Think Twice About Not Paying
What EXACTLY is a Mechanics Lien?
How Mechanics Liens Work
How to Protect Against Mechanics Liens
Some Important Distinctions
Once advertised as the “cool” and “elegant” thing to do, smoking has lost its edge. The number of people in the U.S. who smoke has been falling each year for many years now.
In 2015, nearly 21% of U.S. adults smoked at least a few times a week, according to the CDC. By 2018, the CDC reported only about 13.8% of U.S. adults were current smokers.
Quitting smoking is tough, but it’s worth it. Once you kick the habit, you not only enjoy improved health but also see financial benefits. In some instances, you’ll see the financial gain right away.
If the promise of better health hasn’t gotten you to quit smoking, thinking about the financial benefits could be what gets you to give up tobacco for good.
The price of cigarettes has climbed in recent years. States and cities have increased taxes on tobacco products, and the tobacco companies have also raised prices.
When you buy a pack of cigarettes, you’re paying for the cigarettes themselves, plus a federal cigarette tax of $1.01, plus your state’s cigarette excise tax, plus state sales tax in some cases.
States’ cigarette excise taxes vary considerably. The average tax across all states is $1.91 per pack.
Washington, D.C. has the highest tax rate, charging $4.50 per pack. New York state has the second-highest at $4.35 per pack. Missouri has the lowest cigarette tax at just 17 cents per pack. Because of taxes, the average cost of a pack of cigarettes in D.C. or New York is over $10. In Missouri, you can still get a pack for less than $5.
To get a sense of how much you could save if you quit smoking today, let’s use the average price for a pack of cigarettes across the U.S.: $6.30 (as of June 28, 2019), according to the Campaign for Tobacco-Free Kids.
If you smoke one pack a day, on the first day you quit, you will have an extra $6.30 in your pocket. Put that extra money in a savings account, open a brokerage account and start investing it, or use it to pay down debt.
You’ve made it through the first week smoke-free. Congratulations! If you used to smoke a pack a day, you’ll have an extra $44.10 in your wallet.
After 30 days without smoking, you’ll have successfully saved $189. Make it one full year without a smoke, and you’ll have saved $2,299.50.
Quitting smoking today doesn’t just allow you to save the money you would otherwise spend on cigarettes. You’ll also save the money you would have spent on smoking-related accessories, such as lighters, breath mints, and ashtrays.
Every year, nearly half a million people die as a result of cigarette smoking, according to the CDC. You’ve probably heard the laundry list of health issues smoking and tobacco use can cause:
Smoking-related illnesses increase your health care costs and put a burden on the health care system as a whole. Smoking-related illnesses cost more than $300 billion per year, with $225 billion going to pay for direct medical expenses, according to the CDC.
Once you quit smoking, health improvements happen quickly. About 20 minutes after your last cigarette, your blood pressure drops and your heart rate slows, according to Tobacco Free Life. If you suffer from cold hands or fingers, you might notice they warm up soon after you quit smoking.
You’ll have a nicotine-free system within 24 hours of quitting. You’ll have cravings at this point, but stay strong! Your risk of heart attack starts dropping between 15 and 90 days after you quit.
Your blood circulation will return to normal between 10 days and two weeks after you stop smoking. If you previously had trouble with your gums and teeth, your smile will look healthier.
According to the American Cancer Society, your risk of developing heart disease is cut in half about one year after you quit smoking. After five years, your stroke risk falls to that of a nonsmoker, as does your risk of bladder, mouth, esophagus, and throat cancer.
Quitting smoking significantly cuts your risk of lung cancer and improves lung function. If you remain smoke-free for a decade, your risk of dying from lung cancer is about half of that of someone who still smokes.
The Affordable Care Act prevents health insurance companies from denying you coverage for preexisting conditions, but it doesn’t prevent insurance companies from charging you extra if you smoke.
In some cases, the cost of a smoker’s premium can be up to 50% higher than the cost of a nonsmoker’s, according to Health Affairs. Insurance companies justify the higher premium because they usually end up paying more for smokers’ health care than for nonsmokers’.
Your insurance premiums won’t drop the minute you quit smoking. Usually, insurance companies charge premiums to people who used any sort of tobacco product within the past six months.
But you’ll qualify to sign up for a new plan as a nonsmoker during the first open enrollment period after that six months is up.
