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Deductions For Homeowners

by Jon Smith, CRB, CRS, GRI

With the new year also comes tax time, and homeowners may be able to deduct many home-related expenses. Keep in mind these tax breaks are available for any type of home whether it be a mobile home, single-family residence, townhouse or condominium.


Deducting Loan Points Paid on a Purchase or Refinance
The points you pay on a loan for a
home purchase are tax-deductible for the year you made the purchase. You can deduct the points you paid as well as those a seller paid on your behalf if you meet the following criteria:

  •   The loan is secured by your primary residence
  •   The loan was used to buy, improve or build the home
  •   Paying points is a common practice in your geographic area
  •   The points are calculated as a percentage of the loan principal

First-time home buyer credit.  A $7,500 tax credit is available to eligible taxpayers must have bought, buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2010 and close on the home by June 30, 2010. For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 return. and before July 1, 2009.  You are considered a first-time home buyer as long as you did not own a home during the three years leading up to the purchase of your new home.

Moving expenses. If a move is connected with taking a new job that is at least 50 miles farther from your old home than your old job was, you can deduct travel and lodging expenses for you and your family and the cost of moving your household goods. 

Deducting Real Estate Taxes. Real estate taxes are deductible in the year paid. They are generally reported on Form 1098, Mortgage Interest Statement, the annual statement from the financial institution holding your mortgage, or on your county real estate tax assessment statement. You should also deduct any prorated taxes collected from you at closing. These amounts are not always included on Form 1098, but may be itemized on your real estate closing statement.

Make sure you’re not missing out on important home-related tax deductions. Everyone has a different situation and you may actually qualify for other deductions you were not aware of, so always check with your tax advisor to find out which deductions apply to you.

Do You Have Hard Water?

by Jon Smith, CRB, CRS, GRI

You may have heard the term 'hard water' but many homeowners do not understand exactly what it is and even if they have this problem. According to the U.S. Geologic Survey, 85 percent of the homes in the United States have hard water.  While hard water is not considered to be unhealthy for people to drink, it can be damaging to household plumbing, water-using appliances and it can make it difficult to clean. Below are the basics of hard water, how to tell if you have it and what can be done about it.

 
What Is Hard Water?

Hard water contains calcium and magnesium and while this is quite natural, excessive amounts create what is commonly referred to as hard water. Hard water is not considered a serious health risk but people who are more prone to rashes and skin problems can have problems because it changes the skin’s pH and soap remains on the skin, clogging pores.

Ways To Tell If You Have Hard Water

The best way to tell whether water is hard or soft is the soapy factor. Soap and toothpaste do not lather up as quickly in hard water as it clogs skin pores and coats hair. The minerals in hard water can affect the ability of soap to clean kitchen and bath surfaces, dishware and laundry. Most homes have hard water problems without necessarily knowing about it.

Hard Water Solutions

If you suspect you have hard water, call a professional to test your water and recommend soft water solutions. The most common solution is to use a water softeners or water treatment systems. While many systems use salt, there are several water softeners available that have a salt free system. However if you are concerned about the presence of sodium ions in their water, use of sodium ions does not make the water noticeably salty or cause a significant increase in a person’s sodium intake. In fact, the FDA defines water that would result from softening 75 gpg hard water (where much more sodium ions would have to be exchanged that is typically the case) as a “low sodium” beverage.

There are many affordable solutions available for both purchase and for rent. If you are interested in a system for purchase, a typical household water softener costs around $1,000 to $1,500 with a monthly operating expense of around $2 to $8 if sodium is used. Many companies offer systems for rent with monthly costs ranging from $25-$85 depending on the model. Be sure to look for the WQA Gold Seal to find products that have been successfully tested to industry performance standards.

Tips When Househunting

by Jon Smith, CRB, CRS, GRI

Even if you know exactly what you're looking for, searching for a new home can be a time consuming and frustrating process. You may look at several homes so making the most of your time is key to finding the house of your dreams. Below are some tips to help you make the most of your search.

