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Want to Complain About Your Lousy Mortgage Closing?

Want to Complain About Your Lousy Mortgage Closing?

by | Jun 30, 2015 | Homeownership

Published: January 15, 2014

A consumer watchdog wants homeowner feedback — by Feb. 7 — on hellish settlements to make the process better for all.

Think it took a long time to close your last purchase or refi mortgage? How about more than seven hours? That’s what happened to a couple of folks I know in Texas, and theirs is just one of many stories I’ve heard about things, ranging from interest rates that rise to mysterious appearance of random fees, that go way wrong at settlements.

I’ve heard many of these closing table stories from my husband, who used to be a loan officer, and my BFF, who’s a REALTOR®. Add to that a couple dozen closings where we bought or sold rental properties and you’ve probably got a reality TV show.

Do these stories sound familiar?

  • You were told you had to write a check for $20,000 because the loan officer “forgot” to mention that your loan was approved for only 80% of what you need to buy the house.
  • It took so long to get to closing that your interest rate lock expired. You had to pay a higher interest rate even though you promptly provided all the paperwork the lender asked for.
  • Fees show up on your settlement statement that weren’t on your loan estimate. You wanted to argue, but since you were getting a $50,000 check from your cash-out refinance, you closed anyway.
  • You found out at the settlement table about community covenants that restrict what you can do with your new property.

There’s no simple solution for these kinds of snafus. You can refuse to close the deal and walk away from settlement. Easy to do when you’re refinancing, but when you’re buying or selling a house, that could violate your sales contract.

CFPB Has a Plan to Fix Closing Problems

If you got shafted at the closing table, you have a unique chance to tell someone who can make sure that what happened to you doesn’t happen to other people. (It’s OK to share positive stories, too.)

The Consumer Financial Protection Bureau (CFPB) is collecting consumers’ closing table stories. “The stories and information you provide will be used to research and test solutions that address some of the biggest pain points associated with closing on a mortgage,” CFPB Policy Analyst Noerena Limon said in a CFPB blog post.

Get your comments in by Feb. 7, 2014.

Improvements Already in the Pipeline

Some of the work the CFPB has already done for consumers should eventually clean up some closing table issues. Starting in August 2015, you’ll get a new loan estimate when you apply for a mortgage and a comparative closing disclosure three days before closing.

That closing document is about a bazillion times easier to read than the current HUD-1 Settlement Sheet. And because both documents are very clear, you’ll be able to quickly tell when things like your interest rate or fees change between application and closing.

Related: How Your Money Management Practices Affect your Credit Score

Ways to Ensure a Smooth Closing

Until lenders start giving you the new disclosures:

Have your REALTOR® look over your settlement statement, even if you’re doing a refi. The title company can email or fax her your settlement sheet whenever you get it.

Call your title company ahead of the closing to see if everything is ready to go before you head over there. Be warned, though, your title company may tell you the paperwork is there even if it’s not, because they’d rather have you sit waiting for the closing package than wait for you to show up.

Bring the disclosures you got when you applied for the loan, so you know if any of the deal terms changed. If something seems wrong, ask about it and don’t sign if anything isn’t as promised.

 

 

By: Dona DeZube© Copyright 2015 NATIONAL ASSOCIATION OF REALTORS®

 

Getting the Most Out of Your Remodeling Dollars in 2014

Getting the Most Out of Your Remodeling Dollars in 2014

by | Jun 30, 2015 | Cutler Bay, Homeownership, renovations

 

Published: December 20, 2013

As a serial remodeler, I’m looking forward to spending part of my winter holiday curled up on the sofa planning the wonderful things I’m going to do to my home in 2014. If you’re also day-dreaming about your next home improvements, these ideas (plus some eye candy) from the experts at realtor.com can help you balance the impulsive and emotional (I must have purple countertops!) with the long-term value-adds (Buyers don’t like my purple countertops!) of remodeling.

