There's a right way and a wrong way to transfer a home posthumously.  The right way requires having a documented plan.  The wrong way could stick your loved ones with a tax bill so large they may have to sell the home just to cover it.

With just 4 minutes for the segment, The Today Show rushes through some very important estate planning considerations, but that doesn't make the points any less relevant.

Among the estate planning tips:

1. Even a simple will can big protection
2. For multiple beneficiaries, consider a trust agreement
3. Avoid taxes by "selling" your home to heirs while you're still living

Estate plans are simple, are cheap, and affords protection from the state and the IRS. Every homeowner should have one. 

It's Tax Day today and who among us doesn't love a legitimate tax deduction?

The IRS expects to process 138 million tax returns this year and accompanying those returns will be a melange of tax deduction requests. 

Most will be run-of-the-mill including such staples as mortgage interest, vehicle mileage, and child care deductions. Others, however, will be less ordinary.

On its website, TurboTax pays homage to some of the most off-the-wall, offbeat tax deductions through the years permitted by the IRS. 

Among the "weirdest deductions allowed":

• A bodybuilder's body oil so his mustles would glisten in competition
• A private airplane for owners of investment properties
• Landscaping for a sole proprietor that meets clients at home
• A swimming pool for a man with emphysema

Tax deductions are prized by U.S. taxpayers. Hopefully, your 2008 tax returns included some good ones, too.

There are 138 million taxpayers in the United States and, according to the IRS, 20 percent of them file their taxes within 7 days of April 15.  In a holiday-shortened week, that means that 27 million people had better get a move on.

And while a portion of this year's last-minute filers will file with storefront operations like Liberty Tax Service or H&R Block, many others will self-prepare with the help of tax software from TurboTax or TaxCut.

If you're a member of the do-it-yourself crowd, consider taking a review of this year's tax law changes before starting your returns.  The stimulus package signed into law this past February made a profound impact on tax liability and the list of changes may be helpful for you.

A few of the new, allowable income tax deductions for 2008 include:

• Mortgage debt forgiveness in the event of a short sale
• An additional standard deduction on real estate taxes paid
• $8,000 tax credit for homes bought since January 1, 2009

TurboTax offers 4 tax filing choices online, ranging in price from $100 to free.  If you're among the 27 million yet to file, choose whichever program fits best -- just choose it before April 15.

Filing could take several hours.  Plan accordingly.

Well, there are a couple of big deadlines coming up in the month of April.  We all know about the 15^th, for income tax purposes – unless you stall for a few months.  But, did you know that Orange County homeowners have a deadline of the 30^th of April in order to try for a re-assessment of their property taxes? 

Here is a recent development with our County’s Assessor’s office.  You no longer have to provide 3 comparable properties along with your request for a review of your property tax assessment.  Here is a link to an article from this morning’s Orange County Register: ( Which includes a link to the form needed, and a link to the Assessor’s website.)

Assessor says no comps needed for property tax reviews

While this is good news, it is my opinion that providing comps along with your request couldn’t hurt.  And while you can obtain “comps” from a couple of Internet sites such as Trulio, or Zillow, my observation of those is that they are not usually very accurate, especially if you have some features with your house such as a pool & spa, a view, or a great ( or poor.) location.  For many “extras” it is better to have a trained set of eyes doing the evaluating, instead of a microchip.

With that idea in mind, if you might be inclined to request an assessment review, first check out the Internet sites.  If you like the comps they provide – in other words they make a re-assessment look probable – then, there you go.  On the other hand, if you don’t like their comps, give me a call at (949)  643-2100, or shoot me an email, Bob@BobPhillips.net  with your address, and I would be happy to do the research at no cost.

An oft-touted benefit of homeownership is its tax benefits.  However, like most IRS-related items, understanding how the benefits work is not always clear.

In general, homeowners are entitled to two home-related tax deductions -- one for annual mortgage interest paid, and one for real estate tax bills paid.

Not everyone is eligible, though.  Some of the exclusionary traits include total amount borrowed, and whether or not the home is a primary or secondary residence.

The official IRS publication is filled with notes and explanations but, in general, you can calculate your approximate mortgage interest tax deduction using the following math:

1. Sum your annual mortgage interest and real estate taxes paid
2. Find your tax rate on the IRS tax bracket schedule
3. Multiple your tax rate by the sum from Step 1

This is grossly simplified, but fairly accurate.

As an example, a homeowner paying a combined $20,000 in 2008 mortgage interest and real estate taxes, and who is in the 28% tax bracket, may be due $5,600 in tax credits.

The availability of mortgage interest tax deductions is one reason why loan officers make reference to "after-tax mortgage rates".  An after-tax mortgage rate is effective interest rate, post-tax code, and can be calculated using the formula below:

(After-Tax Mortgage Rate) = (Mortgage Rate) * (1 - Marginal Tax Rate)

The same homeowner with a 5.000% mortgage rate, therefore, has an after-tax mortgage rate of 3.600%.

Because not every homeowner is eligible for home-related deductions, and because not every homeowner should claim them, talk with your personal accountant before making any tax-related decisions.

For most Americans, mortgage interest paid on a home loan is tax-deductible in the year in which it was paid. 

With advance planning, therefore, homeowners can increase their 2008 tax deductions and limit their tax liability on April 15.

The key is to make the January 2009 mortgage payment before the New Year begins.

In making the payment in 2008, the payment's mortgage interest is applied against this year's tax deductions instead of next year's.  And lest you think you're paying "in advance", remember that mortgage interest is paid in arrears; a payment due January 1 accounts for interest that accumulated in December 2008 anyway. 

Tax planning is a complicated issue and not all homeowners will qualify for mortgage interest tax deductions. Check with your tax professional before making tax planning decisions.