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Those individuals living in the UK may be familiar with the term county court judgments, or ccjs. A ccj is a court judgment which is registered against an individual for any number of reasons. The ccj is basically the court stating that an individual failed to pay a debt and has received a monetary judgment against them. Many lenders and business entities will research the ccj registry to see if an individual is on it prior to lending them money or credit. There are many reasons why UK ccjs affect an individual who is trying to obtain a mortgage or remortgage.

Alludes to Credit Worthiness

One reason why companies consider mortgages with ccjs of an individual or loans with ccjs of an individual is that the ccj is a judgment that relates to credit worthiness. If an individual has a ccj, this means that they were unable to repay a debt in the past and it even went to such lengths as to have a ccj issued against the debtor. This is why companies perform a ccj check, so that they may check on the individuals credit worthiness. If that particular person has a ccj under their name, the lender may hesitate when issuing a mortgage or remortage to the debtor.

Relates to Future Debt Patterns

Some lenders check the ccj registry not only to ascertain current and past credit worthiness but future debt patterns as well. A ccj check may help the company to decide whether the individual who receives a mortgage or remortgage will be more likely to repay the debt in the future. Those individuals who have multiple ccjs issued against their name may be less likely to obtain a ccjs mortgage or remortgage ccj than those who only have one ccj issued against them on the registry.

Provides a 6 Year Credit Span for the Company to Review

Companies and mortgage lenders also like to review the ccj registry as it gives them some insight into the past six years of the applicants life. Since ccjs remain on an individuals record for six years past the repayment of the debt, reviewing such a registry will provide additional information to the company as ccj removal is not an instantaneous occurrence post-repayment.

Allows Companies to Review the Overall Lending Risk

Lastly, those companies who review the ccj registry to determine whether they should lend to an individual or not allows them to review the overall lending risk which they might encounter should they lend to a particular individual. Again, those individuals who have multiple ccjs may be less likely to see a loan come their way. Lenders can use the ccj registry to aid them in their lending decisions.

Summary

The ccj registry is something that lenders consult quite frequently in the UK. It provides companies with some insight with regard to lender habits and past nonrepayment of debts. It is important to keep in mind however that even though an individual may have a ccj against them, this does not obliterate all chances of obtaining a mortgage as some lenders offer mortgages and remortgages to those with ccjs.

Let’s be honest: April 15th is a day of reckoning, the moment when we find out what we really owe for taxes. In households nationwide wallets are drained and many who were rich on the 14th are greatly impoverished by the 16th.

But for those with real estate the load is made lighter by tax rules which encourage the ownership of homes and investment property. Such rules are not only good for homeowners, they’re also good for the country: About 20 percent of all economic activity nationwide is related to real estate, so policies which encourage real estate activity help everyone.

It seems that almost every year changes to the tax code require the production of new forms and a re-education process. That said, the real estate basics remain in place and they’re good news for buyers, sellers, borrowers and owners.

Mortgage interest is generally deductible.

The IRS says there are three categories of deductible home mortgage interest:

Mortgages you took out on or before October 13, 1987 (called grandfathered debt).

Mortgages you took out after October 13, 1987, to buy, build, or improve your home (called home acquisition debt), but only if throughout 2005 these mortgages plus any grandfathered debt totaled $1 million or less ($500,000 or less if married filing separately).

Mortgages you took out after October 13, 1987, other than to buy, build, or improve your home (called home equity debt), but only if throughout 2005 these mortgages totaled $100,000 or less ($50,000 or less if married filing separately) and totaled no more than the fair market value of your home reduced by (1) and (2).
Substantial profits can be sheltered when a prime residence is sold.

When a prime residence is sold, up to $500,000 in profits can be sheltered from federal taxes if married, $250,000 if single, providing the home has been used as a prime residence for two of the past five years. Generally this deduction cannot be used more than once every two years, according to the IRS.

There are also provisions which may be helpful to individuals who must sell a prime residence in less than two years. Under the 2004 safe harbor rules, individuals may be able to get some capital gains relief under certain circumstances, such as being forced to move because a job has been relocated at least 50 miles or a home that must be sold because of multiple births resulting from the same pregnancy.

Also, individuals in the Armed Forces and the Foreign Service may be entitled to special consideration under the Military Family Tax Relief Act of 2003 (MFTRA). For instance, you may have longer to take a capital gains deduction or to amend a tax return. There are other provisions under MFTRA that also may be helpful, so check with a tax professional for specifics.

