CHECK OUT THIS RECENT QUOTE BY A MAN KNOW TO HAVE MADE THE GREATEST TRADE OF ALL TIME!
Favorite quote made recently by John Paulson's who bet against the housing market before the CRASH is thought to be The Greatest Trade Ever: "If you don't own a home buy one. If you own one home, buy another one, and if you own two homes buy a third."
FEEL FREE TO EXPRESS YOUR OPINION ON BUYING A HOME IN TODAY'S ENVIORMENT?
Thursday, December 9, 2010
Friday, December 3, 2010
energy-saving tax credit
Talking Points
As winter approaches, homeowners may be looking for ways to cut energy bills. To assist with the cost of making energy-saving home improvements, the federal government is offering tax credits for qualified purchases. However, some of the credits expire Dec. 31, 2010.
Homeowners can get a tax credit for installing certain wood or pellet stoves; energy-efficient furnaces, water heaters, and air-conditioning systems; insulated roofs, windows, and doors; and wall and ceiling insulation. The tax credit covers 30 percent of the purchase costs, up to $1,500. A full list of eligible purchases can be found at www.energystar.gov.
As winter approaches, homeowners may be looking for ways to cut energy bills. To assist with the cost of making energy-saving home improvements, the federal government is offering tax credits for qualified purchases. However, some of the credits expire Dec. 31, 2010.
Homeowners can get a tax credit for installing certain wood or pellet stoves; energy-efficient furnaces, water heaters, and air-conditioning systems; insulated roofs, windows, and doors; and wall and ceiling insulation. The tax credit covers 30 percent of the purchase costs, up to $1,500. A full list of eligible purchases can be found at www.energystar.gov.
Thursday, April 29, 2010
Top Ten Tax Deductions for Landlords
Learn about the many tax deductions available to rental property owners.
Every year, millions of landlords pay more taxes on their rental income than they have to. Why? Because they fail to take advantage of all the tax deductions available for owners of rental property. Rental real estate provides more tax benefits than almost any other investment.
Often, these benefits make the difference between losing money and earning a profit on a rental property. Here are the top ten tax deductions for owners of small residential rental property.
1. Interest
Interest is often a landlord's single biggest deductible expense. Common examples of interest that landlords can deduct include mortgage interest payments on loans used to acquire or improve rental property and interest on credit cards for goods or services used in a rental activity.
2. Depreciation
The actual cost of a house, apartment building, or other rental property is not fully deductible in the year in which you pay for it. Instead, landlords get back the cost of real estate through depreciation. This involves deducting a portion of the cost of the property over several years.
3. Repairs
The cost of repairs to rental property (provided the repairs are ordinary, necessary, and reasonable in amount) are fully deductible in the year in which they are incurred. Good examples of deductible repairs include repainting, fixing gutters or floors, fixing leaks, plastering, and replacing broken windows.
4. Local Travel
Landlords are entitled to a tax deduction whenever they drive anywhere for their rental activity. For example, when you drive to your rental building to deal with a tenant complaint or go to the hardware store to purchase a part for a repair, you can deduct your travel expenses.
If you drive a car, SUV, van, pickup, or panel truck for your rental activity (as most landlords do), you have two options for deducting your vehicle expenses. You can:
deduct your actual expenses (gasoline, upkeep, repairs), or
use the standard mileage rate (55 cents per mile for 2009; 58.5 cents per mile for July 1, 2008 through December 31, 2008 and 50.5 cents per mile from January 1, 2008 through June 30, 2008). To qualify for the standard mileage rate, you must use the standard mileage method the first year you use a car for your business activity. Moreover, you can't use the standard mileage rate if you have claimed accelerated depreciation deductions in prior years, or have taken a Section 179 deduction for the vehicle.
5. Long Distance Travel
If you travel overnight for your rental activity, you can deduct your airfare, hotel bills, meals, and other expenses. If you plan your trip carefully, you can even mix landlord business with pleasure and still take a deduction.
However, IRS auditors closely scrutinize deductions for overnight travel -- and many taxpayers get caught claiming these deductions without proper records to back them up. To stay within the law (and avoid unwanted attention from the IRS), you need to properly document your long distance travel expenses.
6. Home Office
Provided they meet certain minimal requirements, landlords may deduct their home office expenses from their taxable income. This deduction applies not only to space devoted to office work, but also to a workshop or any other home workspace you use for your rental business. This is true whether you own your home or apartment or are a renter.
