Business Economics Finance

Commercial mortgage loans are used when purchasing structures such as office buildings, apartment complexes, health care facilities and retail outlets. Whether it’s a hi-rise tower or a family-owned restaurant, buyers typically need additional funding to complete the transaction. Commercial mortgages are what they pursue.

Similar in many ways to residential loans, commercial mortgages require far more paperwork. Both types of loan require that the properties being purchased undergo a thorough appraisal. Both require collateral to secure the loan and protect the lender against default.

Like residential mortgages, commercial mortgages can be refinanced to take advantage of more favorable terms, or they can be re-mortgaged to establish a line of credit to use for running the business. And like residential mortgages, the lender will hold the deed to the property until such time that the loan is
repaid in full.

During that time, the lender makes money off the interest on the loan. If the borrower fails to make payments on the commercial loan, the lender has the right to initiate foreclosure proceedings and take the property. Remember, the property likely is what will be used as collateral. The interest paid on the commercial mortgage usually is tax deductible; just be sure to consult with a professional first.

When you apply for a commercial mortgage, you will typically be offered two different types of loans: fixed rate loans and variable rate loans. These work the same as they do for residential mortgages.

On a fixed rate commercial mortgage, the interest rate that is negotiated and agreed to remains in effect until the loan is fully amortized. If you’re obtaining a commercial mortgage and interest rates are heading higher, a fixed rate likely is a better option. You can always refinance your mortgage should
interest rates go lower than your fixed rate.

With a variable rate commercial mortgage, the interest rate will fluctuate during the payback period. Interest rates are determined by the US Federal government. Make sure you understand how variable rates are determined. Also, find out from the lender how often the rate on a variable rate mortgage will change. It’s fine as long as the interest rate is decreasing; it’s the increases that you need to worry about. Make sure, too, that should the interest rates increase, you can still afford the monthly payments. With some variable rate loans, the rate is fixed for the first few years, and then converts to a variable rate loan.

When applying for a commercial mortgage, also ask about the Early Redemption Charge (ERC). Remember, lenders make money off the interest on the loan. When the loan is repaid in full sooner than anticipated, the lender loses money. To avoid losing money, lenders often include an ERC which can amount to a substantial, one-time sum. If you discover an ERC in the fine print, try to negotiate it away. If you’re not successful, take your business elsewhere.

Applying for a commercial mortgage means that you’re about to make a serious investment. Be sure you know exactly what you’re signing before you sign the documents. You have a right to ask questions, renegotiate more favorable terms and do whatever else you feel is necessary. It’s your money and your future. Good luck!

Commercial Lifeline are commercial-lifeline.co.uk Commercial Mortgage and Bridging Finance specialists.

Download our free Commercial Mortgage guides by visiting our Commercial Mortgage Guide page.

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Jimmie Clemons, retired, received a Form W-2G reporting $44,800.00 in winnings from a casino. As his gambling losses for the year were more than $44,800.00, he did not report any winnings or losses on his 1040.

The Tax Court, in Jimmie L Clemons T.C. Summary Opinion 2005-109, upheld the IRS position that gross gambling winnings must be reported as income on Page 1 of the tax return, with losses, to the extent of winnings, allowed as a “miscellaneous” Itemized Deduction. The losses can be deducted in full on Schedule A, and are not subject to the 2% of AGI exclusion.

While Jimmie was able to deduct $44,800.00 in losses to wipe out his $44,800.00 of income, the fact that the winnings were included in his Adjusted Gross Income caused 85% of his Social Security benefits to be taxed!

As a tax professional with a practice in New Jersey, and my share of regular lottery players and senior citizens who frequent the casinos of Atlantic City as clients, I have seen many examples where a taxpayer with net gambling losses for the year is royally screwed by “Uncle Sam”.

* Because of the way Social Security and Railroad Retirement benefits are taxed, there often exists a situation where you would be taxed on $1.85 for every additional $1.00 of income. If you have $3,000.00 in gambling winnings and $4,000.00 in substantiated gambling losses you could end up increasing your AGI by $5,550.00 ($3,000.00 x 185%). Even if you can take full advantage of an itemized deduction of $3,000.00 in losses, you still could end up paying $383.00 in federal income tax in the 15% bracket, or $638.00 in the 25% bracket, on a net loss for the year of $1,000.00.

* Even if you can deduct enough losses to wipe out your gambling income, an increased AGI could reduce your allowable medical and miscellaneous job and investment related deductions, reduce or even wipe out a multitude of deductions and credits that are affected by AGI, and even cause you to fall victim to the dreaded Alternative Minimum Tax (AMT).

