What is Joint Tenancy?

Joint Tenancy

A professional and legal term for an arrangement between two or more people who own property together is joint tenancy. All property owners have the same rights and obligations to the property. Married couples, non-married couples, acquaintances, family, and even business partners might all own the land. The joint tenancy agreement can be used for personal property, bank accounts, and brokerage accounts, but it is most typically utilized for real estate investments. The joint tenancy agreement gives all property owners equal rights and obligations.

The legal arrangement for joint tenancy provides owners with a right to survivorship. If one of the owners dies, the deceased owner’s interest will be transferred to the remaining owner without the need for a court appearance or the use of probate law. This means that the shares of a deceased owner are passed on to other owners rather than being inherited. It is critical to file joint tenancy with a trusted partner because these agreements are difficult to manage, and the property will be passed to the trusted partner if you die.

How Does Joint Tenancy Work?

Many married couples own joint tenancies because it is the safest way to keep a property in the same family. Joint tenants have an equal share of the property’s rights and interests. There is no primary owner; instead, the two tenants have a contract that allows them to visit the property at any time. Joint tenants have complete freedom to make decisions regarding the property and are not restricted from any elements or aspects of it.

How is a Joint Tenancy Created?

Joint Tenancy

Anyone, whether a married couple or good friends, can apply to be a joint tenant. If you want to become joint tenants, talk to your real estate attorney about drafting a legal co-ownership agreement that meets all of your state’s criteria. They will also provide you with the best advice on whether the property is worth purchasing as joint tenants, as well as the benefits and drawbacks of doing so.

To become a joint tenant, there are a few prerequisites that must be satisfied. At the same time, all co-tenants of the land must receive equal shares of the property through the same deed. They must also have the same financial interest in the property and share equal financial responsibility. If the property has any loans, all owners are obligated to be responsible for those loans.

What happens If a Joint Tenant Wants to Sell Their Share?

In order for a co-tenant to sell their share of the property, all other tenants must agree. The co-tenants will be entitled to sell their interests in the property if all other tenants agree. If this occurs, a joint tenant will have to transfer their share of the property to another person who owns it. Keep in mind, however, that transferring shares ends the joint tenancy arrangement, therefore the new co-owner will need to enter into a new ownership agreement with the other co-tenants.

Tenancy in common is a new type of ownership agreement that is comparable to joint tenancy. Tenants in common, for example, are entitled to share their interest and will be equally accountable for all debts against the property’s loan.

What are the Mortgage Requirements for Joint Tenants?

In order to qualify for a loan, borrowers must have a credit score of at least 620 and a debt-to-income ratio of less than 50%. When applying for a mortgage as a joint tenant, however, co-tenants are allowed to add up their income and debts, increasing their chances of qualifying. They will easily qualify for mortgages if each co-tenant has a good credit score.

What are Some Advantages and Disadvantages of Joint Tenancy?

Becoming joint tenants has its own set of advantages and disadvantages. Here are a few of the many advantages:

  • Property Protection: Joint tenants are allowed to share all property duties, such as paying off debts and maintaining the property. In this example, you would have to undertake all of the maintenance yourself if you were a single owner; however, shared tenancy shields you from a variety of situations.
  • Property Access: In joint tenancy, the right of survivorship is a valuable asset since it avoids owners from having to go through probate court if a co-tenant dies. You are granted immediate access to the property.

The following are some of the disadvantages of joint tenancy:

  • Relationships: If the tenants’ relationship is paused or ended, this could be a major issue. Selling the property’s shares without the consent of all co-tenants is difficult and passing the property to someone else without the death of one co-tenant is even more difficult.
  • Property Management and Maintenance: If a co-tenant dies, it may be difficult to manage and maintain the property on your own. Once everything is passed to you, you will be burdened with a slew of duties.

For married couples, joint tenancy is a benefit, but it can also be a liability. If the property is purchased as joint tenants, the federal, state, and local taxes may differ. Contact our Certified Public Accountant Miami today to learn more about filing taxes on joint properties.

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Personal Property Tax

Personal Property Tax

Almost everything in America is subject to taxation. It’s as though you can never get away from the government. If you don’t pay your taxes, they’ll come after you like hunters, seeking to acquire the money they need to cover the country’s expenses. Everything is taxed, from fast food to living in a neighborhood. You’re effectively running the government since the country can’t function if you don’t pay your taxes. You will be required to pay taxes if your neighborhood requires road maintenance. Overall, you and your neighbors are responsible for maintaining the neighborhood clean and well-kept. Personal property tax is one of the many taxes you must pay, and that is what we will be discussing today in this article.

What is Personal Property Tax?

A personal property tax is a levy imposed by state or municipal governments on certain types of properties held by residents. Personal property refers to assets that are not considered real property, such as land or houses. Personal property taxes are typically collected by the local government or the state for purposes such as funding public works projects. This might involve things like road construction and school construction. Property tax is not required in every state, and the states that do levy it have varied rates. It’s critical to understand the distinction between personal and real property. Personal property is moveable and cannot be permanently placed in one area. Some personal property taxes are calculated as a percentage of the total value of the item. Cars, furniture, boats, and other valued items are examples of personal property taxes.

What are Some Examples of Personal Property?

Every state has its own set of rules for determining whether assets are taxable. Many states that levy a personal property tax take into account goods like machinery, equipment, and furniture that are utilized for business, sold, or stored. The following are examples of possible items:

  • Aircraft
  • Automobiles
  • Mobile homes
  • Office equipment and furnishings
  • Boats
  • Trailers
  • Farm machinery and equipment
  • Supplies other than inventory supplies
  • Books, media, CDs, and other equipment all available at libraries. Including the library itself.

