TGTSO (Thank Goodness Tax Season's Over)

This is usually the time of year when Evansville residents have gotten through tax season, heaved a sign of relief, and gone back to working on more important matters – like earning enough to make reducing taxes a goal worth pursuing.

This year, the latter part of April may be a little different. Because this is an election year, tax matters are already being widely debated, and changes that could affect everyone are more possible than usual. I am bringing these topics up for discussion with the firm caveat that your own planning (includingEvansville home buying decisions) should always be made after consultation with the financial experts you trust. Currently, federal and Indiana rules carry tax benefits that can greatly reduce a homeowner’s tax liability. They are very unlikely to be eliminated, but you may want to keep your ear tuned whenever you hear these topics under discussion, because seemingly minor changes can have major impacts.

Mortgage Interest and Points

Many renters found that they were able to use the standard deduction tables to simplify their federal filings. Homeowners, on the other hand, were usually better off using itemized deductions because of the welcome mortgage interest deduction. Qualifying points paid to obtain a mortgage can also generally be deducted in the year they are paid.

IRA Penalties

Everyone with a standard Individual Retirement Account has heard about the penalties for withdrawing funds before retirement age. But currently there is an exception in some home buying situations. Generally, some IRA funds can be applied to home buying (or building) a first home without those tax penalties. The catch is that you can only withdraw up to $10,000 over your entire lifetime (not annually). Those with Roth IRAs may find additional tax advantages, too.

Real Estate Taxes

Qualifying local and Indiana property taxes can amount to sizeable deductions. If, in the home buying process, you reimbursed a seller for prepaid property taxes, that amount can qualify, too.

As in all financial planning, you should consult your accountant or other tax professional before making any important decisions. And whenever buying or selling a Evansville property makes sense for your family, I’m standing by to answer all of your real estate questions.

You can reach me on my cell phone 812-499-9234 or email Rolando@RolandoTrentini.com

New-Home Building Permits Soar to 2008 Levels

Permits for new-home building — a gauge of future demand — reached its highest level last month since September 2008, the Commerce Department reported Tuesday.

New housing permits rose 4.5 percent in March, reaching an annualized level of 747,000.

But while the future of home building shows signs of picking up, actual construction started last month slowed, the second consecutive month for declines.

Builders broke ground in March on a seasonally adjusted annual rate of 654,000 homes, a 5.8 percent drop from February, the Commerce Department reported. The construction of multifamily homes — those with at least two units — posted a 16.9 percent drop last month while construction of single-family homes dropped slightly at 0.2 percent.

New-home building declined the most in the South — posting a 15.9 percent decline in March — while the Northeast saw a 32.8 percent gain and the Midwest saw a 1 percent increase.

The new-home market continues to struggle to compete against foreclosures and short sales plaguing many markets, which are often sold at big discounts. Coupled with that, new homes tend to be priced about 30 percent higher than previously occupied homes.

While builder confidence has been increasing in recent months, confidence showed a slight decrease in April, the first time it's declined in seven months, according to the National Association of Home Builders/Wells Fargo Housing Market Index.

"Although builders in many markets are noting increased interest among potential buyers, consumers are still very hesitant to go forward with a purchase, and our members are realigning their expectations somewhat until they see more actual signed sales contracts," says Barry Rutenberg, NAHB chairman.

Source: “U.S. March Housing Starts -5.8% to 654K,” Dow Jones International News (April 17, 2012) and National Association of Home Builders

Tax Deductions for Barrier-Free/Universal Design Home Modifications

Tax deductions for home –modifications, capital expenses incurred if home improvements are necessary for medical reasons. The following comes from I.R.S, Pub. 502, medical and dental expenses.

"You can include in medical expenses amounts you pay for special equipment. Installed in a home, or for improvements, if their main purpose is medical care for you, your spouse, or your dependent. The cost of permanent improvements that increase the value of your property may be partly included as a medical expense. The cost of the improvement is reduced by the increase in the value of your property. The difference is a medical expense. If the value of your property is not increased by the improvement, the entire cost is included as a medical expense."

Certain improvements made to accommodate a home for a disability condition, do not usually increase the value of the home and the cost can be included in full as a medical expense. As the baby boomers age these improvements will definitely improve the resale value of your house. That being said, perhaps the time to make these improvements is sooner than later. These improvements include, but are not limited to the following items.

Adding an elevator or stair lift system. Elevators generally add value to the
house. Other improvements include:

• Constructing entrance or exit ramps for your home

• Widening doorways at entrances or exits to your home is a deductible expense. Widening or otherwise modifying hallways and interior doorways is deductible. Installing railings, support bars, or other modifications to bathrooms.

• Lowering or modifying kitchen cabinets and equipment is deductible.

• Moving or modifying electrical outlets and fixtures is deductible.

• Modifying fire alarms, smoke detectors, and other warning systems.

• Modifying stairways.

• Adding handrails or grab bars anywhere (whether of not in bathrooms) Modifying hardware on doors.

• Modifying areas in front of entrance and exit doorways.

• Grading the ground to provide access to the residence.

Only reasonable costs to make a home-modification are considered medical care. Additional costs for personal motives, such as for architectural or aesthetic reasons, are not medical expenses.

Amounts you pay for operation and upkeep of a capital asset qualify as medical expenses, as long as the main reason for them is medical care. This rule applies even if none or only part of the original cost of the capital asset qualified as a medical care expense.

Improvements to property rented by a person with a disability are also an eligible medical expense. IRS Publication 502 indicates that “amounts paid by a renter to buy and install special plumbing fixtures in a rented house for a person with a disability, mainly for medical reasons, are medical expenses.”

As a footnote remember it is always much less expensive to include accessible/ universal design features in the original design of the home. Our universal designed “smart” home plans incorporate all of the above and more in the initial design.

