Thursday, March 30, 2017

The cost of Getting into a Home vs. Getting into a Rental

Thinking about making the move from being a renter to a buyer? Afraid about what it might cost to do so? Here are a couple of quick facts that might ease your fears.

When renting a home or apartment in the Treasure Valley area, in many cases you may need to be able to provide first and last months rent and a security deposit. This could be upwards of $3000-$4000 that you might need to just to secure that lease.

When purchasing a home, you might be surprised, but if you have good credit, you can typically get into a home for as little as $500-$1000. How, you say?

Well, in many cases, you may qualify for some of the fabulous $0 down programs that are geared towards consumers that have worked hard to take good care of their credit. Pay your bills on time, carry a few lines of credit but not too crazy? Maybe a car payment, Visa and a store card or two? Keep those credit card balances under 30% of your borrowing capability? You very well may qualify for the IHFA, Good Credit Rewards program. This program puts you into a typical loan and then allows you to borrow the down payment of about 3.5%. When making an offer on the home, you’re likely going to need at least $500 to $1000 “deposit” or what we call Earnest Money. This money goes towards your down payment, so you may even be able to get it back at closing if you indicate to your lender you’d like to finance the full purchase price of the home and include your closing costs in the loan.

Even better, what you may not realize, is that unlike a lease, a mortgage is actually paid in arrears. This means that you don’t make a mortgage payment until after the 30 days you’ve lived in it; whereas, with a rental, you pay in advance each month. It’s get’s even better…if you sign the paperwork on your loan for the purchase of your home, you may have almost two months before your first payment is due. This is a terrific way to ensure you have a few extra funds to cover the cost of a move.

With rental vacancies hovering around 2%, landlords are able to charge quite a bit on their monthly rates. In most cases, you will likely be able to purchase a home for a lower monthly payment than you can rent. This is a perfect time to call this favorite REALTOR®.

Tuesday, March 28, 2017

The Home Office Tax Deduction: One of the Most Misunderstood (and Dangerous) Tax Breaks

Caiaimage/Paul Viant/Getty Images

According to the latest figures from the Bureau of Labor Statistics, 24% of employed people now do some or all of their work at home. Beyond the obvious benefits of unfettered access to your refrigerator and a dress code of stretchy elastic-waist pants, working at home can save you more than lunch money on National Tax Day, thanks to the home office deduction.

Simply put, the home office deduction allows you to write off part of your home expenses on your business tax return by separating out the costs associated with using your home for personal purposes (making pancakes) and business (answering work email). Yet of all the tax write-offs available, this one is among the most murky and misunderstood.

Allow us to clear the air for you happy home workers so you can claim your home office tax deduction with confidence.

Who can claim the home office deduction?

To claim the deduction, you must meet two requirements. First, an area of home has to be designated as your principal place of business, and—the clincher—used exclusively for work. Got that?

“This means your couch, exercise room, and kitchen table don’t count,” says Aaron Lesher, a CPA at Hurdlr, a finance management app. Ignore these rules and your chance of being audited can skyrocket.

To be clear, that room you work in that doubles as a guest room when mom comes to town won’t pass muster, even if you spend 40 hours a week there, says Abby Eisenkraft, financial expert and author of “101 Ways to Stay Off the IRS Radar.” So if you really want to do things right, kick mom out of your office and have her sleep on the couch!

While this separation of work and personal use is probably easier if your office is its own separate room, it doesn’t have to be. If, say, your desk is parked in a corner of your bedroom or part an open floor plan, simply measure the space you use for your office, whether or not there are walls.

The key is the area must be used only by you, just for work—not to peck out personal email or pay bills. To make that delineation easier, you can even put up a physical barrier like a partition or shelves.

What if I’m an employee for another company?

Employees of larger companies can also claim the home office deduction. But there’s an additional requirement that the home office must be for the convenience of the employer—for example, if the employer doesn’t have a local office.

“The IRS will look at this closely and request proof, such as a letter from the company,” says Eisenkraft. If you simply prefer to work at home, you can’t take the home office deduction.

“That’s considered for your convenience,” explains Eisenkraft, “not the employer’s.”

How to claim a home office deduction

The IRS offers two ways to calculate this separation—one simple, the other a bit more involved, says Jeff Morris, accounting partner at Nathaniel Jacobson, serving Maryland and Washington, DC.

