Register-250.jpgThere is a significant difference in how the money you spend on your home is treated for income tax purposes. Repairs to maintain your home’s condition are not deductible unlike rental property owners who can deduct repairs as an operating expense.

On the other hand, capital improvements to a home will increase the basis and affect the gain when you sell which may save taxes.

Additions to a home or other improvements that have a useful life of more than one year may be considered an increase to basis or cost of the home. Other increases to basis may include special assessments for local improvements like sidewalks or streets and amounts spent after a casualty loss to restore damage that was not covered by insurance.

Unlike repairs, improvements add to the value of a home, prolong its useful life or adapt it to new uses.

You can read more about improvements and see examples beginning on the bottom of page 8 of IRS Publication 523. For a form to keep track of money you spend, print this Improvement Register.

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I love reading my subscription to Dr. Kevin Elko. Such a smart man with profound thoughts. This mornings message spoke to me. Wanted to share.

The Blame Game

Recently, a man, who had attended one of my presentations, called me because his wife had had an extramarital affair. He explained the situation; he wanted my help; he wanted my opinion on who was to blame, since he believed assigning blame was the first step in this recovery (now, you and I know I thought he wanted to hear his wife was to blame). Basically, he wanted me to be the scorekeeper in his blame game.

Christ was once asked who was to blame for a man’s blindness, was asked who had sinned—the man’s mother or his father to cause the child’s defect (if a parent as only to sin for their child’s becoming blind, then every child would have some kind of sight challenges, to say the least; everyone is a sinner). Christ answered, “Nobody.” Occurrences happen for a reason: for something HIGHER.

The blame game, not baseball, is America’s great pastime (although there’s not much fun built into the game of blame). Whatever you practice, you become better at doing, and we are proficient blamers. When I was in private practice, I should have worn a striped referee shirt, not a white shirt and tie. My job was to hear the story that someone had been telling themselves over and over, and maybe not even accurately by the time I was hearing it, so that I could then tell them their “upset” and secondary gain of being a victim was justified.

Identifying yourself as a victim is giving yourself permission to have a lazy approach to life. It justifies your doing nothng; it makes doing nothing, or at least doing less than you are capable of, acceptable (Sure, your mother liked your sister better than you. . . . You might be now thinking, “I didn’t have a sister.” Okay, yeah, but your mother always wanted you to have one, I am sure. Poor mom and dad – what DIDN’T they get blamed for? Be careful! Your kids are getting older and there is a therapist in their office building just dying to give them a spot. Once I had a woman upset because her mother never taught her how to ride a bike. Wild coincidence! I rode my bike to my private practice that day and offered to teach her since she was sure that that “neglect” was the source of her miserable state!).

I did not offer this man with the broken marriage what he was looking for. I told him it didn’t matter who was to blame, but that what mattered was his vision of the man and father he always wanted to be, that he focus on himself and even meditate on a blessing to come to the man who was involved with his wife (I know I’ve lost at least one reader here). If the husband sits in blame, he will never get outside of the angry box he is in, because all he will see is the confines of its enclosure. I tried to make clear to this man what I had heard a thousand times from my mother: “Blame always betrays us in the end.” If he simply stops blaming, something much bigger than he is will take care of the score with others. Everybody eventually gets what they deserve. When people get their just desserts, the package is a lot more fanciful than anything we would have ever invented for them ourselves.

How often do you see blame circles at work? If you join in the blame game, aren’t you just establishing an argument for your limitations? Aren’t you losing focus of using the gift you were given to make a difference? Aren’t you wasting what is precious – time? In my doctoral dissertation I studied the psychologist Albert Ellis’ work with athletes and effective performance. Ellis said that the best years of your life are the ones when you own your problems. I say that somebody else can be dealt the exact cards you are dealt and win. Stop entering into blaming circles, especially at work; they waste precious time. As the singer Ice Cube sings, “You better check yourself before you wreck yourself!”

Nobody is to blame. Things just happen; if you can stay at peace, the issue has a remarkable lesson in it. As my mother used to say, “You learn or you feel.” If you do not learn the lesson, whatever it is will happen again. Don’t ask me why; it just does. When it comes to blame—of the marriage, or the bankruptcy, or the weight or the bank account—there has to be an “aha” moment when you say, “I have circled this mountain long enough, I am made for more, I am headed north!” In that moment, you must quit saying, “The ex” or “The in-law,” but rather, “There was a part, be it a small part, that I played in the blame. And I am going to step back to allow this realization to teach me and give me meaning.”

I was friends with a coach, who lost his job and blamed many in a most creative blame game I ever saw. He made himself a dangerous man, because the blamers and the angry are very dangerous people (the OK City bomber who hurt and killed, or even people who go into schools and hurt and kill children – blame is the reason – for what? The kids or hurt didn’t cause the situation; just ask them). Stay away from haters who sip on haterade; they can destroy the careers and dreams of others. We can chose to be bitter and then be pitiful or stop blaming and then be powerful.

An airplane pilot saw a light come on the dashboard signifying engine trouble. So he told the co-pilot to keep flying as he went to look at the engine. In there, he saw a mouse gnawing at the wires, so he went back and told the co-pilot, “We got to take this plane higher.” They did, the oxygen became thinner, and the mouse suffocated. Don’t blame but see the gift; go higher.

Adam Levine, the popular lead singer of Maroon 5, was asked why he sings so high. He said, when he was in school, he was constantly teased about his high voice. One day he decided to use the teasing, not blame the bully, but to sing the voice he had: to use it for something. He said that, when he did, people started to like it. We have signs at schools, “No bullying,” but we should have signs, “No blaming.”

