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Estate Planning Fees No Longer Tax Deductible

4/30/2019

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Question:         I wrote an estate plan last year.  Are the legal costs tax deductible?
 
Answer:           Prior to the Tax Reform act of 2018, the IRS allowed deduction of your estate planning legal fees and costs, related to your “income”.  For example, legal fees related to the creation of a Trust holding title to “income producing property”, once qualified as deductible.  However, with the passage of the new act, the deduction has been negated until 2025. 
 
California financial advisor, Jason Thomas, explains why this is not a huge loss: “Even when estate planning fees were deductible, it was only for expenses related to the production of income, not for all estate planning fees”.  Furthermore, Thomas states, “expenses were previously subject to a floor of 2% of your Adjusted Gross Income”, meaning you would need very high expenses, to begin deducting. 
 
As always, confer with a CPA to obtain the latest advice on such tax matters.  

Attorney James Haroutunian practices real estate, estate planning and business law in Billerica at 630 Boston Rd and can be reached with questions at 978-671-0711 or via email: James@hlawoffice.com.  ​
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Made a Cash Offer.  Can I Still Use a Loan?

4/2/2019

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Question:  I am buying a home after recently making a ”cash offer”.  Now, I want to borrow the purchase funds.  The Seller is now complaining.  What are my rights?
 
Answer:  I will let you in on a little secret…there are two types of cash offers.  Each one provides different levels of confidence.  However, this is rarely understood by the parties. 
 
From Seller’s perspective: a cash offer confirms the buyer will not use a lender at all.  This conveys the most confidence and is likely what the Seller assumed about your situation.
 
From Buyer’s perspective: a cash offer, is simply not contingent upon the Buyer obtaining financing.  The buyer may use his own cash or borrow the purchase funds from a lender.  If this type of “cash” buyer fails to get a loan, he will lose his deposit – but still walks away from the deal. 
 
In your case, the Seller likely can’t terminate the deal, because of your loan.  It isn’t a violation of your contract.  However, give your Seller confidence in your ability to get a loan.  Share your good credit score, or your mortgage commitment when it comes in.  Remind the Seller that he will get your deposit if you fail to purchase.  Hopefully, the deposit amount is sufficient to calm the Seller’s nerves. 
 
Attorney James Haroutunian practices real estate, estate planning and business law in Billerica at 630 Boston Rd and can be reached with questions at 978-671-0711 or via email: James@hlawoffice.com.   
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