Plus, if you’re thinking of financing your project — with equity or a refi — we’ll help you plan with the a housing market forecast.

Future-Proof Kitchen

I’m nearing the end of what turned out to be a nearly two-year long kitchen remodel, but if you’re still in the contemplation stage, consider some of 2014’s top kitchen remodeling trends care of property listing site realtor.com:

  • Modern design with white or gray cabinetry
  • Simple countertops
  • Minimalist designs
  • Appliances that blend into the cabinetry
  • Hammered, matte brass hardware

Several of these kitchen “trends” — particularly white, minimalism, and simplicity — are actually not trendy, but enduring. You’ll find most of them on HouseLogic’s definitive list of timeless kitchen features. They’re the features you’ll love now and in 10 years — and that will be marketable when it’s time to sell.

Flex Rooms   

The hordes of relatives visiting your house this year say they’re staying just a little while, but chances are, one of them will want to move in with you at some point. Embrace the multigenerational trend, says realtor.com, by creating flex rooms.

Adding or converting a bedroom to include a sitting area and bathroom makes a lovely sanctuary for your guests now and a cozy space for your mother in her later years. Consider a separate entrance, too.  When you get up there in age yourself, you can supplement your retirement income by renting out the space.

Related: Multigenerational Remodeling Strategies

Paint Color

The official color of 2014 (according to the official arbiter of color, Pantone) is radiant orchid — a souped-up lilac. Purple accent pillows for the sofa? Definitely yes. But radiant orchid as a dominant color in your house? Not so much.

“Be wary of any trend that has the potential for a short shelf life,” realtor.com advises. Stick to neutral colors for anything in your home (inside and outside) that’s not as easy to replace as a pillow.

Home Equity Rising

OK, now for the brass tacks part of remodeling: paying for it. A few real estate predictions for 2014 might help your sort out your options.

Experts predict home prices should rise in 2014, which means you could have the home equity you need to fund your next renovation. Areas where foreclosures are falling and buyer demand outstrips the number of homes on the market have the best chance of seeing rising prices.

Related: When to Use Home Equity and When Not To

Interest Rates Headed Up

You may have more home equity in 2014 than you did in 2013, but doing a cash-out refinance to pay for your remodel will be harder and more expensive to do in the year ahead due to rigid underwriting rules and rising interest rates. Lenders say loan files are now routinely hundreds of pages long, so lower your expectations about how fast and how easy it is to refinance. Don’t let your frustration with the process wreck your enthusiasm for your remodeling dream.

Related: Turned Down for Refinance? Don’t Take No for an Answer

And Now for that Eye Candy

Whenever you’re remodeling, it’s smart to make sure you don’t over- or under-improve compared with neighbors’ homes. So check out some of the home listings on realtor.com in your Zip code, many of which include interior pictures.

Once you’ve spied on the Joneses, check out these hilarious pictures of the wildest home features of 2013.

I won’t even guess what installing a rowboat bathtub or cathedral-themed wine room would do to your home’s resale value, but looking at them could sure amuse you on a long winter’s night.

 

 

 

By: Dona DeZube© Copyright 2015 NATIONAL ASSOCIATION OF REALTORS®

 

Do Organic Home Remedies for Lawn Care Work?

Do Organic Home Remedies for Lawn Care Work?

by | Jun 29, 2015 | Cutler Bay, Homeownership

Think you’re smart and thrifty feeding flat beer to your lawn? Think again. Home remedies for lawn care may cost you more than you think.

We might love the idea of maintaining our lawns with non-toxic pantry products — soda, vinegar, and dish detergent — that help keep pesticides and other chemicals out of the environment while saving us a little money.

But do these home remedies really work as organic alternatives to traditional pesticides? And if so, do they really save money?

Not so much, say turf professors and pros.

“I wouldn’t waste my time,” says John Boyd, a University of Arkansas professor of weed science. “You can kill a weed with vinegar — in the better neighborhoods they use balsamic. But it’s not all that effective or cost-efficient.”

