Tax talk can be pretty draining, especially since you haven't recovered much from the last deadline rush YET. But did you know that prepping up for the next one as early as now can help you save thousands of dollars before April 2018 arrives? Homeowners should make use of these tax breaks NOW to avoid paying too much (and to avoid that much-hated procrastination habit that ALWAYS makes you do things at the last minute!)
1. Set up your home office
If you're working on a La-Z-Boy in the living room, it might be time to clear out the guest room and assemble that Ikea desk. That way, you can take the home office tax deduction in 2017. The "simple method" allows you to take $5 per square foot for a total of $1,500. You could also go for a more complicated...
Becoming a real estate investor is suddenly hot, thanks in part to those legions of HGTV-aholics inspired after binge-watching episodes of shows like “Fixer Upper” and “Flip or Flop.” But if they’re planning to purchase an investment property to rent out, even the most devoted of fans still need to figure out which parts of the country offer the best buys.
It turns out aspiring real estate moguls should head south, according to a new report by Attom Data, a real estate data firm. Three-bedroom, single-family house rentals in Clayton County, GA, home to Atlanta, earned the highest returns so far in 2017, at about 23.7%, Attom found. That’s...
Do you ever feel like the rich just keep getting richer? Well, allow us to let you in on a little secret: Part of the reason they keep on raking in dough is that they take advantage of real estate tax strategies that many ordinary homeowners have no clue even exist. So what are they, exactly—and can we ordinary mortals take advantage of them, too?
For starters, most of these strategies involve investment properties—in other words, not your primary residence. So if you have a cabin in the woods or a beach house that sits empty most of the year, you might be in luck. Read on to follow in the well-heeled footsteps of the wealthy and maximize your tax savings this year.
Strategy No. 1: Take advantage of ‘safe harbors’
Smart investors don’t let second homes lie vacant, but rent them out, says Crystal Stranger, president of 1st Tax and author of “The Small Business Tax Guide.”
Who says paying taxes isn't fun? Well, it isn't, but it is our solemn duty to do our part, right? In any case, there are certain loopholes that make it legal for you to minimize the amount of tax you have to pay without getting in trouble with the IRS. This is especially the case if you are a homeowner, as you are privileged to enjoy certain tax deductions. Familiarize yourself with the most common tax breaks and see how far you can go at minimizing your taxes. Here they are:
The interest you pay on your mortgage is tax-deductible for loans of up to $1 million. Be prepared to itemize your deductions to take it, but it's worth it especially if you just bought a home. Most mortgages are structured with payments paying off the interest first, so if you bought a $300,000 home with a fixed-rate 30-year loan @ 4% interest, that's $10,920 in deductions!
Private mortgage insurance
Buyers who weren't able...
Sometimes, we easily let our guard down while waiting for closing. This is especially the case after going through the tedious process of getting pre-approved, finding that dream home, and having your offer accepted! But there is no reason to be lax about the closing process until it's actually over. There are some money moves that you have to be careful with while waiting for closing, as they may affect your mortgage. Cain Realty Group lists them out for you here:
Adding to Your Credit Lines
Applying for a new credit card or requesting for a credit limit increase might not hurt you too much in the months before you close on a home, but be warned! Certain credit inquiries can lead lenders to reflect on your recent attempts to borrow additional funds, and regard these steps you've made as those of an unwise spender. Your credit score dips with any credit-related inquiries, so make sure to do these (applying for a new credit card, asking for a credit limit increase,...
While it is natural for homeowners to desire protecting their largest investment by purchasing as much home insurance as they can, there are some product types out there that simply aren't worth the purchase. Here are some insurance types that you can make do without if you are hellbent on cutting down on insurance payments:
Private mortgage insurance - Private mortgage insurance is mandatory for home purchases with less than 20% down. However, if you can pay 20% DP or more, then you have the option to avoid the PMI. This mortgage insurance only benefits the lender, so it is best to get rid of it at the soonest possible time. You have the option to use lender-paid PMI, single-payment PMI, or piggyback loans to help you avoid this additional insurance cost.
Mortgage protection life insurance- This insurance type protects your family when it comes to paying your mortgage in case of your unexpected, early demise. However,...
According to Freddie Mac’s latest Primary Mortgage Market Survey, interest rates for a 30-year fixed rate mortgage are currently at 3.47%. Rates have remained at or below 3.5% each of the last 16 weeks, marking a historic low.
The interest rate you secure when buying a home not only greatly impacts your monthly housing costs, but also impacts your purchasing power.
Purchasing power, simply put, is the amount of home you can afford to buy for the budget you have available to spend. As rates increase, the price of the house you can afford will decrease if you plan to stay within a certain monthly housing budget.
The chart below shows what impact rising interest rates would have if you planned to purchase a home within the national median price range, and planned to keep your...
Life is short. And while no one wants to focus on the end, forcing yourself to do so can ultimately makes things a bit easier for your loved ones—not just emotionally, but financially too. One way to deal with the latter concern is to put your home in a living trust.
A living trust is a legal document that places your assets into a trust for your benefit (you’re the trustee) while you’re alive and then transfers those assets, via your “successor trustee,” to beneficiaries after you die or become disabled.
Think of it as a bucket filled with your money, property, and other assets. You’re free to do whatever you want with the contents of the bucket, such as sell stock or property. But after you’re gone, whatever’s left in the bucket goes to your heirs.
How is a living trust...