The simple method: Since 2013, you can claim your deduction by figuring out the square footage of the space in your home that you use for business purposes. Each square foot you use for work is worth $5, and you can claim up to 300 square feet for a maximum claim of $1,500. This new method vastly reduces the paperwork required for taking the deduction, says Morris.

The complicated method: This method works best if the expense of your home business exceeds the simple $1,500 deduction. Calculating this involves tracking all the costs of your home (think maintenance, insurance, repairs, utilities, real estate taxes, etc.) and depreciation(normal wear and tear).

Next, separate and allocate those expenses based on the percentage of the home you use solely for business purposes. So if your office space breaks down to 10% of your home’s total square footage, you can deduct 10% of your home costs—which could add up to a sizable chunk of change. The key to using this deduction is keeping careful records.

Isn’t the home office deduction a red flag for an audit?

In a word: nope. In fact, the IRS created the simplified, square-foot-of-office-space method to take the audit fear out of the home office deduction.

“This might surprise some people, given the fear of an audit that the home office deduction used to strike in the hearts of many taxpayers,” says Morris. But in the age of telecommuting and online behemoths like eBay that started from a home office, the reality is that the deduction is becoming increasingly common, and it doesn’t make a taxpayer any more susceptible to an audit than any other deduction a small-business owner may take.

Still, if you want to make sure you don’t end up in the auditing line, there are things you can do. First off, remember this: “It’s not the home office deduction that flags a return for an audit, but the magnitude of specific claimed expenses that get taxpayers in trouble,” says Morris.

What would a red flag look like? Claiming 2,950 feet out of a 3,000-square-foot home for business use. “Or trying to write off that $25,000 pool renovation.”

In other words, as long as you’re legitimately working at home and aren’t unashamedly trying to con the system, you should be able to claim your home office deduction fair and square.

Article from

Tuesday, March 21, 2017

28 Genius Uses for White Vinegar Around Your Home


What if we told you there’s a magic potion that makes housework a breeze, costs next to nothing, and is probably sitting in your pantry right now?

Good ol’ white vinegar is a strong antimicrobial agent and solvent that banishes bacteria, odors, and stains. It’s an extremely cheap—$2.50 a gallon—and nontoxic alternative to harsh cleaners. When combined with other ingredients you’re bound to have on-hand (e.g., water or salt), vinegar can clean anything in your house. Well, just about anything.

“Vinegar is acidic, so you can’t use it to clean all surfaces in your home,” says Nancy Bock, senior vice president of education for the American Cleaning Institute in Washington, DC. So skip the vinegar when cleaning granite and marble countertops, because the acid can eat away at the sealant that prevents stone from staining, she explains.

But when it comes to other household tasks like disinfecting, deodorizing, and removing stains, vinegar has your back.

Check out all the ways white vinegar will revolutionize your cleaning routine.

Refresh your fridge: Wipe down shelves, bins, and walls with a 1-to-1 solution of vinegar and water.
Remove coffee stains: Scrub coffee stains from mugs with a paste of equal parts vinegar and salt. The salt acts as a mild abrasive.
Beat bathroom germs: Wipe down the outside of the toilet and around the sink and shower enclosure with full-strength vinegar. Follow up with a damp sponge.
Clean toilet bowls: Pour a cup of vinegar into the bowl, let it work its magic for a few hours, scrub with a toilet brush, and flush.Voila!
Clean crud from faucet aerators: Soak faucet aerators in vinegar for an hour. Scrub the screen with an old toothbrush and rinse.
Shine shower doors: Remove soap residue on glass shower doors by scrubbing with a sponge soaked in full-strength vinegar.
Deodorize the garbage disposal: Keep your garbage disposal odor-free with vinegar ice cubes. Mix a solution of 1 cup vinegar and 2 cups water, and freeze the solution in an ice-cube tray. Run several cubes through the disposal, then flush with cold water. Yes, this really works.
Clean the coffee maker: Get rid of mineral deposits from your automatic drip coffee maker during spring cleaning by filling it with vinegar and running it through a brewing cycle (but leave out the coffee grounds!). Rinse the coffee maker thoroughly after the treatment.
Disinfect cutting boards: Scrub cutting boards with full-strength vinegar. Rinse thoroughly.

