Tag: Home Owner Tips

Tax Benefits of Owning a Home

An image of pennies on a wooden backdrop to depict the tax benefits of owning a home.

If you own your home you might not be aware of some of the benefits that come along with it. Of course there is the increased satisfaction of home ownership. We know that we appreciate the benefits of owning our own space.  We can paint the walls the colors that we like.  Decorating choices are are our own. When we want to make improvements like new carpet or hardwood instead of carpet the choice is ours. There is also the benefit of appreciation that we get the benefit of when it is time to sell. But what are the tax benefits of owning vs. renting? This week we wanted to highlight the tax benefits of owning a home. Here are seven that you should remember come tax time!

Mortgage Interest Deduction

The number one benefit of owning is that you are able to deduct the mortgage interest at tax time. The more recent your mortgage the greater your tax savings.  This deduction is itemized.

Tax Benefits of Owning a Home: Property Taxes

Another benefit is that you are able to deduct your property taxes. Taxes are built in to most people’s monthly mortgage payment so you may not even know how much you are paying in taxes.  You will be receiving a statement at the end of the year that will tell you and this amount can be written off.

Mortgage Insurance

Did you know that your private mortgage insurance is also tax deductible?  It is!  If you were not able to put down 20% when you purchased your home you are paying PMI or private mortgage insurance. That amount can be tax deductible.

Tax Benefits of Owning a Home: Energy Efficiency

Have you made any energy efficient upgrades to your home?  You can receive a tax credit for solar electric and solar water-heating equipment.

Work From Home

Many of us have had to work from home at points during the last several years. If working from home is a requirement for your job you may be able to deduct for a home office.  That deduction can be as much as $5 per square foot up to 300 square feet or office space.  If you are a W-2 employee, sorry you can not use this deduction.

Tax Benefits of Owning a Home: Home Improvements

Many of us are trying to decide if we are better off buying a place that fits our needs long term, as we age or if we are best staying where we are and making changes so that our current home works for us.  Did you know that home improvements that are done to help you age in place may be tax deductible.  The total cost must exceed 7.5 % of your adjusted gross income.  You must also prove that the changes were medically necessary with a letter from your doctor.

Home Equity Line of Credit

Another deduction to consider is the interest on a home equity line of credit (HELOC). Interest is deductible only if used to buy, build or improve the property.

As a home owner these are the tax benefits of owning a home for you to think about now and remember when it is tax time.  Make sure that you are prepared so that you are not missing anything that can save you money! If you are a renter and would like to enjoy some of these deductions for yourself.  Contact us and let’s explore home ownership!

What is Recasting a Mortgage

Let’s say that you are the lucky recipient of a significant sum of money. Great Aunt Martha died or your played the lottery and won. You have decided to use that money to pay down your mortgage. What is the best way to do that?  Let’s say you just provide your mortgage company with a lump sum payment, to go towards principal. The amount that you owe is reduced and the length of time that you have to make payments on your mortgage is reduced. However, your monthly payment will remain the same. This is why it is important to understand what is recasting a mortgage.

So What is Recasting a Mortgage

An image of pennies and keys.

If you would prefer to have your monthly payment reduced once you make your substantial payment, there are only two ways to do so.  One is through refinancing your mortgage and the other way is through recasting your mortgage. If you refinance your mortgage that will cost you thousands of dollars. Additionally, it will change your interest rate and length of your mortgage and your payment. When you recast your interest rate remains the same. The length of the term of the mortgage remains the same. However, the amount that you owe is smaller because of the lump sum payment that you have made. Additionally, your payment is in turn reduced.

It’s In The Numbers

For example, if you owed $300,000 on your mortgage and you payed down $100,000 your payment could be reduced to a payment $1,000 a month.  Prior to recasting your payment was $1,500.  If you had a thirty year mortgage and you still had 14 years left to pay it off, you still would have 14 years to pay it off after recasting. If your interest rate had been 4% it still would remain 4% after your loan was recast. This can be especially appealing as interest rates continue to rise. The cost to recast is in the range of $250 to $500 depending on who holds your mortgage. The typical length of time to complete the recasting is about 3 months. During that time you will continue to make your payments like you always have.

What do you need to do if recasting sounds appealing to you? 