Along with enjoying lower health insurance premiums as a nonsmoker, you’ll also enjoy lower life insurance premiums after quitting. Since smokers have lower life expectancy than non-tobacco users, life insurance companies often charge them premium rates that are double or triple the rates offered to nonsmokers.
Smoking not only affects your appearance and health. It can also affect the looks of your home or other areas where you smoke.
Cigarette smoke permeates and lingers in soft materials such as carpets and curtains. Tobacco smoke makes furnishings and fixtures smell and will stain or discolor them.
Keeping a home clean when you smoke inside is also expensive. You might have to rent special equipment, such as a carpet cleaner, to get rid of the smoke smell and stains. Depending on how much you smoke indoors, you might need to hire a professional cleaner who specializes in restoring smoke-damaged homes.
Smoking in a rental residence often means you won’t get your full security deposit back when you move – if you get anything. Quitting smoking now won’t magically clean your home, but smoke will stop building up.
After you quit smoking, your laundry cost and dry cleaning bills will probably drop too. When your clothes don’t smell like an ashtray, you don’t have to wash or dry clean them every time you wear them.
Your decision to quit will also help your friends and family save money, especially if you used to smoke around them.
Secondhand smoke contributes to productivity losses of $5.6 billion per year, according to the American Lung Association. People exposed to secondhand smoke might miss workdays because of illness or be slower on the job if they are surrounded by smoke.
Kids exposed to secondhand smoke are more likely to develop lower respiratory tract infections, middle-ear problems, asthma, or other smoking-related diseases. In 2009, total health care costs related to secondhand smoke in California alone were over $241 million, according to Tobacco Control.
When you quit smoking, you protect and improve the health of the people you care most about. You also help them save money by reducing their risk of developing preventable conditions.
When you quit smoking, you also help your employer. According to the CDC, $156 billion of the $300 billion in smoking-related health care costs each year comes from lost productivity – and $5.6 billion of that is related to lost productivity due to secondhand smoke.
As a smoker, you’re likely to miss twice as many days of work due to illness compared to a nonsmoker. You’re also more likely to go to the hospital or seek health care, which means higher medical expenses for you and higher health insurance costs for your employer.
Why should you care about the costs your employer has to pay because of your smoking?
Think of it this way: If you quit smoking and begin missing fewer days and taking fewer breaks, your employer is likely to notice. You’re more likely to get a raise or promotion if your boss sees a boost in your performance.
Quitting smoking is one of the best things you can do for your health, both physically and financially.
Although it is challenging to give up cigarettes, especially if you’ve been smoking for years, it can be done. There are many resources out there, from your friends and family to your family doctor, to help you along the way.
Once you give up the habit, you’ll have a new lease on life and way more money in your pocket. Just think about what you could do with an extra $44 per week or an extra $2,200 each year, and that might be all the incentive you need to say goodbye to tobacco.
When they peaked in popularity during the early 1930s, mobile homes were once considered a thing of the future — but now they seem to be a thing of the past to many people. Despite their decline in popularity, these styles are still a cheaper alternative to a traditional home. Some communities across the nation still honor the antiquity of the mobile home, and today, they can be customized to fit the needs of any family size and can feature just about all the amenities that a traditional abode offers. Here are some cities with the most mobile homes.
21.5 percent of homes in Lakeland, Florida are mobile. Located in the Tampa Bay region, this Polk County city is the largest between Tampa and Orlando. True to its name, Lakeland mostly comprised of lakes — and some land. With so much space, it’s the perfect place to have a lot to put a mobile home on. Lakeland has over 30 mobile home parks for those looking to settle in one.
McAllen is a small Texan town that has a large percentage of mobile homes – 14.6 to be exact. According to data by the U.S. Department of Housing and Urban Development (HUD), An estimated 58 percent of all renter households live in single-family homes, duplexes, or mobile homes. The average price for a mobile home in McAllen in 2016 was just over $36,000, making it an affordable alternative to traditional houses. Columbia, South Carolina, the state’s capital, has a mobile home stock of 13 percent. According to data, South Carolina has the most mobile homes per capita than any other state. 12.8 percent of homes in Augusta, Georgia, located close to the South Carolina border, are also mobile homes. The Palmetto State actually makes our list twice, with a mobile home housing stock at 12.6 percent in Greenville, South Carolina.
Read on for more reasons to make your next home a mobile home.