For the ins and outs on taking the home office deduction, see Home Business Tax Deductions or Every Landlord's Tax Deduction Guide, both by Stephen Fishman (Nolo).
7. Employees and Independent Contractors
Whenever you hire anyone to perform services for your rental activity, you can deduct their wages as a rental business expense. This is so whether the worker is an employee (for example, a resident manager) or an independent contractor (for example, a repair person).
8. Casualty and Theft Losses
If your rental property is damaged or destroyed from a sudden event like a fire or flood, you may be able to obtain a tax deduction for all or part of your loss. These types of losses are called casualty losses. You usually won't be able to deduct the entire cost of property damaged or destroyed by a casualty. How much you may deduct depends on how much of your property was destroyed and whether the loss was covered by insurance.
9. Insurance
You can deduct the premiums you pay for almost any insurance for your rental activity. This includes fire, theft, and flood insurance for rental property, as well as landlord liability insurance. And if you have employees, you can deduct the cost of their health and workers' compensation insurance.
10. Legal and Professional Services
Finally, you can deduct fees that you pay to attorneys, accountants, property management companies, real estate investment advisors, and other professionals. You can deduct these fees as operating expenses as long as the fees are paid for work related to your rental activity.
Did You Know?
Did you know that:
Landlords can greatly increase the depreciation deductions they receive the first few years they own rental property by using segmented depreciation. Careful planning can permit you to deduct, in a single year, the cost of improvements to rental property that you would otherwise have to deduct over 27.5 years. You can rent out a vacation home tax-free, in some cases. Most small landlords can deduct up to $25,000 in rental property losses each year. A special tax rule permits some landlords to deduct 100% of their rental property losses every year, no matter how much. People who rent property to their family or friends can lose virtually all of their tax deductions.If you didn't know one or more of these facts, you could be paying far more tax than you need to. For more information, see Every Landlord's Tax Deduction Guide, by Stephen Fishman (Nolo).
Every year, millions of landlords pay more taxes on their rental income than they have to. Why? Because they fail to take advantage of all the tax deductions available for owners of rental property. Rental real estate provides more tax benefits than almost any other investment.
Often, these benefits make the difference between losing money and earning a profit on a rental property. Here are the top ten tax deductions for owners of small residential rental property.
1. Interest
Interest is often a landlord's single biggest deductible expense. Common examples of interest that landlords can deduct include mortgage interest payments on loans used to acquire or improve rental property and interest on credit cards for goods or services used in a rental activity.
2. Depreciation
The actual cost of a house, apartment building, or other rental property is not fully deductible in the year in which you pay for it. Instead, landlords get back the cost of real estate through depreciation. This involves deducting a portion of the cost of the property over several years.
3. Repairs
The cost of repairs to rental property (provided the repairs are ordinary, necessary, and reasonable in amount) are fully deductible in the year in which they are incurred. Good examples of deductible repairs include repainting, fixing gutters or floors, fixing leaks, plastering, and replacing broken windows.
4. Local Travel
Landlords are entitled to a tax deduction whenever they drive anywhere for their rental activity. For example, when you drive to your rental building to deal with a tenant complaint or go to the hardware store to purchase a part for a repair, you can deduct your travel expenses.
If you drive a car, SUV, van, pickup, or panel truck for your rental activity (as most landlords do), you have two options for deducting your vehicle expenses. You can:
deduct your actual expenses (gasoline, upkeep, repairs), or
use the standard mileage rate (55 cents per mile for 2009; 58.5 cents per mile for July 1, 2008 through December 31, 2008 and 50.5 cents per mile from January 1, 2008 through June 30, 2008). To qualify for the standard mileage rate, you must use the standard mileage method the first year you use a car for your business activity. Moreover, you can't use the standard mileage rate if you have claimed accelerated depreciation deductions in prior years, or have taken a Section 179 deduction for the vehicle.
5. Long Distance Travel
If you travel overnight for your rental activity, you can deduct your airfare, hotel bills, meals, and other expenses. If you plan your trip carefully, you can even mix landlord business with pleasure and still take a deduction.
However, IRS auditors closely scrutinize deductions for overnight travel -- and many taxpayers get caught claiming these deductions without proper records to back them up. To stay within the law (and avoid unwanted attention from the IRS), you need to properly document your long distance travel expenses.
6. Home Office
Provided they meet certain minimal requirements, landlords may deduct their home office expenses from their taxable income. This deduction applies not only to space devoted to office work, but also to a workshop or any other home workspace you use for your rental business. This is true whether you own your home or apartment or are a renter.
