Magazine article Medical Economics

Q & A: Money Management

Magazine article Medical Economics

Q & A: Money Management

Article excerpt

This seller expense is a buyer deduction

To help my husband and me buy our new home, the seller paid the two points our lender charged to lower our mortgage rate. Will we owe income tax on that money for 2006?

No. Instead, when you eventually sell your home you'll reduce its cost basis by the amount the seller paid on your behalf. In the meantime, you can deduct the two points the seller paid as if you paid them yourself, assuming you itemize your deductions on your 2006 return.

Tighter rules for credit counselors

I've run up more credit card debt than I can handle and have considered credit counseling, but I've heard that counselors care more about collecting debts for credit issuers than helping strapped debtors. Is this true?

Some disreputable nonprofit credit counseling agencies have been known to push debt management plans that may not be geared toward the borrower or even necessary. Because they receive compensation from credit issuers, they're sometimes motivated to focus on collecting the debts owed. Other agencies charge borrowers exorbitant fees based on a percentage of the borrower's debt or tack on extra undisclosed fees.

Provisions included in the Pension Protection Act of 2006 clamp down on these and other tactics that take unfair advantage of borrowers seeking help. Debt plans now have to be personalized to address each borrowers specific needs. Fees must be disclosed up front and can't be based on the amount of debt unless state law permits it. Nonprofits also can't hit debtors up for "contributions" during counseling or turn away those who can't afford to pay for the services received. …

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