What Items are Not Subject to Personal Property Tax?

As previously stated, each state has its own set of rules, and the types of personal property that are taxable differ. The following are some of the most common goods that aren’t taxed as personal property:

  • Intangible personal property: intangible personal property includes shares of stock, bones, money at interest, patents, trademarks, company records, notes, computer software, designs, and surveys, which are not subject to personal property tax.
  • Personal property tax does not apply to farm animals.
  • Personal property tax will not apply to household goods, clothing, or equipment used for personal purposes around the house.

How to File and Pay Personal Property Tax?

Personal Property Tax

Personal property taxes are usually due and assessed on January 1 in states that have them. After being assessed, the final tax bill is mailed to the individuals or businesses who owe taxes. When you buy certain types of properties, such as those described above, it is recommended that you register them with your local tax office, either online or in-person, using a form. It is up to you to decide whether or not to fill out this form based on where you live. There may be a yearly deadline for submitting this form.

To learn more about whether your recent property purchase is subject to property tax, call your Miami Tax Professional and Certified Public Accountant.

Failing to Pay Personal Property Tax:

If your state levies property taxes, you are obligated to pay those taxes, nevertheless. Failure to do so will result in further fines and penalties. If personal property taxes are not paid on time, the taxpayer will receive a notice in the mail along with a copy of the overdue tax bill, including penalties and interest. If the taxpayer still fails to pay the outstanding tax, the tax authority could go to court and ask for access to the taxpayer’s wages or bank accounts in order to reclaim the money owed. The tax authority can also issue a warrant for the seizure and forced sale of personal property if the situation is extreme.

The Benefits of a 403(b) Retirement Plan

403 Retirement Plan

Setting money aside for retirement is always a good idea; it is the wisest decision you can make for your future. Many Americans ignore all of these retirement plans, and when it comes time to retire, they find themselves with very little money. That amount of money will not be enough to ensure them a secure future and a comfortable retirement. Contributing effortlessly to a retirement plan provided by your workplace is the greatest way to save money for retirement. These may differ based on your employer and the type of employment you have. A 401(k) plan is offered by many private organizations; however, a 403(b) plan is only available to certain types of employees and workplaces.

What is a 403(b) Plan?

403 Retirement Plan

A 403(b) plan, commonly known as a Tax-Sheltered Annuity (TSA) plan, is a type of retirement savings plan. A 403(b) plan is similar to a 401(k) plan, but it is only available at specific workplaces. It is for those who work for tax-exempt organizations, certain healthcare groups, or public school employees who meet certain criteria. Government and religious employees may be qualified for the 403(b) plan in some cases. To learn if you are eligible for the 403(b) plan, contact your Miami Personal Tax Accountant immediately.

Your employer determines the type of plan you will receive. The 403(b) plan has a variety of investment options, including mutual funds, that can help you build a portfolio that best suits your risk tolerance. This plan includes an annuity arrangement, so keep that in mind. This affects a few scenarios and results in a few penalties:

  1. Except for a few circumstances, most withdrawals are subject to a 20% federal income tax withholding.
  2. A fee of up to 8% will be charged if a 403(b) plan’s annuity investment is attempted to be dissolved.

Contact your Miami Tax Accountant today to learn which plan is ideal for you and how to resolve these issues.

How does a 403(b) Plan Work?

Many employers deduct payments to 403(b) plans from employees’ paychecks. In most cases, the deduction is given as a percentage. For example, suppose you earn $3,500 every pay period and only want to contribute 5% to your 403(b) plan. Your employer will then deduct $175 from each of your paychecks and put it into your 403(b) plan. Keep in mind that payments to retirement plans under a 403(b) plan are withdrawn from your paycheck before taxes are applied. This lowers your tax payment for the next few paydays, but the underpaid amount will reappear when you withdraw money in the future. If your workplace offers a Roth 403(b), you’ll have to pay taxes when you make contributions.

Employers also match contributions in the same way that they do in a 401(k) retirement plan. They might match a set proportion of your earnings or employ a dollar-for-dollar match. Employer matching is quite advantageous because it essentially amounts to free money that you can put toward your retirement.

What are my Contribution Limitations for my 403(b) Plan?

The United States government supports retirement plans, which is why it offers so many tax-advantaged 403(b) plans to its residents. That does not, however, imply that you can invest all of your money in a tax-advantaged account. The programs have limits in place to ensure that employees do not contribute excessively.

The contribution limits for a 403(b) plan are identical to those for a 401(k) plan. Contribution amounts are capped at $19,500 per year in 2021. As of 2021, employees aged 50 and older can make additional contributions to their plans worth up to $6,500 per year. There is also a benefit in a 403(b) retirement plan for employees who have worked for the same company for 15 years. This benefit is not dependent on your age; if you have worked for the same employer for 15 years, you will be eligible for it. Employers in the foregoing situation are eligible for additional catch-up contributions from the Internal Revenue Service (IRS).

Withdrawing Money from a 403(b) Plan:

Employees can withdraw money from their retirement plans within certain timeframes. If employees withdraw money before reaching the age of 59 ½ they will be required to pay taxes as well as a 10% penalty from the IRS. If you have a Roth account, this will not happen. If you have a Roth account that is five years old, you can withdraw your contributions without penalty. If your workplace offers a Roth account, take advantage of it as soon as possible.

Keep in mind that after you reach the age of 71 1/2, you must begin taking Required Minimum Distributions (RMDs) from your non-Roth 403(b) accounts. You’ll have to pay taxes on RMDs as well. To understand more about retirement plans and what would work best for you, contact Miami Certified Public Accountants like SDG Accountants.