Tuesday, January 03, 2006

The Real Estate Market is Down

This morning, Al Tompkins reports that new homes sales are down 11% and that developers are offering some very generous incentives. If Al is talking about it, you'll be hearing about it from print and broadcast journalists all over the country.

This is a just a quick note to you if you're on the market for a new home - or any home that comes with inducements to buy.

Some of those offers are really generous - and tempting. But they will come with a surprising price tag - taxes.

Gifts, vacations, golf-club memberships will all turn out to be taxable income to you.

Instead, opt for price reductions, carpets, drapes, upgrades, landscaping and such. Things that are attached to the home, or that reduce the price of the home will simply change your basis (tax cost) in the home. They won't create a taxable event.

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