Also, home remedies — especially bug-killing concoctions — don’t have the same precision and accountability of store-bought lawn care products.

“They’re not labeled as pesticides, and have not been through any review or screening process,” says Dan Gilrein, an entomologist with the Cornell Cooperative Extension of Suffolk County in New York. “Materials may not be as benign as assumed — particularly when not used as intended.”

So are organic home remedies for lawn care a waste of time and money? Some are; some aren’t. Below, we break it down for you.

Boiling Water

Reputation: Weed killer

Reality: Undoubtedly, dumping boiling water on a weed will scald and kill some shallow-rooted, annual weeds, like chickweed. But it won’t wipe out the deep roots of perennial weeds, like dandelions, unless you repeat for days.

What’s more, the boiling water treatment is non-selective; not only can you scald yourself, but you can also kill grass and prized plants around the weed, says Craig Jenkins-Sutton of Topiarious Urban Gardens in Chicago.

Cost: How much is your time worth? By the time you boil the water, run it out to the garden before it cools, and carefully dump it on unwanted weeds, you could have grabbed a good weeder and dug up a garden full of dandelions — and those won’t come back.

Vinegar

Reputation: Weed killer

Reality: Acetic acid is a good general herbicide that sucks water from common weeds. But most pantry vinegar has only a 5% acetic acid concentration — too weak to kill all but the most tender, annual weeds. Perennial weeds — fuggedaboutit!

If you want to kill weeds with vinegar, you’ll need a commercial solution that’s 20% acetic acid. It’ll suck weeds dry, but will also dry out your prized plants, so be careful when spraying.

Cost: Distilled white vinegar: $2.40/gal.; commercial vinegar: $33/gal. (Note: Diluting it 1:1 with water will give you twice the amount of vinegar at a high concentration.)

Dish Detergent

Reputation: Insecticide

Reality: The Iowa State University Extension says it’s OK to use dish detergent, like Ivory or Palmolive, to kill soft-body insects, such as aphids, scales, and whiteflies. The soap destroys the waxy shell that protects the bugs, causing them to desiccate (dry up).

In a spray bottle, combine 1 tablespoon of dish detergent with 1 quart of water. Then thoroughly saturate the infected plants to completely wet the insects you want to kill.

One problem with dish soap, however, is that it can kill plants along with the insects. That’s where commercial insecticidal soaps have the advantage. Their formulas usually have a stabilizing agent that helps prevent the soap from damaging plants. Of course, you pay more for that formula.

Cost: Palmolive dish washing liquid: $3.30/10 oz.; Safer Brand Insect Killing Soap spray: $6.40/24 oz.

Soda and Beer

Reputation: Fertilizer that greens-up lawns

Reality: Home remedy guides say beer and soda contain carbohydrates and phosphorous, which feed lawns. Turf scientists, however, say that grass makes its own carbs from photosynthesis, and that soil generally has all the phosphorous a healthy lawn needs. Actually, phosphorous runoff is a watershed pollutant, and some municipalities are banning commercial fertilizers that contain phosphorous.

Spraying flat cola or beer on your lawn essentially just waters the grass, which can help it turn green.

Cost: Six 16-oz. cans of Bud: $7.80 (enough for a 10-by-20-ft. lawn)

So What’s a Greenish Lawn-Owner to Do?

First, know this: Lawns suck up more water than any other irrigated crop in the U.S. — so their very existence, arguably, is eco-unfriendly. If you’re dedicated to protecting life on Earth, replace your lawn with indigenous, drought-resistant plants or artificial turf.