  1.  Start by concentrating on a few neighborhoods first.  Decide what's most important to you about the neighborhood you want. This can greatly narrow down your search.  
  2. Allow yourself plenty of time. When househunting be sure to dedicate an entire day or weekend. It is important to not rush, you want to be able to spend enough time at the home, especially if you if you find one you really like. Keep in mind you might just find one that you want to act on quickly and make an offer!
  3. Bring a checklist. Create a realistic checklist of the aspects your idea home should have. When looking at homes you can check off and make notes on which homes have or don’t have what you are looking for. This will help you analyze your needs and wants and focus on the properties that you can get serious about. 
  4. Be prepared to look at the potential of a house rather than what you see in front of you. Set your needs versus your wants so you can decide on some items that can be sacrificed. It's more important that the layout of the house and the number of bedrooms you need fit your needs and that all major systems are functional versus your dislike for the carpeting or outdated stove. Keep in mind that those types of cosmetic shortcomings can be easily remedied once you buy the house.
  5. Dress comfortably. Wear comfortable shoes but it is a good idea to wear slip on shoes as many homes might have a posted  “please remove shoes” sign to help keep the flooring clean. Having to untie and tie your shoes at every house can be a huge waste of time. Wearing comfortable clothing will allow you to focus on the aspects on the home and enjoy your experience.
  6. Bring a Digital Camera. Digital cameras are ideal for house hunting. You can take pictures of the homes you visit and save them in labeled folders on your computer. Which home had the huge walk in closet? Which one had the great backyard? Just look at the photos and you’ll remember!

Tips For Moving In Winter

by Jon Smith, CRB, CRS, GRI

Moving in any season is a chore but add cold temps, ice and snow and the task can be even more daunting. If you are moving this winter season I have some tips that can help you make your move during the winter months a little easier.

1. Be sure to have enough warm clothes with you - don't pack them. If you are moving from a warm climate to a cold one this can be even more important in case your items get delayed!
 
2. Make sure your car is serviced before the move - you don't want to break down in cold weather. A good idea for anyone who lives in cold climates is to keep an emergency 'survival' kit in your car that has canned food, bottled water, a first-aid kit and flashlights.

3. Keep plants in the passenger area of the vehicle or store them in plastic bags with holes punched for air.
 
4. Keep in mind that your belongings will be in a cold moving van for a long time, so plan accordingly. Precautions should be taken to protect expensive electronics, anything with liquid that can freeze or anything that might be damaged due to the cold.

5. In case of inclement weather be sure to clear your sidewalk, driveways and walkways of ice and snow. Remember that any accident on your property could become your liability.

Checking Your Credit Before Purchasing A Home

by Jon Smith, CRB, CRS, GRI

If you are planning to be a homeowner in the near future, you should access and check your credit report before starting to look for a home. Most lenders usually prefer to check your credit report before considering your application when you apply for a loan. The information in your credit history helps the lenders in deciding your credit worthiness and how much credit to offer you in case of a loan approval. Your credit score will also decide which interest rate you are eligible for. 

The first critical step is to review your credit report to check for any errors.  Unfortunately, many people fail to take this all important first step. Instead, they wait until they have applied for a mortgage loan to find out from the lender that there are problems with their credit scores.

By checking your credit score before you apply for a mortgage loan you gain the opportunity to find out if there are problems which you can correct and discrepancies that need to be removed. There are three national credit reporting agencies that you can choose from: Experian, Trans-Union and EquiFax. Remeber that you are also eligible for a free credit report annually by law, click here to get your free 3-in-1 credit report.

Review your credit report carefully for any errors and if you find any discrepancies you have a right to contest it. You will need to contact the credit reporting agency and explain why you believe the item is incorrect and thus you will need to provide documentation such as receipts and cancelled checks can help your claim. Bank Rate offers some great advice on fixing these errors along with the forms you will need. Although this is will be an inconvenience it is better to get everything cleared up before you fall in love with a home only to be denied a loan due to problems with your credit report.

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Photo of Jon Smith, CRB, CRS, SRES, SFR Real Estate
Jon Smith, CRB, CRS, SRES, SFR
Iowa Realty
3521 Beaver Ave.
Des Moines IA 50310
515-240-2692
Fax: 515-453-6404
 

 

 

Licensed in the State of Iowa