It's Fall: Time to Prepare Your Home for Winter
Fall maintenance is important because it helps make homes more energy efficient during the winter months, and will safeguard homes against potential seasonal 'disasters' such as leaking roofs or home fires caused by neglected chimneys. Here are ten tips to a safer, warmer winter.
TIP #1 -- Check the heating system. Check the filter, pilot light and burners in a system fueled by gas or oil. Fireplaces, boilers, water heaters, space heaters and wood burning stoves should also be serviced every year. Have the specialist inspecting your unit show you how to change the filter and then you should change it at least once every 2 months. Clean ducts in the heating system. Clean and vacuum dust from vents, baseboard heaters and cold air returns. Dust build-up in ducts is a major cause of indoor pollutants. Ducts should be professionally cleaned about every three years.
TIP #2 -- Have the chimney inspected by a qualified chimney professional. Chimneys should be checked and cleaned, if necessary, on an annual basis. If you are using a wood stove this season, be sure that the stovepipe was installed correctly according to the manufacturer's recommendations and local codes. If there is any doubt, a building inspector or fire official can determine whether the system is properly installed. If you have a chimney that will not be used, consider having it sealed shut.
TIP #3 -- Test fire alarms, smoke detectors and carbon monoxide detectors, and vacuum out the dust. Batteries should be checked every six months to ensure that they're working.
TIP #4 -- Remove excess leaves and damaged branches from trees surrounding the house. Dead branches have the potential to break and fall, ruining roofs, decks, or vehicles and the possibly causing injuries to people.
TIP #5 -- Maintain gutters. Remove all debris that can slow or impede the ability of water to drain effectively from the roof. Trapped water can be destructive not only to the gutters themselves but to the adjoining roof as well. Make sure gutter water drains away from your home.
TIP #6 -- Inspect the roof. Look for damaged or loose shingles, gaps in the flashing at joints with siding, vents and flues, as well as damaged mortar around the chimney.
TIP #7 -- Inspect exterior walls, doors and windows. Check walls and window sills for damage such as cracks, gaps, loose or crumbling mortar, along with splitting and decaying wood. Caulk exterior joints around windows and doors, which helps keep the home weather tight and lower heating bills. Check windows and doors to make sure locks work properly and that they are in good condition. Clean tracks and lubricate hinges. Repair or replace any cracked windows.
TIP #8 -- Maintain steps and handrails. Repair broken steps and secure loose banisters and handrails. Broken steps can cause a dangerous fall. Similarly, a person slipping will grab a handrail for support.
TIP #9 -- Inspect the attic and basement or crawlspace. Insulate voids in the attic - the entire attic floor above a living space should be insulated with at least six inches of insulation, except around electrical fixtures such as recessed lights that aren't rated for contact with insulation. Damp basements and crawl spaces can become mold and mildew problems. Watch for leaks from your water heater, plumbing system and seeping rain water from the roof. Locate and maintain a clear access to your main water shut off valve. If you have a sump pump, test, clean and lubricate it.
TIP #10 -- Shut down sprinkler systems and outside faucets. Homeowners can shut down outside faucets, however weatherizing the underground sprinkler system is best performed by industry professionals who will flush the system before the cold sets in, preventing cracked pipes.
Excerpted from http://rentonwa.gov/
Wednesday, September 23, 2009
Tuesday, September 8, 2009
Building Your House: Inspirational Story
An elderly carpenter was ready to retire. He told his employer-contractor of his plans to leave the house building business to live a more leisurely life with his wife and enjoy his extended family. He would miss the paycheck each week, but he wanted to retire. They could get by.
The contractor was sorry to see his good worker go and asked if he could build just one more house as a personal favor. The carpenter said yes, but over time it was easy to see that his heart was not in his work. He resorted to shoddy workmanship and used inferior materials. It was an unfortunate way to end a dedicated career.
When the carpenter finished his work, his employer came to inspect the house. Then he handed the front door key to the carpenter and said, “This is your house… my gift to you.”
The carpenter was shocked!
What a shame! If he had only known he was building his own house, he would have done it all so differently.
So it is with us. We build our lives, a day at a time, often putting less than our best into the building. Then, with a shock, we realize we have to live in the house we have built. If we could do it over, we would do it much differently.
But, you cannot go back. You are the carpenter, and every day you hammer a nail, place a board, or erect a wall. Someone once said, “life is a do it yourself project.” Your attitude and the choices you make today, help build the “house” you will live in tomorrow. Therefore, Build Wisely.
