Be prepared to answer the following: 4. You are a new tax accountant. A potential client...

Be prepared to answer the following:

4. You are a new tax accountant. A potential client would like to meet with you to discuss your tax preparation and planning services.

A couple, with 1 child in college owns two homes, one in the city and one about 2 hours away on the beach. Both taxpayers are employed full time and would like to retire in the next 5 years.

Before your meeting, prepare a list of tax opportunities or tax issues to highlight with your potential clients. Choose 3 items from your list of tax opportunities or tax issues and expand on them, preparing a short write up on each item that you will share with the potential client.

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Expert Solution

LIST OF TAX OPPORTUNITIES & ISSUES

A) PROPERTY LET OUT BENEFIT

Holding property jointly provides tax benefit for rental income. First of all, rental Income is divided between owners in their respective ownership share. Different slab benefits will be available for both the owners as In case one of the co-owner has lower tax slab rate, he can avail the benefit of a lower tax rate on a part of the rental income received.

B) PROPERTY SELF-OCCUPIED BENEFIT

Deduction for the interest paid on the housing loan is allowed under the Income Tax Rules. For self-occupied properties, deduction for interest paid on housing loan is allowed to all the co-owners as per the respective Tax Laws. This tax saving may be invested wisely in various investment plans available.

C) TAX INVESTMENT BENEFIT

Capital Gains derived from the sale of house property are taxable as per the Income Tax Act. If an individual purchases another residential house property within the stipulated time, the amount invested in the new house will be allowed as deduction from the taxable capital gains.

ekkarill92 answered 1 year ago

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