Source: Realty Times/Benny L. Kass/01 October 2015
Friday, October 2, 2015
HOME REPAIRS VS IMPROVEMENTS: NO CLEAR ANSWER
Homeowner Question: I am having trouble figuring out what constitutes an improvement and what is ordinary maintenance. Thinking ahead to selling my house in a few years when the market rebounds, I have been keeping accurate records so that I can deduct these costs to lower the capital gains. Recently, I remodeled a bathroom, replaced a deck, replaced and upgraded the spa filter and motor, replaced the front door with a fiberglass model guaranteed to last more than my lifetime, and replaced a roof and rain gutters. Which of these can I safely regard as improvements, and which are just maintenance?
Answer: The line between repairs and improvements is fuzzy. The Court cases that have analyzed this issue are all over the place, with Judges deciding the exact same work going in opposite directions.
If your property is a rental, then in most cases you want to call the work a repair. Repairs can be deducted as rental expenses in the year that you pay them, thereby reducing your rental income. But discuss this with your tax advisors or your accountant first.
If this is your principal residence, however, while you obviously want to keep your house in good repair, the moneys you spend on ordinary maintenance provide no taxable benefits for you.
Improvements, on the other hand, may be very valuable to you when you sell your house, since they increase the tax basis in your house. The higher the basis, the less tax you have to pay.
Let's look at this example. In 1985, you bought your first house for $100,000, and sold it for $200,000 in l990. That same year, you bought another house for $200,000. Prior to l997, an important tax break for homeowners was called the "roll-over". Although you made a profit of $100,000 when you sold your first house, you did not have to pay any capital gains tax. Instead, the profit was "rolled-over" into the new house. The basis for tax purposes of the second property became $100,000.
You now want to sell, and have listed your house for $700,000. You know that under the current law, since you are married and have lived in the house for two out of the five years before sale, you can exclude up to $500,000 of your gain. You do the numbers and think that because you bought the house for $200,000, and will sell it for $700,000, you are home free on any capital gains tax.
Wrong: since you took advantage of the old "roll-over", your basis was $100,000, and when you sell it for $700,000, you will have made a profit of $600,000. While you can exclude up to $500,000 of this gain, you will have to pay capital gains tax on the $100,000 difference. Currently, the tax rate can be as high as 20 percent, so you will have to send a check to the IRS in the amount of $20,000. You may also have to pay the applicable state tax.
For purposes of this discussion, I am not taking into consideration other expenses which you have paid, such as closing costs, real estate commissions, or legal fees. These expenses will, of course, reduce your overall tax obligation.
How can you increase your tax basis? Here is where improvements play a vital role. Any work which you do to your house that adds to its value, prolongs its useful life or adapts it to new uses (such as "going green") will be considered an improvement and can be added to the tax basis of your property.
Thursday, September 24, 2015
How Much Must You Trust Your Listing Agent?
You and your family have decided to sell your house. It is now time to choose a real estate professional to help with the process. One of the major attributes this agent must possess is trustworthiness. To what degree do you need to trust them?
You must have enough trust in them that you feel comfortable they will accomplish all four things below:
1. Sell possibly the largest asset your family owns
In many cases, a home is the largest asset a family has. Studies have shown that the equity many families have in their home is the largest percentage of that family’s overall wealth.2. Set the correct market value on that asset
Pricing is crucial even in the best of markets. You want to get the best price for your home without putting your house at a value that buyers will have little interest.3. Set the time schedule for the liquidation of that asset
Your family probably has a certain timetable for the sale of your house and the move into your next home. Coordinating the home selling process to meet certain schedules can be tricky.4. Set a fair fee for the services required to liquidate that asset
You will need to pay a commission to an agent for selling the home and coordinating all elements of the selling transaction including possible future negotiations (ex. with a home inspector or appraiser). That’s a lot of trust. Make sure you pick a true professional to help with the sale of your home.Source: Keeping Current Matters 09252015 The KCM Crew
Friday, September 18, 2015
Homeselling Tips this Autumn
You may think that autumn isn't the best time to showcase your home, but you'd be wrong. Yes, fall days are shorter, with fewer hours of daylight for buyers to see your home. There may be many days of grey skies, rain, or early snowfall.
But autumn has a unique appeal that's all its own. You can look forward to gathering with friends and loved ones by a crackling fire, play winter sports in the backyard, or walk on the beach without all the tourists. Most important, homebuyers are motivated; they want to move in before winter. Here are six tips to selling your home during the changing season.
Say welcome with fall decorations
One nice thing about fall décor is that you can put out pumpkins, gourds, scarecrows, and mums now, and they will last through Thanksgiving. Put a nice new welcome mat out for buyers and their agents to wipe their feet, and if it's been raining or snowing, provide booties that can be slipped on over shoes so mud or road salt aren't brought into your home. It's worth paying the neighborhood kids to keep your driveway and sidewalks clear of snow and slush.
Air out your home
As the weather cools, you may tend to shut windows and doors, but closed homes tend to hold odors, so make sure you open the windows for an occasional airing. Run the fans after cooking meals. Moisture also holds odor, so use the exhaust fans in the bathrooms after every bath and shower. While buyers are inside, keep temperatures moderate and even -- not too warm or cool.
Let the light in
We already know there's less sunlight in the fall and winter, so leave lights on for showings. It won't hurt to pump up the wattage in areas you really want buyers to see details, such as kitchens and baths. Open the drapes and keep windows as clean as possible for showings.
