Tax Guru – Ker$tetter Letter

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Archive for July 20th, 2007

Posted by taxguru on July 20, 2007

5 mistakes that can tax your 401(k) – From USA Today


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Posted by taxguru on July 20, 2007

A week or so ago, I stumbled across a web site for a group in Oregon called The Settlement Institute that claims to have better solutions for reducing capital gains taxes than just normal 1031 exchanges.  They sell a book for $29.97 with supposedly the top nine ways to sell properties and businesses that they claim even CPAs and tax pros don’t know. They even have an affiliate program costing $297 up front and $99 per year that is supposed to allow tax and financial advisors an opportunity to earn referral fees for steering clients their way to some kind of vague and unexplained installment sale scheme.

As part of my never ending ongoing research into tax issues, I signed up for their free email newsletter and downloaded their free pdf booklet on “5 Steps to the Right Exit Strategy” which was far too vague and useless to be of any value.  I’m now receiving daily hard-sell emails for their services.  The one I received today was amazing in its inaccuracy.  I have copied and pasted it exactly below.  See if you have the same reaction as I did when reading it.

Subject: Kerry, roll over the gains on your primary residence?


Hi Kerry,


I know that you have probably heard of a 1031 exchange and a IRA rollover, but did you know that you can actually “roll over” the capital gains on your primary residence and defer your capital gains taxes for a long time?


Well… most people don’t!


This tax loophole is not one of the more commonly used loopholes, simply because people do not know about it and their situation just does not call for its use.


Let me tell you how it works very briefly.


The 1031 exchange has a bit of a black hole when it comes to your primary residence.  It doesn’t work all that well.


However, you can do pretty much the same thing with your primary residence with the “roll over” loophole. 


To utilize this loophole all that you have to do is keep on “trading up” to a home of equal or greater value.  As you keep “trading up”, the rolled over capital gains accumulate until you finally decide to downsize to a lesser valued home.


To make this even nicer, at the age of 65 you get a lifetime exemption of $125,000 (as of 2007).  So, if you keep “rolling over” and do not downsize until you reach 65, you get to take the $125,000 exemption on your capital gains.  This is in addition to any “one time” exemption that you already get ($250,000 if unmarried: $500,000 if married).


This is a nice little gift from Congress that rewards people who keep upgrading to higher value homes over the years.


Kerry, if this loophole helps you out a bit, congratulations!


My best,




P.S. – This is just one tip of hundreds that are in our comprehensive manual, “The Top 9 Ways to Sell…”.  You can download this manual at: 



The Settlement Institute


18414 Old River Landing
Lake Oswego, OR


Wow!  I wonder why nobody knows about this special tax break for home sellers.  Could it be because this provision was repealed over ten years ago and replaced with an even more generous one?  The fact that they are touting tax advice that was repealed over ten years ago is more than enough to scare me away from ever relying on this outfit.  However, if anyone out there has more info on them, especially how their affiliate program works, I would love to hear about it.  In the meantime, I’ll stay with services that I know are more up to date on tax savings strategies, such as the hard working crew at TaxCoach Software.



TaxCoach Software: Are you giving your clients what they really want?


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