florida. We’re thinking of changing our residency to Florida. If in two years as non-residents we sell our New Jersey home, will we have to pay the exit tax? — Considering A. We have two issues here: the sale of your New Jersey house and changing residency while you still own a New Jersey home. Let’s start with your change in residency. We all know taxes in New Jersey are sky high, and people of all income levels are leaving the state. “If you sell your New Jersey home and move to a no-tax state like Florida,no one can question your change of residence,” said Bernie Kiely, a certified