Photo by Rad Design IncUse vinegar to get those annoying water stains and soap residue off your shower door.

Carpet cleaner: Remove carpet stains with a mixture of 1 teaspoon vinegar and 1 teaspoon liquid detergent. Squeeze onto the stain, blot (don’t rub), then rinse with a small amount of clean water.
Brighten the wash: Make your whites whiter and your colors more vibrant by adding a half-cup of vinegar to your wash. Vinegar also helps reduce static cling.
Shine shoes: Restore the luster and remove scuff marks from old leather shoes and handbags by wiping them with vinegar. Follow the treatment with a damp cloth and a fresh coat of polish.
Revive cut flowers:
Boost a tired bouquet by adding a tablespoon of vinegar and a pinch of sugar to half-quart of water. Pour the solution into the vase.
Wash windows: Spray windows with a solution of equal parts warm water and vinegar; wipe dry with a microfiber cloth for streak-free glass.
Remove water marks: Vinegar can remove rings on woodwork caused by wet glasses. Rub the mark with a solution of equal parts vinegar and olive oil. Rub with the grain, then wipe dry. Test an inconspicuous spot first.
Renew clothes: Make clothes and towels soft again by adding a half-cup of vinegar to the last rinse cycle of a load of laundry.
Polish metal: Make brass and copper shine with a paste made of 1 teaspoon salt dissolved in 1 cup vinegar. Add flour to make a soft paste. Apply the paste, let stand 15 minutes, then rinse and polish with a soft cloth.
Remove labels: Get rid of sticky label residue by rubbing stubborn glue with vinegar.
Clean glass fireplace doors: Remove soot from fireplace doors with a solution of equal parts vinegar and water. Wipe clean with a microfiber cloth.
Unclog a steam iron: Fill the water chamber with a mixture of equal parts vinegar and water. Set the iron to steam mode, and leave upright for several minutes, then unplug. When cool, pour out any unused solution and refill with clean water.
Deodorize doggy smell: Wet your pooch with plain water, then wash the dog with a solution of 1 cup vinegar diluted in 2 gallons water. Make sure to keep the solution out of the dog’s eyes. Dry the dog without rinsing.
Fight dandruff: Give your hair a final rinse with a half-cup of vinegar mixed with 2 cups of warm water.
Get rid of toenail fungus: Soak your feet in 1 cup of vinegar mixed with 2 cups of warm water. Soak for 15 minutes, once a day.
Relieve itch: Add a quarter-cup of vinegar to your bath water to soothe itchy skin.
Remove weeds: Straight vinegar will get rid of weeds in your yard and driveway cracks. Pour directly on unwanted plants, making sure to protect wanted plants.
Beat morning windshield frost: The night before an expected frost, spray a solution of equal parts vinegar and water onto your car windows. The vinegar lowers the freezing temp of water so frost won’t form as easily.
Change soil pH: Acid-loving plants, like hibiscus, will love a drink of a gallon of water spiked with 1 cup of vinegar.
Soften old paintbrushes: Soak paintbrushes in warm vinegar, then wash the bristles with warm soapy water. Rinse thoroughly.

Article from

Tuesday, March 14, 2017

Savings and Equity 101

As REALTORS®, we frequently are asked why we should buy vs. rent.

Oh, how many articles I can point you to that explain this over and over, but let’s break it down a little more for the Boise, Idaho area. In other words - let’s get down and dirty.

First and foremost, if you, as a Millennial, Gen-Xer, maybe Gen Z, who knows, had to tell me what you have in savings, could you do it and feel proud? Maybe you feel pretty good about putting away 10% of your monthly paycheck…you do right?

But let me ask the homeowner the same question. “What’s in savings?”. Here’s the beauty of that question, the homeowner may also be saving 10% each month out of her paycheck, but additionally, the homeowner is experiencing approximately 7% annually in increased equity right now in the Boise area. Let’s break it down:

Renter :

Monthly rent payment $1200/month - bye bye money. Good news, roof over your head! Woohoo!

Monthly mortgage payment $1200/month - Woohoo! I just paid myself to have a roof over my head!

But let’s REALLY break it down.

