2020 was a crazy year for many people, but it turned out to be a good year for us business-wise. I had many goals in 2020 including flipping 15 houses, buying 50k square feet of rentals, writing 2 books, possibly buying another car, and more! We did not accomplish all of the 2020 goals but … Read more
Source: investfourmore.com
The real estate market is getting hotter and hotter. The local Boise market is no exception. Hereâs your monthly update on whatâs happening.
Data from Intermountain MLS from December 1, 2020 to December 31, 2020.
According to data from the Intermountain MLS, Boise home sales are dipping monthly but higher year-over-year. At 1,245 units sold, there were 91 fewer monthly sales in December than in November, a 6.8% decrease. This follows seasonal real estate trends. Looking at yearly changes, there were 28 more homes sold in December 2020 than in December 2019. Thatâs an increase of 2.3% from last year.
Data via Intermountain MLS.
At $452K, Idahoâs average sale prices continued to rise last year. The average home price in December 2020 was $87K, or 23.7%, higher than in December 2019. The monthly trend follows the yearly move upward. Average home sale prices were up by $3.7K, or .8%, from November 2020.
Data via Intermountain MLS.
Homes in Boise are going off the market faster than ever. Decemberâs average number of Days on the Market was 18. The previous monthâs average DOM was 17, so the average DOM has stayed steady with a one day, 5.5% increase. The average DOM in December of 2019 was 48. That means a 30-day (a whole month!) decrease year-over-year–a staggering drop of 61.9%. Homebuyers will need to jump to make an offer quickly when they find a home they like.
Data via Intermountain MLS.
âBoise is one of the fastest growing cities in the country. Since COVID-19, this trend has only accelerated. There are roughly 2,000 (79%) fewer houses on the Boise market now than there were last year, and we already had a housing shortage a year ago. I have personally never seen numbers this low in my 18-year career in the Treasure Valley. This lack of homes for sale and tremendous population growth has led to a very strong seller’s market. It’s not unusual to hear of a seller receiving 20 offers on a property.
Because of the fierce competition and lack of inventory, many homes are selling significantly above the asking price. To sweeten the pot further, buyers often waive inspections and appraisals and offer generous seller leasebacks and other concessions. Sales price data typically lags, as it usually takes 30 days for a home to close after listing, and reports come out monthly. I believe Boiseâs median average home prices are actually higher than the numbers stated in the reports.
The good news for buyers is that interest rates are at or near their lowest levels in the last 40 years. This has made home buying more affordable. Buyers can procure a strong hedge against future inflation by securing low interest rates that are fixed for 30 years. If inflation ever comes back, these buyers will be repaying depreciating dollars. In other words, they get more bang for their buck.â
Homie now has local real estate agents in Idaho. These agents are pros in everything they do, including understanding the local real estate market. Click to start selling or buying and to get in touch with your dedicated agent.
The post Homieâs Boise, Idaho Housing Market Update December 2020 appeared first on Homie Blog.
Source: homie.com
Buying a house is a big decision, but it can feel especially overwhelming to place an offer on a home less than 24 hours after seeing it for the first time. Plus youâre under pressure to outbid several other buyers â or risk losing the house.
While these circumstances might sound extraordinary, theyâre not. With housing inventory nationwide at an all time-low â down 22% from last year according to the National Association of Realtors â itâs no wonder buyers are competing for the same few houses.
I was in this exact position last fall. Here are seven key takeaways from my experience buying in a sellerâs market.
In order to be competitive in a hot sellerâs market, you will need to line up your financing in advance.
Besides all the usual suspects, like saving up for a down payment and improving your credit score, youâll also want to get a pre-approval letter from your bank. It states that a bank would approve you for a mortgage of a certain amount, and acts as a guarantee to the seller that you can actually afford to buy their house.
This is where it helps to know your budget up front.
âItâs important to understand that the strength of financing is a key consideration a seller takes into account when selecting an offer,â said real estate developer Bill Samuel.
No seller wants to risk accepting an offer that might fall through. Aand since pre-approval letters can take some time to get, have one ready before you find your dream house.
This might sound crazy, but making a good impression on your new neighbors can actually make a difference when it comes time for a seller to review offers.