A man, before he became a minister, happening upon a wreck, found a man slumped over the steering wheel, bleeding. The yet-to-be minister asked, “Do you want me to call the police?” The man pulled back, blood coming down his face, and softly said, “No, call the ambulance.” In your situation, don’t make a call to judge and attribute blame. Instead, focus on the healing of the wound and the teaching of the spirit. Today, we keep on telling our story to the police so they can handcuff somebody.

But why not remove all the blame “on credit”? Stop blaming people for what is happening; in fact, make a promise that you will not blame when something happens down the road – letting go on credit, not being attached to something that didn’t go your way even before it didn’t go your way. In other words, stop the blame game as an occurrence; stop it as an attitude. Decide you aren’t going to blame but are rather going to use every challenge as an opportunity for you not to become bitter but better.

Lead your family, team or workplace away from the blame game. In fact, make the very thing you are complaining about the starting point for the next great vision for your best project. You will waste the opportunity if you handicap your vision with blame. Sitting in that challenge is a gift; now find it!

Commit that you are going to blame nobody for anything, but simply say to yourself, “What is the lesson and what will I do differently when a situation arrives?” As Jimmy Buffet sings, “Some people say that there is a woman to blame, but I know it’s nobody’s fault.” He should have stopped right there. Think on a higher plane.

50% off (small).pngSerious shoppers wait for a 50% off sale to make the decision because of the bargain factor. Renters who are serious about lowering their monthly cost of housing should consider buying with today’s low mortgage rates. For an example, let’s assume a person buys a $200,000 home with 3.5% down payment on a 4.5% FHA mortgage for 30 years.

The total house payment would be approximately $1,508 per month. However, once you consider the equity build-up due to normal amortization, a monthly appreciation estimated at 2% annually for this example, the tax savings and paying maintenance that a tenant wouldn’t be required to do, the net cost of housing is $772 a month. This is almost half of the full mortgage payment.

If this person was paying $1,750 a month for rent, it would cost him almost $978 more to rent than to own. In the first year alone, it would accumulate to over $11,000 which is more than the down payment required of $7,000.

Owning a home is the largest investment that most people make and the down payment of $7,000 to purchase this home would grow to $58,837 in equity by estimating a 2% appreciation and normal amortization.

To check out what your real housing costs might look like, go to Rent vs. Own or contact your real estate professional.

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Attending the annual NAR Legislative Conference this week to get the latest housing trends and statistics as well as continue to fight for private property rights.

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Save Commission-250.jpgOne of the most common reasons buyers want to deal directly with the seller is because they feel they can save the commission. It’s a valid consideration but interestingly, it’s the same reason the seller isn’t employing an agent; they feel they can save the commission.

Both parties cannot save the commission. The buyer feels they have earned it because they’ve had to find the home, determine its value and negotiate with the seller. They had to arrange their own financing, title and inspections.

The seller equally feels that they have earned the commission because they have incurred all of the marketing expenses and have invested hours upon hours to be available to show the property, hold open houses and answer inquiries. They have had to research value, financing, title work and make decisions.

There is certainly value in all of the things that buyers and sellers are willing to do to save the commission but only one person can save the commission only if the buyer and seller can reach a written agreement.

There is value to having a third party advocate helping each party to the transaction.

The Profile of Home Buyers and Sellers (Exhibit 8-1) reports that 14% of sales were For-Sale-by-Owners in 2004 compared to just 9% in 2013. The trend shows that agent-assisted sales rose to 88% in 2013 from 82% in 2004.

The three most difficult tasks identified by for-sale-by-owners is attracting potential buyers, getting the price right and understanding and performing the paperwork. When surveyed, sellers most value the home selling in an anticipated time frame and for an expected amount.

The reality is that both parties cannot save the commission. It is earned by providing specific services that are essential to the transaction. The capital asset of a home represents the largest investment that most people make. An investment that important certainly deserves the consideration of a professional trained and experienced to handle the complexities involved.

Keys in Hand Small.jpgConsideration associated with a contract is generally thought to be the price and terms but being sympathetic and courteous towards the seller could make a difference in getting the home you want.

Business people, like store owners, expect to deal with customers and even come to expect behavior that might not be accepted in a purely social atmosphere. Homeowners, on the other hand, may not be aware of what to expect. They are opening the sanctity of their home to the public for review and criticism. Buyers may be detached from emotional feelings while the sellers might react unfavorably to comments that are taken personally.

  1. Be on time for appointments; cancel if necessary. The sellers may be rearranging their schedules and making an additional effort to make it convenient for you to see the property.
  2. Be a good guest and respect the seller’s privacy. Look at the home and avoid looking at the seller’s personal items; there is no reason to look in refrigerators or furniture drawers.
  3. Don’t sweat the small stuff. Try to focus on critical items of a home like location, floor plan, layout, size and not dwell on cosmetic items that are easily and inexpensively changed.
  4. It’s not a good negotiating technique to list the defects. Most people become defensive when presented with a list which could have the opposite effect of helping you get a better deal.
  5. Limit your visits until you actually own the home. It’s natural to be excited and making plans to move into your new home but it is still the seller’s until closing and they’re making plans to move too.
  6. Negotiations are generally finished when a contract is completed. It can be frustrating to continually be asked for “one more thing.” Make a deal with the seller and live with it. If there’s something you’re not sure about, specify it in writing in the contract.

Some things are obvious: the seller wants the most for their home and the buyer wants to pay the least possible. Showing consideration to the seller about things that don’t have anything directly to do with price can actually benefit the buyer.

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