For the ins and outs on taking the home office deduction, see Home Business Tax Deductions or Every Landlord's Tax Deduction Guide, both by Stephen Fishman (Nolo).
7. Employees and Independent Contractors
Whenever you hire anyone to perform services for your rental activity, you can deduct their wages as a rental business expense. This is so whether the worker is an employee (for example, a resident manager) or an independent contractor (for example, a repair person).
8. Casualty and Theft Losses
If your rental property is damaged or destroyed from a sudden event like a fire or flood, you may be able to obtain a tax deduction for all or part of your loss. These types of losses are called casualty losses. You usually won't be able to deduct the entire cost of property damaged or destroyed by a casualty. How much you may deduct depends on how much of your property was destroyed and whether the loss was covered by insurance.
9. Insurance
You can deduct the premiums you pay for almost any insurance for your rental activity. This includes fire, theft, and flood insurance for rental property, as well as landlord liability insurance. And if you have employees, you can deduct the cost of their health and workers' compensation insurance.
10. Legal and Professional Services
Finally, you can deduct fees that you pay to attorneys, accountants, property management companies, real estate investment advisors, and other professionals. You can deduct these fees as operating expenses as long as the fees are paid for work related to your rental activity.
Did You Know?
Did you know that:
Landlords can greatly increase the depreciation deductions they receive the first few years they own rental property by using segmented depreciation. Careful planning can permit you to deduct, in a single year, the cost of improvements to rental property that you would otherwise have to deduct over 27.5 years. You can rent out a vacation home tax-free, in some cases. Most small landlords can deduct up to $25,000 in rental property losses each year. A special tax rule permits some landlords to deduct 100% of their rental property losses every year, no matter how much. People who rent property to their family or friends can lose virtually all of their tax deductions.If you didn't know one or more of these facts, you could be paying far more tax than you need to. For more information, see Every Landlord's Tax Deduction Guide, by Stephen Fishman (Nolo).
Thursday, April 22, 2010
5 Costly Mistakes First-Time Buyers Make
Buying a first home can be a daunting experience. Here are five common and costly mistakes that novice home buyers make:
1. Ignoring the costs of having a low credit score. Lower-score borrowers pay thousands of dollars in increased interest rates over the life of the loan.
2. Muddying the waters by shopping for other things before closing. Lenders continue to check credit scores right up until the time of closing. Too much shopping could cause the lender to take back the loan.
3. Scrimping on an inspection. Being surprised by the need for expensive repairs can be financially devastating.
4. Buying without contingencies. Buyers should give themselves an out if the inspection turns up problems or the bank raises the interest rates.
5. No money for insurance. Insurance can be surprisingly pricey. Buyers who don’t budget for it can face a nasty surprise.
1. Ignoring the costs of having a low credit score. Lower-score borrowers pay thousands of dollars in increased interest rates over the life of the loan.
2. Muddying the waters by shopping for other things before closing. Lenders continue to check credit scores right up until the time of closing. Too much shopping could cause the lender to take back the loan.
3. Scrimping on an inspection. Being surprised by the need for expensive repairs can be financially devastating.
4. Buying without contingencies. Buyers should give themselves an out if the inspection turns up problems or the bank raises the interest rates.
5. No money for insurance. Insurance can be surprisingly pricey. Buyers who don’t budget for it can face a nasty surprise.
Wednesday, April 14, 2010
California won’t tax forgiven mortgage debt
Governor Schwarzenegger on Monday signed SB 401 (Wolk) into law providing distressed homeowners with state tax exemption on debt forgiven in a short sale, foreclosure, or loan modification. Effective immediately, this bill generally aligns California's tax treatment of mortgage debt relief income with federal law. For debt forgiven on a loan secured by a qualified principal residence, borrowers now will be exempt both from federal and state income tax consequences. The tax exemptions apply, with certain restrictions, to debts discharged from 2009 through 2012. Californians who have already filed their 2009 tax returns may claim the exemption by filing a Form 540X amendment.
Taxpayers who do not qualify for the above exemptions (e.g., second home or rental property) may nevertheless be exempt under other provisions. Most notably, taxpayers who are bankrupt are exempt from debt relief income tax. Also, taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets
Taxpayers who do not qualify for the above exemptions (e.g., second home or rental property) may nevertheless be exempt under other provisions. Most notably, taxpayers who are bankrupt are exempt from debt relief income tax. Also, taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets
Friday, March 26, 2010
Governor signs home tax credit bill
Governor Schwarzenegger signed AB 183. Eligible taxpayer credit is equal to the lesser of 5 percent of the purchase price or $10,000. You must not have owned a home in the past three years to qualify.