Here at Money Talks News, we spend a lot of time telling you how to save money.
We’ve explained how to save $1,000 quickly and how to save on every online purchase.
What happens once you’ve cut the lattes and canceled the gym membership, but you’re still burning a hole in your checking account each month? At that point, it may be time to pull out the big guns — time to get extreme.
Here are some out-of-the-box ways to save big. These go beyond the frugal tips that save you pennies. Instead, they are things that may require big lifestyle changes, but that will pay off in the form of serious savings.
About 6% of all electricity produced in the U.S. is used by air conditioners, which collectively cost homeowners around $29 billion per year, according to the U.S. Department of Energy (DOE). So, turning off the A/C — and leaving it off — could save you some serious cash.
In some parts of the country, this would hardly be considered extreme — one-fourth of homes don’t have an A/C system, according to the DOE. But in hotter areas, it’s not for the faint of heart — and not something you should try if it would endanger your health.
If you want to give it a shot, we’ve got directions for how to make your own mini A/C as well as “5 Unusual but Effective Tips to Stay Cool Without A/C.”
We love our electronic toys, but using them costs us a pretty penny.
Cutting cable TV seems to be fairly standard money-saving advice. A more extreme way to save might be to not only cut cable, but also to eliminate internet and mobile phones altogether.
Unless you have a legitimate need to have the internet or a smartphone for work, you can probably get by with checking your email once or twice a week at the library. As for your cellphone, you probably don’t need to be accessible 24/7, right? Try carrying a prepaid phone for emergencies.
Less extreme options: If you don’t want to completely unplug at home, at least lower your bills. Free streaming services, for example, let you cut the cost of in-home entertainment entirely — see “15 Free Streaming Services to Watch While Stuck at Home.”
You can also use Money Talks News’ free cellphone and plan search tool to find cheaper options for phone service.
Imagine your whole family squeezed into a home the size of your living room. It may sound crazy, but the tiny house movement can be the ticket to big savings.
Tiny houses typically run from 250 to 600 square feet, and they may be permanent or mobile. It may seem unrealistic to pack several people into such a small space, but some families do it — and quite happily too.
Small houses mean small bills. Plus, with minimal storage space, you may find you are forced to stop spending money on stuff you don’t need.
Ready to take the plunge? Check out “7 Ways to Know You’re Ready for a Tiny House.”
Less extreme options: If a tiny house isn’t for you, cut your bills by moving to a smaller home. It costs a lot less to heat or air-condition 1,000 square feet than it does to keep 2,500 square feet as warm or cool as you like it.
Or, move to an apartment. Sure, you’re not building equity, but you’re also eliminating all of your maintenance costs and possibly some utility bills.
You can save some serious money by selling your vehicle and relying on your feet, bicycle or public transportation instead. If you need a car for a longer trip, rent one.
Less extreme options: If you can’t bear to be without a vehicle, at least drive it less. Carpool whenever possible, and combine errands. You can also go in with a neighbor or friend and buy a car to share.
Beef takes a bite out of many grocery budgets. Extreme savers might want to eliminate meat altogether from their diet. Of course, vegetarian diets can be expensive if you’re buying out of season or loading up on specialty products.
Less extreme options: Maybe you aren’t ready to give up meat completely. You can always have one or two meatless days a week or buy cheaper cuts of meat to keep costs down.
The cheapest way to replace costly heating oil and propane may be to install a wood-burning stove. If you have trees on your property, you can cut your own wood for free heating. If not, you might need to buy wood, which shouldn’t be too costly.
However, please be sure any stove is installed by a professional and inspected each year before use. Install carbon monoxide detectors, too. Dying from an improperly vented stove may be one extreme way to save money, but we would prefer that our Money Talks News readers stick around to enjoy more great articles for years to come.
Less extreme options: While a little more expensive than a wood-burning stove, a pellet stove is another inexpensive heating option. Also, if you have a little money stored up in savings, you might want to see about converting to natural gas. That might cost a bit upfront but will save money in the long run.
If you already have natural gas or none of these options will work, you can try the conventional advice of installing a programmable thermostat and adjusting the temperature at night and when the house is empty during the day to use less energy.
Cut down living expenses by living in a commune — or an intentional community, as they are now often called.
These living arrangements vary significantly from community to community, but most involve shared work and shared expenses. In addition, many of these communities are based upon values such as conservation or voluntary simplicity.
