Wendy Johnson - RE/MAX Professional Associates



Posted by Wendy Johnson on 10/30/2019

Do you ever wonder why so many Americans dream of owning a home? From complete privacy to a nest egg in the future, one lesser-known but vital reason why homeownership is something everyone is longing to achieve is the tax breaks it provides. No one enjoys paying taxes so owning a home set you aside for tax breaks that renters are not able to claim So whether you are gearing up to buy a house or you are a homeowner preparing to file your taxes the season. This post will cover six significant tax breaks homeowners can enjoy.

What Are Tax Breaks?

You might think the term "Tax break" is another real estate complicated term but actually, it is not. Here is how ridiculously easy the meaning is: A Tax break means the government is providing you a reduction in your taxes. Plain and simple. Here are some common tax breaks for homeowners.

Common Tax Breaks for Homeowners

Mortgage Interest

Owning a home comes with several perks. One of them is that you can deduct the interest paid on the initial and second mortgage up to a million dollars in mortgage debt. To be eligible for a mortgage interest tax break, you must fulfill these requirements:

- You must have filed an IRS from 1040 and listed your deductions

- The mortgage must be a secured debt on a qualified home in which you are the owner.

State and Local Property Taxes

The property taxes from your city or State can be deducted from your income annually. But please note there is an exclusion to the deductible expenditure.

Rental Income

As a homeowner, when you rent out a room in your house or even the entire place will make you eligible for a 20% deduction on business income.

Equity Loan Interest

Another tax break you can enjoy as a homeowner is that you can lessen the amount of interest you pay on your home equity loans. However, there is a limit to the number of debts you add within the "home equity" scope.

Home Office Expenses

Working from home is the new norm of the 21st century, and many homeowners are taking full advantage of their space. If you work from your home, you will be able to reduce costs for the office space on your itemized deduction.

Capital Gains from a Home Sale

Not all tax breaks come from owning a home. Selling you your home often gives you a kind of tax break which is only know by a few people. If you would like to sell your home in the future, the capital gain will allow you to keep the profit you get from selling the house without paying any tax on it.

If you want to know more about tax breaks to get prepared for the next tax season, discuss with your local accountant.





Posted by Wendy Johnson on 12/12/2018

Youíve been paying off your mortgage for 10 years, building equity while making careful financial decisions to ensure that youíre on track to pay off your mortgage. So, all of those payments are essentially money in the bank for you, right?

Not quite. The equity youíve built toward is home isnít really accessible until you either fully pay off the home, sell your home and use your equity toward a down payment, or use it to take out a second mortgage.

In todayís article, weíre going to be talking about second mortgages--what they are, when to use them, and when you should seek out other options. Hopefully, by the end, youíll be able to make a more informed decision.

What is a second mortgage?

A second mortgage is somewhat deceptively named. The process of taking out a second mortgage revolves around using your equity as collateral toward a second loan. That loan amount doesnít have to be used toward a home, however. It can be spent pretty much at the discretion of the homeowner, as long as you stay within the spending limits of the loan terms.

Why take out a second mortgage?

Homeowners typically take out a second mortgage when an expense is tossed their way, whether foreseen or unforeseen. It could be a costly house or vehicle repair, a childís education, or any other large expense that you might not have been aptly prepared for.

Types of second mortgages

There are two main types of second mortgages that homeowners qualify for. First is a standard home equity loan. You receive a fixed-rate loan that usually paid off over a loan term of 15 or 30 years.

The other type of second mortgage is a home equity line of credit (HELOC, for short). A HELOC is similar to a credit card in that you are approved for a certain amount but donít need to spend the full amount.

Risks of home equity lines of credit

This type of loan is ideal for expenses that you maybe donít know the full cost of. However, there is an inherent risk in taking on an expense that might go over the credit limit of your HELOC.

Just like with credit cards, interest rates vary. However, the interest rate is linked to something called a ďbenchmark rate.Ē When interest rates for the benchmark increase, so do your HELOC rates.

Aside from the variable interest rates, HELOCs can also prove to be difficult to manage for people who are already in credit card debt. So, itís only recommended that you take out a HELOC if you are sure that you can stay on top of your monthly payments and are in good standing with other credit lenders.

Risks of home equity loans

Standard home equity loans arenít without their own risks. For one, youíre putting your house on the line when you take out a second mortgage. So, before taking out a home equity loan on a new expense, be sure that you can manage that expense or you could risk losing your home.

Having a second mortgage can also make it difficult to refinance your home loan, which could cost you in the long run if it would otherwise pay off to refinance.

Benefits of second mortgages

Second mortgages do have their time and place. Home equity loans, for example, can help you achieve a lower interest rate than a typical loan if you have a great deal of equity built in your home. This could make the most financial sense over the long term.

Similarly, a HELOC might be a better option than a credit card for homeowners who donít have a credit score high enough to land them a good interest rate.




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Posted by Wendy Johnson on 4/13/2016

In today's economic climate protecting your financial health is more important than ever. From health insurance to your plans for retirement, thereís a lot to consider. Here are some tips from Family Wealth Management Group, LLC to help protect your assets and financial future. It is never too early to plan In order to plan, you need to know what you have. Review your pension plan, 401 (k), IRAs, Social Security benefits and other savings plans to assess whether they meet your long-term retirement goals and will generate an income stream to meet your projected expenses. Curb spending Time to take an inventory on how much you spend. Keep a log on trips to the market, afternoon lattes, dry cleaning and all of your miscellaneous spending. Try to eliminate a portion of these expenses. Once you track them you will realize you are spending more than you thought. Re-define your financial goals Ask yourself where you see yourself in five, 10 or 15 years. See if it is possible to redefine your goals. You may be able to retire earlier or pay for college. Set goals to achieve the things you want. Get help Professional advice about investment losses, financial products, insurance coverage and other important issues will help you make the right choices for your current financial situation.




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