Still, you might think life on Earth isn’t worth living unless you can wiggle your toes through cool fescue that’s not covered with toxic chemicals. If so, here’s some advice:

  • You’ll have to devote yourself to precisely mowing (with a push mower, if you want to be green), watering (deeply and less often), and fertilizing (with nutrient-rich compost). Diligent lawn care will keep out weeds naturally and promote beneficial insects that will eat the ones you don’t want.
  • Forget the idea of lawn perfection. Without chemicals, a few weeds will grow and some patches will turn yellow.
  • Spend a few extra bucks and buy organic lawn products that take the guesswork out of applying non-toxic solutions.

Related: Was Your Lawn Damaged by Severe Winter Weather? Here’s How to Fix It.

 

 

By: Lisa Kaplan Gordon© Copyright 2015 NATIONAL ASSOCIATION OF REALTORS®

 

Did You Know Dirty Light Bulbs Waste Energy?

Did You Know Dirty Light Bulbs Waste Energy?

by | Jun 29, 2015 | Homeownership

 

Dirty light fixtures not only look bad, they reduce brightness and waste energy. Here’s how to clean your fixtures and brighten the room to boot.

Granted, cleaning light fixtures is a hassle that requires a stepladder and a steady hand. But it’s a necessary spring-cleaning chore that freshens your home and gives you the light you’re paying for.

Dirty bulbs shed 30% less light than clean ones, says the U.S. Department of Energy. Add a dusty, dead-bug riddled cover, and you’ve got an automatic dimmer, whether you want one or not.

Got a dirty light fixture? We’ve got your cleaning tips.

Chandeliers

Yes, you should dust your crystal chandeliers weekly, especially during pollen season. But once or twice a year, you should make those crystals sparkle with a thorough wash.

1.  If the chandelier isn’t too big, take it down and lay it on top of a towel spread on a table. If it’s huge, hire a handyman to bring it down, or grab a stepladder and clean it while it hangs.

2.  Take a picture of the chandelier before you start cleaning. That way you’ll remember where each crystal belongs if you take them off during cleaning, says Meg Roberts, president of Molly Maid cleaning service.

3.  Mix a solution of 1 ounce mild dish soap with ¼ cup white vinegar and 3 cups water.

4.  Add to a spray bottle.

5.  Spritz each crystal.

6.  Let dry and polish with a microfiber cloth.

Related: A Healthy Shine: Green Cleaning Products for Your Kitchen
Light Bulbs

These days, bulbs have long lives thanks to new LED and CFL technology. They’re bound to get dirty and should be cleaned.

Mary Beth Gotti, manager of the GE Lighting Institute, says a thorough wipe with a dry cloth is the best way to get rid of dust and dirt.

“If you use a damp cloth, you can get water into crevices in the lamp that can damage electronics,” Gotti says.  Also, don’t spray cleaning solutions directly onto the light bulb, which could damage the bulb.

Most important: Turn off the electricity to the fixture before messing with the bulbs. To be extra cautious, turn off the circuit breaker, or put a piece of tape over the switch so no one else turns it on while your working.

Ceiling Fixtures

Ceiling fixtures can be a dusty, grimy, buggy mess. Carefully take down the fixture cover and slide it into a sink full of soapy water. Dry and shine with a microfiber cloth.

Avoid the temptation to put glass fixtures into the dishwasher. The glass can shatter, ruining your fixture and your dishwasher.

Pendant Lights

These usually are easier to reach than ceiling fixtures, so you can clean in place.

Turn off the light, let bulbs cool, then spray and wipe the outside of globes with a microfiber cloth and cleaning spray.

Wipe bulbs and extension rods and cables with a dry cloth.

Recessed Lights

Dust weekly with a long-handle duster, such as a Swiffer, that traps dust and cobwebs.  For a more thorough cleaning, wipe the insides of canisters and the bulbs with a microfiber cloth or a slightly damp rag.

Caution: Before cleaning, make sure the electricity is off and the bulb is cool.

Ceiling Fans

Dust the lights on ceiling fans weekly when you clean the fan blades. When a bulb goes out and you have to climb a ladder anyway, clean globes and bulbs with a microfiber cloth. If the globes are really dirty, take them down and clean with soapy water or a cleaning solution.

