People, we must continue to critically examine what we hear on the news… We are not in a season of comfort! “Without a doubt, the most urgent challenge that we face right now is getting our economy to grow faster and to create more jobs…. we can’t wait for an increasingly dysfunctional Congress to do its job. Where they won’t act, I will.”
Our lives begin to end the day we become silent about the things that matter (Dr. ML King). Please take the leadership in making sure your friends and family are registered to vote, and vote. I challenge you today to find one person who is not, and give them a card, share the website, and pass along the dates for absentee voting in your city.
1. Decide what you can do yourself: Do you really have the skills to do it? Some tasks, like stripping wallpaper and painting, are relatively easy. Others, like electrical work, can be dangerous when done by amateurs. Do you really have the time and desire to do it? Can you take time off work to renovate your fixer-upper house? If not, will you be stressed out by living in a work zone for months while you complete projects on the weekends?
2. Price the cost of repairs and remodeling before you make an offer. Get your contractor into the house to do a walk-through, so he can give you a written cost estimate on the tasks he’s going to do. If you’re doing the work yourself, price the supplies.
3. Check permit costs: Ask local officials if the work you’re going to do requires a permit and how much that permit costs. Doing work without a permit may save money, but it’ll cause problems when you resell your home. Factor the time and aggravation of permits into your plans.
4. Doublecheck pricing on structural work. If your fixer-upper home needs major structural work, hire a structural engineer for $500 to $700 to inspect the home before you put in an offer so you can be confident you’ve uncovered and conservatively budgeted for the full extent of the problems. Get written estimates for repairs before you commit to buying a home with structural issues. Don’t purchase a home that needs major structural work unless: You’re getting it at a steep discount, 2.) You’re sure you’ve uncovered the extent of the problem, 3.) You know the problem can be fixed, 4.) You have a binding written estimate for the repairs
Important!!! Tax Deductions When You Work from Home
Working from home can offer many advantages including tax deductions. Just take care what you try to write off for your home office on your return. To meet IRS guidelines, your home office must be your principal place of business, or the place you see clients in the normal course of business. Parts of your home you use to store products or equipment for your business also count. That doesn’t mean that all your work has to be done from home. If you’re an outside salesperson, you probably spend most of your work time elsewhere. But if you do you billing and return customer calls primarily from your home, your home office should qualify.You can also qualify for the deduction if your employer requires you to work from home, as long as you don’t charge your employer rent. One big catch is that you must maintain the at-home office for your employer’s convenience, not your own, such as to complete reports at night or on weekends.
Measuring your home office: The amount you can deduct for your home office depends on the percentage of your home used for business. Your work space doesn’t need to be a separate room—a table in a corner qualifies. But it has to be an area that’s used solely for business. The tax break also covers separate structures on your property, like a detached garage you’ve converted to an office.
What can you deduct? Once you’ve figured out what percentage of your home you use for business, you can apply that percentage to different home expenses. These include: Mortgage interest, Real estate taxes, Utilities (heating, cooling, lights), Home repairs and maintenance (painting, cleaning service) and Home owners insurance premiums
Don’t forget depreciation: Depreciation is based on the idea that everything—even something like a home—wears out eventually. To figure home office depreciation, start by calculating the tax basis of your home: generally the purchase price plus the cost of improvements, minus the value of the land it sits on. Depreciation deductions for a home office are figured over a 39-year period. There are caveats. For a crash course, read IRS Publication 946 or talk to a tax pro. Depreciation deductions on your home office increase the amount of profit on a home sale that is subject to taxes. There’s an exclusion of $250,000 of profit if you’re a single filer, $500,000 for joint filers. Consult with a qualified tax professional on how depreciation deductions affect your tax liability when you sell (Houselogic 1/2/12)
State and federal officials finally reached a landmark $26 billion settlement on Thursday with five of the nation’s largest banks for fraudulent lending practices. The lengthy negotiations came to a close after the attorneys general of California and New York joined more than 40 other states on the proposed settlement. With news of continued low mortgage rates and a positive housing outlook for 2012, the settlement came on top of an already-good news week for home owners.
The New York Times: States Negotiate $26 Billion Agreement for Homeowners: After months of painstaking talks, government authorities and five of the nation’s biggest banks have agreed to a $26 billion settlement that could provide relief to nearly 2 million current and former American home owners. It’s part of a broad national settlement aimed at halting the housing market’s downward slide and holding the banks accountable for foreclosure abuses.
Bloomberg: Banks Paying Homeowners to Avoid Foreclosures: Banks, accelerating efforts to move troubled mortgages off their books, are offering as much as $35,000 or more in cash to delinquent home owners to sell their properties for less than they owe.
Line 6: If you bought or sold a home in the middle of 2011, figuring out what to put on line 6 of your Schedule A Form is tricky. Don’t simply enter the number from your property tax bill. If you bought or sold a house in midyear, you should instead use the property tax amount listed on your HUD-1 closing statement.
Line 10 – Deducting points when refinancing…You can deduct points paid on a refinance, but not all at once, they are deductible over the life of your loan. So if you paid $1,000 in points for a 10-year refinance, you’re entitled to deduct only $100 per year on your Schedule A Form.
Line 10 – HELOC limits. If you took out a home equity line of credit (HELOC), you can generally deduct the interest on it only up to $100,000 of debt each year. The bank will send you Form 1098 for interest paid on $200,000. But you can deduct only the interest paid on $100,000. If you just pull the number off Form 1098, you’ll deduct more than you’re entitled to.
Line 13 – Private Mortgage Insurance. You can deduct PMI on your Schedule A Form, as long as you started paying the insurance after Dec. 31, 2006. Unless Congress acts to extend the PMI deduction, however, 2011 is the last year for which you can take this deduction. This is also a good time to review your PMI: You might be able to cancel your PMI altogether because you’ve had a change in loan-to-value status.
Line 20 – Casualty and Theft Losses. You can deduct part or all of losses caused by theft, vandalism, fire, or similar causes, as well as corrosive drywall, but the process isn’t always obvious or simple: 1.) Only deduct losses that are greater than 10% of your adjusted gross income (line 38 of Form 1040); 2.) Fill out Form 4684, which involves complex calculations for the cost basis and fair market value, this form gives you the number you need for line 2. (Houselogic: January 5, 2012)
Schedule A Form: 6 Home Deduction Traps
Trap #1: Line 6 – real estate taxes
Your monthly mortgage payment often includes money for a tax escrow, from which the lender pays your local real estate taxes. That will lead you to putting the wrong number on Schedule A.
Example: Your monthly payment to the lender: $2,000 for mortgage + $500 escrow for taxes
Your annual property tax bill: $5,500
Now do the math: Your bank received $6,000 for real estate taxes, but only paid $5,500. It may keep the extra $500 to apply to the next tax bill or refund it to you at some point, but meanwhile, you’re making a mistake if you enter $6,000 on Schedule A.
Instead, take the number from Form 1098—which your bank sends you each year—that shows the actual taxes paid. (house logic, 1/5/12).