Your Money

Taxes and Your Home

There are many benefits to owning a home: gaining control over your environment, becoming part of a community, the opportunity to build equity, and of course, tax breaks. *

The Most Common Tax Deductions
There were once again rumblings that the mortgage interest deduction was going to be eliminated, but we’ve gotten a reprieve for yet another year. Why is this a great benefit? The government is giving you a credit just for paying interest on your home loan. You can even deduct interest paid on a loan secured by a second home or a home equity loan. Houses, condos, co-ops, mobile homes, and even some RVs or boats may qualify.

Points are a way of defining the cost you pay to the lender for your home loan. One point is one percent of the principal amount of the loan. Points on a purchase can be deducted in the year of the purchase, while points paid on a loan refinance are deducted over the life of the loan. That is, on a 30-year loan, you divide the points by 30 and then deduct that amount each year. Your home mortgage servicing company will send you a Form 1098 at the end of the year to let you know how much you paid in interest and in points during the year.

Note that if you have rental properties or more than two homes for personal use, you should consult an experienced tax advisor for more information on available deductions.

Property Tax
If you’re itemizing your federal return, you can deduct your property tax. These fees are also known as real estate tax, and they are based on the assessed value of the home. Property tax can be collected by local and state governments. It’s possible to challenge your property tax bill if you feel your assessment is too high; check your local laws and requirements to find out more.

Investment Properties and Taxes
There are a number of deductions associated with investment properties. In general, you can deduct interest on the mortgage loan with which you obtained the property, as well as the expenses associated with maintain the property, such as retaining a property manager and making necessary repairs. You can also get credit on depreciation of the property.

Owning a home is a benefit in so many ways, from establishing a sense of community and putting down roots for your family, to fostering your sense of independence, to easing some of the burden at tax time. If you have more questions about purchasing or refinancing your home, or if you need a referral to a qualified tax consultant, I’m happy to help. Call me today to learn more about making your mortgage work for you!

* We are not a tax advisory firm. The information contained in this article is for informational purposes only and may not reflect current tax year rules and regulations. Consult your tax adviser or the IRS for current tax year rules, restrictions and regulations.

Re-posted with permission from Glen Daignault, MoveMent Mortgage.

Live Out Your Golden Years at Home

The Consumer Electronics show was held in Las Vegas last month and the focus was on high tech innovations designed more specifically to meet the growing needs of the aging boomer population. According to the latest data from the Center for Aging Services Technologies, 89% of the country’s baby boomer generation ( roughly 78 million born between 1946 and 1964) say they would prefer to live out their golden years at home, rather than go to assisted living communities.

The bulk of the new products introduced were aimed at keeping older adults living independently at home longer. This hot trend is in both tech and architecture where practices like incorporating handrails in shower stalls and other unobtrusive accessibility features around the house are part of smart “aging in place” design. At home live monitoring devices and systems that provide data back to their care agency are also an integral piece of the puzzle. Tech alone will not be enough to fulfill the boomer dream of never leaving their homes. In home care is also another important aspect of the total picture. Specially trained caregivers who can help interpret all of the diagnostic data and provide proper health care assistance is the winning combination for the future!

Arizona Leading the Country in Housing Recovery

Arizona was one of the hardest hit by the housing bubble bursting between 2006 and 2008. In 2008 there were tens of thousands of foreclosed homes causing an excess of supply which drove prices down dramatically.

The reasons for the volatility of Arizona’s home pricing can be found in our real estate laws. In Arizona we use Deeds of Trust instead of mortgages. This means that more than 99% of foreclosures are non-judicial, completed by a trustee without having to go to court. Arizona trustees are very efficient and therefore we have some of the shortest times in the nation between a Notice of Trustee Sale and a completed foreclosure.

Since 2009, lenders have sought to avoid the foreclosure process by allowing borrowers to short sell their property for less than the outstanding debt. Our short sale success rate is again amongst the highest in the country mostly due to the fact these transactions are being handled by Realtors vs. many other states required to use Lawyers.

The large drop in delinquency and elimination of troubled loans has meant that our market here has been able to recover it’s stability more quickly.

The housing supply is now well below normal and demand is strong due to low interest rates and low pricing. Luxury homes are showing modest price gains and recovery strength. The market bottom is behind us!

Contact a trusted Arizona Real Estate Professional today for all of your home buying and selling needs. Contact Randi Christel.

Now is the Time to Re-finance Your Arizona Home

Interest rates are at an all time low and there are many programs and scenarios to consider when re-financing. The most important thing is to align yourself with a mortgage professional who you trust and who can walk you through the various options available to you. Even a 1% reduction in interest rate on a $200k loan can lower your payment by approximately $120 a month or over $1,440 a year in savings!

The HARP loan program is available through 2013 and allows certain conventional loans to be re-financed even if the property is “underwater” from a value perspective.

Also, now may be the time to take advantage of this low interest rate environment to convert from a 30 year fixed rate mortgage to a 15 or even a 10 year fixed rate mortgage in order to pay off your mortgage sooner.

Because everyone’s financial situation and loan scenario is different the best thing to do is fax your mortgage statement to a local mortgage professional and a true business partner of mine, RJ Crosby, at 1-866-393-2651 or e-mail to rjcrosby@primelending.com for a free review and analysis of your current mortgage and potential options. You may also visit his web-site at www.rjcrosby.com.

Contact a trusted Arizona Real Estate Professional today for all of your home buying and selling needs. Contact Randi Christel.

How About Refinancing?

Conventional wisdom has always been to pay off your mortgage as soon as you can, especially before you reach retirement age. More and more baby boomers are taking advantage of historically low interest rates to re-finance their mortgage.

Refinancing has long been a strategy for homeowners who want to pay off their mortgage in a shorter time period or negotiate a lower interest rate . Older investors want to use the equity in their homes to not only recoup losses in their retirement accounts but to get a better handle on their fixed expenses..

If you have a 5%-7% mortgage, now may be the time to refinance the balance at nearly half that rate, sometimes resulting in lower monthly payments or to reduce the number of years to pay off the loan.

Many baby boomers typically hold a lot of equity, some are cashing in their home equity to pay down other debts.

The current rate for a 30 year fixed mortgage rate is near an all-time low at 3.61%

*As of 8/7/2012 Source:bloomberg.com