Control Your Home From Afar With ‘Smart’ Upgrades

If you’re looking for ways to increase your home’s value or boost your asking price when you sell, smart technology can have a big impact on your home’s desirability. 

Earlier this year, Google announced its $3.2 billion cash purchase of Nest Labs Inc., best known for its smart thermostat and smoke alarm for residences. If Google is headed in the direction of smart home services, rest assured this trend isn’t going away anytime soon.
Want your home to stand out as an energy-saving, tech-savvy gem? Consider adding one or more of these features:

1. Programmable energy savers

The pros at Consumer Reports say programmable thermostats can slash your energy bill by about $180 per year by automatically reducing your heating or cooling when you need it least. The Nest Learning Thermostat takes this concept a step further by learning your schedule and programming itself to raise and lower temperatures according to your routines. Not only will you be saving money, the next family to live in your home can also enjoy the financial benefits of a smart thermostat.

2. Smart lighting

Forget to turn off the lights when you leave a room? That simple failure to flip the switch can definitely affect your energy bill. Companies are beginning to offer “smart lighting” options, which allows you to control your home’s lighting via computer or mobile. “Connected” by TCP offers a starter pack that includes three bulbs, a remote and a gateway that controls your lighting. The home lighting kit works with both iPhone and Android devices, so you can easily control your LED lights at home or on the go.

3. Fiber-optic technology

When it comes to cable and Internet, fiber-optic technology is a green alternative to traditional coaxial copper wires because it is more energy efficient, lasts longer and is safer because the cables produce less heat. With more and more smart devices operating at the same time in your home – not counting your tablets, laptops and gaming consoles – you’ll probably notice a serious drain on your Internet connection if you’re using broadband Internet from cable, DSL or satellite providers.
Fiber-optic Internet technology gives you the capacity for greater Internet speeds – meaning you can have more wireless and smart devices in your home operating simultaneously with little to no effect on your online activities. The largest providers in the country are Verizon FiOS, Google Fiber and AT&T U-verse — but they have limited service areas. If your neighborhood is serviced by one of these providers, it’s a definite selling point.

4. Tankless water heaters

Heating water accounts for up to 30 percent of the average home’s energy budget, since your standard water heater keeps 40 to 80 gallons of water heated to 120 degrees or higher at all times during the day. Tankless water heaters have been gaining more and more traction in the past few years, since they heat water on-demand, reducing utility costs and environmental impact. The best part? You won’t run out of hot water mid-shower.

5. Remote-controlled shades

Closing the blinds to your windows is another way you can maintain the temperature in your home. Serena Shades are one remote-controlled product that can help you conserve energy and money each month. The Android- and iOS-controlled shades are also available as part of a whole-home lighting package offered by Lutron. Wireless shades allow you to raise and lower them from your phone – allowing you to easily manage your home’s light and heat from any location.

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Income Tax Tips for ‘Accidental Landlords’

So you’ve just joined the world of being an “accidental landlord.” Maybe you had to relocate, or perhaps you had to downsize. Now you’re renting out your personal residence or second home instead of selling it.

This makes you a landlord in the eyes of the IRS, which means you’ll have to report the rental property on your federal income taxes.

So what’s a landlord to do?

Fortunately, most rental property ownership will initially generate taxable losses for you, which may save you some money on your taxes. These savings come from shielding, or deducting, losses against part of your regular taxable income. But keep in mind, taxable losses are different from positive or negative cash flows (and that’s a story for another day).

For our purposes, we’re just going to discuss what you need to do as a newbie landlord to get your taxes heading in the right direction.

Income and expenses

Next April you’ll add an IRS 1040 Form Schedule E (Supplemental Income and Loss From Real Estate) when you file your taxes.

On the Schedule E, you’ll record all the rental income you received for the prior year. Then you will record all the cash expenses related to the property: mortgage interest, property taxes, HOA fees — which are now deductible because it is a rental property instead of a personal residence — maintenance and repairs, gardening costs and any other expenses, such as depreciation (described below) that are related to the operation of  your “business.”

The net rental income, less all those expenses, will provide an income or loss figure that will be calculated on Schedule E and flow to your IRS 1040 Form, Line 17. So if rental income is $15,000 and expenses are $17,000, you have a $2,000 loss for tax purposes.

