Home Ownership

What is tax deductible for my personal home?

As the tax deadline is soon approaching, you may be wondering what you can deduct from your primary residence. Here is a list of housing-related expenses that may be tax-deductible for your home:

  • Property taxes.
  • Points that you paid on your mortgage loan.
  • Mortgage interest on up to $750,000.
  • Loan interest on home equity lines of credit.
  • Home improvements required for medical care.  
  • Energy efficient upgrades to your home.

Of course, check with your local CPA to make sure you qualify for these. If you need a referral to a CPA, please call or email us - we’d be happy to help facilitate!

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How to use gift money as a down payment

Have you always wanted to buy a home but haven't saved enough for a down payment? Many lenders have loan programs that allow the use of gift money for your down payment. This means family can give you down payment money and you can still qualify for a mortgage!

There are several different loan programs that allow gift money to be used as a down payment and each program has specific guidelines you have to follow (the income restriction in most of Portland is up to $81,400). Even if this isn’t your first house, many of these loan programs aren’t restricted to first time home buyers, and some of them have no income limit.

For more information or if you’d like a recommendation for a lender that has these loan programs, call or email us today!

 

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Qualifying for a Home Loan When Self-Employed

Last week we talked about the difference between a jumbo loan and a conventional loan. This week, we’ll answer another common question about mortgages: how do I qualify for a home loan when I’m self-employed?

Most lenders require proof of income for the last two years. If you’re self-employed and don’t have W-2s, you can show this with your last two years of tax returns. The lender will want to verify that you have consistent income and that it is stable and/or increasing. In addition to your income, lenders will also take into account (as they do with all applicants, whether self-employed or not), your credit score, debt-to-income ratio, and down payment amount.

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Qualifying for a home mortgage without two years of income history on your tax returns can be more difficult, but if you’re approaching the two-year mark (e.g. you’ve been self-employed for close to 2 years), you may be able to do if you have a good credit history.

For more information or if you’d like a recommendation for a lender, call or email us today!

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What's the difference between a jumbo loan and a conventional loan?

What's the difference between a jumbo loan and a conventional loan?

The major difference between a conventional loan and a jumbo loan is that conventional loans are limited to dollar amount set by Fannie Mae; Jumbo loans are loans of any amount above that limit. See below for more details...

Conventional Loans

Conventional loans are probably the most common type of mortgage loan. Conventional loan qualification is determined based on income, employment history, debt, and credit score. There are also conventional loan limits. In Oregon, it is currently $484,350 in most areas. Generally, conventional loans require at least a 3-5% down payment. Additionally, if your down payment is less than 20%, you will be required to pay private mortgage insurance (PMI) until you reach at least 20% equity. PMI insures the lender in case of default. Once you reach 80% equity, the PMI goes away.

Jumbo Loans

Jumbo loans are very similar to conventional loans but the criteria for qualifying is stricter because they don’t have the loan limits that conventional mortgages do. In Oregon, any loan over $484,350 is considered a “jumbo” loan. Qualification for a jumbo loan uses the same criteria as conventional loans, but usually requires a higher down payment, income, and credit score due to the higher amount of money being loaned.

Have more questions, or want a referral to a good lender? Contact us, and we’ll be happy to help you!

 

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Pros and Cons of Tiny Homes

Pros of living in a tiny home:

  1. Tiny homes are less expensive.

Tiny homes are much less expensive than traditional homes, starting at about $25,000. Of course, this does not account for the cost of land to place your tiny house, which would need to be leased or purchased as well.

  1. Tiny homes use less energy.

Tiny houses are generally about 100-400 square feet. Less space means less energy usage. Additionally, since only 1-2 people can live in a tiny house comfortably, this means modest water, sewer, and garbage waste. This will also bring your utility expenses down.

  1. Tiny homes can be mobile.

Since tiny homes are so small and are usually built with wheels, they are easily transportable. That means if you decide you want to move somewhere else, it’s relatively easy to move your house with you.

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Cons of living in a tiny home:

  1. Zoning laws may restrict where you can place a tiny home.

Depending on your area, there are restrictions to where you can or can’t put a tiny home. Since most tiny houses are considered vehicles rather than residences, it can be tricky to find land to permanently place your tiny home.

  1. Tiny houses have little, if any, storage space.

Since tiny houses are so small there isn’t much storage space. If you’re not used to such a confined space, or are hoping to downsize, you’ll probably have to get rid of many of your belongings or rent a storage unit for them (which can be expensive).

  1. There’s no room for entertaining in your tiny house.

Again, since tiny homes have very little square footage, it’s difficult to have more than 1-2 people in one at the same time. This highly limits your ability to host any indoor gatherings or even host a small dinner.

  1. You can’t finance a tiny home with a mortgage if it’s mobile.

Traditional mortgage financing is not available for tiny homes that are movable because they are considered “recreational vehicles”. This means if you don’t have the cash to purchase one, you’ll likely need to take out a personal loan or an RV loan at a higher interest rate.

One way to own a tiny home without so many restrictions is to have it built on a foundation on land that you own or purchase. There is usually a minimum size requirement for homes built this way (depending on your area) but it may be the best option for those who desire a tiny home and aren’t concerned with mobility. Another upside to this option is that it could also make your tiny house eligible for a traditional home mortgage, or allow it to qualify as an ADU (additional dwelling unit) on your current property.