The Foundation for Intentional Community maintains a searchable directory.
Less extreme options: Rather than moving to a commune, embrace communal living in your own home by renting out a room. A step above that might be buying a duplex or similar property to share with a friend’s family.
Some folks curb-surf for useful items others have left out as trash, while others actually climb into garbage bins to retrieve overstock food from restaurants and stores.
I have a hard time recommending this extreme way to score free stuff. The law can be a bit hazy about the legality of dumpster diving, particularly when the trash is located on private property and not on the curbside.
Less extreme options: Instead of dumpster diving, you could try Freecycle to find freebies in your area. Also, send out the word to family and friends that you are on the hunt for reclaimed items, and you might be the first person they call before sending unwanted goods to the curb.
Are you tough enough for this strategy? Blogger Tanja Hester writes in Forbes that she and her husband have learned to tolerate an indoor temperature of 55 degrees in winter.
After moving into a new home the couple got a whopping bill for heating fuel. They began to search for the lowest indoor temperature they could handle. Their answer: 55 degrees, which probably would be pretty frigid for most of us.
“Any colder and we actively shiver … which is unhealthy. But 55 degrees we can handle by bundling up. We warn guests who visit in the winter!”
Less extreme option: If you don’t have a programmable thermostat (to set and forget the house temperature), get one. If you do have one, use it as intended.
You can save up to 10% a year on the cost of heating without sacrificing comfort by dropping your indoor temperature setting by 7 to 10 degrees for eight hours daily — while sleeping, for example — says Energy.gov.
We’ve got other tips for saving money and energy here: “22 Mistakes That Send Energy Bills Soaring.”
Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.
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As a buyer in this intense seller’s market, you may have experienced this unfortunate scenario: You find the perfect house, make what you believe is a strong offer, wait on pins and needles to see if it was accepted, only to find that you haven’t won this round of bidding wars. It begs the question: how do you choose your offer price so you know it’s competitive right out of the gate?
As cash offers have risen sharply and multiple offer situations have become the norm, buyers are having to bring more to the table, employ strategic tactics, and work with an experienced, full-time real estate agent. But one of the biggest questions buyers are navigating these days isn’t merely how much they’re willing to offer; they’re having to decide how much they’re willing to offer over list price. And while there isn’t a perfect formula to help a buyer decide, there are several things to consider when creating a purchase offer that could help it stand a chance of winning a bidding war.
The median existing home price is up over 17% from March 2020, and what this means for buyers is that they will need to pay substantially more than they probably want to pay and more than they would’ve paid just one year ago.
In some markets, offering a few thousand dollars over list price might be all it takes to win a bidding war. But in other markets, offering $50,000 over still won’t get the job done. Since real estate is a local endeavor, it’s critical to work with an experienced buyer’s agent that has a pulse on the current trends of your market.
There’s a reason real estate contracts are several pages long, and price is only one small section in the offer. While presenting a strong purchase price is critical, there are other factors that make up a home purchase contract — which means there are other ways to strengthen an offer in this seller’s market!
One of the biggest ways buyers weaken their offer is by including contingencies. The most common contingency is the home sale contingency—the purchase is contingent upon the sale of their home. While needing to sell in order to buy is common and reasonable, in this market, sellers are just not wanting to entertain these offers if they can avoid it.
Buyers should consult their lender to see if they can safely purchase without having to sell. In addition, work with your real estate agent to determine a reasonable list price and sale price to get your home sold quickly. And while it’s not ideal, buyers should consider selling first and living in temporary or month-to-month housing while they search for a home to avoid having a contingency offer. If a home sale contingency is necessary, buyers can strengthen their offer by adding a kick-out clause.
If you’re considering asking the seller to pay for your closing costs, you should rethink it depending on your local market. A strong offer these days means that it’s “clean” and over list price, so sellers won’t be likely to consider requests for concessions, personal property, or any others. Before buyers begin their home search, they should educate themselves on the upfront costs of purchasing a home, and become familiar with loan programs available to buyers that assist with some of those upfront costs.
In this market, sellers are doing less and getting more. They’re not wanting to spend thousands on repairs, especially when there’s plenty of buyers who would purchase it “as is.” That said, offers that forego inspection and repairs or offer a repair threshold stand out among the crowd.