There are also business deductions for complying with the ADA, Section 44 of the IRS Code allows a tax credit for small businesses and Section 190 of the IRS Code allows a tax deduction for all businesses.

Source: http://handicaphomemods.blogspot.com/2012/03/tax-deductions-for-barrier.html

Stay Within Your Budget When Buying Evansville Real Estate

This is a pretty common topic when purchasing Evansville Real Estate. A lot of prospective homeowners dream of buying Evansville Real Estate and making one of the biggest investments in their lives without having to break the bank. The investment of buying Evansville Real Estate requires careful study and a lot of financial discipline. These are just a few tips to help you stay within your budget.

First and foremost, it must be noted that budgeting demands the utmost of financial discipline. Studying your annual income and determining what you can afford comes easy enough, but it is a step that a lot of prospective homebuyers tend to forget. Keep track of your current expenses and confirm that you are ready for the responsibilities of buying Evansville Real Estate. Spending only a maximum of 25% of your current monthly income to make payments for the purchase will be a wise decision.

Before approaching a lender, know and verify your credit score first. This is a fair measurement of how well you can manage your finances, although at this point you should already be sure that you are ready to purchase Evansville Real Estate. Online services from FICO can help get this score for you quickly and accurately. Getting this little bit of research done can definitely aid you when you decide to approach a lender, so that the loan application process can go along much smoother.

Now that you have determined the amount of your income you are willing to spend on Evansville Real Estate, it's time to go house-hunting. Contact your realtor and ask to see the listings. Narrow down your search in terms of square feet and locations that you can afford. Visit only the properties that are within the budget you have set for the purchase, so the temptation to go beyond it won't even cross your mind.

Another great practice to help you stay in budget would be to stop spending and start saving. Cutting down on unnecessary luxuries in your current expenses can help boost your bank account so you can make a bigger down payment on your purchase. This will also condition you to become even more financially stable, so that future real estate investments can be more than just dreams for you.

Staying within your budget when buying Evansville Real Estate can be difficult for some, but following these little tips can help you make one of the biggest investments of your financial life without a hitch. All it takes is a little discipline, a little know-how and help you get the most bang for your buck. Don't be afraid to ask your realtor about home affordability and your current financial status. The realtor’s experience in the industry has certainly earned him a few stars and can help you make the right choices for your Evansville Real Estate.

I hope you have found this information helpful. If you need any help with buying, selling or renting a home in Evansville, Indiana please contact me at any time. You can reach me on my cell phone at 812-499-9234 or email Rolando@RolandoTrentini.com

'Improving Housing' List Holds Mostly Steady in April

An index measuring improvement in the nation’s housing markets is showing signs of plateauing, which could be a good sign for the spring home-buying season, according to an economist.

The number of metro areas joining the Improving Markets Index ticked up slightly to 101 in April from 99 in March, according to the index released by the National Association of Home Builders and First American. The index measures improvements in metro areas by analyzing increases in housing permits, employment, and housing prices for at least the last six consecutive months.

Source: http://realtormag.realtor.org/news-and-commentary/daily-news?page=1

Buyer Urgency Improves, More See Now Good Time to Buy

More home buyers may jump off the sidelines this spring as they get more urgent about purchasing a home, fearing that home price and mortgage rate increases are on the horizon.

Housing surveys in recent weeks have shown that more Americans are seeing now a great time to purchase a home. In the most recent survey, 73 percent of Americans say now is a good time to buy, according to the latest Fannie Mae Housing Survey conducted in March. That’s up from 70 percent in February who said it was a great time to buy.

"Conditions are coming together to encourage people to want to buy homes," says Doug Duncan, Fannie Mae’s chief economist. "With an increasing share of consumers expecting higher mortgage rates and home prices over the next 12 months, some may feel that renting is becoming more costly and that home ownership is a more compelling housing choice."

Indeed, more buyer urgency is evident in the market. Thirty-three percent of those surveyed by Fannie say they expect home prices soon to increase, which is the highest percentage in a year. What’s more, nearly 40 percent say they expect mortgage rates to rise in the next year too, which is also up from previous surveys.

Coupled with that, 48 percent of Americans say they expect rents to continue to climb, and 44 percent say they expect their financial situation to improve in the next year.

Source: “More Americans Think It’s Time to Buy a Home,” MSN Real Estate (April 9, 2012)

Evansville Real Estate News Letter for April 2012

Market Watch

Last month’s Market Watch was all about listings. I suggested that based on the way this year’s real estate market has started that we would soon need more listings and that based on virtually any measure, now would be a good time to list your home if you were considering a move. Everything I suggested last month has proven to be true and there are even more reasons to list real estate for sale now.

We have fewer homes on the market than at any time in 6 years. The month’s supply of homes on the market (6.59) is lower than it has been for 68 of the past 70 months. Our average month’s supply for the first 3 months has been lower than any year for the past 4 years. We have seen slight improvements in both our list to sale price ratio (95.10%) and in our days on market number. Unit sales are up 7% from the first 3 months of last year and I am confident that next month will show continued improvement. Even the national media has made some positive comments about real estate.

Although everything I said in the previous two paragraphs is true and I am confident that now is a good time to list a home. I don’t want to overstate or exaggerate the current state of our real estate market. Things have definitely improved but we will not have as strong a year as we did in 2006 or 2007. Prices have improved but have not returned to their previous highs. Although the market has rebounded it would not surprise me to see a little slowdown this fall because of uncertainty about this fall’s election. Interest rates are great but will not stay this low forever, which is another reason for buyers to act and take advantage of current rates.

As always I am happy to answer your real estate questions. You can reach me on my cell phone at 812-499 or email Rolando@RolandoTrentini.com