* You can only receive the full tax benefit from deducting gambling losses if the total of your other Itemized Deductions equals or exceeds the allowable Standard Deduction. What if a single taxpayer with $5,000.00 in winnings and $6,000.00 in losses has only $2,000.00 in other deductions (i.e. state and local taxes and charitable contributions). While he can deduct $5,000.00 in gambling losses, he only gets a tax benefit for $2,000.00 of the losses: $5,000.00 losses $2,000.00 other deductions = $7,000.00 Schedule A - $5,000.00 Standard Deduction = $2,000.00 tax benefit. If he is in the 25% bracket he still ends up paying $750.00 in federal income tax on $1,000.00 in losses.

I should point out that losses from any type of wagering transaction can be deducted against your gambling winnings. If you win in the slots your deduction is not limited to losses from slot machines. You can deduct losses from the lottery, 50-50s, bingo, table games such as poker and blackjack, charity raffles, horse racing, keno, etc., up to the amount of your total winnings. It is a good idea to keep your losing lottery, raffle and racetrack tickets for the year, and keep track of slot activity by using a player’s card, in case you make a big score. If you are unlucky enough to be chosen for an audit of your losses here is a word of advice - make sure your losing racetrack tickets to not have footprints on them.

You should also know that winnings from a “no purchase necessary” marketing sweepstakes or contest are not considered to be gambling winnings for the purpose of calculating deductible gambling losses. The IRS defines gambling winnings as winnings from a “wagering transaction”. A recent IRS “Technical Advice Memorandum” (TAM 200417004) states that such winings are not gains from a “wagering transaction” because the winner did not furnish “consideration” for the chance to win the prize. If you win the Publisher’s Clearing House sweepstakes, or a trip to Club Med by being the 10th caller to a radio station, you must report the winnings, or the market value of the trip, as income on your Form 1040, but you cannot deduct any losing lottery tickets, slot machine losses, or any other kind of gambling losses against this income.

The unfair way gambling winnings and losses are treated on the 1040 is similar to the unfair way most taxable legal awards and settlements and the related legal fees are treated. Let us hope that the President’s Advisory Panel on Federal Tax Reform will address these inequities in the tax code in its report.

Robert D Flach is a tax professional with 34 tax seasons of experience preparing 1040s for individuals in all walks of life. He writes THE WANDERING TAX PRO weblog ( rdftaxpro.tripod.com/weblog rdftaxpro.tripod.com/weblog), the NJ TAX PRACTICE BLOG ( rdftaxpro.tripod.com/newjerseytaxpractitionernetwork rdftaxpro.tripod.com/newjerseytaxpractitionernetwork), and the website robertdflach.net robertdflach.net, which has a wealth of tax advice and information. He also writes and publishes THE FLACH REPORT, a quarterly tax newsletter. The above article is taken from postings to THE WANDERING TAX PRO.

Mistake No.1

Hello Fellow-Investor.

Most people will never reach their dreams of building wealth, being financially free and secure, and being able to retire in comfort. The reason is most often a combination of the 8 biggest money mistakes.

Now you might ask yourself what this has to do with trading the stock market?

Well, lots! Because as you know yourself, it takes money to trade and invest. And the more there’s left for you at the end of the day, the better. And avoiding the 8 biggest money mistakes can make a huge difference.

So here’s mistake No.1:

Giving Control of Your Money to Someone Else

Never allow this to happen! I can’t stress this enough. I’ve have seen people go down finacially before my very eyes because of this fatal mistake. Lucky for one person that she’s my own mother! At least me and other family members can support her, because my father doesn’t.

She left all the finances in the hands of my father that unfortunately didn’t know the very first thing about controling and handling money. He had absolutely no money management skills whatsoever..

And then they separated after 30 years and the financial downward spiral started.

If you’re not involved in your day-to-day family finances, you’re putting yourself at risk.
If you’re married and you let your spouse handle all the financial matters, you’re at risk if your spouse passes away or becomes seriously ill or if you divorce.

Know the details of your family’s finances, investments, debts, retirement savings, etc.!!!

Don’t turn your investments and financial affairs over to a broker or financial consultant either without keeping track of what is being done with your money and being involved in investment decisions.

Never give control of your money to anyone else. NEVER!!!

Next time you can read about mistake No.2: Not Controlling Spending Leaks.

Yours in Successful Trading,

Ricky Schmidt
stockbreakthroughs.com/ www.stockbreakthroughs.com

Ricky Schmidt is a captain with a major airline in Germany and stems from Miami, USA.

He got raised in South Africa and in Germany where he now lives.

Before he started his flying career though, he first got in touch with the financial market by working for a bank in South Africa back in the early 1980’s. His interest in finances stayed with him ever since and he started specializing in the stock market.

His ezine “Stock Secrets For Novices” is a newsletter that was created out of frustration in trying to decode books, magazines and newsletters on the subject, which are supposed to be for beginners but are not because they’re too difficult to understand. Too many “Big Words” and too much intelligent sounding grammar is used which is not very useful to any novice!

“Stock Secrets For Novices” is clearly and simply explained information that shows you how the stock market works in the easiest terms.

Knowing how the stock market works is half the battle won already. More often than not, you need to have a coach to challenge you and get you to the next level!