When removing or returning globes or bulbs, be sure not to steady yourself by grabbing fan blades, which will turn if touched.

Tricks of the Trade

1.  Dryer sheets are low-cost alternatives to microfiber clothes. They’re great for dusting bulbs.

2.  Wear goggles when dusting or spritzing overhead fixtures to prevent dust or cleaning solution from hurting your eyes.

3.  If you’re having trouble removing the bulb in a recessed light, cut a 12-inch strip of duct tape, and fold it over the bulb so that the ends act like handles that are easier to grip than the glass.

 

 

 

By: Lisa Kaplan Gordon© Copyright 2015 NATIONAL ASSOCIATION OF REALTORS®

 

8 Cleaning Tips and Tricks to Keep Things Cleaner Longer

8 Cleaning Tips and Tricks to Keep Things Cleaner Longer

by | Jun 29, 2015 | Homeownership

Giving your home that fresh feeling takes some elbow grease, but these ideas make it easier to fight those dirty jobs faster and keep it cleaner longer.

1.  Defy Dust

Trick: You can combat dust by adjusting your home’s humidity level.

The facts: Low humidity levels cause static electricity. Not only does static attract dust, it makes it stick, so it’s difficult to remove. High humidity causes problems, too — it’s an ideal environment for dust mites. These microscopic critters are a double threat: They’re a common allergen, and they contribute to dust production. There are as many as 19,000 dust mites in half a teaspoon of house dust, according to the American College of Allergy, Asthma, and Immunology. Yuck!

Next steps: Keep your home’s humidity level between 40% to 50%. That’ll eliminate static while decreasing dust mite growth.

Related: Measure Your Home Humidity Level

Tip: Make it easy to keep your household vents dust free. Remove and wash them once a year with mild soap and water. After they’re clean and completely dry, apply a liberal coat of car wax; then buff.

2.  Keep Glass Shower Doors Crystal Clear

Trick: You can eliminate soap scum build-up by coating your glass shower doors with a rain-repellant product made for car windshields.

The facts: When applied to glass, products like these create an invisible barrier that causes water, oils, and debris (like soap suds) to bead and roll off.

Next steps: Find this product anywhere that sells basic auto supplies. You’ll know it’s time to reapply when water stops beading on shower doors. Keep in mind, windshield rain repellants were made to treat glass, not plastic.

Tip: Automatic shower cleaners claim to let you clean your shower and tub less frequently — like every 30 days. After you finish bathing, the gadget will douse your shower and tub with a cleanser that prevents soap scum build-up while combating mold and mildew. You can buy automatic shower cleaners at most big-brand retailers, like Target and Walmart.

Related:

  • Green Clean Your Bathroom for Pennies
  • 5 Things You Forgot to Clean in Your Bathroom

3.  Seal Your Stone Countertops

Why: Natural stone countertops, including granite and marble, are porous, so if they’re not sealed, liquids like red wine, juice, or soy sauce can stain them.

The facts: A countertop sealer repels stains by causing spills to bead instead of getting absorbed. Likely, your contractor sealed your countertop when it was installed.

Next steps: To keep your countertops in tip-top shape, re-apply sealer twice a year. To see if you need a fresh coat, pour a tiny bit of water on your natural stone countertop. If the water doesn’t bead or doesn’t stay beaded for two to three minutes, it’s time to reseal.

Tip: Shopping for stone countertops? Slabs with lots of swirls or veins tend to be more porous.

4.  Protect Your Furniture and Carpets

Why: Protective furniture sprays and carpet sealants guard against inevitable spills. Some of these products also protect fabrics from fading and resist mold, mildew, and bacteria.

The facts: Protective sprays and sealants, like Scotchgard and Ultra-Guard, cause liquids to bead on the surface instead of being absorbed.

Next steps: Apply the appropriate sealer once a year after a deep upholstery and carpet cleaning.