Points may be deducible by both buyers and sellers.

Picture a situation where a home is sold for $500,000 and the owner — to help close the sale — offers to pay 1 point for the buyer. If the property was financed with a $350,000 mortgage, a point would be worth $3,500. According to the IRS, “the seller cannot deduct these fees as interest. But they are a selling expense that reduces the amount realized by the seller.”

Interestingly, in this situation the buyer can also deduct the points when the home is sold.

“The buyer,” says the IRS, “reduces the basis of the home by the amount of the seller-paid points and treats the points as if he or she had paid them.”

In effect, the seller gets to write-off the $3,500 cost by reducing any profit from the sale. The buyer essentially lowers the purchase price of the property when the home is sold at some point in the future — thus increasing the size of any profit. However, since up to $500,000 in sale profits may be untaxed, most buyers will effectively never pay a tax on the seller’s contribution for points.

If a prime residence is refinanced then the deal with points is different: The expense of a point must deducted over the life of the loan. If the home is sold before the loan term ends, then any undeducted cost for points can be used to reduce owner’s profit from the sale.

Home offices may be deductible.

If a portion of your home is used regularly and exclusively as your principal place of business or for the convenience of your employer it may be possible to write off a portion of such costs as mortgage interest, property taxes and utilities. There are a number of tests which must be met to take this deduction, see IRS Publication 587, Business Use of Your Home for details.

In some cases there may be tax advantages associated with not deducting your home office in the year or two before you move. Speak with a tax professional for specifics.

Natural Disasters

The Katrina Emergency Tax Relief Act of 2005 provides extensive tax benefits and assistance to those who were victims of hurricanes Katrina, Rita and Wilma. For details, go to the IRS Katrina relief page or call 1-866-562-5227.

If you have been in a natural disaster — a flood, hurricane, tornado, etc., contact your local congressional office to see if special tax help is available. Links to congressional offices can be found by pressing here.

Investment real estate can generate substantial write-offs.

If you own rental property you must seek a fair market rental for your property. You may generally deduct mortgage interest, property taxes, repair costs, management by an outside party, depreciation, advertising, insurance, utilities, legal services and other expenses.

It’s possible with rental properties to have both a positive cashflow and a loss for tax purposes. However, the ability to use real estate losses to reduce overall taxes may be phased out as income rises above $100,000.

If a rental involves relatives special rules and restrictions may apply. Check with a tax pro for details.

A 1031 exchange may allow investors to defer all capital gains taxes.

With a 1031 transaction, investment property is exchanged for “like” real estate. The basic requirements are that within 45 days after the “relinquished” property has been sold, a “replacement” property must be identified. The identified replacement property must then be acquired within 180 days after the sale of the relinquished property.

What’s important about a 1031 exchange is that the capital gains tax on the relinquished property is deferred — but it does not disappear. What really happens is that the basis for the new property (the “replacement property”) is reduced by the adjusted value of the “relinquished property” (the old property).

A 1031 exchange is complex and requires the services of a “qualified intermediary.” Among other tasks, a qualified intermediary holds the money from the sale of the relinquished property and applies it to the purchase of the replacement real estate. This must be done because under the rules for 1031 exchanges, the seller of a relinquished property cannot touch money from the sale — it must be held by the qualified intermediary.

Accounting for a 1031 exchange is also complex. Essentially there is a need to figure out the sale value of the relinquished property, add back depreciation and account for financing. Ed Horan, a well-known exchange authority and the author of How To Do a Like Kind Exchange of Real Estate, has posted a free 13-page exchanging guide with an accounting worksheet that’s well worth reviewing before meeting with a tax pro.

Sources and Publications

As always with taxes, nothing is ever simple or easy. Speak with a qualified tax professional for specific advice — an enrolled agent, a CPA or an attorney who specializes in tax issues.

Also, the IRS itself has excellent information at its website, www.irs.gov, by phone at 1-800-829-1040 and with specialized publications such as those below:

Publication 523, Selling Your Home

Publication 527, Residential Rental Property

Publication 530, Tax Information for First-Time Homeowners

Publication 535, Business Expenses

Publication 587, Business Use of Your Home

Publication 936, Home Mortgage Interest Deduction

Publication 946, How To Depreciate Property