Since youâll likely be visiting the home at least once before making an offer, be prepared to talk to any neighbors you might run into. In close-knit neighborhoods, or ones where people share resources (like an HOA), sellers might care a bit more about the type of person they sell the house to.
If you happen to meet a neighbor when visiting the home, introduce yourself and make a good impression. You never know how much their opinion of you might factor into any final decisions.
After youâve seen a house, and decided you love it, be prepared to submit an offer quicklyâ as in, ASAP.
Work with your real estate agent to determine how many other offers the seller already has (or expects to get) and then be prepared to draft something up that day. In our case, we toured our home for the very first time at 11 a.m. on a Monday â it came on the market the evening before â and made an offer by 4 p.m. that same day.
If that sounds fast, it is. But by the time we submitted our offer, the seller already had three others. This is where it helps to have a great real estate agent on your side.
âHaving a realtor who can get your offer submitted quickly is crucial,â said Erik Wright, owner of New Horizon Home Buyers. âYou want to get your offer in front of the seller first, and make it strong. Purchase price is the obvious factor and in a competitive market, houses often go for over asking price. However, a strong offer has several factors and it depends on whatâs most important to the seller.â
Work with your real estate agent to find out what matters most to the seller â is it money, closing quickly, something else entirely? Then make sure your offer addresses their needs.
Another way to win over your seller (and prevail in any bidding wars) is by keeping your contingencies to a minimum.
Contingencies are the contractual stipulations buyers and sellers must meet before the deal can close. Unsurprisingly, sellers donât like to have too many of them to deal with. Contingencies can include such things as requesting a seller to make certain repairs, getting a home inspection, or even the fact that youâll need to sell your old house before being able to buy the new one.
âIn a really aggressive sellerâs market, a home buyer who has to sell a current property should do so before placing an offer on another home,â said Jason Gelios of Community Choice Realty. âDonât always assume that the seller will take the highest price. Other conveniences can play a factor in gaining the sellerâs attention, especially things like faster closing times and less restrictions.â
While my partner and I didnât make the highest offer on our house, we did have the fewest contingencies â mainly, we didnât ask too much of our seller in the way of repairs, or have another house to sell in order to afford the new one.
All that said, there are certain contingencies you should never forgo, and a home inspection is one of them. Getting your home inspected is hugely important, since inspectors will often find things even the sellers werenât aware of. No matter how much you love a house, donât be afraid of exercising your right to an inspection.
According to buyer protection laws in most states, sellers are required to report any findings in home inspections to subsequent buyers. In other words, if an inspector finds something wrong with the house, the seller will have to deal with it one way or anotherâ either with you, or the next buyer should you choose to drop out of the deal.
When trying to woo your seller in a competitive market, it helps to make a generous earnest money deposit. An earnest money deposit is a good-faith deposit requested by the seller when you enter into a contract to buy the house and typically run anywhere from 1% to 3% of the sale price of the home.
When deciding how much of an earnest money deposit to include in your offer, keep in mind that whatever amount you give comes off the price of the home (and is returned to you if the deal falls through). In other words, thereâs no reason to be cheap. If you can, go slightly above the sellerâs requested deposit amount. Even if itâs just a little more than what theyâre asking, that gesture of good faith might just be what gets you the house.
Wait. Why would anyone make an offer thatâs above asking price? Because the competition did it first, and in a hot sellerâs market, offering above asking price is often what it takes to even be considered.
Upping your offer may not break the bank as much as youâre fearing. âWith interest rates so low these days, offering more than what the seller is asking may not make a drastic difference in your overall monthly payments,â real estate agent Pavel Khaykin of Pavel Buys Houses said.
Letâs say the listing price on your dream home is $320,000 and youâre able to put down a 6% down payment. That leaves you with a mortgage of roughly $301,000. For a 30-year fixed mortgage at an interest rate of 3%, that translates into $1,269 monthly payments. Now letâs say you decide to bid a little higher on the home and offer $10,000 over asking price. This would only bump up your monthly payment (assuming you qualify for that low interest rate) by $42.
In a hot sellerâs market, youâve got to be ready to move fast. Often this is more of a change in mindset than anything else. When my partner and I first started looking at homes, we considered ourselves casual buyers â that is, until our dream home came on the market late one Sunday night. From there, things moved quickly. We saw the home, made an offer, were under contract by morning, and spent the next month and a half going through the process of closing on the house.