Depreciation

One favorable expense deduction that you can take against rental income is called depreciation. It is usually a large amount and can help you greatly decrease the taxes you pay. To figure out this amount, first you need to determine the tax basis and depreciable basis of your rental property. The tax basis will generally be what you originally paid for the property, plus any capital improvements you’ve made over the years. So if you paid $200,000 and put in a $25,000 addition, your taxable basis is $225,000.

You’ll then split that basis into land value and building value, which is your depreciable basis. Divide that building value by 27.5 years to get your depreciation deduction, which goes on your Schedule E just like any other expense. Make sure to have a tax preparer help you with this calculation.

Adding it up

Now let’s look at how the Schedule E income or loss flows to your main 1040 form. You would take your net income or loss on the Schedule E form and transfer it to your 1040. If it’s a loss, you save money on taxes. If it’s positive income, you pay additional taxes.

Note: On losses there are some “Passive Activity Loss” limitations on using losses to shield income. The net maximum loss you can use to shield income is $25,000, and the ability to use any losses phases out starting at $100,000 adjusted gross income. Real estate professionals, however, may be able to use unlimited losses. Talk to a tax professional on all these issues.

Even though your new landlording career may be an accident, being smart about the relevant income tax deductions shouldn’t be. Do some Internet research, talk to your tax professional, look at the Schedule E form, save all those receipts and make sure you maximize your deductions, especially depreciation, so you get the largest possible tax savings the IRS code allows.

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Expecting a Tax Refund? Invest It In Your Home!

Sitting by the mailbox, waiting for your tax refund? Stop waiting and start thinking about the best ways to invest that money in your home.

Your home is likely one of your biggest assets, so it makes good financial sense to take care of it. Keeping your home up to date will contribute to its longevity, heighten your enjoyment and help you sell your home if you ever decide to. So, instead of a fleeting ski weekend, why not consider investing at least a portion of your refund in your home?

Even modest investments can improve your home’s value and make it more livable. Drawing inspiration from Zillow Digs, here are five home improvement projects you may want to consider, all under $3,000:

New front door

TrueHome Design Build brought an urban feel to this farm house with a contemporary front door.

First impressions mean a lot. A new front door can enhance curb appeal, improve security and lower utility costs. According to Remodeling magazine’s Remodeling 2014 Cost vs. Value Report, a $1,162 steel entry door replacement project returns 96.6 percent of your investment. Fiberglass doors are generally more expensive, but they’re still a smart investment. According to the same report, a $2,822 fiberglass entry door project will yield a return of 70.8 percent.

Garage door replacement

Tuckahoe Creek Construction, Inc. gave this colonial home character with a new garage door. The appearance and condition of your garage door also plays a big role in your home’s overall appearance. According to the Cost vs. Value Report, an uninsulated, 16-by-7-foot garage door costing $1,534 will increase your home’s resale value by $1,283, a return of 83.7 percent.

Weatherized windows

Lindus Construction uses a variety of custom-fit, maintenance-free, energy-efficient windows proven to reduce heating and cooling costs.

For just a couple hundred dollars, a do-it-yourselfer with the most basic of skills can install insulation, caulk and door seals, reducing household energy consumption by almost 35 percent in the typical weatherized home. Willing to invest more? Windows can allow major losses of heat in the winter and cool air in the summer, requiring more energy — and money — to keep your home comfortable. Replacing old windows with Energy Star-qualified windows can reduce household energy bills by 7 to 15 percent and will shrink your home’s carbon footprint.

Fresh coat of paint

Isola Homes used bold blue and green paint to give this Wallingford craftsman some Pacific Northwest flair. This may be the perfect time to kiss your dated mint bathroom or mauve rec room goodbye. A gallon of paint typically costs less than $40 and will provide one-coat coverage for about 350 square feet. If you think you might be putting your house on the market sometime soon, opt for neutral colors that have more universal appeal. Even if you’re staying put, a fresh coat of paint can update and personalize your space for a fraction of the cost of a total remodel.

Lighting

Titled “Serenity in the Woods,” this TN home by Eddie Miles has a warm, yet contemporary feel with under-cabinet lighting.

Updated home lighting can enhance your decor, save on energy costs and increase your safety. Even if a new chandelier isn’t in your budget, dimmer switches will allow you to control the intensity of light throughout your home while saving electricity. A basic dimmer costs less than $15 while fancier, remote-control and programmable dimmers can be purchased for $40 and up.

Metal can or recessed lights will brighten dark corners while under-cabinet light strips can add much-needed light to kitchens, craft rooms and laundry rooms. Unless you have knowledge of electrical wiring, you’ll need to hire a pro to handle the installation.