While waiving an inspection altogether can be highly risky (and is often not recommended), it is happening in many markets. But, if you still wish to have the comfort and protection of a professional home inspection without sabotaging your offer, consider an offer that specifies there will be no requests for repairs, or that you will request repairs only if they meet a certain financial threshold. This tactic gives buyers the protection of an inspection discovery while also reassuring the seller that they won’t be nickel-and-dimed on repairs.
In years past, the appraisal price was the dominant factor in the transaction and one of the biggest protection for buyers. Now, however, buyers are readily agreeing to pay well over appraisal. By including an appraisal gap in a purchase offer, buyers can substantially strengthen their offer. An appraisal gap is when a buyer agrees to pay all or some of the shortage between the offer price and the appraisal value. It’s important to remember that banks will only lend on the appraised value, so any appraisal gap is the out-of-pocket responsibility of the buyer.
The best way to get your offer accepted? Submit an excellent offer and keep it ethical. Submitting a subpar offer but including a buyer love letter is no longer the way to win a bidding war. Not only is it risky, but it can also potentially violate federal law. So forego the love letter and instead submit your strongest, cleanest offer for the best chance to stand out from the crowd. It might not be the most convenient scenario, but if you’re really wanting to buy, it could mean all the difference between getting that coveted house or staying in the search pool!
A house purchase accounts for a sizable net worth of a person. Just like any investment, insuring your house makes economic sense. Ideally the cover should help you rebuild and replace your belongings if disaster strikes. A good policy should also shoulder the financial burden arising from injuries that a third party might suffer within the property.
So, how much homeowner’s insurance should you get? When deciding on this, the following factors will come into play.
Your house is insured on replacement basis. This means you will be reimbursed the equivalent cost of rebuilding your entire house or part of it that has been damaged.
To this end you should go for a policy whose limit will cover the current cost of rebuilding the house. It should take into account the cost of buying the same type of materials as well paying the labor at current prices.
The policy should also be flexible enough to account for possible changes in building regulations. Such include building code upgrades that may require some aspects of your house to be changed; say better foundations or a different drainage design.
Beware of policies that only cover the original value of a house. The premiums might be lower but they won’t cover any increase in labor or material costs. The payout will also be less the depreciation value of your home.
This is the out-of-pocket money that a policy holder must pay before the insurer settles a claim. It’s advisable to go for policies with high deductibles since they offer low insurance premiums.
A publication by Oregon Insurance Division shows that on average homeowners make a claim once in every 9 years. With this in mind, it makes sense to foot a higher deductible when disasters strike and save on monthly instalments in the long run.
Most insurance companies will increase your premiums or refuse to cover you in the future if you get into a habit of claiming reimbursement for minor damages. The move will ensure that you only file claims when the direst of disasters hit.
Your policy limits will vary depending on the location of your home. Houses built on sloppy or hilly sites are deemed problematic. Same goes for homes at far off places like a heavily wooded area that may inaccessible to emergency services e.g. fire trucks.
Some locations and states are also flagged as high disaster areas. These include flood, earthquake or hurricane prone areas. If your house is located in such an area then expect to pay high limits on your policy.
Flooding accounts for the highest percentage of insurance claims from natural disasters. You should consider having a policy that addresses it; even if your zone is not susceptible to floods. This is according to Loretta Worters, the Vice President of Communications at Insurance Information Institute
A detailed inventory of your belongings should give you an idea of what you stand to lose as a result of burglary or damage from a disaster. Normally, policies will insure possessions up to 75% of the home value.
You can insure your belongings on their actual value or that of replacing them. Replacement coverage attracts higher premiums but it makes more financial sense. This is due to the fact that most house possessions have a high rate of depreciation.
What Else to Consider
Having factored the above in your insurance calculations, the figure that you come up with should fall within a given margin. Take it upon yourself to find out the average cost in your state and specific city.
To give you an idea of what to expect let’s consider a home coverage of $200,000 with a $1000 deductible and a liability coverage of $100,000. A study showed that:
The national average falls at $1,228 with Florida and Louisiana having annual average rates north of $2900. Hawaii and Vermont attract the minimum coverage averaging at $589 and $337 respectively.
Pro Tip: Your policy limit can vary slightly from the average figure depending on the uniqueness of your home and possessions.