If youâre serious about finding your dream home in the next few months, the best thing you can do is know what you want from the outset, and get your ducks in a row to make a compelling offer when you find it. Maybe this means making a list of your must-haves in a house, and working to improve your credit score. It might also mean reaching out to a real estate agent before you need one, and getting that pre-approval letter in place.
Although inventory is low, new houses come on the market all the time.
Larissa Runkle is a contributor to The Penny Hoarder.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
Source: thepennyhoarder.com
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Making the leap from being a renter to becoming a homeowner is a process that includes taking stock of your financial situation and determining whether you’re ready for such a massive responsibility. For most people, the primary question is affordability. Do you have enough cash in the bank to fund a down payment, or do you have a credit score high enough to qualify you for a home loan? But there are other considerations, tooâand plenty of misconceptions and myths that could keep you from making that first step.
Below, our experts weigh in on why some situations that may seem like roadblocks are actually not as daunting as they appear.
Some may argue that continuing to rent can spare you from taking on heavy debt. But owning a house offers advantages.
âBuying a home and using a typical loan would be spread out over 20 to 30 years. But if you can make one extra payment a year or make bimonthly payments instead, you can shed up to seven years from that long-term loan,â says Jesse McManus, a real estate agent for Big Block Realty in San Diego, CA.
Plus, as you pay your mortgage, you gain equity in the home and create an asset that can be used when needed, such as paying off debt or even buying a second home.
âCurrently, mortgage interests rates are at their lowest point in history, so … it’s a great time to borrow money,â McManus says.
âContrary to popular belief, a 20% down payment is not required to purchase a home,” says Natalie Klinefelter, broker/owner of the Legacy Real Estate Co. in San Diego, CA. “There are several low down payment options available to all types of buyers.â
These are as low as 0% down for Veterans Affairs loans to 5% for conventional loans.
One of the main reasons buyers assume they must put down 20% is that without a 20% down payment, buyers typically face private mortgage insurance payments that add to the monthly loan payment.
âThe good news is once 20% equity is reached in a home, the buyer can eliminate PMI. This is usually accomplished by refinancing their loan, ultimately lowering their original payment that included PMI,â says Klinefelter. âSelecting the right loan type for a buyerâs needs and the property condition is essential before purchasing a home.â
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Watch: 5 Things First-Time Home Buyers Must Know
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Having a credit score at or above 660 looks great to mortgage lenders, but if yours is lagging, thereâs still hope.
âCredit score and history play a significant role in a buyerâs ability to obtain a home loan, but it doesn’t mean a buyer needs squeaky-clean credit. There are many loan solutions for buyers who have a lower than the ideal credit score,â says Klinefelter.
She says government-backed loans insured by the Federal Housing Administration have lower credit and income requirements than most conventional loans.
âA lower down payment is also a benefit of FHA loans. Lenders often work with home buyers upfront to discuss how to improve their credit to obtain a loan most suitable for their needs and financial situation,â says Klinefelter.
McManus says buyers building credit can also use a home loan to bolster their scores and create a foundation for future borrowing and creditworthiness.
Buying a home at the right timeâduring a buyer’s market or when interest rates are lowâis considered a smart money move. But don’t let the fear of buying at the “wrong time” stop you from moving forward. If you feel like you’ve found a good deal, experts say there is truly no bad time to buy a home.
âThe famous saying in real estate is ‘I donât have a crystal ball,’ meaning no one can predict exactly where the market will be at a given time. If a buyer stays within their means and has a financial contingency plan in place if the market adjusts over time, it is the right time to buy,â says Klinefelter.
Some people may be hesitant to buy because it means staying put in the same location.
âI always advise my clients that they should plan to stay in a newly purchased home for a minimum of three years,” says McManus. “You can ride out most market swings if they happen, and it also gives you a sense of connection to your new space.”
In a healthy market, McManus says homeowners will likely be able to sell the home within a year or two if they need to move, or they can consider renting out the property.
âThere is always a way out of a real estate asset; knowing how and when to exit is the key,â says Klinefelter.
The post 5 Myths About Transitioning From Renter to Homeowner appeared first on Real Estate News & Insights | realtor.com®.