The contractor was sorry to see his good worker go and asked if he could build just one more house as a personal favor. The carpenter said yes, but over time it was easy to see that his heart was not in his work. He resorted to shoddy workmanship and used inferior materials. It was an unfortunate way to end a dedicated career.
When the carpenter finished his work, his employer came to inspect the house. Then he handed the front door key to the carpenter and said, “This is your house… my gift to you.”
The carpenter was shocked!
What a shame! If he had only known he was building his own house, he would have done it all so differently.
So it is with us. We build our lives, a day at a time, often putting less than our best into the building. Then, with a shock, we realize we have to live in the house we have built. If we could do it over, we would do it much differently.
But, you cannot go back. You are the carpenter, and every day you hammer a nail, place a board, or erect a wall. Someone once said, “life is a do it yourself project.” Your attitude and the choices you make today, help build the “house” you will live in tomorrow. Therefore, Build Wisely.
Monday, September 7, 2009
Wednesday, September 2, 2009
Mortgage Market Commentary
Rates were GREAT yesterday and yet have IMPROVED today!!
If you’re an honest, law-biding citizen, should you care if the IRS starts comparing mortgage payments and income? What about if you’re a roofer who makes half his income in cash? If Jane Doe claims she makes $2,000 per month on her taxes, yet her mortgage payment is $3,500, should that be a reason for Ms. Doe to be investigated? In yet another story yesterday, it appears that the IRS “will study whether it should make greater use of data on mortgage-interest payments provided to it by banks.” The IRS currently uses such data to send notices to non-filers who it believes should have filed a return. The data could also be used to target for audits individuals who don't file tax returns, or who report less income than they paid in mortgage interest. Of course, if you’re a struggling borrower that is using money out of your savings account, or from Mom & Dad, to make the mortgage payment, you don’t need two guys with badges showing up at your office….
Wells Fargo was in the rumor mill yesterday, not for anything mortgage-related but rather on if and when it is going to pay back the government TARP money. The rumors prompted its CEO to make a statement that Wells will not be selling more stock to pay back its TARP monies but rather use its earnings. Wells, in addition to Citi and Bank of America, have not paid back any TARP money yet. Although $25 or $26 billion is a big chunk of change, Wells has been having its best results in its history and has had made money by cutting its dividend. Let’s hope that they keep buying mortgages!
Yesterday was one of those days when it was better to own fixed-income securities than to own stocks. As it turned out, there were rumors swirling about Wells Fargo (see above), and this caused the herd to shuffle into the proverbial “flight to quality”. Besides, many think that the stock market has gotten a little ahead of itself in recent weeks, and took some profits by selling. Regardless, bonds did well, and rates came down. But as I have said, few are complaining about rates – they are too busy wondering if guidelines will ever loosen up.
What moved rates yesterday? Construction Spending was -0.2% in July, and year-over-year spending is down 10.5%. The Institute for Supply Management’s Factory Index increased to 52.9 in August, better than expected. We also had the National Association of Realtors report that Pending Home Sales were up 3.2%, more than forecast, and once again attributed to lower rates, less expensive houses, and the tax credit (which expires around Thanksgiving). So go figure: better news across the board should have moved the stock market higher and bonds lower, but the reverse happened.
Today we have Factory Orders and the FOMC Minutes, although we have already seen mortgage applications. U.S. mortgage applications were down last week a little over 2%, with purchase apps declining for the first time since early July. Purchase loan applications dipped 1%, and applications to refinance fell about 3%. We also had the ADP employment numbers, which don’t include government jobs, which showed that job losses in the U.S. private sector fell to their lowest monthly level in nearly a year. “Only” 298,000 jobs were cut in August. After this tidbit we find the 10-yr at 3.36% and mortgage securities about unchanged.
Make it a great day!!!
If you’re an honest, law-biding citizen, should you care if the IRS starts comparing mortgage payments and income? What about if you’re a roofer who makes half his income in cash? If Jane Doe claims she makes $2,000 per month on her taxes, yet her mortgage payment is $3,500, should that be a reason for Ms. Doe to be investigated? In yet another story yesterday, it appears that the IRS “will study whether it should make greater use of data on mortgage-interest payments provided to it by banks.” The IRS currently uses such data to send notices to non-filers who it believes should have filed a return. The data could also be used to target for audits individuals who don't file tax returns, or who report less income than they paid in mortgage interest. Of course, if you’re a struggling borrower that is using money out of your savings account, or from Mom & Dad, to make the mortgage payment, you don’t need two guys with badges showing up at your office….
