Tax-Free Income

April 30, 2012

Some residents of Augusta, Georgia have purchased tickets to the Master’s for years but have never attended the famous golf tournament. It’s because they include the tickets as a bonus to the people who rent their home during the event.

Each year, owners rent their home for a big premium during the Masters and make tax-free income. Homeowners benefit from a little known provision in the tax code that does not require taxpayers to recognize the income derived from renting their home for less than 15 days per year. See Rental of property also used as home on IRS.gov.

Large sporting events like golf and tennis tournaments, championship games and other high attendance events increase the demand for a temporary rental of a private residence. Obviously, there are challenges with personal belongings and damage but getting a premium rental rate with a substantial deposit and not having to recognize the income could be worth it.

You’ll certainly want to discuss this with your tax professional prior to making this decision. You’ll probably also want to get some help from an experienced real estate professional.

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Automatic thermostats can lower your monthly utility costs while conveniently regulating your comfort by adjusting temperatures on your heating and cooling systems. These can be particularly effective in homes with zoned systems where you live in one area during the day but sleep in a different zone.

There are programmable thermostats available at home improvement stores that can make the adjustments for specific times during the day and specific days of the week. They’ll allow you to override the setting when needed without tampering with the programming. They’ll even remind you to change your filter.

An exciting development is the Wi-Fi enabled thermostat that allows adjustments from any Internet connection such as computer or Smartphone. Imagine how convenient it can be to change your temperature from the car before you get home.

Reasonably priced under $100 for most models, it makes it easy to recapture the cost of the thermostat quickly. Most of the thermostats are designed for do-it-yourselfers; however, you can always have a heating and cooling professional install it for you.

Montgomery Street Fair

April 21, 2012

The Montgomery Street Fair was an event originally in the late 1800’s.  It is being revived today in downtown Montgomery with over 40 artists, musicians, and vendors.  My daughter is a photographer and will be showing her work as well.  Look for Pint Bottle photography.  http://www.facebook.com/#!/PintBottlePhotography

Click the link http://goo.gl/szQbo  to see the interview with Senator Clay Schofield who sponsored and is helping pass a bill in Alabama which holds lending institutions accountable for releasing liens on properties within a specific timeframe.  Before this bill was introduced if a mortgage holder did not release the lien then a property owner may not know until they go to refinance or sell the home.  In some cases that could be years and by then it’s a nightmare to try to get it released.  With all the bank failures that we’ve had in the last few years, it’s going to be even worse to release liens.  Hopefully this bill will pass right through the House and signed by the Governor very soon!

Attitude is Everything!

April 19, 2012

Gina Grant, our 2012 Alabama Association of REALTORS®, talks about her theme this year…. Attitude is Everything.  It is truly a contagious spirit that we as REALTORS® work hard to implement in our daily interaction with the consumer.  With the media inundating us with gloom and doom, unemployment woes and rising gas prices, it’s hard to stay positive.  This weeks Parade Magazine picked the top 25 Hardest Working Towns.  Montgomery, AL was selected as number 23 scoring four points above the national average.  We work hard and we play hard and we encourage others to stay positive.  Hard work and keeping that positive attitude work in any industry.  How’s your attitude?

 

http://youtu.be/OjuNaGlFEjs

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.

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.

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