Still have more questions about tiny homes, or want to know your options for buying one? Contact us

 

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Real Estate for Retirement

There are several ways to use real estate to your advantage if you’re starting to think about retiring, even if you’re years away. Here are three great options to consider:

1.    Downsize your home.

One of the simplest ways to save for retirement is to downsize from your current home to a smaller one. Doing this will increase your savings, lower your utility bills, and could reduce or eliminate monthly mortgage payments. If you don’t need all of the space in your current house, this is a great option.

2.    Invest in a rental property.

Another way to use real estate for retirement is by investing in a rental property. You’ll receive monthly income from renters and can potentially make a large profit once you decide to sell it. Additionally, if you invest while you’re still working and making an active income, it can serve as a tax shelter and eventually provide passive income after you retire. Rental income is also a good way to reduce debt over the long-term. Of course, this option should only be considered as a long-term investment in order to avoid any short-term tax repercussions or a fluctuating real estate market.  

3.    Rent out extra space.

If you have extra space, especially if it’s an ADU (additional dwelling unit), there are many ways to make additional income for retirement. You can rent it out short-term through sites like Airbnb.com or lease it out to tenants for longer periods of time. This is a great way to increase income and savings.  

If you’d like more information on any of these options, please Contact us! We’re happy to help explain your options. 

 

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Property Tax Appeals

The statewide average of error on assessed property value is a whopping 11%! This means you may be paying more property taxes than necessary on your home.

Why is there such a high percentage of error? Multnomah, Clackamas, and Washington counties have dedicated staff that search through home listings looking for recently-improved properties in order to raise assessed values and collect more taxes. Typically, they are looking for “assumed remodels.” When they find an assumed remodel, they will look at the final occupancy permit (issued by the contractor once the remodel is complete and the home is move-in ready) for the increased value of the property. Unfortunately, remodeling contractors will often erroneously include costs on the final occupancy permit that are not associated with home value, such as dumpster rentals, porta-potty rentals, or remodeling materials. If you are remodeling your home, make sure to ask the contractor not to include these costs on the occupancy permit.

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When you get your tax bill in November, look over it carefully to make sure the numbers are accurate. Check to see if an increased assessed value is correct and not due to any sort of “maintenance improvement”. For example, new paint or carpet, a roof replacement, or new furnace should not count as added value. What should be included as added value are structural changes like a bedroom addition, a kitchen/bath remodel, or finishing a basement. If you find errors in your assessed value, you have one year to contest it, and can only argue one year’s worth of taxes (unless the increase is 20% over the market value, in which case you can contest the past two years of taxes).

How do you contest your home’s assessed value? The best way to appeal your assessed value is by using comparable (similar) properties in your neighborhood that are more representative of your property’s current value. Have this information prepared and outlined before your scheduled hearing because you will only have 10-15 minutes to make your case. Make sure your evidence is strong and to the point! In all cases, the property assessor is assumed correct unless you can prove otherwise. And, of course, reach out to us if you have questions! We have great professionals that can help you contest your property taxes.

 

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Preparing for Tax Season

Tax season is upon us! If you're gathering all your documents together to file your taxes, you're not alone. We've compiled a list of documents you'll need for you or your tax preparer to file this year:

  • Your W-2 or 1099 from your employer.
  • A copy of your property tax bill for 2018.
  • 1099s from all your mortgage holders (lenders). Remember, mortgage interest is deductible for up to $750,000 in mortgage loans. 
  • A copy of your settlement statement for any property bought or sold in 2018. There may be other deductions here!

 

For more information, check out our "Dear Claire" Facebook Live series.

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Home Ownership: Your First Year

10 Things to Remember During Your First Year of Home Ownership

  1. Hire a locksmith to change your locks.
  2. Switch all utilities (electric, gas, water/sewer, garbage, cable/internet, etc.) into your name as of your move-in date.
  3. Be sure to change your address with the post office and anyone you receive bills from (bank, credit card companies, student loans, etc.). USPS will forward mail to your new address for up to 6 months.
  4. Make note of where all your shut-off valves and electric panel are in your new home.
  5. Change all smoke detector and carbon monoxide detector batteries.

  6. Have your heating, air conditioning, and all major appliances serviced if not done recently. And be sure to change your furnace air filter regularly!
  7. Hire a yard care company, or purchase any yard care tools you may need for each season (including lawn mower, weed-wacker, shovel, etc.).
  8. Check and clean your gutters as needed.
  9. Check and clean your dryer vent regularly.
  10. Winterize your home during cold months by disconnecting and insulating outdoor faucets.

Want more home maintenance tips? Contact us, or check out our YouTube channel series on 5-minute home maintenance throughout the year!

 

Follow our Facebook events page, or visit our Instagram or Twitter feeds to see the most current open house updates and details.

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Portland Real Estate Market Stats November 2018

According to the latest real estate statistics from RMLS,  the Portland metro area saw a decrease in average home sale price, down to $448,900. Median sale price in the Portland metro area also went down, to $391,400. The number of days homes are on the market increased by 4, now up to 57 days. This indicates that prices are slowly decreasing and inventory is slowly increasing. 

Wondering what this means for you? Contact us

 

Follow our Facebook events page, or visit our Instagram or Twitter feeds to see the most current open house updates and details.

Join us on Tuesdays at 1pm PST for our "Dear Claire" Facebook Live series. Subscribe to our YouTube channel today to help us reach our goal of 100 subscribers.

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