Although home insurance is a must-have for every homeowner it needn’t be expensive. Lack of knowledge on the subject can land you on expensive policies that are not worth your property. Similarly, you may find yourself with a cheap cover that is inadequate for your property. The above information will guide you in deciding on the amount of insurance that you should get for your home.
Technology has totally transformed the house buying experience. You no longer get in your agent’s car, and the agent drives you around to different properties. Now, you can sit on your couch and view hundreds of homes with the click of a mouse.
In addition to home listings, there are a bunch of other technology tools to help you find the perfect home. These tools are easy to use, at your disposal and can help you make a better decision when purchasing a home.
Many of us are familiar with Google Maps because we often use it for directions anytime we go somewhere. It’s also a valuable tool when buying a home. You can use the tool in several different ways. Most importantly, you need to know where the house is located and once you have the location of the home, you can easily calculate the distance to the airport, local schools and the closest grocery store.
Google Maps also gives you an overall view of the region when you pull back the view. You can locate the nearest park and get a sense of the community’s population density. You can use the street view feature in Google Maps to virtually drive around the neighborhood. This helps you better understand if the community fits with the type of neighborhood that you are seeking.
Most counties and cities have made property records easily accessible online. It’s not like the old days of going to the country courthouse and entering a room with hundreds of books with local property records. Now, you enter the address into a database, and the program pulls the property record. The listing contains recent sales of the property and the assessed value. These are valuable pieces of information when making an offer on a house. You want to better understand the owner’s selling position in the market.
If you have or plan to have children, schools are an important part of the decision-making process when you buy a home. You want your children to attend well-rated schools. There are several school rating sites online — greatschools.org and a niche.com are two examples. All of these sites usually feature a grade and give parents the opportunity to comment on their experiences at the school. Most states also make the yearly report cards from standardized testing available online.
If you are actively looking for a house, you are going to open houses and your real estate agent is setting up viewings. You can easily confuse different houses that interest you. You should take picturesoft the houses that you visit. You want to focus on the features that most interest you and areas that concern you. You can review these pictures when you are serious about a house.
When buying a house, you are most likely going to need a mortgage. That means you need to know what it’s going to cost. A mortgage calculator can quickly calculate your monthly payment. You just enter the price of the house, the down payment, interest rate, and whether you are seeking a 30- or 15-year loan. The website will kick out the monthly payment, and that will let you determine if the payment fits within your budget.
You want to get a sense of your neighbors when you buy a house. You also need to know if the neighborhood contains anyone on a sex offender registry. Most states make the sex offender registry public information online. You can search by the address of a house you are considering buying and the website you let you know if anyone in the area is on the registry.
NextDoor and several other community billboard sites have become popular over the last few years. These are sites where people post concerns and observations about the neighborhood. They also post questions. You get a sense of the important issues in the neighborhood and whether there are things that should concern you. The app. is easy to download. Once installed, you search for the particular neighborhood and find the bulletin board. You can scroll through the different posts.
When you visit a house, you might want to write down notes and document your thoughts on a house. Evernote and other note-taking applications allow you to easily organize your notes. You can add photos and other information to the note, and the information can be tagged for particular keywords. That makes it easier to sort in the future.
Drones are becoming common in the real estate industry. Real estate agents use them to fly around a house, and the camera footage is placed with the listing. But you can also use a drone to gather more information about the house. You can fly a drone around the neighborhood to get a bird’s eye view of the neighborhood. You can record the flight and watch the video later. It’s just another piece of information to help you in your real estate purchase.
The new tax law that took effect in January includes several changes that have a significant impact on owners of second homes, including vacation homes. It’s a good idea for current owners and those who are thinking of buying a second home to familiarize themselves with the new law now. It’s not too soon to plan for your 2018 tax returns.
The news isn’t so good for families that don’t rent out their vacation homes because they probably won’t be able to deduct as much as they have in the past. However, those who use their second homes only or mostly for the rental income may do better than they did under the old law.
The new law limits the total amount of state and local taxes you can deduct to $10,000 on a joint return for single and joint returns. The new limit covers sales, occupancy, income and property taxes, including taxes paid at closing on a new property. If you own a primary and secondary home, you will almost certainly exceed this limit. You will be able to deduct less-perhaps a lot less in property taxes than you did last year. The new limit on state tax deductibility will affect homeowners in high tax states more than others.