Tip: In the future, you may not need to buy a protective furniture spray or carpet sealer thanks to a new fabric coating that repels dirt and water. It’s made by Liquipel, the company that created a water-shield substance to protect cell phones, MP3 players, and other electronic devices. The company plans to release a water-repellent clothing line next year. We bet household fabrics and materials will be next.

Rust-Oleum introduced a similar product, NeverWet, last year. But the company doesn’t recommend it for furniture, because the product “will repel liquids when applied to fabric, but will change the appearance.“

5.  Give Oven-Cleaning Products the Boot

Why: Most cleaners give off noxious fumes and make a horrible mess.

The facts: The basic ingredient in many oven cleaners is lye, which can burn your eyes and your skin; it’s usually fatal if swallowed.

Next steps: Use a wet pumice stone to scrape off dirt and grease. It’s faster than oven cleaner and toxin-free.

Tip: Need to wipe your range or anything else down? You can bust filth faster by heating up a clean, damp sponge or cloth in a microwave for 30 seconds before wiping with or without a cleaning product. Put on rubber gloves before you pick up that hot sponge.

Related: Green Clean Your Kitchen to Avoid Chemicals

6.  Keep Things Tidy with Quick Touch-Ups

Why: Small cleaning projects prevent filth from building up.

The facts: When you spot clean daily, you can prevent smudges from staining, banish dust bunnies, and even combat allergens.

Next steps: Create a spot-cleaning kit so you can address small, dirty situations in minutes.

  • Cleaning pads are great for eradicating dirty fingerprints on walls and light switches.
  • Damp micro-cloths can reduce airborne dander when used daily to wipe down pets.
  • Dry sweeper cloths can quickly pick up dust and dry dirt off floors, shelves, and electronics.

Tip: Keep stored items cleaner longer by shutting closets, cabinets, and drawers, so circulating dust and dirt can’t get in.

7.  Ditch Your Outdated Low-Wattage Bulbs

Why: Good lighting can make you and your home look and feel great.

The facts: A room lit with low-wattage incandescent bulbs and compact fluorescents can look dark and dingy. “Daylight” bulbs brighten things up. These full-spectrum light bulbs mimic natural light, so they give better visual accuracy. Bonus: Like sunlight, these bulbs can boost your mood.

Next steps: When shopping for bulbs, look for those marked “daylight” that have a range between 5,000 to 6,500 kelvins.

Tip: Don’t understand the difference between warm white bulbs and daylight bulbs? Check out the video for a side-by-side comparison.

Related:

  • Save Energy and Feel Better with Daylighting
  • Did You Know that Dirty Light Bulbs Waste Energy?

8.  Use a Cleaner Sweeper

Why: Brooms hold on to dirt.

The facts: You don’t want to just push dirt around when you sweep. You can use spray dusters (like the ones used on computer keyboards) to blow dust bunnies off brooms, and soapy water to get rid of the grime. But how about combing dirt off broom bristles while you’re sweeping?

Next steps: Check out the Broom Groomer. It was invented by a guy who cut his hand on broken glass when it got stuck on the bristles of his broom. Watch the video to see how it works.

Tip: About 80% of dirt in homes walks in from the outside. Stop dirt with a bristly doormat before it’s tracked inside

 

 

 

 

By: Deirdre Sullivan© Copyright 2015 NATIONAL ASSOCIATION OF REALTORS®

 

9 Easy Mistakes Homeowners Make on Their Taxes

9 Easy Mistakes Homeowners Make on Their Taxes

by | Jun 26, 2015 | Cutler Bay, Homeownership

Published: January 5, 2015

Don’t rouse the IRS or pay more taxes than necessary — know the score on each home tax deduction and credit.

As you calculate your tax returns, be careful not to commit any of these nine home-related tax mistakes, which tax pros say are especially common and can cost you money or draw the IRS to your doorstep.

