Negative gearing is the act of borrowing money to buy an asset which may or may not later earn the borrower some tax advantages.
It has its own advantages and disadvantages. It offers the borrower tax advantages in the event of his investment making a loss and the promise of long term gains in the form of capital appreciation, thus presenting the borrower the mouth-watering situation of saving tax as well as making money.
Many countries in the world exempt some taxes citing deduction of negative gearing losses as the reason. However, as always, the truth is often overlooked as one can be tempted by the win-win situation.
There is a huge risk in negative gearing as the losses associated with it can be huge. Thus, the borrower should always be at hand to withstand the shortfall and to fund the negative flow of cash. It is proven money making strategy, but keeping in mind the risks involved, it’s not a very reliable one.
Property tax appraisal is the practice of estimating or assessing the value of a property in terms of money. It is the very foundation on which property taxes are calculated.
This is because it is the tool used by the authorities in order to determine the value of the property and then in respect to that value, the amount of property tax to be levied.
Knowledge of property tax appraisal is an absolute necessity as it involves with determining the value of the land while keeping in mind the various factors.
Property tax appraisal is always performed by an expert who is generally known as the appraiser.
Different methods of appraising properties are used all over the world by the different governments with each method having its own pro and con.
Appraisal is also necessary because each and every property in the world is unique in its own way.
Tax liens refer to the right of the government to encumber property when taxes are not paid it is slightly different from tax levy. Well a person can also benefit through buying and selling “tax liens”. It is not a difficult job it just involves earning interest through financing the homeowner at an interest. Tax liens are not always bad since it makes a tax payer responsible .the following are the advantages of tax liens:-
The government is sure of getting tax or else it could encumber the property.
A person can earn interest by paying off tax lien of the house owner at a certain interest and if the house owner fails to pay the borrowed money then the person can have the whole property to himself.
There are tax lien certificates too. In case the government encumbers the property of a defaulter then since, we are holding the tax lien certificates we get the first priority in purchasing that property.
Doesn’t it seem odd when we say the real estate value is falling and the property taxes are decreasing? At this time should not the property tax be decreasing to increase purchase of real estates and let the real estate market come in equilibrium with demand? .But unfortunately my friends that is not the case.
Property taxes are calculated on consumer price index rather than state equalized value which may fluctuate according to market conditions.
State Equalized Values or SEV is equal to 50 percent of the market value of ones property. So even if the market value of properties is high or low the property tax can be higher.
When a person buys a property, the purchase price, exact half of it becomes the new State Equalized Values.
To the relief of property owners in 1994, Michigan voters approved a constitutional amendment known as Proposal A. Proposal A stated that to limit the increase in property taxes to either 5% or the annual change in the Consumer Price Index (CPI), whichever is less, until ownership of the property is transferred.
Debt-Stacking is the way to reduce ones debt in the shortest time possible with the same amount of money which is going out as repayment of debt each month. The principle of debt stacking implies payment of one debt after another but not both at the same time. In other words it can be stated as after payment of one debt utilizing the amount to be used to same debt at a later date for the payment of another debt. The following steps would enable a person to perform debt stacking better:-
Do not indulge in creating new debts.
Make a list of all the existing debts and arrange them according to their earliest clearance i.e. which one can be cleared of early.
Make Payments for the minimum amount required on all the debts until the first one is cleared.
Finally, after few years when all the debt would be cleared the saved interest on the debts paid off can be invested.