7 Tax Benefits Of Owning Real Estate

There are so many advantages to purchasing your own home.  For instance, it offers the pride of ownership, provides an overall sense of accomplishment, and is a place where you and your family will build many lasting memories.  Among others, real estate opens the door to many tax benefits as well.  Here are some of the ways that owning a home can help to create a tax shelter.

1. Mortgage Interest & Points: If mortgage debt is $1,000,000 or less, married couples filing jointly can deduct the full amount of their interest.  Otherwise, those filing separately can write off up to $500,000 worth.  This also includes second homes or adjacent land to your main residence.  Points on either a home purchase or refinance can also be deducted, but these must be amortized for the latter.

2. Property Tax Deductions: All state and local taxes regardless of how many properties you own can be deducted, up to the alternative minimum tax required by law.  Funds that are held in escrow accounts can only be written off once the taxes are paid.

3. Private Mortgage Insurance (PMI): A portion of PMI can also be deducted if household income is less than $109,000 per year or $54,500 for those filing separately.

4. Interest On Home Equity Loans: As long as you have the necessary equity in your home to secure the required debt, you can write off the interest on a loan of up to $100,000 for those who are married filing jointly, or $50,000 when submitted separately.

5. Working From Home: That’s right!  Even those who use a portion of their home for work purposes are able to deduct a percentage of the home’s depreciation, utility/maintenance costs and insurance.  This is one you definitely want to review with your tax professional to make sure you are getting the maximum available to you.

6. Home Maintenance Interest: This is a tricky one, as you can write off the interest on any capital improvements made to your home, which will increase value and/or prolong the life of your home.  This includes certain types of restorations or additions made to the home with no cap on the investment.  However, you will not be able to deduct minor patching or cosmetics made to the home.

7. Capital Gains/Selling Costs: As long as you have lived in your primary residence for at least 2 of the last 5 years, you are permitted to sell your property for up to $500,000 of profit for married couples filing jointly, or $250,000 for singles with absolutely no tax penalties.  However, if you end up selling for an amount above either threshold, you can subtract the amount of closing/selling costs that you incurred from your total gain.  Those who fall outside of the 2 out of 5 year limitation may be granted an exception given certain unique circumstances such as health problems, relocating for work or other such occurrences.

Therefore, it pays to consider the benefits of homeownership and to discuss with your tax professional what you may qualify for.  Especially for those who are entertaining the thought of buying instead of renting, it is very important to consider the long-term impact that owning real estate can have on your overall financial future.  There are advantages whether you are buying for yourself or investing in properties for additional income.  For more information to start exploring what options may be available for you, feel free to contact me...I'd love the opportunity to assist you!

How to Better Manage Your Credit Score & Maintain Peace of Mind

 Credit Crusher:

Let’s face it.  We live in a credit crazed society.  The times have certainly changed, and more and more business is now being conducted with the simple swipe of a card.  In fact, a high percentage of the purchases we make on a daily basis are completed by using either credit or debit.  These cards are very convenient, easy to carry and are usually safer than walking around with a wad of cash in our wallets or purses. 

On the other hand, credit is a strong indicator of your spending habits, and can even make or break you when applying for loans or larger purchases.  Just like fire, if credit is not contained and channeled properly, it can easily consume your financial status and engulf everything in its path.  Therefore, we need to know what is healthy, how the bureaus evaluate our information, and what we can do to employ better habits in our own lives.


According to Creditcards.com, the average credit card debt per household with credit is a whopping $14,750!  This statistic is staggering evidence that we have allowed things to get out of control; thus, we must take action to improve our own situation.  Although this brief, yet seemingly long post is not intended to teach you how to pay off your outstanding debts, it will reveal the very behaviors you must begin to practice in order to maintain healthy credit and to keep your financial house in order. 

What Exactly is a Credit Score?

A credit score is simply the statistical likelihood of a person falling 90 days behind on a particular loan obligation within a 2 year period.  In fact, there is nearly a 99% higher chance of a person with a 620 or lower credit score to end up 90 days behind than for those who have an 800.  So your score is a very strong predictor of future outcomes. 

Now each credit bureau will use their own unique scoring system when evaluating your information, so that is why your score will fluctuate somewhat on every report.  These numbers will also differ depending on the type of debt your take on, such as mortgages, car loans and consumer debt.  The obvious reason for this is that each carries its own unique risk factors that must be considered.   