The first step will be to contact your mortgage company and find out if they offer recasting and to verify how much it costs. Your mortgage company will provide you with the details of their process.  Not all of us will be lucky enough to receive such a gift during our lives, but if you are the lucky person it is good to know about recasting.  You can then thank Great Aunt Martha every month when you make that lower payment.  Or if you won the lottery you can thank the lottery. Contact us with any real estate questions you have.

Life Expectancy of Housing Components

In our last post we covered a plan for home maintenance.  However, in this post we will be covering the life expectancy of housing components. With home components the better you take care of them the longer they will last. When it comes time to sell your property buyers can certainly tell the difference. The difference between a property that has been well taken care of and one that has not been.  Buyers often will pay more for the home that has been well maintained.  That should be reason enough to take the time and spend some money one home maintenance.  Consider it protecting your investment.

Below is a chart of the Life Expectancy of Housing Components

A chart showing the life expectancy of home components

The actual life expectancy of the components of a home depend on several factors.  Those factors include level of maintenance, climate conditions and the intensity of use. If you never use your stove when you cook it will last longer than someone that uses their stove frequently.  This graph does not warranty or guarantee the life expectancy of any particular product. However, this chart can be used as a guide. With this guide you can plan for expenses. 

When you buy a home the seller’s property disclosure often tells you the age of the components.  If you purchase a home that has a 12 year old refrigerator, an 8 year old dishwasher, you should plan on saving for new kitchen appliances. This chart does not include all components of a home but can be used as a general guide for the life of the components listed. If there is a specific component you are concerned about Contact us with your questions about housing components and when to replace them. We can also provide you with a list of qualified professionals who can help repair or replace components as needed.

What is Basic Home Maintenance?

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Congratulations, you are a home owner.  This wonderful event may have just happened or it may have been a while ago.  However, no matter how long it has been this information is good for you to know.  Additionally, here are basic home maintenance tasks that should be completed regularly that will ensure that you get the maximum life out of your home’s components.

You should be checking the following annually:

An image of a bathroom sink describing the need to for basic home maintenance to check plumbing annually
  • Check grout and caulking.  Touch up voids to protect against water damage. Additionally, check for plumbing leaks under sinks, around toilers and in showers.
  • Check sump pumps.
  • Do a visual inspection of the water heater.
  • Test smoke and carbon monoxide detectors.  Additionally, make sure to replace batteries.
  • Have HVAC systems cleaned and checked. Moreover, make sure that you have filters on hand for your furnace and you are changing them every 3 months.
  • Clean out the gutters and check for leaks.
  • Walk around the exterior of your property.  Additionally, check to make sure that vegetation is trimmed.  Test your lawn sprinkler system for leaks.

Home maintenance every 2 to 5 years:

An image of a fireplace describing the need to service fireplaces every 2-5 years
  • Fireplaces should be serviced.  Gas log fireplaces should be cleaned about every couple of years, depending on use.  Additionally, wood burning fireplaces should have the chimney cleaned every couple of years.
  • Clothes dryer exhausts vests should be cleaned.
  • Replace caulking around windows and doors.

Home maintenance every 5 to 10 years:

  • Plan on replacing the water heater in this time frame.
  • Replace the garage door opener.
  • Replace smoke and carbon monoxide detectors.

Home maintenance every 15 years:

You are now reaching the point in home maintenance that you have gone full circle.  Additionally, this means that you have replaced everything and you are starting over again.  There are some items in this list that have a big price tag on them.  Moreover, the replacement of these items may require some planning and saving for.

An image of a deck describing the need for basic home maintenance to plan on replacing a deck every 15 or more years.
  • Plan on replacement of the roof.  Depending on the roofing material and the climate.  Replacement of the can need to occur anytime between 20 and 40 years.
  • Budget for replacement of HVAC systems including furnace and central A/C units. Properly servicing these units can length the life of the equipment, but plan on replacing between 15 years and 20 years.
  • If your property has a deck, plan on replacement.  Decking materials have greatly improved with the introduction of Trex and other composite decking materials.  You do not have to choose wood.  Do your research and select replacement products that will function well and give the new deck a long life.
  • Bathroom and kitchen faucets and sinks.  This is a task that could be performed by you or a handyman. Remember to select quality.  It will save you money over the long term.

