Like your mother always told you, you don’t ever want to play with fire.
Fireplaces should be inspected and/or swept once a year to prevent fire damage and to keep your home safe.
To be sure that all of your systems are in working order and operating as they should, it is recommended that homeowners get an annual chimney inspection. The specialist will generally open and adjust your damper, caulk the flashing on the roof if needed, and clean & adjust the fireplace screens & doors. They will also generally check the condition of the chimney spark arrestor and clean the fire chamber. Most chimney sweep companies will put you on an annual inspection plan once you work with them. During this inspection they will tell you if it’s time to sweep. Many homeowners opt to have a chimney cleaning done every year as well at this time, especially if they use their fireplace on a regular basis.
Don’t delay, get your fireplace inspection scheduled before the cold weather hits!
For those of you who own multiple properties – vacation homes, lake homes, second homes, rental properties – real estate taxes can become an issue. Here is a brief discussion on real estate taxes to take to your tax accountant or attorney when you prepare for this years taxes:
Are there any income tax benefits to owning multiple homes in the U.S.?
Extra residences are not often a huge benefit or tax haven for investments, according to William Kambas, a partner at Withers, an international law firm with offices around the world.
Property taxes are due on each property, but owners can save when filing their federal income taxes. For starters, state and local property taxes on second homes are still deductible from one’s federal income returns, according to Mark Stone, a partner at New York City-based firm Holland & Knight.
The same goes for mortgages, although the Tax Cuts and Jobs Act of 2017 limited both of these. (The tax changes are in effect for the period between Dec. 31, 2017 and Dec. 31, 2025, although Congress is considering making them permanent.)
That means $10,000 of one’s combined property taxes for all residences is deductible, he said. However, keep in mind that state and local income taxes are also included in that bucket. And up to $750,000 in mortgage interest, again, for one an owner’s principal residence and one additional residence is also deductible.
For rental properties, there are additional tax benefits, Mr. Kambas said. To qualify, the home must be rented out for more than 14 days a year, or 10% of the total days it is rented, whichever is greater. So if an owner spends 30 days a year at a residence, he or she must rent it for 300 days or more to qualify for the deductions, according the IRS.
Then, “the expenses of doing business will be deductible,” he said. That includes travel to do work on the home or to show it, costs of advertising the property and other activities that benefit the business.
Maintenance, cleaning, professional fees and insurance, utilities and common charges are also deductible, Mr. Kambas added.
If owners are operating multiple homes as a business, they are likely eligible for a 20% qualified business income deduction. The company needs to be set up as a sole proprietorship or through a limited liability company, partnership, S corporation, trust or estate, according to the IRS.
LLCs are most commonly used by real estate investors. Those businesses do not pay income taxes; the tax is instead passed through to the owner or owners of the company. For individuals with less than $157,500 of income (or less than $315,000 of income for couples), there is a 20% deduction. So the owner ends up only being taxed on 80% of the income from that business.
For those with a higher income, the taxes are a bit more complicated. Individuals making more than $207,500 ($415,000 for couples), can deduct either the lesser of 20% of the qualified business income, or the greater of 50% of the W-2 wages paid from the business; or 25% of the W-2 wages paid from the business, plus 2.5% of the unadjusted basis of the qualified property, according to the IRS.
Either way, the owner is taxed at his or her individual rate, not the corporate rate.
Many real estate investors buy property under an LLC for that reason, but Mr. Kambas warned that it is a “highly scrutinized area by the IRS.”
Article originally published by Mansion Global 2018.
When it comes to buying or selling a home there are many factors you should consider. Where you want to live, why you want to buy or sell, and who will help you along your journey are just some of those factors. When it comes to today’s real estate market, though, the top two factors to consider are what’s happening with interest rates & inventory.
Mortgage interest rates have been on the rise and are now over three-quarters of a percentage point higher than they were at the beginning of the year. According to Freddie Mac’s latestPrimary Mortgage Market Survey, rates climbed to 4.72% for a 30-year fixed rate mortgage last week.
The interest rate you secure when buying a home not only greatly impacts your monthly housing costs, but also impacts your purchasing power.
Purchasing power, simply put, is the amount of home you can afford to buy for the budget you have available to spend. As rates increase, the price of the house you can afford to buy will decrease if you plan to stay within a certain monthly housing budget.
The chart below shows the impact that rising interest rates would have if you planned to purchase a $400,000 home while keeping your principal and interest payments between $2,020-$2,050 a month.