35% of your score is made up of your history of delinquencies (30 days plus), and another 30% is your revolving debt ratio.  Since this makes up 65% of the total pie, it is imperative that you pay your bills on time and keep down the total amount of debt you incur.  This will also help you to avoid the temptation of over borrowing when you don’t have the means to pay. 

It is noted that there should be some type of activity on your card at all times, so try paying the statement balance that is owed for the month while allowing the remaining amount to carry over to your next bill.  That way you never have a zero balance and can avoid heavy interest charges.  Also make a point of paying the debt before the statement date, so that it always reports the lower amount and boosts your score.   

Next, another 15% of your score is based on the age of your credit.  So, it's wise to always keep your oldest lines open.  The remaining 20% is split up among the combination of credit (i.e. mortgage, car, consumer, etc.) and hard inquiries.  Experts report that a healthy credit mix usually contains around 3-5 revolving accounts, 1-2 automobiles, 1-2 mortgages and 3-5 hard inquiries each year.

Now for clarification, there are both “hard” inquiries and “soft” inquiries.  Each “hard” inquiry reduces your score by almost 3% for the first 10 each year.  After that, the reduction rate goes slightly down.  “Soft” pulls would be anything that is considered to be personal or promotional in nature, such as your yearly account review.

Credit Report Resources

If you have not taken the time to review your credit report lately, you can run a free search at http://www.annualcreditreport.com.  You have the choice of pulling reports from all 3 bureaus at once, or you can choose to do one at a time throughout the year.  Each entity (Experian, Equifax, and Transunion) is required to give you one free report each year. 

Did you know it is estimated that 70% or more of reports indicate some type of error?  Therefore, it is highly likely that you will have something that must be disputed within your lifetime.  Be sure to stay on top of this, because it can affect you and your overall score greatly.

A second great resource for reporting is located at http://www.missingmoney.com.  Want to find out if you or another relative is entitled to receiving money?  It’s possible that there are lost assets out there that are rightfully yours but were in fact never paid.  This site offers a free and comprehensive search to help track down any lost assets that have accumulated over the years.

Myth Busters:

Below are five questions that involve common misconceptions about things that affect your credit score.  Take the time to answer each one.  I've provided the answers for you, so don’t try to peak just yet.  Let’s see how well you know your stuff!

1.  My credit score will improve if I close unused credit cards.

2.  FICO credit scores should fluctuate somewhat between all 3 credit bureaus.

 

3.  Once married, my credit report will be merged with my spouse’s.

4.  Your credit score is negatively affected every time you request a copy of your credit report.

5.  Annual household income is not a part of your FICO score.

Answer key: F, T, F, F, T

What Affects My Credit Score?

Now, in order to build up a credit score, you must have an account that is at least 6 months old and has had updates within the last 6 months, with no active disputes.  Any negative history can remain on your reports for up to 7 years. 

However, if you went through Chapter 7 or 13 bankruptcies, records could remain on your report for as long as 10 years.  Also keep in mind that by signing on as an authorized user with another who has strong credit will also boost your score.

Next, “hard” inquiries will only negatively affect your record for 1 year, even though they may show up on your report for 2 years.  While this is the maximum amount of time that negative marks can remain on your report, creditors can wipe records clean at any time throughout this timeframe using their own discretion.  

For scoring purposes, revolving credit will typically have more of an impact than installment accounts.  The only real exception for this are mortgages due to the size of the debt and the amount of time it takes to pay down. 

On the other hand, all secured and unsecured credit cards (including department store cards) score the same.  If you use any bank issued cards, it is possible that if you pay off the full amount on your card every month, they may choose to lower your maximum available credit over time.  Remember that a higher credit limit will help lower your debt ratio, but this shouldn’t be used as a way to drive yourself into further debt.

American Express (AE) functions as a revolving account, and actually reports the total amount owed on your card as being your credit limit.  Therefore, it is wise to have all AE debts paid off before running a credit check as it will be bypassed in the report.

I hope this information is both insightful and encouraging.  As always, I'm here to help you in any way I can.  If you need further assistance or guidance, feel free to contact me at any time.  It is my goal to provide you with the best service and contacts available so that you can improve your finances and future!

Email: rhonda@rhondasrealestate.com

Be Aware When Shopping For A Mortgage

Shopping for a mortgage is one of the most important steps involved in purchasing your next home.  Since the terms and conditions that you agree to will impact your financial future for years to come, it is vital that you take the necessary time to research and compare the best packages available to you.

