Can “U” help you?

In Michigan and many other states the sale of a property provides an opportunity for the tax man to

get in on the action with what is called a Transfer Tax. The tax is levied on most sales and is split between the state and the counties. It is made up of two deceptively named components – the State Revenue Stamp and the State Tax Stamp.  It’s sort of like a sales tax on the transaction and in Michigan amounts to a total of $8.60 per $1,000 of value of the sale. In Michigan it is customary that the Transfer Taxes are paid by the seller of the property; however, if the property is bank owned the banks lately have been requiring the buyer to pay those taxes.

There are also exceptions in the law that established these taxes (when are there ever not exceptions?), one of which was recently “clarified” by Michigan lawmakers. Exemption “U” provides that the seller is exempt from the Transfer Taxes if the SEV value of the property at the time of the sale is lower than the SEV value when the seller bought the property, i.e. it is still underwater, with negative equity, from the recent Great Recession.

While many areas in Michigan have recovered nicely the value that was lost in the Great Recession, not all area have shared equally in the comeback.  Many properties (mostly residential homes) that were purchased at the peak of the “real estate bubble” that led to the Great Recession are still way below those values. In most cases the SEV values of those homes rose along with the bubble prices (although not as fast due to restrictions on how fast SEV’s could be raised by local assessors) and reached heights that are well above where we are today. Many severely depressed areas, like Detroit and some surrounding, older suburbs saw value drops exceeding 50% during the Great Recession, after having seen run-ups in value that just didn’t make sense in retrospect.

So, now people who bought during the peak years are trying to sell and are usually taking a loss. In addition, the SEV values were brought down relatively rapidly to reflect the market values losses of

the recession. Most of those people now qualify for the Exception “U” relief from paying Transfer Taxes on the sale of their homes. Many who sold within the last 4 years and actually paid those taxes may also be due a refund of the taxes that they paid. The recent Legislative action clarified when and how properties qualified for the exemption from those taxes under Exception “U”.  There is a good article explaining how you can determine if you are eligible for a refund of those taxes at the Alger Law Office web site –

http://www.agerlawoffice.com/real-estate/2015/09/29/are-you-entitled-to-a-state-real-estate-transfer-tax-srett-refund-updated/

If you seem to be eligible, you can download the form to request the refund here –

https://www.michigan.gov/documents/2796f7_2601_7.pdf

So, the bottom line is that you may still take a loss on a property that was just way overpriced during the heat of the real estate bubble; but, you don’t have to add insult to injury by being taxed by the state on that transaction. And if you did sell within the last four years, you may be able to get a refund. So “U” can help you. 

I hope this post helped you, too.

Need tax help - Go with a Pro - Get Gerry Hoffman

It’s that time of the year when people think about taxes. Those are thoughts that stir fear and trepidation in many. The tax laws just keep getting more and more complex and there are more and more of them to be concerned about. All of this complexity increases the chances that you’ll do something wrong and end up with an IRS audit. That’s the big reason to seek help with your taxes. Once you’ve admitted that you’d like help, get the best - go with the pro - Gerry Hoffman of Hoffman’s Tax and Accounting.

I know of no one better to help you with your taxes and, if needed, to represent you at an IRS audit than Gerry Hoffman. Gerry holds a Master of Science in Taxation Degree and is certified to represent taxpayers before the IRS. If you spend any time just talking to Gerry about taxes you’ll come away with a couple of thoughts – this guy is passionate about his work and he knows what he’s doing. This is no “pay me $200 and I’ll fill in your tax forms” guy. Gerry studies the tax laws and takes over 40 hours a year of continuing education in order to keep up with all of the tax law changes. He knows where all of the legal tax breaks are and he knows where the lines are that you shouldn’t cross. He won’t let you wander across those lines and get into trouble.

This tax year in particular it is critical to understand the tax implications of the Affordable Health Care Act (aka. ObamaCare). Gerry knows what you can and cannot deduct based upon your situation and the choices that you made. Let’s face it, most of us don’t have a clue. If you bought or sold real estate during 2014 it is also critical to have someone who understands the tax codes help you with what is deductible and what isn't.

If you listen to a few of Gerry’s stories about going to IRS audits with clients you’ll quickly conclude that you’d want him there with you if you ever got called. Going into an audit situation like that without someone like Gerry is like going to trial on a potentially serious charge without a lawyer – don’t do it. I particularly like the stories he tells about sitting at the IRS  Audit table with his foot on top of his client’s foot, so that he can remind the client when to keep quiet by gently (sometime not so gently) stepping down. Also his advice, about staying quiet when the auditor leaves the room and until you get all of the way out of the building, makes perfect sense – there is always a chance that they are listening in on any conversations. Gerry makes sure that he doesn't have to confer with his clients on a phone while that sit behind glass in the next room.

Gerry’s a pleasant enough fellow that you might enjoy meeting him at a social gathering and talking about other things; however, he really comes alive when the subject turns to taxes and his passion for that topic shows through. I don’t know about you, but I’d much rather have a guy who is excited and committed to his profession than some part-time tax preparer trying to make a few extra bucks during tax season, especially after he's worked all day at his regular job . That guy will likely be back at his full-time job, if you get called in for an audit. Gerry will be there, ready to make sure that you don’t make any mistakes during the audit and to defend any and all entries that he made on your return (because he won't make any that can get you in trouble).

So, if yo want honest and knowledgeable tax help this season give Gerry a call at 248-553-2226 and get professional help this tax season.