Wednesday, March 24, 2010
Principal Reduction in Your Future?
Bank of America announces a new program for beleaguered home owners that allows for borrowers that are at least 20% underwater to reduce 30% principal of the total mortgage balance reduced.
Citibank responds by saying they have no plans yet to reduce principal. Citi reviews borrowers an a case-by-case basis and has reduced principal after all other options of affordability have been exhausted.
February Existing Home Sales came in yesterday in-line with analyst estimates.
Do you think this will effect the economy negatively and increase bank losses or is this a necessity to help heal the housing market woes?
Citibank responds by saying they have no plans yet to reduce principal. Citi reviews borrowers an a case-by-case basis and has reduced principal after all other options of affordability have been exhausted.
February Existing Home Sales came in yesterday in-line with analyst estimates.
Do you think this will effect the economy negatively and increase bank losses or is this a necessity to help heal the housing market woes?
Tuesday, March 23, 2010
Are you worried about the housing recovery?
Sales of existing homes fell for a third straight month in February, pushing sales down to the lowest level since last July. If this trend continues it will make it very difficult for the overall economy to get back on track.
The weakness in sales caused housing prices to drop almost 2 percent from a year ago to $165,100 on a national level. In the West, sales are down almost 5 percent.
Continued high unemployment and an ongoing extremely difficult lending environment will keep a lid on the housing market and limit overall sales and possible future price appreciation.
Inventory of unsold homes jumped to 8.6 months. 6 months inventory of unsold homes is considered a balanced market and not regarded as a buyer or seller market. If the supply of unsold homes continues to jump at these level and increase to double-digits it will put the brakes on the housing recovery and add significant downward pressure on prices.--Patrick
Expert opinion:
"Without a firm foundation in housing, the economy will struggle to return to normal," said Lawrence Yun, chief economist for the Realtors.
The weakness in sales caused housing prices to drop almost 2 percent from a year ago to $165,100 on a national level. In the West, sales are down almost 5 percent.
Continued high unemployment and an ongoing extremely difficult lending environment will keep a lid on the housing market and limit overall sales and possible future price appreciation.
Inventory of unsold homes jumped to 8.6 months. 6 months inventory of unsold homes is considered a balanced market and not regarded as a buyer or seller market. If the supply of unsold homes continues to jump at these level and increase to double-digits it will put the brakes on the housing recovery and add significant downward pressure on prices.--Patrick
Expert opinion:
"Without a firm foundation in housing, the economy will struggle to return to normal," said Lawrence Yun, chief economist for the Realtors.
Friday, March 19, 2010
Is Real Estate at the bottom?
If the unemployment rate decreases and the work force expands in combination with further credit improvements and affordable homes available this will certainly help overcome the unavoidable rise in future interest rates.
Here are two expert opinions:
(1). “I would bet even odds that we’re at a bottom and that we’re going to see improvement in the coming months,” says Karl Case, co-creator of the S&P/Case-Shiller Home Price Index and a professor of economics at Wellesley College.
(2). “The underlying trend is turning positive,” says Bruce Kasman, chief economist at JPMorgan Chase & Co.
Please let us know your opinion on if we have hit the bottom in real estate or not. Thank you. Patrick
Here are two expert opinions:
(1). “I would bet even odds that we’re at a bottom and that we’re going to see improvement in the coming months,” says Karl Case, co-creator of the S&P/Case-Shiller Home Price Index and a professor of economics at Wellesley College.
(2). “The underlying trend is turning positive,” says Bruce Kasman, chief economist at JPMorgan Chase & Co.
Please let us know your opinion on if we have hit the bottom in real estate or not. Thank you. Patrick
Thursday, March 18, 2010
Interest Rates
The Feds on Tuesday, March 16 left interest rates unchanged. They left the rates in the 0 percent to 0.25 percent range.
Buyers of real estate will continue to benefit from super low rates. Today, March 18, Bank of America is offering 30-year Fixed rate of 4.875 percent.
Buyers of real estate will continue to benefit from super low rates. Today, March 18, Bank of America is offering 30-year Fixed rate of 4.875 percent.
Saturday, March 13, 2010
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