Wells Fargo was in the rumor mill yesterday, not for anything mortgage-related but rather on if and when it is going to pay back the government TARP money. The rumors prompted its CEO to make a statement that Wells will not be selling more stock to pay back its TARP monies but rather use its earnings. Wells, in addition to Citi and Bank of America, have not paid back any TARP money yet. Although $25 or $26 billion is a big chunk of change, Wells has been having its best results in its history and has had made money by cutting its dividend. Let’s hope that they keep buying mortgages!
Yesterday was one of those days when it was better to own fixed-income securities than to own stocks. As it turned out, there were rumors swirling about Wells Fargo (see above), and this caused the herd to shuffle into the proverbial “flight to quality”. Besides, many think that the stock market has gotten a little ahead of itself in recent weeks, and took some profits by selling. Regardless, bonds did well, and rates came down. But as I have said, few are complaining about rates – they are too busy wondering if guidelines will ever loosen up.
What moved rates yesterday? Construction Spending was -0.2% in July, and year-over-year spending is down 10.5%. The Institute for Supply Management’s Factory Index increased to 52.9 in August, better than expected. We also had the National Association of Realtors report that Pending Home Sales were up 3.2%, more than forecast, and once again attributed to lower rates, less expensive houses, and the tax credit (which expires around Thanksgiving). So go figure: better news across the board should have moved the stock market higher and bonds lower, but the reverse happened.
Today we have Factory Orders and the FOMC Minutes, although we have already seen mortgage applications. U.S. mortgage applications were down last week a little over 2%, with purchase apps declining for the first time since early July. Purchase loan applications dipped 1%, and applications to refinance fell about 3%. We also had the ADP employment numbers, which don’t include government jobs, which showed that job losses in the U.S. private sector fell to their lowest monthly level in nearly a year. “Only” 298,000 jobs were cut in August. After this tidbit we find the 10-yr at 3.36% and mortgage securities about unchanged.
Make it a great day!!!
Cost Segregation – Save Taxes and Increase Your Cash Flow
Cost Segregation – Save Taxes and Increase Your Cash Flow
What is Cost Segregation?
Cost segregation is the IRS sanctioned process by which real property components are re-classified as personal property. Re-classifying real property to personal property creates larger depreciation deductions because personal property is depreciated over much shorter periods (5, 7 or 15 years) than real property (27.5 years for residential or 39 years for commercial). And, creating larger tax deductions reduces current taxable income and allows the taxpayer increased cash flow.
Does the IRS approve of Cost Segregation?
Cost segregation studies are accepted and approved by the IRS. There are various IRS rulings, regulations and court cases which provide the basis for cost segregation studies.
For more detailed information, see the below link to the IRS Cost Segregation Audit Techniques Guide revised in March of 2008.
http://www.irs.gov/businesses/article/0,,id=134180,00.html
Who Can Utilize Cost Segregation and When Can It be Implemented?
Any taxpayer can use cost segregation for buildings acquired in prior tax years; when constructing a building; buying an existing one; or, in certain circumstances, years after disposing of one.
A taxpayer that uses cost segregation for a previously acquired structure must file IRS Form 3115, Change in Accounting Method.
How is a cost segregation study prepared?
Typically, the taxpayer engages an accountant and an engineer to analyze the components of the building structure to determine which components can be re-classified as personal property and re-allocated shorter depreciation periods. These professionals analyze architectural drawings, mechanical and electrical plans, and other blueprints to identify and segregate the structural and general building elements including electrical and mechanical components from those linked to personal property.
The following is an estimate of the range of building costs eligible for re-classification through a cost segregation study to personal property resulting in accelerated depreciation.
Apartment Buildings 21-36%
Auto Dealerships 26-39%
Banks 26-38%
Hotel 26-41%
Manufacturing Facilities 26-39%
Medical/Dental Facilities 25-40%
Office Buildings 22-37%
Restaurants 30-45%
Shopping Centers 21-37%
Warehouses 18-31%
What are the benefits of Cost Segregation?
The primary benefit is greater depreciation deductions and increased cash flow.
For example, if a taxpayer acquires a small residential apartment complex for $1.5 million and thereafter obtains a cost segregation study, which re-classifies 35% of the property as 5 year personal property, the taxpayer’s depreciation deductions increase from $54,545 each year to $140,454 each year – an increase of 157%.1
There are, however, other significant benefits:
If a building component needs replacement at some point after the cost segregation, the taxpayer may take, as a deductible loss, the value of the component at the time of replacement.