Owning a home is more than just enjoyment and a place to store your stuff.  A home requires regular maintenance. This post should give you an idea of what you should be doing to maintain your home.  Additionally, if this is nothing you feel comfortable doing you can always hire this work done for you. Contact us for a list of trusted people who can help you complete these tasks.

The Dangers of Over Improving Your Home

Today we want to tell you the cautionary tale of the golden throne and what this means about the dangers of over improving your home. Let’s say that your favorite room in the house is your bathroom. Therefore, you decide to make some improvements. First, you start with a new vanity, maybe some fresh paint. Before long the home improvement bug has sunk its teeth into you. So, you decide you want to make some other improvements. You spend some time on the internet looking at remodeling images. Maybe you even get some much needed inspiration from Pinterest.

Home Over Improvement

Before long you have decided on the final must have item for that bathroom, the thing that will tie it all together with a bow. That item is a golden toilet. You shop around trying to find the best deal, and finally order it. Since you’re a competent and handy and have done toilet installs before there is no need to call a professional. Before long it is all finished. You look upon your work and craftsmanship with pride, and the bathroom continues to be your favorite room in the house.

Time to Sell

After a few years, it comes time to move. The reason (family, work, retirement, fill in the blank) doesn’t matter so much to this story. However, the thing that does matter is you must sell your home. So you look back at all the improvements you made. This includes totaling up the amounts you spent on each item. You think to yourself, that amazing bathroom is really going to increase the value of my home.

Golden Throne

Only one problem, it doesn’t. You have fallen victim to one of the classic blunders. You improved your home in a way only an owner like you could love. Every prospective buyer who comes into your home will see your golden throne. They will think that it is nice, but not see that it adds any real value. This is especially true when you compare what you initially spent on such an improvement. The truth is the prospective buyer who would see the value in your golden throne is probably out there. However, the majority of buyers will write it off as something that is nice but would not be willing to pay more for it.

This is something to keep in mind as you make improvements to your home. Would a prospective buyer actually see the value in the investments that you made, or would they rather buy your neighbors house without those improvements and save a little money.

We Can Help Protect You From The Dangers of Over Improving Your Home

Concerned that you might be making one of the classic blunders? Fear not, we are here to help. Contact us and we would be happy to provide insight into what renovation expenses will give you the best return on your investment.

Autumn Maintenance Tips

I know it is hard to believe that it is the first day of fall when the temperature is 80 plus degrees outside. But the calendar, and the crazy snow storm we have already had, let us know that we need to get ready. Here are 10 autumn maintenance tips.

First

  •  Disconnect hoses from your home.  I know because it is still warm you may be watering plants, but remember when done to disconnect the house from the house. 
  • Bring your outdoor furniture inside or purchase the water proof covers that are sold at Lowes, Home depot and online.  You may feel like the covers are too expensive, but having to replace furniture that gets damaged is expensive also.
  • Clean out the gutters on your home.  This is the time of year when gutters get filled with leaves.  Clean them and they will last longer.
  • Change your furnace filter. If your furnace is more than 3 years old it is a good idea to get in the habit of an annual service. 
  • Fertilize your lawn.  Doing that now will give the lawn a boost so it will be green sooner in the spring.

Additionally

  • Trim trees and bushes.  An early snow, like we have already had, can really be hard on limbs. Giving them a good trim can remove limbs that might break in a storm.
  • Change batteries in smoke detectors and CO detectors.
  • Time to start thinking about scheduling to get the lawn sprinklers blown out.  The City of Fort Collins is asking home owners to stop outdoor watering 10/1 this year because the Cameron Peak fire has the City not using water from the Poudre River.  Horsetooth reservoir dam is requiring maintenance, so water level is being lowered.  All of this means that water is scarcer.
  • Switch the direction of your ceiling fan.  You want the warm air to come down off the ceiling in the winter.  It can make such a difference and help you save on your heating bill. 
  • Check weatherstripping around doors and windows.  Having a weather tight house can also save you money on those winter utility bills. Chalk and weatherstripping can be purchased at the hardware store and fill gaps around windows.

There are a few autumn maintenance tips. Maintenance is the un-fun part of home ownership.  But taking a bit of time and doing these things can certainly improve your enjoyment of your home. Contact us if you need a recommendation for an excellent contractor to help with your home maintenance.