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Displaying blog entries 41-45 of 45

June Checklist for a Smooth-Running Home

by The Ellerbrake Group
Kitchen designs, bathroom designs, and more ∨

Browse thousands of bathroom designs and hire a top bathroom remodeler in your area.
Find inspiring decorating ideas, from tufted headboards to custom window treatments, to help you redesign your bedroom.

Home Owners Insurance Costs

by The Ellerbrake Group

If you are getting ready to buy a first home or are new to the O'Fallon IL area, you might be wondering home much you will pay for home owners insurance. The costs vary depending on a multitude of factors related to the home itself including location, age of the home, construction methods, number of stories, square footage, building costs, home upgrades, replacement costs, etc. Importantly, many other factors including the amount of personal property coverage, the amount of the deductible, the amount of liability coverage, the property’s proximity to emergency services like fire hydrants and fire departments, the person’s credit history, and if there have been prior insurance claims all figure in to premiums. Also there are commonly premium discounts available for bundled policies which may include auto, homeowners, and/or other insurance. So, there is no set answer to the question. The best way to find out how much homeowner’s insurance would cost would be to contact an insurance company and ask for an estimate.

Does Finishing A Basement Add Value?

by The Ellerbrake Group

A finished basement definitely adds value to homes in O’Fallon, IL. The amount of value added varies depending on a number of factors including the amenities included and the level of finishes. For example, a basement with a finished bathroom, a home theater, a fireplace, a bar, or other amenities will be valued differently from a basement without those amenities. And a basement with newer, high-end finishes will be valued differently from a basement with older finishes. There is no typical square-foot dollar value that can be called accurate because these variables are fairly wide-ranging and are dependent upon subjective opinion. In other words, what the buyer might pay for the basement may define what the market will bear and therefore, the value is defined in part by individual buyer sentiment. Appraisers use formulas based on comparative market analysis to establish value for finished basements as well.  However, the square-foot dollar value is almost always considerably less than above-ground square footage. Sellers should also keep in mind that storage space is important to many consumers, so a balance of finished to unfinished space should be considered.

6 Home Deduction Traps and How to Avoid Them

by The Ellerbrake Group

6 Home Deduction Traps and How to Avoid Them

By: Barbara Eisner Bayer

Published: December 21, 2012

Get an “A” on your Schedule A Form: Dodge these tax deduction pitfalls to save time, money, and an IRS investigation.

Trap #1: Line 6 - real estate taxes

Your monthly mortgage payment often includes money for a tax escrow, from which the lender pays your local real estate taxes.

The money you send the bank may be more than what the bank pays for your taxes, says Julian Block, a tax attorney and author of Julian Block’s Home Seller’s Guide to Tax Savings. That will lead you to putting the wrong number on Schedule A.

Example:

  • Your monthly payment to the lender: $2,000 for mortgage + $500 escrow for taxes
  • Your annual property tax bill: $5,500

Now do the math:

  • Your bank received $6,000 for real estate taxes, but only paid $5,500. It may keep the extra $500 to apply to the next tax bill or refund it to you at some point, but meanwhile, you’re making a mistake if you enter $6,000 on Schedule A.
  • Instead, take the number from Form 1098—which your bank sends you each year—that shows the actual taxes paid.

Trap #2: Line 6 - tax calculations for recent buyers and sellers

If you bought or sold a home in the middle of 2012, figuring out what to put on line 6 of your Schedule A Form is tricky.

Don’t simply enter the number from your property tax bill on line 6 as you would if you owned the house the whole year. If you bought or sold a house in midyear, you should instead use the property tax amount listed on your HUD-1 closing statement, says Phil Marti, a retired IRS official.

Here’s why: Generally, depending on the local tax cycle, either the seller gives the buyer money to pay the taxes when they come due or, if the seller has already paid taxes, the buyer reimburses the seller at closing. Those taxes are deductible that year, but won’t be reflected on your property tax bill.

Trap #3: Line 10 - properly deducting points

You can deduct points paid on a refinance, but not all at once, says David Sands, a CPA with Buchbinder Tunick & Co LLP. Rather, you deduct them over the life of your loan. So if you paid $1,000 in points for a 10-year refinance, you’re entitled to deduct only $100 per year on your Schedule A Form.

Trap #4: Line 10 - HELOC limits

If you took out a home equity line of credit (HELOC), you can generally deduct the interest on it only up to $100,000 of debt each year, says Matthew Lender, a CPA with EisnerLubin LLP.

For example, if you have a HELOC for $200,000, the bank will send you Form 1098 for interest paid on $200,000. But you can deduct only the interest paid on $100,000. If you just pull the number off Form 1098, you’ll deduct more than you’re entitled to.

Trap #5: line 13 - Private mortgage insurance

You can deduct PMI on your Schedule A Form, as long as you started paying the insurance after Dec. 31, 2006. Congress renewed the PMI deduction for 2012 and 2013 for people making less than $110,000.

Since you're thinking about it, this is also a good time to review your PMI: You might be able to cancel your PMI altogether because you’ve had a change in loan-to-value status.

Trap #6: line 20 - casualty and theft losses

You can deduct part or all of losses caused by theft, vandalism, fire, or similar causes, as well as corrosive drywall, but the process isn’t always obvious or simple:

  • Only deduct losses that are greater than 10% of your adjusted gross income (line 38 of Form 1040).
  • Fill out Form 4684, which involves complex calculations for the cost basis and fair market value.  This form gives you the number you need for line 20. 

Bottom line on line 20: If you’ve got extensive losses, it’s best to consult a tax pro. “I wouldn’t do it myself, and I’ve been dealing with taxes for 40 years,” says former IRS official Marti.

This article provides general information about tax laws and consequences, but shouldn’t be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice.

Should I Buy a Home Now?

by The Ellerbrake Group

I'm often asked if this is a good time to buy a home. Some clients are concerned that home prices may fall further than they have already. They are assuming that the best course of action is to wait for the bottom in the market and then buy. The problem with this approach is that you don't know where the bottom is until you see it in the rear view mirror, meaning until you've missed it!

Home prices are one factor in determining your cost of ownership, but so are interest rates and financing availability. Even though interest rates have gone up in the last six months, they are still near historic lows. Since your monthly mortgage payment is a combination of paying down your principal and paying the interest owed, if home prices come down a little further but interest rates go up, it could cost you even more to service a mortgage on an identical home!

While a home is a major investment, it is also the center of your personal life. It's important to live in a home that reflects your taste and values, yet is within your financial "comfort zone." To that end, it may be more important to lock in today's relatively low interest rates and low home prices, rather than to hope for a further break in prices in the future.

Please give me a call if I can be of any assistance in determining how much home you can afford in today's market.

Displaying blog entries 41-45 of 45

Contact Information

Photo of The Ellerbrake Group Real Estate
The Ellerbrake Group
RE/MAX Preferred
1668 Windham Way
O'Fallon IL 62269
Office: (618) 632-0001
Direct: (618) 791-8773
Fax: (984) 222-6820