0% financing has induced car buyers into taking the plunge because it doesn’t cost anything to use someone else’s money. While mortgage rates are not at zero, they’re close enough that many buyers are applying similar logic. Qualified mortgage interest is deductible on taxpayers' returns subject to the maximum acquisition debt of one million dollars. For the fortunate homeowners who have paid off their mortgage, their acquisition debt was reduced to zero and only the interest on a maximum home equity debt of $100,000 is deductible. If you have to pay interest, deductible interest is preferable because it reduces your actual cost. Consider the following example of a taxpayer with a $500,000 debt-free home. If they did an 80% cash-out refinance of $400,000, $100,000 would be considered home equity debt and the interest on that would be deductible on their income tax. The other $300,000 of debt is considered personal debt and the interest is not deductible. However, because the rates are currently so low, the loss of deductibility of the interest doesn’t have as much impact as if the rates were higher. The key is to have a good purpose for the money that would offset the actual cost of the interest. Paying off a higher rate debt such as credit cards, student loans, possibly, business debt could all have significantly higher interest rates. Refinancing a home and eliminating debts like these could be a big savings. All lenders are not the same. Call for a recommendation of a trusted mortgage professional.
There are many reasons for wanting to have a home of your own like a place to raise your family, share with friends and feel safe and secure. While investment opportunities rank high for most people based on the fact that homeowners’ net worth is over forty times higher than that of renters, so do the tax benefits that reduce tax liability.
- Taxpayers who have owned and used a home for at least two out of the last five years, can exclude a maximum of $250,000 of gain as a single taxpayer and up to $500,000 of gain for married taxpayers filing jointly.
- If the gain on a principal residence exceeds the allowed exclusion, the balance is taxed at the lower long-term capital gains rate rather than the marginal tax rate of the homeowner.
- Homeowners can deduct the interest paid on up to $1,000,000 of acquisition debt used to buy, build or improve their first or second home. They may also deduct the interest on up to $100,000 over acquisition debt that is a recorded lien on their first or second home.
- IRS will allow taxpayers to decide each year whether to take the higher of the itemized deductions or the standard deduction.
- Points paid on new loans for home purchases are considered interest and can be deducted in the year paid. On the other hand, points paid for refinancing a home must be amortized over the life of the mortgage.
- Meet your neighbors and exchange phone numbers and email addresses. Agree with each other that you’ll let them know if you see something strange going on at their home.
- Slow down when driving through the neighborhood; it will make it safer and everyone will appreciate it.
- Control your dog: keep it on a leash; pick up after it; don’t let it bark too much.
- Don’t park in front of your neighbor’s home.
- Notify your immediate neighbors when you’re having remodeling done and ask them to let you know if any of the contractors cause damage to their property.
- Let your neighbors know when you’re having a party and that there will be more cars on the street than usual.
- Maintain your home and yard so that it adds to the beauty of the neighborhood.
- Put your garbage out for collection on the correct day and bring the containers back in promptly.
- Select a tree with fresh green needles that don’t fall off when touched or when the trunk is tapped on the ground.
- When trees are cut too early, they have a greater risk of drying out and can become more dangerous especially with electrical lights.
- Cut 1” to 2” off the base of the tree before placing it in the stand to facilitate it drawing water to the limbs and quills.
- Trees require water similar to cut flowers or they’ll dry out. Tree stands should hold at least one gallon of water and it should be checked every day. A six foot tree could use up to a gallon of water every two days.
- Position the tree a minimum of three feet or further from heat source like fireplaces, space heaters, heat vents or candles. Do not allow the tree to block an exit.
- Lights should be labeled from an independent testing laboratory and intended for indoor use.
- Follow manufacturer’s recommendations for how many strings of lights can be connected to each other.
- Turn off all tree lights when you go to bed or leave the home.
- If the tree becomes dry and begins shedding needles, it can be a fire hazard and should be removed from the home. Even if the holidays are not over, it is not worth the risk to keep it in your home.
- After the gifts have been opened, don’t return the paper and boxes under the tree.
- Remove the tree as soon as possible after the holidays.
- Trees should never be burned in a fireplace. The trees will burn very hot and quickly when they are dry and could spread outside of the fireplace which could cause an unfriendly fire.
- Check to see if there is a recycling program for holiday trees in your community.