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Buyers Expected to Gain More Leverage This Year as Inventory Across US Rises

Home values saw their smallest monthly increase since May 2012, up just 0.2 percent in January from December according to the latest Zillow Real Estate Market Reports. Year-over-year, U.S. home values rose 6.3 percent in January, down from peak gains of 7.1 percent in August 2013. This slowdown is in part due to the rise in inventory of for-sale homes across the country. The number of homes listed for sale on Zillow was up 11.1 percent annually in January, the fifth straight month of rising year-over-year inventory.

According to Zillow Chief Economist Stan Humphries, home shoppers should expect to have more buying power this spring as more inventory comes onto the market and home prices start to level off. This slightly more balanced market is another step on the road back to normal, and will help offset the impact of rising mortgage rates and more expensive homes for buyers.

Inventory rose year-over-year in 82 percent of metro areas covered by Zillow, with the largest inventory gains coming in some of the areas that were hit hardest by the housing recession, including Las Vegas (up 42.8 percent), Phoenix (up 30.5 percent) and Sacramento (up 26 percent). These metros also experienced significant cooling in the pace of home value appreciation in January, as buyers had more homes to choose from and were less apt to engage in the kinds of bidding wars that helped drive prices up so quickly last year.

Want to know what the current state of the housing market is where you live?  Dive into Zillow’s data, available all the way down to ZIP code and neighborhood levels, here.

Skip Credit Repair Clinics and Do It Yourself Instead!

When you’re planning on buying a home, your credit score will have a big impact on your interest rate and loan terms. If your score falls on the lower end of the scale, you’ll pay a higher interest rate. Dip too low, and you may not get approved at all.

Boosting your credit score can help you find a better mortgage deal, but be careful how you go about it. Companies promising to repair your credit for a fee may seem like a good bet, but you’re better off saving your money and rebuilding your credit yourself.

Credit Repair Clinics

Credit repair clinics all have the same promise – they’ll fix your credit seemingly overnight. But as the saying goes, if something sounds too good to be true, it probably is. Rather than use legitimate tactics, “Credit repair companies simply bombard the credit bureaus with letter after letter in the hopes of getting legitimate, accurate information removed from your credit report,” said Michael Mack, consumer lawyer and founder of the Bankruptcy Credit Foundation.

While this occasionally works, Mack warned that the results don’t stick. Many creditors will do a soft-delete, meaning the negative mark will reappear on your credit report 60 to 90 days after the credit repair clinic has done its work.

As a result, you’ll end up paying the clinic either by the month or per item deleted, and the cost can add up quickly.

DIY Credit Repair

Repairing and rebuilding credit scores yourself is free and something anyone can do. Mack recommended starting by ordering a copy of your reports from Equifax, TransUnion and Experian. By law, you’re entitled to free copies once per year through AnnualCreditReport.com. Once you have your reports, order your credit scores through an authorized website like myFICO.

Look for “obvious errors and inaccuracies like wrong name, address, accounts showing twice, collections which continue to be reported twice for the same account,” Mack said. If you find errors, send a certified letter to the credit bureaus asking them to investigate and correct the problem. Send a letter for each error you find. “Even though this is more time-consuming, you will get better results.”
Pay off your old debts through a negotiating tactic known as goodwill letters.

“Even negative items on your credit report that are accurate can be legally and ethically and permanently deleted through goodwill letters,” Mack said. “State politely how you were late, or how you were delinquent, and what you’re doing to correct your bad habits.” You can offer to pay the debt, or settle for a portion of the amount owed in exchange for the creditor removing the negative remark from your credit report, he said.

Meanwhile, pay your bills on time each month — payment history accounts for 35 percent of your credit score — and keep your credit card balances low. Mack recommends keeping your balance under 9 percent of your total available credit limit.

Avoid These Mistakes

Don’t close old accounts: “Closing accounts hurts your score,” Mack said. Instead, pay off the balance and leave the account open.

Don’t apply for several new credit-card accounts: “FICO allows ‘rate shopping,” Mack said. “You can apply for 20 different mortgages in a 45-day period and it only accounts as one inquiry under FICO. Likewise you can apply 20 different times for a car loan or installment loan and it only accounts for one inquiry. But with revolving credit it’s different, and the more inquiries you have in a 12 month period, the lower your FICO score.”