Many buyers tend to primarily focus on obtaining the best interest rates; and though this is an extremely important piece, there are a host of other factors to consider.  Therefore, let’s discuss some of the other criteria that should be reviewed before signing on the dotted line.

First of all, please be wary of only searching for rates and quotes online.  Although there are very reputable companies that can be found using an internet based search, it is wise to also spend time working with local companies and banks that are familiar with the current market.  This is a very detailed process, so you should not base your decision on simply one or two sources.

As you have seen from the recent mortgage industry scare, it is typically best to invest in a fixed rate loan.  With adjustable rate mortgages, you could be stuck paying higher amounts of interest and maybe even eventually owe more on the loan than the house is worth.  Be sure to review this with your mortgage professional before making any final decisions.

Next, along with attractive interest rates may also come additional fees and terms.  Be careful that you fully understand what you are signing up for before choosing your mortgage.  Although the rates may look somewhat favorable, here is a list of some things to be aware of:

Processing Fees—Items such as processing and underwriting fees could be added to the cost of the loan as well.  Although you typically will have to pay a few hundred dollars for the application fee, there are other extras that may be attached as an added expense.

Private Mortgage Insurance (PMI)—In order for lenders to protect their own interests, buyers will be required to pay for PMI on a loan until they have built up 20% equity in the home.  These fees are calculated based on a person’s credit score.

Appraisals—It is becoming more common for lenders to charge this fee upfront before an appraisal is conducted.  Unfortunately, you will end up paying for this regardless of whether or not it gives you the evaluation necessary to obtain the loan.

Points—Each point equals 1%  of the actual loan amount.  Many buyers can elect to choose a plan that charges points so that they can acquire a lower interest rate.  Lenders will typically charge anywhere from 1-3 points (or even more), and these will be charged as a fee at closing.  Whether or not you should choose a plan with points will be dependent on your available cash and how long you plan on staying in the home.

This is just a sampling of what may be included with your mortgage.  It is best to find out up front exactly what you will be responsible for with all additional fees included.  As long as you are working with a reputable company, you should get a good feel of what will be expected at closing.

Be sure to avoid working with any parties that seem to make unfulfilled promises, suddenly change the terms at closing, ask for more information than is necessary to process the loan, or overall make this an uncomfortable process for you.

There are more than enough resources available to you to obtain a loan that will suit your needs. 

Happy Mortgage Shopping!

Before You Buy Homeowner's Insurance

In order to guard yourself from risk and liability, it is essential to invest in a homeowner’s insurance policy that will give you the protection you need.  Although such policies are not a requirement by law, any mortgage company will require this as a stipulation to receiving your next home loan.

Types of Policies

Several types of plans are available that include various optional riders dependent on your particular needs.  There are specific policies for older homes, mobile homes, condos, and anything from basic protection to high liability coverage.  However, a majority of owners will invest in something known as an HO-3 policy, because it offers protection for both the dwelling as well as your contents that are available in your home.  

For example, the HO-3 policy will guard the outside of your property from any of the open perils (i.e. threats or dangers) to your home and also named perils for your contents.  However, there will be a list of specific issues that the policy will not protect you from (such as earthquakes or water damage).  Uncovered perils may be added at an additional cost. 

On the other hand, others may be interested in reviewing the options available with the newer HO-5 policy.  This coverage takes the HO-3 a step further by providing open peril policies for both the home and also contents.  So essentially you would be protected for more items within your house, without having to prove that damage occurred under one of the named perils.

Other Important Factors

Next, there are liability limits.  In the event that damage would occur, this amount would provide the coverage necessary to help restore your home.  However, please keep in mind that this is not the same thing as the home’s actual value.  There are other things that you need to consider such as the land, possessions, living expenses (if you need to rebuild), or other structures that are located on your property.

Therefore, take the time to assess what type of limit you would need to help cover the total loss in the event of a major catastrophe.  Also, be sure to revisit your policy from time to time as the property appreciates, and/or you consider making changes and additions to the property.

Finally, it’s important to review the differences between actual cash value and replacement costs.  For those who have a lot of contents that hold a high value, it may be better to consider replacement cost coverage, which could be worth the added price.  This will provide a brand new replacement for all covered contents.  

On the other hand, for people who are less concerned with replacing everything at market value with comparable items, you may want to consider actual cash value protection for household items which will take into account depreciation.

