Archives: September 2012

Have You Backed Up Your Home?

Personal computers have been around long enough that everyone has experienced or knows someone who has lost their data due to a hard drive crash, accident or burglary. If they had a backup, the loss was inconvenient but not critical.


Do you have a backup for your personal belongings? Not that you need duplicates of all the items but do you have a journal listing of all the items with a description and their approximate values? That record becomes the backup that supports the claim for your insurance.


If a building sustains a total loss, the insurance company will usually pay the face amount of the policy. When it comes to personal property which might be 40% to 50% of the insured value of the dwelling, the insurance company is going to expect an accounting with receipts or at least, a relatively recent inventory.


The better your inventory, the less likely you’ll have difficulty with the claim. Almost everyone has a digital camera that can take stills and probably even videos. The combination of the images as well as a written description will help you replace the belongings and serve as proof to the insurance company.


Once you’ve made the inventory, store it off site for safe keeping. Online storage in the “cloud” might be the best place to insure you’ll always know where it is. Contact me for a free Home Inventory form; it’s my way of helping you be a better homeowner.

Mortgage Interest Deduction (MID) Per Residence

A recent U.S. Tax Court ruling clarified the IRS position that the $1.1 million limit for mortgage interest deduction applies per residence and not per taxpayer as some high-priced homeowners were hoping.


A married homeowner filing jointly can have fullly deductible interest on a mortgage of up to $1,000,000 of acquisition debt and up to an additional $100,000 of home equity debt. If the married couple files separately, each party is limited to deducting the interest on half of those maximum amounts.


The court case came about when two unmarried individuals who owned a home together as joint tenants felt that they were entitled to deduct the interest on $1.1 million of debt each. IRS did not agree with their understanding and neither did the Tax Court. The Court ruled that the limits apply per residence, not per taxpayer even if a home is co-owned by unmarried taxpayers.


The result for the taxpayers in this case was that their deduction was cut in half resulting in much more income tax due. While this situation only affects a few taxpayers, homeowners in this position should have a discussion with their tax professional.

Before You Call The Repairman!

Have you ever had a service company to your home to repair something and find out that it really wasn’t “broken”? It probably conjured up ambivalent feelings of joy that it wasn’t something serious and frustration that you had to pay a service call for something so simple.


Before you call the repairman next time, keep these things in mind to see if it is something simple:



  • Disposer not working – check to see if the reset button has been thrown. It is usually on the bottom of the disposer. If the disposer is making a humming sound, the blades may be stuck. While the disposer is turned off, use a wooden broom handle as a lever to gently rotate the blades. Remove the broom handle and turn on the disposer to see if it works properly.
  • Air conditioner not working – check to see if a breaker has thrown on your electric panel. You might need to flip the breaker completely off and flip it back on.
  • Electrical outlets not working – Electrical plugs in bathrooms or outside, especially on a porch or patio, are many times connected to a ground fault interrupter. The GFI will be a wall outlet and it may be located in the garage. Locate the outlet and reset the button that may have tripped.
  • Clogged drain – a simple way to correct a slow or clogged drain is to use the water pressure from a garden hose. You’ll need a helper to turn on the water full-blast once you have safely placed the hose in the drain and are holding a hand-towel around the hose to direct the water to the drain. Be prepared to tell your helper to turn off the water when needed.


Whether it’s preparing a home to market or arranging repairs required by the sale, REALTORS® know reputable, reasonable and reliable service contractors. We’re here to share our contacts with you to help make home ownership better.

Don’t Miss The Recall

Occasionally, you hear about an important recall on a product you have and you take care of it immediately. However, if you were to miss such a notice, it could put you or your family in jeopardy.


You can subscribe to the U.S. government’s service to notify the public when recalls are made on vehicles, tires and child restraints through the National Highway Traffic Safety Administration on their site called SaferCar.gov.


You’ll receive a notification by email when there is a new recall based on the type you selected. You can change your selections or unsubscribe at any time by going back to their website in the “Manage Your Notifications” section.


We’re committed to helping you be a better homeowner by providing information on items that can protect your home’s value, reduce expenses, improve maintenance and increase the enjoyment of your home.

Another Indication – The Housing Affordability Index

The Housing Affordability Index was developed over thirty years ago to help consumers determine when it is a good time to buy a home. It’s considered advantageous to the buyer when the index is over 100 because a median income family can qualify for a median price home.


Recent figures released by the National Association of REALTORS’ economic department show that the 2011 index of 184.5 is the highest annual average since it has been calculated. The most recent month released, December 2011, was 194.9. The index is also broken down into four regions of the country.


The two major components that contribute to the index are home prices and mortgage interest rates which are lower than they’ve been in the last five years which account for the dramatic rise in the index since 2006.