To get into a home with a $1200 payment this is what the homeowner had to do:

Qualify for a loan, typically for about 3.5% down, so let’s assume to get that $1200 payment:

(rule of thumb with interest rates where they are…for every $1000 you spend in house, it will cost you approximately $6.00)

So, $1200 mortgage payment


$207,000 home - your downpayment of 3.5% or $7,000

(now, if you have super credit and/or have served in the military, you may qualify for a ZERO down loan)

Assuming you don’t though, you now just bought a $207,000 home

You financed $200,000.

Monthly payment to include taxes and insurance : Approximately $1,200.

Here’s the good part:

Renter : $1200 to the landlord ($24,000/yr. GONE)

Homeowner : $1200 to her mortgage payment ($24,000/yr. to HERSELF)

Homeowner in Boise Area, house price increases 7%. $207,000 is worth $221,490 next year.

Profit : $14,490 that year or $1207.50 per month. (made more than she spent!)

So, not only did the homeowner put her mortgage payment of $24,000/yr into her “savings (equity), but she also made $14,490 on that investment for a grand total of :

drum roll please….


Renter : additional savings $0

Homeowner : additional savings $38,490

(I didn’t even begin to discuss the tax write off - yes, keep in mind that the tax write off for the interest she payed on her home loan is deductible, so even though there is interest paid on the loan, it’s TAX DEDUCTIBLE!!)

Time to invest in yourself and create your own wealth.

Thursday, March 9, 2017

How Do Homeowners Accumulate Wealth?

The differences between buying and renting are massive. According to the Federal Reserve, a typical homeowner’s net worth was $195,400, while that of renter’s was $5,400. The data reflects 2013 and the next survey of household finances, which is conducted every three years, will be out in 2016. Based on what has happened since 2013 and projecting a conservative assumption of what could happen next year to home prices if we see only 3% price growth, the wealth gap between homeowners and renters will widen even further. The Fed is likely to show a figure of $225,000 to $230,000 in median net worth for homeowners in 2016 and around $5,000 for renters. That is, a typical homeowner will be ahead of a typical renter by a multiple of 45 on a lifetime financial achievement scale.

Though there will always be discussion about whether to buy or rent, or whether the stock market offers a bigger return than real estate, the reality is that homeowners steadily build wealth. The simplest math shouldn’t be overlooked. A vast majority of homebuyers take out a 30-year fixed rate mortgage to make a home purchase. After 30 years, there is no mortgage payment (nor rent payment). So the home price growth over that time period would be the equity that the homebuyer would have accumulated. For example, the median home price of a single-family dwelling in the U.S. thirty years ago in 1985 was $75,500. This year, it will be at least $220,000. That figure of $220,000 is the housing component of the person’s wealth. Even had home prices not risen, the person would still have $75,500 in wealth today – on top of not paying any further monthly mortgage after 30 years.

This simple example does not play out nearly as neatly in the real world, since people do not stay in one residence over the 30 year period. Almost all homeowners trade up, change neighborhoods, or move to a better school district at some point. However, they are able to make those residential relocations due to the housing equity accumulated, even over a shorter period, and can immediately apply that equity to the next home as a downpayment. Therefore the conditions of steadily building housing wealth still hold.

We also know that not everyone can or should be homeowners. The memories of easily accessible subprime mortgages and subsequent harsh foreclosure pains are still fresh, and remind us of the devastating impact on the families involved, local communities, and to the broad economy. In addition most young adults have not developed the financial standing or have found a stable, desirable career and, therefore, choose not be homeowners until later. The homeownership rate among households under the age of 35 is 35% currently and rarely rises above 40% historically. For those under the age of 25, the current ownership rate is 23% and rarely rises above 25%. But the time will eventually come when people want to convert to ownership. By the time people are in their prime-earning years of 45-to-55, nearly three-fourths do eventually become homeowners. By retirement, nearly 80% are homeowners.

A recent survey of consumers commissioned by my organization revealed that 80% believe that purchasing a home is a good financial decision (2015 National Housing Pulse Survey). Most consumers appear to already understand the simple math and the benefits of homeownership. So don’t overthink the matter of whether now is a good time to buy, or whether stock market returns will be better. The exact timing of a home purchase will have little financial impact in the big scheme of things. Just know that homeowners generally do come out ahead of renters in the long run.

Article from Forbes.