Source: realtor.com
Source: wisebread.com
For investors with short-term saving goals, short-term bonds can be appropriate investments for your money.
They are stable and they certainly provide a higher return than a money market fund.
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However, even with the best short term bond funds, there’s also a risk of losing a percent or two in principal value if interest rates rise.
There are many options available to you, but your best option is to invest in taxable short-term bond funds, U.S. Treasury short-term bond funds and federally tax-free bond funds.
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Short-term bonds, or any bonds for that matter, are debts instruments that companies and the government issue. They typically mature in 1 to 3 years.
When you buy a bond, you are essentially lending money to the issuing company or government agency.
They are obligated to pay back the full purchase price at a particular time, which is called the “maturity date.”
Short-term bonds are low risk investments and you can have access to your money fairly quickly.
As with all bond funds, one of the risk of short term bond funds is that when interest rates rise, the prices of the bonds in the fund decrease.
But short term bond funds have a reduced risk of default, because the bond funds are backed by the full faith and credit of the U.S. government.
Moreover, because the term is short, you will earn less money on it than on an immediate-term or long term bond fund.
Nonetheless, they are still competitive and produce higher returns than money market funds, Certificate of Deposits (CDs), and banks savings accounts. And short-term bonds are more stable in value than stocks.
At a minimum, don’t buy a short-term bond fund if you’re saving for retirement or if you want to hold your money longer.
If you’re looking to invest your money for the long term and are still looking for safety, consider investing in Vanguard index funds.
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You should invest in short-bonds if you intend to use the money in a few years or so. However, don’t push your emergency cash into bonds. That is what a bank savings account is for.
Also, you should not put too much of your long term investment money into bonds, either. If you have a long term goal for your money, it’s best to invest in mutual funds such as Vanguard mutual funds, real estate, or your own business.
Here are some situations where you should invest in short term bonds.
Most people prefer to buy bonds through a broker such as Vanguard or Fidelity.
If you’re looking for the best short-term bond funds to buy now, consider these options:
There are some short-term bond funds that are both state and federally tax free. But there are not too many out there.
However, the ones that are available are good investments. So, if you are in a low state bracket and in a high federal bracket, consider investing in these Vanguard bond funds.These are federally tax free bond funds:
Vanguard Limited-Term Tax Exempt Fund Investor Shares (VMLTX)
This Vanguard bond fund seeks to provide investors current income exempt from federal taxes. The fund invests in high-quality short-term municipal bonds.
This bond fund has a maturity of 2 years. So, if you are looking for a fund that provides modest income and is federal tax-exempt, the Vanguard Limited-Term Tax Exempt Fund is for you.
The fund has an expense ratio of 0.17% and a minimum investment of $3,000. This makes it one of the best short term bonds to buy.
Vanguard Short-Term Tax-Exempt Fund Investor Share (VWSTX)
Like the Vanguard Limited Short Term fund, this fund also provides investors with current income that is exempt from federal income taxes.
The majority of the fund invests in municipal bonds in the top three credit ratings categories. It also invests in medium grade quality bonds.
This fund too has an expense ratio of 0.17% and a minimum investment of $3,000, making it one of the best short term bond funds.
U.S Treasury Short-term Bond Funds: Vanguard Short-Term Treasury
If you’re interested in a bond fund that invests in U.S. Treasuries, then U.S.Treasury bond funds are a great choice for you. One of the best U.S.Treasury bond funds is the Vanguard Short-Term Treasury.
This bond fund seeks to track the performance of the Bloomberg Barclays US Treasury 1-3 Year Bond Index. The Vanguard Short-Term Treasury invests in fixed income securities with a maturity between 1 to 3 years.
This bond fund has an expense ratio of 0.07% and an initial minimum investment of $3,000. Currently, this short term bond fund has a 1-year yield of 4.51%, making it one of the best short term bond funds.
Of note, this fund is also available as an ETF, starting at the price of one share.
The Fidelity Short-Term Bond Fund (FSHBX)
The Fidelity Short Term Bond Fund is one of the best out there for those investors who want to preserve their capital. This fund was established in March of 1986 and seeks to provides investors with current income.