The tax man cometh... get professional help from the best

At this time of the year when people think beyond the Holiday season they think about taxes. Those are thoughts that stir fear and trepidation in many. The tax laws just keep getting more and more complex and there are more and more of them to be concerned about. All of this complexity increases the chances that you’ll do something wrong and end up with an IRS audit. That’s the big reason to seek help with your taxes.

I know of no one better to help you with your taxes and, if needed, to represent you at an IRS audit than Gerry Hoffman. Gerry holds a Master of Science in Taxation Degree and is certified to represent taxpayers before the IRS. If you spend any time just talking to Gerry about taxes you’ll come away with a couple of thoughts – this guy is passionate about his work and he knows what he’s doing. This is no “pay me $200 and I’ll fill in your tax forms” guy. Gerry studies the tax laws and keeps up with all of the changes. He knows where all of the legal tax breaks are and he knows where the lines are that you shouldn’t cross. He won’t let you wander across those lines and into trouble.


If you listen to a few of Gerry’s stories about going to IRS audits with clients you’ll quickly conclude that you’d want him there with you if you ever got called. Going into an audit situation like that without someone like Gerry is like going to trial on a potentially serious charge without a lawyer – don’t do it. I particularly like the stories he tells about sitting at the IRS  Audit table with his foot on top of his client’s foot, so that he can remind the client when to keep quiet by gently (sometime not so gently) stepping down. Also his advice, about staying quiet when the auditor leaves the room and until you get all of the way out of the building, makes perfect sense – there is always a chance that they are listening in on any conversations.


Gerry’s a pleasant enough fellow that you might enjoy meeting him at a social gathering and talking about other things; however, he really comes alive when the subject turns to taxes and his passion for that topic shows through. I don’t know about you, but I’d much rather have a guy who is excited and committed to his profession than some part-time tax preparer trying to make a few extra bucks during tax season. That guy will likely be back at his full-time job, if you get called in for an audit. Gerry will be there, ready to make sure that you don’t make any mistakes during the audit and to defend any and all entries that he made on your return.


Give Gerry a call at 248-553-2226 and get professional help this tax season.


And once you get past the tax season, give Gerry a call for all of your accounting needs. The best way to be sure that you are ready for next year’s tax season is to use Gerry year-around as your accountant. That way you can take advantage of tax breaks during the year and not wait until tax time to claim them. He can also advise you about your business and do things like getting you set up as a corporation to get further tax advantages. Being in business is not all a DIY venture. That’s what people like your banker and your accountant are there for - to advise you on matters that you probably don’t have expertise on and to make sure that you don’t make mistakes but that you get the full advantage of the laws that govern those areas.


Call Gerry today and get started on a better 2014.

Rats, now I live in a deadbeat State…

I got my 2009 corporate tax documents from my bookkeeper today and in with them was an explanation that Michigan is now a deadbeat state as far as the Federal Government is concerned, so I have to pay extra on my Federal Unemployment Insurance to make up for the fact that Michigan didn’t pay.

Of course they didn’t use the terms deadbeat in their explanation. They used the oh so much better sounding phrase that Michigan is a “credit reduction state.” They explained that what this means is that Michigan borrowed money to pay for unemployment claims which they did not pay back. In fact Michigan generously paid for extended unemployment and then didn’t pay the feds back – the state is a deadbeat.

So what does that have to do with me? Well the Feds have got to get the money from somewhere, so who do you think they’re putting the arm on? You got it – the small business taxpayers of Michigan. So it seems that politicians can just borrow from the Feds and spend money that they don’t have then not pay it back and I’m somehow liable to the Feds on my tax return. How convenient for the state government people.

Maybe I should lay myself off and put in a claim for unemployment, At least that way I’d get my money back. Do you live in a deadbeat state, too? Watch for that on your tax return if you are incorporated as a small business.

Foreclosures and taxes

I've run into the interesting situation lately where some buyers that I've been working with have found some really nice foreclosed homes that they thought that they could buy, only to find out that the taxes put them way over their financing limits. That's particularly true at the low end, where young, first time buyers are perhaps trying to buy more home that they could normally afford by looking at foreclosed homes. They go out and get "pre-qualified" for a mortgage that is right at the top of what they can aford and then start looking for houses at that price.

I have shown lots of foreclosed home that were $300-400K homes a year ago that are now selling in the low $200K's. Sounds like a great deal, and some are - the ones that weren't thrashed by irate previous owners. The kicker that comes into play to prevent some of my buyers from taking advantage of these deals are the property taxes. In Michigan, as I suppose occurs elsewhere, the property taxes continue to be based upon the last appraised value (the one that still reflects a $300-400K home value) and not the foreclosure sale price. So, that deal at $200K may actually bring a tax bill with it as if the buyer paid $400K.

This shouldn't come as a great surprise, since the current taxes are listed right out in public on the MLS tickets. I try to point that out to clients, but many are in their own little worlds with visions of owning this great, new house. It's only when their mortgage person finally totals up the monthly payment, with taxes and insurance included, that they finally realize that another dream has been dashed. I've resolved to be even more diligent, up front with clients to make sure that they understand the tax situation. Local governments aren't likely to give anyone a break on the taxes, since they need the revenues and they hope that new owners will quickly get the places back to the condition that justified the old taxes anyway. So the old saw - "Look before you leap" - now applies to the taxes that your wonderful foreclosure find might have trailing along with it.