Despite attempts to eliminate or seriously reduce its value to homeowners, the deduction for mortgage interest survived largely intact in the new law. The most significant change was the lowering of the limit on total amount of the cost of mortgage debt for all homes owned by a taxpayer.
The new law “grandfathers in” or exempts mortgage interest on homes purchased before December 15, 2017. Homes purchased after that date will come under the new lower limit for the mortgage interest deduction. Thus, homeowners who already owe $750,000 or more in mortgage debt and buy a second home this year, they can’t deduct any of the mortgage interest incurred in the new purchase.
The new law increased the standard deduction to $12,000 for single filers and $24,000 for joint returns. Because of the changes in the deductibility of state property taxes and mortgage interest, homeowners who have little or no mortgage interest and buy a moderately priced second home this year on which they pay less than 12 months of mortgage interest may find that they are better off taking the standard deduction on their 2018 taxes.
For owners who want to use their second homes only for the use of their family and friends and not to rent out, the new tax law will create a disincentive to buy a home. For those who plan to rent out their property, if only for a few weeks during the year, the new law may be a boon.
Most landlords “pass-through” rental income so that it’s taxed as personal income. According to the Nolo website, if the rental activity qualifies as a business for tax purposes, as most do, you may be eligible to deduct an amount equal to 20 percent of the net rental income. If you qualify for this deduction, you’ll effectively be taxed on only 80 percent of your rental income.
Second, rental properties (even a vacation home used by the owner for several weeks a year), may not fall under the limits on deducting state taxes and the cap on mortgage interest.
“On a rental property, you could have a mortgage of $10 million and deduct the full amount of the interest. If the property is part rental and part residence, you can deduct the mortgage interest without limitation for the period of time that it’s a rental property — provided it rented for 15 or more days,” said Robert Gilman, a partner at New York-based accounting firm Anchin, Block, & Anchin LLP recently featured in the Wall Street Journal.
If so, an owner of a vacation home that’s rented out for two weeks or more can write off on a pro-rated basis all mortgage interest and state taxes along with all other operating expenses incurred by owning and renting the property, including maintenance, advertising, and repairs.
According to Stephen Fishman on the Nolo site, “Thus, the portion of a rental host’s mortgage interest and property tax allocated to the short-term rental activity don’t come within the limits. These are rental deductions, not personal itemized deductions.”
Finally, the new tax law includes a new tax deduction for individuals who earn income from businesses owned individually or by pass-through entities like limited-liability companies or partnerships.
“During 2018 through 2022, hosts will be able to use 100% bonus depreciation to write off in a single year the full cost of long-term personal property they use for their rental business. Bonus depreciation may now be used for both new and used personal property. It may not be used for real property,” writes Fishman.
Some economists forecast a drop in demand for vacation properties as a result of changes in the tax treatment of vacation homes. However, demand has remained strong in most of the nation’s vacation destinations.
Picture this; you have a perfect image in your head of the home you are going to buy. It’s the first time you are buying a house and from the look of things, everything is going perfectly; you have narrowed down your search to a favorable neighborhood and made the necessary arrangement to own the home. Then you start noticing flaws that you could have avoided if only you had taken time to do things the right way.
This is a common story amongst most first time homeowners. To avoid falling into the same trap, here are temptations to avoid when searching for your starter home.
Real estate agents are good at their job but they don’t come cheap. Instead of paying an agent, most first time homeowners decide to go it alone. The thinking here is that by foregoing the services of an agent, you can save a few bucks. You embark on open houses, hunting through one listing to the other.
This is usually a bad decision that puts many people at crossroads on which home to buy or how to bargain on a deal. Having an agent means that the leg work is reduced considerably, because not only do they have access to Multiple Listing Service (MLS) but they can also spot an overpriced home from a mile away.
When it comes to real estate, love, at first sight, is one temptation that can cost you dearly. Getting the right home requires due diligence. You should take it upon yourself to have the property inspected and appraised before you make a final decision. As a good measure, it’s advisable to at least view 5 houses to see how they compare.
Being unduly hasty to acquire the very first home that tweaks your interest can make you overlook important appraisal details. Information such as the actual market value of home, age of the home and its general condition could take time. Hurrying the process could mean waiving some of these key processes.
The pride that comes with homeownership can cloud your judgment especially when it comes to getting advice. Family and friends can actually lead you into settling on the wrong home. This is because their advice is biased and will mostly reflect their own housing conditions.