The fund managers invests in corporate bonds, U.S. Treasury bonds, and assets backed securities. Over the last 10 years, this bond fund has a yield of 1.98% and a 30-day yield of 1.98%. This Fidelity bond fund as an expense ratio of 0.45%. There is no minimum investment requirement.
Taxable short-term bond funds: Vanguard Short-Term Investment Grade fund (VFSTX)
If you are not in a high tax bracket, then you should consider investing in a taxable short term bond fund. One of the best out there is the Vanguard Short-Term Investment Grade fund.
This bond fund provides investors exposure to high and medium quality investment grade bonds, such as corporate bonds and US government bonds. This fund has an expense ratio of 0.20% and an initial minimum investment of $3,000, making it one of the best short term bond funds out there.
T. Rowe Price Short-Term Bond Fund (PRWBX)
The T. Rowe Price Short-Term Bond Fund invests in diversified portfolio of short term investment-grade corporate, government, asset and mortgage-backed securities. This bond fund also invests in some bank mortgages and foreign securities. This fund produce a higher return than a money market fund, but less return than a long-term bond fund. The T. Rowe Price Short-Term Bond Fund has a minimum investment requirement of $2500, making it one the most favorite short term bond funds out there.
Vanguard Short-Term Bond Index Fund (VBIRX)
The Vanguard Short-Term bond is a good choice for the conservative investor. It offers a low cost, diversified exposure to U.S. investment-grade bonds. This has fund has a maturity date between 1 to 5 years. Moreover, the fund invests about 70% in US government bonds and 30% in corporate bonds. The bond fund as an expense ratio of 0.07% and a minimum investment requirement of $3,000.
If you’re considering in investing in these or any of Vanguard bond funds, you need to do your due diligence.
First, think about what you need the bond fund in the first place. Is it to diversify your investment portfolio?
Are you a conservative investor who need a minimize risk at all cost? Or, do you want to invest in a short term bond fund because you need the money to use in a few years for a vacation, buying a house, or planning for a wedding?
Once, you have come up with answers to this question, the next step is to do your research about the best bond fund available to you.
Use this list to start. If it’s not enough, do your own research.
Look into how much the initial minimum investment is to buy a bond fund. Most Vanguard short term bond funds require a $3,000 minimum deposit.
Some Fidelity bond funds, however, have a 0$ minimum deposit requirement.
Next compare expense rations, performance for different funds to see if they match your investment goals. But you have to remember that past performance is not an indication of future performance.
Your final step is to open an account to buy your bond funds. If you choose Vanguard, you can do so at their website.
You can make money with short-term bonds the same ways you make money with a mutual fund (i.e., dividends, capital gains, and appreciation). But most of your returns in a bond fund comes from dividends.
In brief, short-term bonds are great investment choices if you have short term saving goals. You may be interested in buying these bonds because you expect to tap into your investment within a few years or so. Or, you want a more conservative investment portfolio.
Short term bonds produce higher yields than money market funds.
The only problem is that the share prices can fluctuate. So, if you don’t mind market volatility, you may wish to consider short-term bonds.
| *TOP CIT BANK PROMOTIONS* | ||
|---|---|---|
| PROMOTIONAL LINK | OFFER | REVIEW |
| CIT Bank Money Market | 1.00% APY | Review |
| CIT Bank Savings Builder | 0.95% APY | Review |
| CIT Bank CDs | 0.75% APY 1 Year CD Term | Review |
| CIT Bank No Penalty CD | 0.75% APY | Review |
The post 7 Best Short-Term Bonds Funds to Buy in 2020 appeared first on GrowthRapidly.
Source: growthrapidly.com
They say that millionaires have 7 streams of income. And most of them are boring. Common examples of income-generating assets include your classics like real estate (rental income, depreciation benefits, equity appreciation) and dividend stocks (dividend income is taxed favorably), which I love.
But every so often, there's one in there that sounds as exciting as going to Vegas and always betting on black.
Today, I want to talk about those obscure investments. Those weird, you only hear about them in the movies, oddball investments that can produce cash flow. I don't want the obscure ones that don't produce cash (invest in whiskey, art, or some other collectible … that just makes you eccentric), these have to produce a stream of income.
Maybe the stock market has you spooked. Maybe you simply have enough in equities.
