Frequently Asked Questions
Q: I am about to sell my house. We have
lived here for 20 months. Do I have to worry
about paying any capital gains?
A: I would advise you to wait four
months before selling; so you will have lived in the
house at least two years. When you sell your primary
residence, there is an exemption from the capital gain
of $250,000. To qualify for this exemption, generally,
you must have owned the home (home, condominium or co-operative
apartment) for at least two years, and must have used
it as your primary residence for two of the prior five
years, before selling.
Q: What is a STAR Exemption?
A: STAR is the New York State School
Tax Relief program that provides an exemption from school
property taxes for owner-occupied, primary residences.
When a New York State resident purchases a new primary
residence, he or she should contact the City or Town
Receiver of Taxes to file the appropriate documents
with the Receiver to obtain the STAR Program exemption.
If you are a senior citizen living on a fixed income,
you should also contact the Receiver of Taxes as you
may be eligible for additional STAR benefits.
Q: Is the STAR Exemption filed automatically when
A: No. The local government does not
automatically file this information on your behalf since
it would not know if this is your primary residence.
Q: My father insists that he doesn't need a will.
How can I convince him that he's wrong?
A: Everyone needs a will. This is
the easiest way to make sure that the individuals and
charitable organizations receive what you want them
Your home state has prepared a will for you if you
do not have a will, or feel you do not need a will.
But the state provisions do not provide for charity.
Additionally, the state does not give all of your assets
to your surviving spouse, and does not name a guardian
for the care of your minor children.
The best way to make sure your father's intentions
are known is for him to have a will.
Q: I've seen software that allows you to
create your own will. Are these recommended?
A: When preparing a will or any other
estate planning document, you should be working with
an attorney who is completely familiar with estate planning
and the related estate planning documents. This assures
that a knowledgeable individual is providing you guidance
and expertise, and that your estate plan will be implemented
Q: I'm about to purchase some tax exempt
bonds. Are these really tax exempt?
A: Be careful of municipal bonds.
Some of these bonds (known as "AMT Bonds")
may be taxable on your federal income tax return. These
are bonds issued by states that do not meet all of the
requirements for complete exemption from income tax.
They are generally issued for a specific purpose, i.e.
the construction of a stadium or other building.
The income from these bonds is exempt from the regular
federal income tax. However, the interest is considered
an item of “Tax Preference,” and becomes
part of the income in determining your “Alternative
Q: I have more than one IRA. How do I know
which one to take annual Required Minimum Distribution
A: Most individuals have more that
one IRA account. If you are over age 70½, generally,
you are required to receive annual distributions from
IRA accounts. You can elect to receive the annual distribution
from one or more of your IRA accounts. This way, if
one account is not performing well, or is invested in
a low yielding bond or CD, you can choose to receive
part or all of the annual Required Minimum Distribution
(RMD)from that account.
If there are other custodians or trustees, you are
required to certify to them that you did take the RMD.
Q: I heard there are some tax changes I
should know about concerning my margin account. Can
you explain them?
A: Most stock brokerage accounts,
when opened, are “Margin Accounts.” An investor
is permitted to borrow funds from the brokerage firm
to purchase stocks or bonds. Interest is charged by
the brokerage firm for the use of that money -- essentially,
it's now considered a "loan."
Currently, the maximum tax rate for qualified dividends
and long-term capital gains is 15% (vs. 35% for all
other income). Depending on how the brokerage firm accounts
for the "loan," some or all of the investor's
dividends may not qualify for the reduced income tax
If you do not intend to use the margin capability,
you may want to consider changing the margin account
to a “Cash Account,” thereby insuring that
all dividends will be subject to tax at the lowest tax
For this reason, I recommend to all my Clients that
if they're using a margin account, they should consider
closing it due to tax changes.