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6 Ways Renters Can Get the Most for Their Money

For many renters, a large chunk of their monthly paycheck goes to paying the rent. As a general rule, Americans should spend no more than one-third of their income on housing. In reality, the rising cost of rent in some of the nation’s largest metros has forced renters to spend a much larger portion of their income on housing. If you’re searching for affordable housing in an expensive city, here are some ways to make sure you’re getting the most bang for your rental bucks.

Negotiate the lease

Don’t accept everything on the rental listing as set in stone. Talk to the landlord before signing the lease to see if they can lower the rent or include perks like parking if you commit to a longer lease. If you’re renting a single-family home you can also try to negotiate a discount by offering to take care of yard work, property maintenance, or snow removal on the property.

Find a roommate

Getting a bigger apartment doesn’t have to mean sacrificing affordability. For those who don’t mind sharing an apartment, splitting the rent with a roommate will allow you to increase your budget to find a larger apartment, but keep costs down. For example, instead of footing the bill for a $1,000 studio apartment by yourself (and don’t forget about utilities), you can split the costs of renting a 2-bedroom for $1,700 and get more square footage to boot.

Take advantage of referrals

Find out if your apartment community gives residents rent discounts if they help fill vacancies. Give your landlord a hand in marketing those apartment vacancies by referring people in your network looking for a place to live. Saving your property manager some marketing dollars can translate to a pretty significant savings on rent for the month.

Find a place that has extras included

All those monthly water, gas, electric bills add up. Keep an eye out for listings that have utilities included in the rent during your apartment search. Compare costs and do the math to make sure the rent and included utilities aren’t more than what you would pay if you metered for them separately. Amenities such as an on-site gym, access to public transportation, and a high Walk Score can also help you save on your costs each month.

Share the Internet with a neighbor

Don’t have a roommate to split the utilities with? Talk to a neighbor or two to see if they’d be willing to share Wi-Fi connection. Dividing up payments will give everyone online access at a fraction of the cost.

Make energy-efficient changes

Investing in a few eco-friendly, low-cost changes in your apartment will make reducing energy costs almost effortless. Replace light bulbs with LED bulbs, and install low-flow fixtures on showerheads and faucets. Cut down on seasonal utility usage by installing insulated curtains, insulating windows with plastic film, and covering electric outlets.

With some planning, renting in an expensive area doesn’t have to deplete your bank account. What are some ways you’ve saved on living costs? Share with us below.

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It’s Tax Time! See Tax Breaks for Homeowners

Calling all homeowners! With tax season rapidly approaching, it’s time to get your paperwork in order and consider all the ways to minimize your tax liability.  Whether you’ve got a single-family home, a town house, condo, or even a floating home, there are various home-related expenses that you should be sure to deduct. We suggest starting with these:

Mortgage interest

The mortgage interest deduction has long been the most-beloved tax benefit of homeowners since it’s such a big money saver (especially in the early years of a home loan).  In fact, Americans save around $100 million every year by claiming this deduction, which you can take on both your primary and secondary homes, providing your loan is less than a million dollars, and providing you itemize your return.

Mortgage points

The IRS sees points — percentage-based fees which a lender charges to originate a loan — as form of mortgage interest paid in advance.  Assuming you meet certain requirements, you can therefore deduct these points, in full, in the year that they were paid. So, for example, if you paid two points on a $250,000 mortgage in 2013, you can write off $5,000 on your 2013 tax return. What if you refinanced a mortgage last year? Then, you would have to deduct the points over the life of the loan. That means you can deduct 1/30th of the points a year if it’s a 30-year mortgage.  Granted, that’s only $33 a year for each $1,000 of points you paid, but every little bit helps.

Property taxes

Once you see what you, (or the holder of your escrow account), paid in property taxes in 2013  —  (find that number by looking at the annual statement you recently received from your lender; or if your taxes aren’t included in escrow payments made with your mortgage payments, then look at your cancelled checks)  —  enter that amount on your Federal form. Property taxes must be taken as an itemized expense. The tax you pay – each year – is deductible, for as long as you own the home. See Schedule A, line 6.

Home improvements

In what may be considered a sign of market confidence about the long-term prospects for the recovery, homeowners took on all sorts of remodeling projects last year. Chances are, you did, too.  Whether you added square footage, put on a new roof, or made other “capital improvements” to your home, know that the money you spent on these projects – which increase your home’s value (as opposed to non-eligible repairs which just return something to its original condition) – can help lower your tax bill when you sell your home. Try using a free tool like Zillow Digs to get a sense for how much a remodeling project will run you and whether it will be a good return on your investment.
And as always, save your receipts!

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