Maybe you want income but all the income-producing assets you know of are boring (or you have enough) – who really cares about certificates of deposit, Treasury bonds, and dividend stocks. If you wanted them, you would've gotten them by now (or you have and want even more diversification).
Today, you'll read about some truly interesting assets that you've probably never heard of before:
I will reference different websites and companies in this list as examples. I haven't used a single one of them. These are not endorsements.
Crowdfunded real estate is a relatively new phenomenon. It's when you can invest in a little piece of real estate as part of a “crowd” of investors. This lets you diversify your real estate holdings without the work of buying and selling properties.
You have some companies, like RealtyMogul, that curate deals and offer you a piece of the investment. There are others, like Fundrise, that run funds that do the investing and you can buy shares of those funds. In both cases, you diversify your risk across several investments and can generate passive cash flow in the process (as well as equity appreciation).
If you aren't an accredited investor, here is a list of real estate investing sites for non-accredited investors.
Peer-to-peer lending is older than crowdfunded real estate investing but follows the same principles. You act as a bank, lending money to borrowers, but are able to diversify your loans across a variety of different borrowers with varying levels of risk. By funding loans with $10 and $20, you can deploy thousands of dollars across hundred of borrowers that, hopefully, are not correlated.
Mineral rights are exactly that—the rights to extra minerals from the earth for a specific plot of land. They may be called mineral rights, mineral interests, or mineral estate, but the term is clear. It gives the owner the right to mine and extract minerals from the land.
When you own the mineral rights, you own any valuable minerals trapped in the land.
This is lucrative because when you own the mineral rights, you own any valuable minerals trapped in the land. The most valuable minerals are oil and gas, gold, copper, diamonds, and coal. In the United States, most of the value is in finding oil and gas.
When you own a mineral right, you can reach an agreement with a miner or extractor to receive a royalty based on production. For example, it's not uncommon for the Lessee (the miner) to pay the Lessor (owner) 1/8th value of what is produced.
If you want to buy mineral rights, do your homework!
Structured settlements are an interesting asset.
Let's say you slip and fall in a store. You sue the store, because they were negligent, and you reach a settlement with the store. They offer to pay you $5,000 a year for 20 years. You see this a lot whenever there is a settlement on a massive scale with multiple claimants. The responsible party has to do this or they might go bankrupt. If they go bankrupt, no one gets paid.
Structured settlements are fine, except sometimes the person getting the money needs the whole sum. Or they don't want to wait. That's when an investor can offer to buy it from them. At this point, it's really an annuity to the investor.
This area has a bad reputation because sometimes the parties involved don't behave honorably. They might take advantage of someone in a bad situation and offer a lowball amount for a settlement. Whatever the case may be, the instrument itself is aboveboard.
Continue reading on Wallet Hacks …
Source: quickanddirtytips.com
If youâre one of the millions of workers whose home is now doubling as office space due to COVID-19, you may be wondering whether that means a sweet deduction at tax time. Hold up, though: The IRS has strict rules about taking the home office deduction â and they changed drastically under the Tax Cuts and Jobs Act, which passed in late 2017.
Thinking about claiming a home office deduction on your tax return? Follow these tips to avoid raising any eyebrows at the IRS.
If youâre employed by a company and you work from home, you canât deduct home office space from your taxes. This applies whether youâre a permanent remote worker or if your office is temporarily closed because of the pandemic. The rule of thumb is that if youâre a W-2 employee, youâre not eligible.
This wasnât always the case, though. The Tax Cuts and Jobs Act suspended the deduction for miscellaneous unreimbursed employee business expenses, which allowed you to claim a home office if you worked from home for the convenience of your employer, provided that you itemized your tax deductions. The law nearly doubled the standard deduction. As a result, many people who once saved money by itemizing now have a lower tax bill when they take the standard deduction.
If youâre self-employed â whether you own a business or youâre a freelancer, gig worker or independent contractor â you probably can take the deduction, even if youâre also a full-time employee of a company you donât own. It doesnât matter if you work from home at that full-time job or work from an office, as long as you meet the other criteria that weâll discuss shortly.
Youâre only allowed to deduct the gross income you earn from self-employment, though. That means if you earned $1,000 from your side hustle plus a $50,000 salary from your regular job that you do remotely, $1,000 is the most you can deduct.