If real property is reclassified as 5-, 7- or 15-year personal property, it may qualify for bonus depreciation. Bonus depreciation allows an owner to depreciate 50% of the asset immediately.
Cost Segregation and tax deferred exchanges
If a taxpayer obtains a cost segregation study and thereafter exchanges the property, he must remember to be cognizant of the new real and personal property allocation to ensure that any replacement property acquired has the same proportion of real and personal property.
What is the cost to prepare a Cost Segregation Study?
Fees for a cost segregation study are based on the size and type of building and the anticipated time required to complete the study and thus can vary substantially from project to project.
I use OREXCO and refer all my investors to check with them and their tax adviser before making a purchase or exchange. OREXCO’s choice of vendor for cost segregation studies, Tax Strategies Group, LLC, will provide clients with a free analysis to determine whether the taxpayer will benefit from a study. Tax Strategies’ estimate includes the projected increase in depreciation, showing the net present value to the client. Clients should expect to receive benefits between five and ten times the cost of the Study. Tax Strategies’ free estimate allows taxpayers to examine and weigh the benefits of its services without risk or expense. Likewise, Tax Strategies’ studies are backed by a policy of insurance issued through Lloyd’s syndicates providing for payment of taxes or fines imposed as a result of a finding that the study is defective or unsupported.
Tax Strategies Group, LLC may be contacted at (877) 394-3300 and info@tax4cash.com. Further information about Tax Strategies Group, LLC can be obtained at their website, www.tax4cash.com.
OREXCO gratefully acknowledges the participation of Jim Davis, Esq. of Tax Strategies Group, LLC in the preparation of this article.
What is Cost Segregation?
Cost segregation is the IRS sanctioned process by which real property components are re-classified as personal property. Re-classifying real property to personal property creates larger depreciation deductions because personal property is depreciated over much shorter periods (5, 7 or 15 years) than real property (27.5 years for residential or 39 years for commercial). And, creating larger tax deductions reduces current taxable income and allows the taxpayer increased cash flow.
Does the IRS approve of Cost Segregation?
Cost segregation studies are accepted and approved by the IRS. There are various IRS rulings, regulations and court cases which provide the basis for cost segregation studies.
For more detailed information, see the below link to the IRS Cost Segregation Audit Techniques Guide revised in March of 2008.
http://www.irs.gov/businesses/article/0,,id=134180,00.html
Who Can Utilize Cost Segregation and When Can It be Implemented?
Any taxpayer can use cost segregation for buildings acquired in prior tax years; when constructing a building; buying an existing one; or, in certain circumstances, years after disposing of one.
A taxpayer that uses cost segregation for a previously acquired structure must file IRS Form 3115, Change in Accounting Method.
How is a cost segregation study prepared?
Typically, the taxpayer engages an accountant and an engineer to analyze the components of the building structure to determine which components can be re-classified as personal property and re-allocated shorter depreciation periods. These professionals analyze architectural drawings, mechanical and electrical plans, and other blueprints to identify and segregate the structural and general building elements including electrical and mechanical components from those linked to personal property.
The following is an estimate of the range of building costs eligible for re-classification through a cost segregation study to personal property resulting in accelerated depreciation.
Apartment Buildings 21-36%
Auto Dealerships 26-39%
Banks 26-38%
Hotel 26-41%
Manufacturing Facilities 26-39%
Medical/Dental Facilities 25-40%
Office Buildings 22-37%
Restaurants 30-45%
Shopping Centers 21-37%
Warehouses 18-31%
What are the benefits of Cost Segregation?
The primary benefit is greater depreciation deductions and increased cash flow.
For example, if a taxpayer acquires a small residential apartment complex for $1.5 million and thereafter obtains a cost segregation study, which re-classifies 35% of the property as 5 year personal property, the taxpayer’s depreciation deductions increase from $54,545 each year to $140,454 each year – an increase of 157%.1
There are, however, other significant benefits:
If a building component needs replacement at some point after the cost segregation, the taxpayer may take, as a deductible loss, the value of the component at the time of replacement.
If real property is reclassified as 5-, 7- or 15-year personal property, it may qualify for bonus depreciation. Bonus depreciation allows an owner to depreciate 50% of the asset immediately.
Cost Segregation and tax deferred exchanges
If a taxpayer obtains a cost segregation study and thereafter exchanges the property, he must remember to be cognizant of the new real and personal property allocation to ensure that any replacement property acquired has the same proportion of real and personal property.
What is the cost to prepare a Cost Segregation Study?
Fees for a cost segregation study are based on the size and type of building and the anticipated time required to complete the study and thus can vary substantially from project to project.