Cut out clutter
When your household spends more time indoors, it's natural for clutter to accumulate, but too much can have a smothering effect on buyers. Take special care to put coats and all-weather boots away.
Keep a basket in every room so that if you get a sudden showing, you and the rest of the family can do a five-minute cleanup before leaving the premises so your buyer can have some privacy. Store the baskets under the bed or some other place out of sight.
Stage Your Home for the Season
If you're selling a home in a ski resort, it's easy to play up the fun of cold weather. Otherwise, you may need a little imagination to stage your home. Ask your real estate professional for ideas, but consider these few to make your home cozy, toasty and inviting.
If you have a fireplace, turn it on, but low. Stage the seating with a comfy Fair Isle throw. If you can find one with snowflakes and reindeer, that's even better. Put some big fluffy pillows on the floor. Boil some apple cider with cinnamon, and let the delicious aroma waft through the house. Make a beautiful wreath for the front door out of the gorgeous gold and red leaves that have fallen in your neighborhood.
Family photos are supposed to be a no-no with one exception -- when they show the home to advantage. Make a quick-flip buyer's album that includes your beautiful garden in the spring, the backyard pool in the summer, and the gorgeous fall colors of your trees.
Tout the neighborhood
Where ever your home is, it's part of a community. Show it off! If your neighborhood offers a bike path, playground or community center, list them for the buyer in a feature sheet, and include pictures for your buyer's album.
Create a map to add to your feature sheet that shows how quickly the buyer can get to various amenities like the nearest grocery store, train stop, and other services. Be sure to point out places unique to your area like the corner book shop or dog groomer.
You can bring out the cozy best in your home by showing buyers that this is a great place to make pleasant memories.
Source: RealtyTimes.com | Blanche Evans | Wednesday, 16 September 2015
Monday, August 24, 2015
5055 WOODLARK, Memphis, TN
Charming, Move-In Ready 3BR Home in Sought After Colonial Acres Neighborhood~Beautiful Hardwood Floors Throughout Majority of Home~Large Great Room w/ Fireplace~Formal Dining Room~Updated Kitchen w/ Plenty of Counter Top & Cabinet Space~Lovely Hearth Room Off Kitchen is Perfect for Entertaining~Lovely Master Bedroom w/ On-Suite Half Bath~Huge Laundry Room w/ Built-In Shelves~Nice Fenced-In Backyard w/ Patio~New Interior Paint Throughout~AND MORE!!
Presented By:
Jennifer Carstensen
RE/MAX Real Estate Experts
901-410-8818
Licensed In: TN
Wednesday, August 19, 2015
4314 NEW CANADA, Lakeland, TN
Beautiful Move-In Ready 4BR + Bonus Home in Quiet Lakeland Neighborhood~Large Great Room w/ Fireplace~Formal Dining Room~Open Eat-In Kitchen w/ Beautiful Cabinets & Stainless Steel Appliances~Large Master Bedroom w/ On-Suite Master Bath & Walk-In Closet~Two More Bedrooms Down~Nice Laundry Room w/ Built-In Cabinets~Fourth Bedroom + Bonus Room Up~New Carpet Downstairs~AND MORE!!
Presented By:
Jennifer Carstensen
RE/MAX Real Estate Experts
901-410-8818
Licensed In: TN
Thursday, August 6, 2015
2450 EAGLERIDGE, Memphis, TN
2450 EAGLERIDGE, Memphis, TN
$ Click for current price
5 BEDROOMS | 4 (3 full, 1 half ) BATHROOMS |
Beautiful 5BR Home in Gated Community~Large Living Room w/Fireplace, Formal Dining Room & Stunning Sun Room w/Heated Floor~Updated Eat-In Kitchen w/Granite Counter Tops & Lots of Cabinet Space~Two Master Bedrooms w/Full On-Suite Baths~Custom Walk-In Closet~Updated Bathrooms w/Granite Counter Top~Heated In-Ground Pool w/Cooking Deck (Grill & Cook Top)~Backyard Overlooks 14th Green @ Colonial CC~New Exterior Paint~New Terraces~Intercom System Compatible w/iPhone for Music Inside & Out~AND MORE!!
Presented By:
Jennifer Carstensen
RE/MAX Real Estate Experts
901-410-8818
Licensed In: TN
Thursday, July 23, 2015
Know About 'Home Equity' and Why it Matters
9521 JACK BOND, Lakeland, TN
$ Click for current price
4 BEDROOMS | 4 (3 full, 1 half ) BATHROOMS |
Must See, Beautiful Custom Home w/Lots of Land~Huge Living Room w/Additional Sitting Area & Wood Burning Stove~Formal Dining Room w/Lots of Natural Light~Large Eat-In Kitchen w/Tons of Cabinet & Counter Top Space + Pantry~Spacious Laundry Room w/Built-In Cabinets~Two Master Suites Down, Both w/Walk-In Closets & Full Bathrooms~Double Vanities, Jacuzzi Tub & Double Shower~Office Down~Two Bedrooms w/Jack & Jill Bathroom + Bonus Room Upstairs~In-Ground Pool~2-Story 3 Car Garage w/Workshop~AND MORE!!
Presented By:
Jennifer Carstensen
RE/MAX Real Estate Experts
901-410-8818
Licensed In: TN
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