The IRS requires that you have a space that you use âexclusively and regularlyâ for business purposes. If you have an extra bedroom and you use it solely as your office space, youâre allowed to deduct the space â and that space alone. So if your house is 1,000 square feet and the home office is 200 square feet, youâre allowed to deduct 20% of your home expenses.
But if that home office also doubles as a guest bedroom, it wouldnât qualify. Same goes for if youâre using that space to do your day job. The IRS takes the word âexclusivelyâ pretty seriously here when it says you need to use the space exclusively for your business purposes.
To avoid running afoul of the rules, be cautious about what you keep in your home office. Photos, posters and other decorations are fine. But if you move your gaming console, exercise equipment or a TV into your office, thatâs probably not. Even mixing professional books with personal books could technically cross the line.
There needs to be a clear division between your home office space and your personal space. That doesnât mean you have to have an entire room that you use as an office to take the deduction, though. Suppose you have a desk area in that extra bedroom. You can still claim a portion of the room as long as thereâs a marker between your office space and the rest of the room.
An easy way to separate your home office from your personal space, courtesy of TurboTax Intuit: Mark it with duct tape.
To deduct your home office, it needs to be your principal place of business. But that doesnât mean you have to conduct all your business activities in the space. If youâre a handyman and you get paid to fix things at other peopleâs houses, but you handle the bulk of your paperwork, billing and phone calls in your home office, thatâs allowed.
There are some exceptions if you operate a day care center or you store inventory. If either of these scenarios apply, check out the IRS rules.
If you use 20% of your home as an office, you can deduct 20% of your mortgage or rent. But thatâs not all you can deduct. Youâre also allowed to deduct expenses like real estate taxes, homeowner insurance and utilities, though in this example, youâd only be allowed to deduct 20% of any of these expenses.
Be careful here, though. You can only deduct expenses for the part of the home you use for business purposes. So using the example above, if you pay someone to mow your lawn or youâre painting your kitchen, you donât get to deduct 20% of the expenses.
Youâll also need to account for depreciation if you own the home. That can get complicated. Consider consulting with a tax professional in this situation. If you sell your home for a profit, youâll owe capital gains taxes on the depreciation. Whenever youâre claiming deductions, itâs essential to keep good records so you can provide them to the IRS if necessary.
If you donât want to deal with extensive record-keeping or deducting depreciation, the IRS offers a simplified option: You can take a deduction of $5 per square foot, up to a maximum of 300 square feet. This method will probably result in a smaller deduction, but itâs less complicated than the regular method.
The home office deduction has a notorious reputation as an audit trigger, but itâs mostly undeserved. Deducting your home office expenses is perfectly legal, provided that you follow the IRS guidelines. A more likely audit trigger: You deduct a huge amount of expenses relative to the income you report, regardless of whether theyâre related to a home office.
Itâs essential to be ready in case you are audited, though. Make sure you can provide a copy of your mortgage or lease, insurance policies, tax records, utility bills, etc., so you can prove your deductions were warranted. Youâll also want to take pictures and be prepared to provide a diagram of your setup to the IRS if necessary.
As always, consult with a tax adviser if youâre not sure whether the expense youâre deducting is allowable. Itâs best to shell out a little extra money now to avoid the headache of an audit later.
Robin Hartill is a certified financial planner and a senior editor at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to DearPenny@thepennyhoarder.com.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
Source: thepennyhoarder.com
A four-bedroom townhouse with park views and tons of charm has recently hit the market, and we’re dying to tell you all about it. The listing, brought to market by Compass’ Michael J. Franco, is right next to Prospect Park, Brooklynâs second largest park, and has plenty of outdoor space (and a rooftop deck to boot).
The townhouse sits in one of Brooklynâs trendiest, most desirable neighborhoods — Park Slope — with its leafy streets lined with brick and brownstone townhouses, many of which were built near the turn of the 20th century and have been lovingly updated over the decades by young families migrating from Manhattan. Much like its neighboring properties, the 2,600-square-foot townhome at 15 Prospect Park was originally built more than a century ago in 1915 and retains its old-world charm — but has been carefully updated to meet modern standards of living.