With each quarter of a percent increase in interest rate, the value of the home you can afford decreases by 2.5% (in this example, $10,000). Experts predict that mortgage rates will be over 5% by this time next year.
A ‘normal’ real estate market requires there to be a 6-month supply of homes for sale in order for prices to increase only with inflation. According to the National Association of Realtors (NAR), listing inventory is currently at a 4.3-month supply (still well below the 6-months needed), which has put upward pressure on home prices. Home prices have increased year-over-year for the last 78 straight months.
The inventory of homes for sale in the real estate market had been on a steady decline and experienced year-over-year drops for 36 straight months (from July 2015 to May 2018), but we are starting to see a shift in inventory over the last three months.
The chart below shows the change in housing supply over the last 12 months compared to the previous 12 months. As you can see, in June, July, and August, inventory levels have started to increase as compared to the same time last year.
This is a trend to watch as we move further into the fall and winter months. If we continue to see an increase in homes for sale, we could start moving further away from a seller’s market and closer to a normal market.
If you are planning to enter the housing market, either as a buyer or a seller, let’s get together to discuss the changes in mortgage interest rates and inventory and what they could mean for you.
The 5 Interior Design Rules You Should Never, Ever Break
Don’t do this. Don’t do that. Always do this. Rules, rules, rules. Where’s the fun in that? I definitely think you should design and decorate your home the way you want. But adhering to just a few simple mandates brings order to the chaos, and more luxurious, simple beauty.
When you walk into rooms that are designed using specific principles—geometry, proportion, scale, pattern—you feel relaxed and at ease. As humans, we thrive on order, and that’s what good design is—using rules to make sense out of what is otherwise random.
Once you know the rules, you can play with them.
For most people, there’s an art to the way the eye sees design in terms of color, shape, texture, and proportion. First you have to understand it, and as you get more confident in applying those rules, you can really have some fun.
These timeless principles prove that “rule” doesn’t have to be a four-letter word.
Rule No. 1: Layer your lighting
Unless you’re going for the feel and comfort of an interrogation room, make sure you’ve distributed light equally around your room. Start by considering natural light sources—which can be maximized and accentuated with mirrors for a full-room glow—and fill in any blanks with a combination of lamps, wall sconce lighting, and overhead fixtures.
But never rely on a single source—especially if it’s overhead lighting.
Layered lighting is the best way to set the emotional tone of a space. One source of lighting will always struggle to carry an entire room.
Rule No. 2: Keep your base neutral
Put away the paintbrushes dripping with statement colors. It might sound boring, but plenty of designers agree—painting with neutrals is a smart way to ensure that your space ages nicely and doesn’t drive you crazy before you’re ready (or have the budget) to switch things up.
We’re so inundated with different design options these days, and keeping a neutral base makes it easy to keep the room looking timeless. If you’re craving color, express yourself with art and accessories—not paint.
Rule No. 3: Avoid matching furniture
Furnishing a room is not a vacation package, so take a pass on the all-included furniture bundles (you know the ones: sofa, loveseat, end tables, coffee table, recliner, and lamps for one low price).
And even if you’re not buying a full-meal deal, steer clear of the matchy-matchy trap by mixing furniture styles. Go for an 80/20 formula, in which the majority of the furniture is the same style and the remainder represents a different era or design trend.
If everything in your house is traditional wood furniture, it can get boring pretty fast – throw in a few surprising wildcard pieces of a completely different style, that makes it fresh and gives the room some soul.
Rule No. 4: Pile on different textures
Got a thing for pretty, shiny objects? We get it. But everything that sparkles is not going to make for a well-designed room. You’ve got to mix things up. That means making sure your bedroom isn’t just a sea of silky fabrics, sequins, and mercury glass.
Every room should have five textures: shiny, matte, smooth, flat, rough – start there. Adding an array of textures always makes a room look more expensive.
Rule No. 5: Decorate in odd numbers
It’s well-worn advice, but it’s still worth repeating. The “Rule of Three,” which holds that anything presented or arranged in odd numbers is inherently more engaging and interesting, is sacred in the design field (and in marketing, advertising, education, and a host of other disciplines).
Following this rule can mean the difference between a polished space and one with a ho-hum, amateur vibe.
When it comes to accessorizing furniture like side tables and shelving, pairing things in groups of three is a timeless standard. Try arrangements with odd-number groupings. They will always look more appealing to the eye than those with an even number.