Q: A mortgage broker recently told me tax laws changed for 2006 and private mortgage insurance can now be deducted on tax returns. I have not been able to find documentation confirming this. Do you know if this is true? I have already filed my return. Would it be worth filing an amended return?

A: Relax. You haven't missed anything.

It's true that private mortgage premiums will be income tax deductible, but that's only for new mortgages placed in 2007. And unless it's later extended, the deduction will apply only to 2007.

Q: My uncle recently had a severe heart attack. Fearing that he would die soon, he was advised to give his daughter a quick-claim deed to his house to avoid probate court. A friend told him, however, that because of not inheriting the house through a will, his daughter would have to pay capital gains tax based on the original basis of the home rather than the stepped-up basis afforded a house at inheritance.

Sanlam first to offer capital guarantees on unit trust funds

Sanlam has become the first company to offer capital guarantees on unit trust investments. Until now capital guarantees have been available only on life assurance products. Sanlam is offering the guarantees on its Topaz range of products. The range was launched last year to give middle- to lower-income invest-ors on a marginal tax rate of less than 30 percent a more tax-efficient investment vehicle than life assurance endowment products. Life assurance companies pay income tax of 30 percent on all interest, foreign dividend and net rental income earned on endowment investments, as well as capital gains tax at an effective rate of 7.5 percent, on behalf of investors. Against this, interest earnings and capital gains from unit trust funds are taxed in your hands at your marginal rate of taxation.

No STT on debt-based schemes

There is no STT on debt-based schemes. Equity-based mutual fund schemes (65% or more exposure to equities) are governed differently from debt-based schemes. In both the cases, the dividend is tax-free in the hands of the investor. However, there is a dividend distribution tax at 14.025% payable by the mutual fund directly to the exchequer in the case of debt-based whereas, the equity-based are exempt from this tax. Equity-based schemes are also exempt from long-term capital gains tax. The short-term capital gains are taxed at 10.2% only.

The authors may be contacted at wonderlandconsultants@yahoo.com

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Fitch Rates Dallas Co. Utility & Reclamation Dist., Texas' $40.4MM ...

AUSTIN, Texas--(BUSINESS WIRE)--Fitch assigns its 'BBB' rating to the $40.41 million unlimited tax refunding bonds, series 2007 of Dallas County Utility and Reclamation District (DCURD or 'the district'), Texas. The series 2007 bonds will be insured by AMBAC and will be rated 'AAA' at closing. Also, Fitch upgrades to 'BBB' from 'BBB-' the underlying rating on the DCURD's outstanding $292.4 million unlimited tax bonds. The series 2007 bonds are expected to price the week of April 23 via UBS Financial Services, Inc. and RBC Capital Markets. The Rating Outlook is Stable.

Security for bond repayment is an annual ad valorem tax, with no legal limit as to rate or amount, levied against taxable property within the district. The refunding transaction will lower the interest cost on certain of the district's debt outstanding.

Beware of pitfalls when reporting your investing as a business

My son came to me perplexed recently. He was playing with one of those Transformer toys that morph into something different if you bend them properly. He was hoping I'd figure this thing out. Yeah, right. I tried for about 10 minutes to get the thing to look something like the police car it was supposed to be.

I have a much easier time transforming income from one type into another that will be taxed at a lower rate. Last week, I spoke about a taxpayer that did something similar. He reported his investment losses as business losses, not capital losses, which saved him tax. You might be able to do the same thing when filing your tax return this year.