Of course, this is only the tip of the iceberg when considering a homeowner’s policy.  Other things that can be considered include:

Jewelry Coverage

Personal Articles Coverage

Umbrella Coverage

Liability Claims Protection

So...take the time to schedule an appointment with a qualified insurance agent to discuss your needs and review what else may be available.  If you need names and numbers of reputable insurance agents, please feel free to contact me as well.

Real estate agents: Get over your smartphone hang-ups

A life lesson in being unavailable!

By Alisha Alway Braatz
Inman News™

Last week my husband and I took our very first family vacation with our new little one, and on the second day away from home my cell phone suddenly stopped working. It offered no warning or explanation for its deadness. (Personally, I think it was made to break two weeks before my upgrade.)

So I found myself without mobile access to the multiple listing service and my email, documents, faxes, phone, address book, calendar, blog feeds, GPS, camera, Facebook and TweetDeck accounts --- I had nothing!

I did find a phone plugged into a wall with a handset as big as my head, but I couldn't remember my own office number. What to do ... what to do?

The nearest Verizon store was 35 miles away, but the thought of spending even one of my precious vacation days in manmade purgatory didn't jibe. I stood there in the hallway, cradling my dear departed Droid and wondering what would happen next.

I stood there a long time.

Nothing happened.

There was complete and utter silence. No message updates and no voice mails. Nothing.

After five or 10 minutes I realized that other people were packing their swim bags for the pool.

"Do you want to borrow my phone?" asked my husband, towel in hand.

I looked at his iPhone in disgust. Its one button fooled me every time.

I shook my head, "Hey, we're on vacation. I'll be fine. Everything will be fine." But I wasn't sure. I reluctantly put the phone down.

The carnival atmosphere of the pool brought me out of my doldrums. I challenged my two 7-year-old nieces to a cannonball competition. Then we ate ice cream. Then we rode our bikes to the novelty store and bought stickers. By 3 p.m. I didn't miss my phone at all. It felt like I was 7, too! And I'm sorry, Aunt Kim, we were unavailable.

Remember that? Being unavailable?

Nowadays, if you don't answer your phone you are doing it on purpose. It's taken as a personal insult because who doesn't have their cell phone in their pocket or stuck in the top of their bra?

And who hasn't promised on their voice mail to call back immediately, at the first possible opportunity, or on the quarter hour?

I started to think: How funny would it have been to see our parents pack for vacation, filling the station wagon with the IBM computer, the yellow pages, four yearbooks each, a map of the world, and the 12-volume encyclopedia set we bought from the last-known traveling salesman.

Not to mention my boom box and tapes. Lots of tapes.

Certainly, some of you are arguing that our parents would have brought all of that stuff if only they could have.

Really?

What has this magical technology brought us? Teenagers are growing sixth fingers to prop their cell phones up so they can text faster. We are never alone. People want to Skype me at 7 a.m. Really, 7 a.m.?!

And there's too much to do. Angry Birds and Jewels have replaced taking deep breaths in the great outdoors.

A broken phone was the best thing that happened to me this summer. I received the gift of freedom, and I liked it!

Sure, I have another phone now: an even bigger, faster and more powerful phone that drives my car and pumps gas for me. But every now and then I put it in a drawer and walk away. I am unavailable! And not because I'm in the bathroom or in the car wash.

Did you know that right outside your window the sky is blue, the sun is warm, and trees are growing taller every day?

Try it. Be unavailable.

Alisha Alway Braatz is a buyer's broker for Coldwell Banker Advantage One Properties in Eugene, Ore., and a real estate humorist.

OPEN HOUSE SUNDAY SEPT 11 ~ 2-4PM

640 SW 161st Street

Oklahoma City, OK 73170

This beautiful home in Stone Meadows South has a very pretty open MIL floor plan. The large living features a wonderful corner tiled fireplace; ceiling fan; & neutral carpet. The kitchen features a breakfast bar; recessed lighting; Oak cabinetry; & black/stainless steel appliances. The laundry has a pocket door, pantry, & great storage! The master bed & bath features a separate shower; large austrailian closet w/ shoe storage; & large jetted tub. One of the secondary bedrooms works great for a study with its bay window! This home also has 2” faux wood blinds; hall storage; covered & open patio, a manibloc plumbing system, surround sound in living, as well as an additional flagstone patio; &  no backyard neighbors! Call or Text Rhonda at 820-1740.

http://www.rhondasrealestate.com/