The Housing Affordability Index is another indication that this is a good time to buy a home for people who have good credit, a down payment and want a home. It may be the best time we’ll see in our lifetimes.

Deductible Is The Point!

Points refer to prepaid interest on a home mortgage and can be fully deductible by the buyer in the year paid if the right conditions exist. The points must be used to buy, build or improve a taxpayer’s principal residence but not all fees charged by the lender are necessarily deductible.


According to IRS Publication 936, “The term ‘points’ is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Points may also be called loan origination fees, maximum loan charges, loan discount, or discount points. A borrower is treated as paying any points that a home seller pays for the borrower’s mortgage.”


If you purchased a home in 2011, have your tax professional evaluate your closing statement to see if there are loan fees that may be used as a deduction on your tax return regardless of whether you or the seller paid them.


Refinancing a principal residence or purchasing an investment or income property require that points must be deducted ratably over the term of the mortgage rather than deducting them fully in the year paid. Borrowers in these situations should consider the benefits of lower interest rates from paying point to higher interest rates without points.


This article is meant to provide information that can be discussed with your tax professional about your specific situation and is not to be considered tax advice.

Choose Your Deduction

One third of all U.S. households, 75% of households with more than $75,000 income and most homeowners itemize their deduction on their federal income tax returns. It makes sense because the interest paid on their mortgage and their property taxes probably exceeds the allowable standard deduction.


However, with interest rates as low as they have been in the last two years and the price of homes having come down considerably, it is possible that the standard deduction may be the better choice.


Each year, the taxpayer can compare the total of the itemized deductions to the standard deduction to select which method will result in the most benefits. The 2011 standard deduction is $11,600 for married couple filing jointly and $5,800 for single filers.

Knowing The Current Value Of Your Home Is Important!

Knowing the current value of your home is important when you’re considering a move, refinancing or getting a home equity loan. Prices are determined by recent sales and the supply and demand of current inventory.


The process of selecting comparable properties involves matching similar features like bedrooms, baths, square footage and updates. In addition to price, there are other factors that affect the value and ultimately, the sale of a home.


Location plays a significant role because of the unique combination of improvements and land. Beneficial considerations would be convenience to schools, shopping, transportation and proximity to freeways. Undesirable concerns could include being in the vicinity of busy streets, high-tension lines, commercial property and other things.


To receive a computerized estimate on the value of your home that includes prices of comparable homes that have sold recently and homes currently for sale, click here.


Value is not totally objective and does require a certain amount of subjective considerations. If you have questions after you receive your report by email, contact us and we’ll be happy to talk to you about your concerns.

American Dream

The American Dream of owning a home is still alive. People still want a place of their own; where they can raise their family; share with their friends; feel safe and secure. Homeownership creates emotional and financial benefits.


The government supports that dream by allowing deductions for mortgage and home equity interest as well as property taxes. The capital gains exclusion on profits from a home is incredibly generous and a low long-term capital gains tax rate applies to excess profits.


It’s reported that some of the social benefits of owning a home include higher voter participation, better physical health, higher student test scores, lower teen delinquency, neighborhood stability and pride in the community.


If for no other reason, the decision to buy a home should be considered when it costs much less to own a home than it does to rent. With the unusually low available mortgage rates, the payment is generally less than comparable rent. However, the decision becomes more obvious when the other benefits are considered like amortization, appreciation and tax savings.


It’s not uncommon for the net cost of housing to be half of the actual mortgage payment. In most cases, it is significantly more to rent than to own which could amount to more than the down payment in the first year alone.  Calculate your cost of Renting vs. Owning.


 

Star Spangled Banner – Happy Labor Day!

Our American flag is obviously the symbol of our country but it has come to remind us of every man and woman who has fought for the freedom that we enjoy. The emotions that are stirred by images of our flag can run from happiness to sadness to even anger and everything in between.


Most of us learned basic flag etiquette when we were young but occasionally, it is a good idea to review the procedures so that we treat the flag with the respect that it deserves.




  • The U.S. flag should not be flown at night unless a light is shown on it.

  • The flag should never touch the ground.

  • The U.S. flag should not be flown upside down except as a distress signal.

  • A U.S. flag should be displayed at the peak of the staff unless the flag is at half-staff.

  • When displaying multiple flags of a state, community or society on the same flagpole, the U.S. flag must always be on top.

  • When flown with flags of states, communities or societies on separate flag poles which are of the same height and in a straight line, the flag of the United States is always placed in the position of honor – to its own right. No flag should be higher or larger that the U.S. flag. The U.S. flag is always the first flag raised and the last to be lowered.

  • When the U.S. flag is flown with those of other countries, each flag should be the same size and must be on separate poles of the same height. Ideally, the flags should be raised and lowered simultaneously.