I use OREXCO and refer all my investors to check with them and their tax adviser before making a purchase or exchange. OREXCO’s choice of vendor for cost segregation studies, Tax Strategies Group, LLC, will provide clients with a free analysis to determine whether the taxpayer will benefit from a study. Tax Strategies’ estimate includes the projected increase in depreciation, showing the net present value to the client. Clients should expect to receive benefits between five and ten times the cost of the Study. Tax Strategies’ free estimate allows taxpayers to examine and weigh the benefits of its services without risk or expense. Likewise, Tax Strategies’ studies are backed by a policy of insurance issued through Lloyd’s syndicates providing for payment of taxes or fines imposed as a result of a finding that the study is defective or unsupported.
Tax Strategies Group, LLC may be contacted at (877) 394-3300 and info@tax4cash.com. Further information about Tax Strategies Group, LLC can be obtained at their website, www.tax4cash.com.
OREXCO gratefully acknowledges the participation of Jim Davis, Esq. of Tax Strategies Group, LLC in the preparation of this article.
Tuesday, September 1, 2009
Would you want your child to go into real estate?
By:Rick Soukoulis
Chairman and CEO
Intero Mortgage
Kind of an interesting question, isn’t it?
It reminds me of that Willie Nelson song, “Mothers, don’t let your babies grow up to be cowboys…”
So what is it? Do you or don’t you want your kids to follow your foot paths into real estate?
First, let’s look at the choices. Your child could be a Realtor, a mortgage broker, a bank lending officer , an appraiser, or a title or escrow officer.
The first thing is that yes, it can be a very lucrative field. This is especially true for Realtors and mortgage brokers.
It’s not unusual, at least in a good year, for a Realtor or mortgage loan officer to make $100,000-200,000 in a year.
The obvious downside is volatility. I know one person who was an account executive for the sub-prime mortgage arm of Lehman Brothers. She was making about $300,000 a year during the good times, but she’s now working as a bookkeeper at a plumbing supply company.
If your kids do go into real estate, teach them early to set aside money during the good times to help them ride out the bad times.
Along with the lack of predictability of income, there is one huge positive: It’s the ability to help people. This is especially true for Realtors who work so hard to help people find their piece of the American Dream.
Being a Realtor was once considered almost a hobby. The cliché was that bored housewives did it to have something to do. I don’t know if that was really the case, but today’s Realtor is highly trained and extremely professional.
A final benefit to being a Realtor or being in the mortgage business is that these careers present all sorts of interesting investment opportunities. If your son or daughter goes into these or related fields, they will learn about good buildings for sale way before an ad shows up in the Sunday paper.
So along with the potential for good compensation, there is the chance to make good money through smart investing.
All in all, would I want my kids to go into real estate?
The answer is, quite simply, yes. And I’d be proud of them for doing so.
Chairman and CEO
Intero Mortgage
Kind of an interesting question, isn’t it?
It reminds me of that Willie Nelson song, “Mothers, don’t let your babies grow up to be cowboys…”
So what is it? Do you or don’t you want your kids to follow your foot paths into real estate?
First, let’s look at the choices. Your child could be a Realtor, a mortgage broker, a bank lending officer , an appraiser, or a title or escrow officer.
The first thing is that yes, it can be a very lucrative field. This is especially true for Realtors and mortgage brokers.
It’s not unusual, at least in a good year, for a Realtor or mortgage loan officer to make $100,000-200,000 in a year.
The obvious downside is volatility. I know one person who was an account executive for the sub-prime mortgage arm of Lehman Brothers. She was making about $300,000 a year during the good times, but she’s now working as a bookkeeper at a plumbing supply company.
If your kids do go into real estate, teach them early to set aside money during the good times to help them ride out the bad times.
Along with the lack of predictability of income, there is one huge positive: It’s the ability to help people. This is especially true for Realtors who work so hard to help people find their piece of the American Dream.
Being a Realtor was once considered almost a hobby. The cliché was that bored housewives did it to have something to do. I don’t know if that was really the case, but today’s Realtor is highly trained and extremely professional.
A final benefit to being a Realtor or being in the mortgage business is that these careers present all sorts of interesting investment opportunities. If your son or daughter goes into these or related fields, they will learn about good buildings for sale way before an ad shows up in the Sunday paper.
So along with the potential for good compensation, there is the chance to make good money through smart investing.
All in all, would I want my kids to go into real estate?
The answer is, quite simply, yes. And I’d be proud of them for doing so.
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