As a first time homeowner, you may not be too choosy or hang-up on every small detail. This is not to say that you should skip the home inspection; however, there are some minute imperfections that you can deal with. Your family or friends may have an issue with such details and advise you against buying such a home.
What they don’t know is that you could have gone through several homes before you settled on that one they are trashing. It’s advisable to only heed the input of those members who have been with you through the entire process.
The housing market fluctuates through buyers’ and sellers’ markets. The two shifts are a result of supply and demand. When the supply of desirable houses is low, prices shoot upwards favoring sellers; on the other hand, a surplus causes prices to tank, a situation that favors buyers. What’s the importance of this information for first-time buyers?
Here is why: A common piece of advice that you will get when looking to buy a house is that you should wait for the prices to come down. This is sound advice but how long is too long- how patient should you be?
It’s hard to give a clear answer on this. The best you can do is keep yourself updated on the housing market. Keep tabs on the Housing Market Index specific to your location. By watching these trends, you can (to a certain degree) know when prices are low enough for you to buy.
While buying a house, most first time owners make mistakes by letting their emotions drive them. Temptations will make you approach a deal blindly; you go it alone or sideline your agent, settle on the first home that interests you, go with a family member’s advice or waiting too long for prices to fall. These temptations can lead you into making the wrong buy.
Buying anything sight-unseen is always a risk, but when the “thing” you’re buying is a house, then the risks are about as high as they can get. For starters, the home may have hidden problems that the buyer won’t know about until they see the property in person. For example: the roof could have leaks; the HVAC system may not work; or, there may be an insect infestation.
While a home inspection can help the buyer gain a better idea of what the home’s quality is like, it is in no way a guarantee that there aren’t going to be issues.
Despite this, many home buyers and investors are willing to take on the risks of buying a home sight-unseen. For some buyers, it is just the fact that they live some distance away from the property and they either don’t have the time to visit or need a home quickly because they’re relocating to the area. For an investor, buying a home without seeing it can sometimes wind up being a good move. Of course, investors usually ensure they include contingencies in their contracts to protect their financial investments.
But what can a regular homebuyer do to protect themselves when they’re in the position of having to buy a home without ever seeing it in person? Here are some tips to help ensure the home you’re buying is worth it.
The agent you choose to work with will have a big impact on your satisfaction level throughout the process. Therefore, you need to do your research so you can find an agent in the area where you’re looking to buy – one who is experienced, knowledgeable, and well-respected.
Make sure you check their social media pages and online reviews from past clients. You can even ask them for references, preferably recent clients, to contact, so you can learn more about how strongly the agent works for his or her clients.
There’s an unfortunate growing trend in the real estate industry in which the photos uploaded for display on online listings are manipulated via Photoshop or other editing software. Rooms are made to look larger then they are. Colors and textures are made more vibrant. Dark rooms can be illuminated by computer-generating artificial lighting effects. Therefore, what the buyer sees online is often not the reality they find when they finally visit the property.
To prevent this misrepresentation, use technology like FaceTime, Google Hangouts, or other video chat programs so your agent can give you a real-time virtual tour of the home. This will help give you a better idea of the size, scope, and quality of the home’s interior, exterior, and property.
If you have family or trusted friends living in the area, then you can ask them to visit the property and provide you with their honest take on it. If possible, send someone who knows your tastes, preferences, and DIY skills. The individual can also serve as the liaison between you and your agent.
A professional home inspection will go a long way toward you determining whether the home is a sound investment or a money pit. While a home inspector won’t be able to tell you if something is about to malfunction, they can let you know about the state of the roof, the HVAC system, the plumbing and electrical systems, and other common concerns. The inspection report will also serve as a strong negotiating tool if the home does have some problems that will need to be fixed before you take ownership.
When buying a home sight-unseen, you are the only party in the transaction that is taking a risk. Therefore, you need to protect yourself by including contingencies in your contract. This way, you will have more room to deal with any unexpected problems or negative information you uncover while doing your due diligence. In bad situations, a contingency can even help you walk away from your contract without accruing any excess costs or legalities.
Homes.com offers home listings for every city in the United States. So, if you are looking to relocate, we can help you find the home of your dreams in your soon-to-be new city. We can even match you up with a preferred seller’s agent in the area where you’re looking to buy. Give us a try today and see for yourself why so many buyers find their homes with Homes.com.