With 4 bedrooms, 3.5 baths, a generously sized living room, and a finished basement, the Brooklyn townhouse also comes with a few rare features for a New York home: ample outdoor space and private parking (that includes a private garage and its own driveway).
The layout is split on three levels, with the first floor housing a large living room and open dining room — both with distinctive pre-war features like classic moldings and arches — and a renovated kitchen that opens up to a lovely terrace.
The second floor is home to 3 bedrooms and a sizeable landing which is perfect for either a library or a home office, while the third floor is dedicated to the primary bedroom suite and its massive walk-in closet, renovated bath with skylights and soaring ceilings, with a separate sitting area/den. The third level also provides access to the townhouse’s own rooftop deck, which adds more outdoor space and looks like a perfect place to entertain guests.
The property is listed for $4,400,000 with Compass associate real estate broker Michael J. Franco.
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The post Newly Renovated, 1915-Built Townhouse in Park Slope Asks $4.4 Million appeared first on Fancy Pants Homes.
Source: fancypantshomes.com
Looking to buy a home soon? There will be upfront costs of buying a house.
You may have found a house that you like. You may have been approved for a mortgage loan, and have your down payment ready to make an offer. If you think that, at that point, all of the hard work is over, well think again.
In addition to the down payment, which can be significant depending on the price of the property, there are plenty of upfront costs of buying a home. As a first time home buyer, this may come to you as a surprise. So, be ready to have enough cash to cover these costs. In no particular order, here are 8 common upfront costs of buying a house.
If you are interested in comparing the best mortgage rates through LendingTree click here. Itâs completely free.
An upfront cost, as the name suggests and in terms of buying a house, is out of pocket money that you pay after you have made an offer on a property. They are also referred to as closing costs and cover fees such as inspection fees, taxes, appraisal, mortgage lender fees, etc. As a home buyer, these upfront costs should not come to you as a surprise.
If your down payment is less than 20% of the home purchase price, then your mortgage lender will charge you a PMI (private mortgage insurance). A PMI is an extra fee to your monthly mortgage payment that really protects the lender in case you default on your loan. Again, depending on the size of the loan, a PMI can be significant. So if you know you won’t have 20% or more down payment, be ready pay an extra fee in addition to your monthly mortgage payments.
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Before you finalize on a house, it’s always a good idea to inspect the house for defects. In fact, in some states, it is mandatory. Lenders will simply not offer you a mortgage loan unless they see an inspection report. Even if it is not mandatory in your state, it’s always a good idea to inspect the home. The inspection cost is well worth any potential defects or damages you might encounter.
Inspection fee can cost you anywhere from $300-$500. And it is usually paid during the inspection. So consider this upfront cost into your budget.
Some lenders may charge you a fee for applying for/processing a loan. This fee typically covers things like credit check for your credit score or appraisal.
Unless the house is perfect from the very first time you occupy it, you will need to do some repair. Depending on the condition of the house, repair or renovating costs can be quite significant. So consider saving up some money to cover some of these costs.
Depending on how far you’re moving and/or how much stuff you have, you may be up for some moving costs. Moving costs may include utilities connections, cleaning, moving
Appraisal costs can be anywhere from $300-$500. Again that range depends on the location and price of the house. You usually pay that upfront cost after the inspection or before closing.
After you reach a mutual acceptance for the home, in some states, you may be required to pay an earnest money deposit. This upfront costs is usually 1% to 3% of the home purchase price. The amount you pay in earnest money, however, will be subtracted from your closing costs.
If you’re buying a condo, you may have to pay homeowners association dues. Homeowners association dues cover operation and maintenance fees. And you will pay one month’s dues upfront at closing.
In conclusion, when it comes to buying a house, there are several upfront costs you will need to consider. Above are some of the most common upfront costs of buying a house.
Click here to compare mortgage rates through LendingTree. Itâs completely FREE.
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When it comes to getting a mortgage, rates and fees vary. LendingTree allows you to view and compare multiple mortgage rates from multiple mortgage lenders all in one place and at the same time, so you can choose the best rates for your needs. LendingTree makes getting a loan faster, simpler, and better. Get started today >>>
The post 8 Upfront Costs of Buying a House appeared first on GrowthRapidly.
Source: growthrapidly.com