Sin #1: Deducting the wrong year for property taxes

You take a tax deduction for property taxes in the year you (or the holder of your escrow account) actually paid them. Some taxing authorities work a year behind — that is, you’re not billed for 2013 property taxes until 2014. But that’s irrelevant to the feds.

Enter on your federal forms whatever amount you actually paid in that tax year, no matter what the date is on your tax bill. Dave Hampton, CPA, a tax department manager at the Cincinnati accounting firm of Burke & Schindler, has seen homeowners confuse payments for different years and claim the incorrect amount.

Sin #2: Confusing escrow amount for actual taxes paid

If your lender escrows funds to pay your property taxes, don’t just deduct the amount escrowed. The regular amount you pay into your escrow account each month to cover property taxes is probably a little more or a little less than your property tax bill. Your lender will adjust the amount every year or so to realign the two.

For example, your tax bill might be $1,200, but your lender may have collected $1,100 or $1,300 in escrow over the year. Deduct only $1,200 or the amount of property taxes noted on the Form 1098 that your lender sends. If you don’t receive Form 1098, contact the agency that collects property tax to find out how much you paid.

Sin #3: Deducting points paid to refinance

Deduct points you paid your lender to secure your mortgage in full for the year you bought your home. However, when you refinance, you must deduct points over the life of your new loan.

For example, if you paid $2,000 in points to refinance into a 15-year mortgage, your tax deduction is $2,000 divided by 15 years, or $133 per year.

Related: How to Deduct Mortgage Points When You Buy a Home

Sin #4: Misjudging the home office tax deduction

The deduction is complicated, often doesn’t amount to much of a deduction, has to be recaptured if you turn a profit when you sell your home, and can pique the IRS’s interest in your return.

But there’s good news. There’s a new simplified home office deduction option if you don’t want to claim actual costs. If you’re eligible, you can deduct $5 per square foot up to 300 feet of office space, or up to $1,500 per year.

Sin #5: Failing to repay the first-time homebuyer tax credit

If you used the original homebuyer tax credit in 2008, you must repay 1/15th of the credit over 15 years.

If you used the tax credit in 2009 or 2010 and then within 36 months you sold your house or stopped using it as your primary residence, you also have to pay back the credit.

The IRS has a tool you can use to help figure out what you owe.

Sin #6: Failing to track home-related expenses

If the IRS comes a-knockin’, don’t be scrambling to compile your records. File or scan and store home office and home improvement expense receipts and other home-related documents as you go.

Sin #7: Forgetting to keep track of capital gains

If you sold your main home last year, don’t forget to pay capital gains taxes on any profit. You can typically exclude $250,000 of any profits from taxes (or $500,000 if you’re married filing jointly).

So if your cost basis for your home is $100,000 (what you paid for it plus any improvements) and you sold it for $400,000, your capital gains are $300,000. If you’re single, you owe taxes on $50,000 of gains.

However, there are minimum time limits for holding property to take advantage of the exclusions, and other details. Consult IRS Publication 523. And high-income earners could get hit with an additional tax.

Sin #8: Filing incorrectly for energy tax credits

If you made any eligible improvements in 2014, such as installing energy-efficient windows and doors, you may be able to take a 10% tax credit (up to $500; with some systems your cap is even lower than $500). But keep in mind, it’s a lifetime credit. If you claimed the credit in any recent years, you’re done.

Installing a solar electric, solar water heater, geothermal, or small wind energy system can also make you eligible to take the Residential Energy Efficient Property Credit.

To claim the deduction, you have to use the complicated Form 5695, which can mean cross-checking with half a dozen other IRS forms. Read the instructions carefully.

Sin #9: Claiming too much for the mortgage interest tax deduction

Taxpayers are allowed to deduct mortgage interest on home acquisition debt up to $1 million, plus they can also deduct up to $100,000 in home equity debt.

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.

 

By: G. M. Filisko© Copyright 2015 NATIONAL ASSOCIATION OF REALTORS®

 

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