About 19669247

Taking down the IRS

Gosh, I truly hope you had better fortune with the IRS than I did this year.  (And no, I promise not to spend it all in one place… LOL)IRS refund 001

  • Seriously though, the tax advantages of owning real estate are many— and hidden in the tax code are many opportunities for seriously reducing what you have to pay the gubmint.   However, as in all things that have to do with gubmint paperwork, the devil is in the details.  Now, you can do yourself a BIG favor though, and take advantage of the IRS publications that discuss (in detail) just what these tax-saving opportunities are all about.  Give ’em a read (they’re free btw) and you may just be surprised at some of the items you might be able to take advantage of— and reduce the amount of money you have to give to the IRS!

Here’s a partial list that you can scope out at www.IRS.gov…

Publication Number

  • 504  Divorced or separated individuals
  • 527 Residential rental property
  • 530  Tax information for homeowners
  • 537  Installment sales
  • 544  Sales and other dispositions of assets
  • 547  Casualties, disasters, and thefts
  • 551  Basis of assets
  • 587  Business use of your home
  • 936  Home mortgage interest deduction
  • 4681  Cancelled debts, foreclosures, repossessions, and abandonments

Forms and Instuctions

  • Schedule A Itemized Deductions
  • Schedule D Capital Gains
  • 982 Reduction of tax attributes due to discharge of indebtedness
  • 4797 Sale of business property
  • 5405 Repayment of first time homebuyer credit
  • 6252 Installment sale income
  • 8828 Recapture of federal mortgage subsidy
  • 8949 Sales and other dispositions of capital assets

Invest a few minutes with a couple of these pamphlets and you just might not have to pay some of your hard earned money to the IRS.  Good luck!

 

Looking for a house to flip?

I just closed two house purchases for two successful fix n’ flip artists.  It got me to thinkin’ why these two particular individuals are so successful- while others seem to never get off the ground.

You know, I get a LOT of calls from people looking for “good deals” on houses to fix n’ flip.  For the most part, the callers fall into one of two categories.

1)  There are the guys n’ gals who talk to me on a regular basis, and then we select the properties with the best potential and we go look at them— inside and out, in bad weather and good, whenever.  Assuming they can do a decent job of estimating costs and getting the work done, they are the successful ones.

2)  Then there are the people who say, “when you find a good deal call me.”  Sorry, but like I said, I get a LOT of calls for these properties.  So why would I want to work with someone who doesn’t want to get off the couch and dig in and do the work necessary to be a successful fix n’ flipper?  (Btw, the people in this category are not usually the successful ones.)

‘Nuff said.  If you want to be a successful fix n’ flipper then you really need to put in the time so that you buy right.  It all starts there.  And btw, we’re a team.

Have questions about how to do successful fix n’ flips— call me!

 

Closing Costs Are a Mystery

Most weeks, I glance through the Sunday newspaper just to see what the “mainstream media” is talking about.  This past Sunday the Indianapolis Star (courtesy of USA Today) carried an article titled, “Closing Costs Are a Mystery to Millennials.”  Based on my experience in the real world, I’d agree and extend that to most everyone else too.  The article was right though, as most first time home buyers have no idea that they not only have to come up with enough cash for a down payment, but for closing costs as well.

When most first time buyers think of closing costs, they think in hundreds, when in fact, closing costs typically run more like $4000 on the average deal.  These costs are tightly regulated.  (If health care costs were this tightly regulated, your health insurance premium would be about a quarter of what they are now.)  Because they are tightly regulated there isn’t a great deal of difference from one lender to another.  The costs tend to run in a fairly narrow range.  Many of the costs are fixed, meaning they don’t change much from one deal to another.  A cost for an appraisal, title search, credit report, county recording fees, etc. doesn’t change whether someone is buying a $50,000 house or a $400,000 house.  And most of the variable costs aren’t determined by the lender you choose- think homeowners insurance, title insurance, real estate taxes, PMI, and homeowners association dues.  All of these costs are determined by some entity other than your lender (and aren’t affected by your choice of lender either).

Because of the variable costs, closing costs do go up as the price of a home goes up.  But, even the least expensive of homes is going to have closing costs running in excess of $3000.  And the average priced house is likely to have net closing costs in the $4-5,000 range.  Buyers need to plan accordingly.  Now, there is one strategy that can come to the rescue of buyers with just enough cash for a down payment, and that is to negotiate to have the seller pay the buyer’s closing costs.  There are some pro’s and con’s to this strategy, and they depend on one’s unique individual situation.  This is something that I review with buyers as they put their home buying plan together.  Let’s talk and be sure to take the mystery out of closing costs!