Category Archives: Tax Information

Have you considered the COST of Selling Your Home?

download (2) Let’s be honest, selling your home is about making a profit, however, that doesn’t mean that it comes without costs. Here is an overview of some of the major costs you will be responsible for paying.

How Much is My Home Worth?

Mortgage Balance
This is the remaining balance on your original home loan.  You will need to pay off your mortgage in its entirety when your home is sold.

Home Equity Loans (2nd & 3rd Mortgages)
Any loan against the value of your home will also need to be paid in full after the sale of your home.

Pre-Payment Penalties
The bank or lending institution that currently owns your mortgage title may assess a pre-payment penalty.  You should speak to your lender directly, and ask if they plan on assessing a pre-payment penalty.  Once you know exactly how much that amount is, you may be able to negotiate with your lender to reduce or waive the pre-payment penalty, if there is any.  You will also want to submit a formal pre-payment notice to your lender.

Pre-Sale Preparations
In most cases, it is not advisable to make major investments in your home right before a sale. There are however, a few things that can be done to increase the curb appeal, fix minor problems, or anything to make your home more attractive to potential buyers.

How to Price to Sell and Still Make a Profit

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Closing Costs
All closing costs associated with the sale of your home will be listed for you and for the home buyer in the final HUD statement.  The buyer is generally responsible for all of these closing costs, which include:

  • Loan Fee’s for the Buyer’s home mortgage
  • Insurance Premiums
  • Title costs (Examination and Insurance)
  • Legal Documents and service fees
  • Recording & Filing Fees

In some cases, buyers make a request for you as the seller to cover their closing costs as part of their purchase offer.  We will negotiate these requests if they are made, and I will help you understand why it would be to your advantage to cover the buyer’s closing costs, and what limitations we can set to make sure we know the exact net of your home sale before closing.  As the seller, you will be responsible for paying the Real Estate Broker commission fee.

tax Taxes
The money that you make from the sale of your home is considered capital gains.  The good news is that these profits can be excluded from your taxable income, up to $250,000 for an individual, or $500,000 for a married couple, as long as your home was your principle residence.

To exclude the full portion of those gains, you will need to have lived in your house for at least 24 months, in the five years previous to the sale date of the property.  This is considered the “2 in 5 rule”.

Moving Costs
Moving is not only a hassle, it can also be very expensive.  Whether you’re moving to a new house in your neighborhood, or across the country, it’s important to estimate and plan for the full cost of moving from your home once it is sold.

So don’t forget, we are still in this to make a profit, however, it will come with some costs.  So plan ahead and know exactly how much you are going to get out of the sale of your home in the end. This way you can plan for the home you are going to buy, and all of the costs that go along with that purchase!

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Tax Deductions Not to Overlook!

tax Believe it or not, as taxpayers, we may overlook some seemingly obvious deductions that could save us more of our hard-earned money!  Here are some of those items to keep in mind when tax time is looming.

Remember, if you’re ever unsure about a specific deduction, ask a trusted tax preparer, or visit http://www.irs.gov for more information.

Also, Tax Benefits For Homeowners

Vehicle Excise Tax If you get a bill from your state or local government charging you a tax for owning a vehicle, you may be able to deduct that tax.  You can also get the tax deduction if you lease a vehicle and your finance company bills you for the tax.

Job-Hunting Expenses It pays to save your receipts for job-hunting expenses.  These expenses are deductible if they were incurred to locate a new job in the same line of work.

Real Estate Taxes Also, don’t forget taxes you pain indirectly, such as taxes paid through a mortgage escrow account.  If you bought a house, check your settlement statement for any taxes which you reimbursed the seller at the closing.

Cost of Tax Preparation Tax software, expenses, preparation fees, and other tax-filing expenses are all deductible on your tax returns as a miscellaneous itemized expense. Be careful to deduct them on the return for the year in which you paid the costs.

taxes Estate Tax  If the estate of the person who died was large enough to trigger estate tax, find out the amount of estate tax attributable to the IRA distribution.  This amount is tax deductible.

Capital Loss Carryover  If your capital losses are greater than your capital gains, you won’t have to pay tax on the capital gains.  If you have a capital loss one year and a capital gain the next year, use your capital loss carryover to reduce your taxes in the later year.

State Tax You Paid in April with your Return  If you owned taxes when yo filed your last state tax return, that check you wrote could help you when it’s time to pay your next year’s taxes.

Reinvested Dividends  Often a mutual fund account is set up to automatically reinvest dividends in additional share purchases.

Credit for Excess Social Security Tax  If you worked for more than one employer during the year, look into the credit for excess Social Security Tax.

Non-Cash Contributions  If you’ve donated clothes, furniture, or other items to a charity, the value of your donated items is deductible.  Always get a written receipt.  With non-cash charitable contributions, no receipt means no deduction if you are audited.

contract New Points on Refinancing  Any points you pay to refinance your home can be deducted on a monthly basis over the life of the new loan.

Old Points on Refinancing  A lot of people miss this one.  All un-amortized points on an old refinancing are deducted in the year of a new refinancing.

Health Insurance Premiums  Any health insurance premiums you pay are potentially deductible. You have to add these to your total medical expenses, however, they have to exceed a certain percent of your AGI or adjusted gross income before they give you any tax benefit.
** If you are self-employed and not covered by any other employer-paid plan, you can deduct 100% of your health insurance premiums.

Investment and Tax Expenses  Many of us forget tax planning and investment expenses because they are part of miscellaneous itemized expenses.  Expenses to track, including your employee business expenses, are tax preparation fees, and even the portion of your legal or accounting fees relating to tax planning.

Casualty Deductions  If the area where you live has been declared a disaster area as the result of a hurricane, flood, wildfire, tornado, etc., you may claim an incentive to save for retirement.

 

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