Tips


Back in 2005 came the introduction of SnapAlarm, an award-winning optical smoke detector from FireInvent, and now the same Swedish company is taking fire protection a step further with its all-in-one Fire Safety Box.

The Safety Box is designed to provide complete fire protection in a single package, and it comes in six different versions tailored to different usage contexts. But the fire extinguishers, smoke detectors, fire blankets and torchlights included aren’t just ordinary versions of those items. Rather, they have been revamped for a modern, attractive look. The Safety Box Design, for example, includes fire extinguisher and Snap Alarm in black or white; black-and-white fire blanket in a modern, botanical design; plus an extra wall-mountable optical smoke detector. The Safety Box Exclusive, meanwhile, includes a chrome option for the fire extinguisher, while the Safety Box Kid includes a Snap Alarm in pink or blue and a fire blanket suitable for children. Pricing begins at $185 and versions for cars and boats are also available.

There will always be a need for functional products like fire protection devices, but there’s nothing to say they can’t be upgraded with a splash of color and design and sold at a similarly upgraded price.

Advertisements

ecoenvelopes.jpg

Minnesota is already known for being “nice”, but a local company called ecoEnvelopes is bringing nice to the world and attempting to turn corporate America green by helping businesses reduce their company’s environmental impact AND save money in the process.

After working for years to perfect the design and obtain the US Postal Service’s approval, ecoEnvelopes has developed an innovative line of reusable envelopes that simply zip open, allowing users to insert their response or payment and seal them up again just like a regular envelope. With 81 billion return envelopes being sent through the US mail each year, ecoEnvelopes stands to have a great impact on the environment by helping  to reduce the estimated cost of envelope-excessive corporate America’s 1 billion pounds in greenhouse gas emissions and more than 71 trillion BTUs of energy.

Not only can everyone participate in environmental stewardship and feel good about their part in greening the mail (the envelopes are also made with up to 100% post-consumer recycled content!), but by eliminating the need to print, store, handle, insert, track and include a separate reply envelope, ecoEnvelopes can cut mail costs 15% to 45%, the company says.

Not a bad way to “green” our real estate businesses, I say! 🙂  ecoauditimage.jpg

homedream.png 

With the constant barrage of negative media surrounding real estate these days, it’s no wonder that newlyweds and other first-time home buyers are putting their dreams of buying their first home on hold. But 2008 promises to be as good a time as any to buy your first home and here’s why:

It’s a buyer’s market

With foreclosures adding houses to a market already hungry for buyers and economists predicting that residential housing sales and prices will not pick up until 2009, sellers who need to sell are lowering prices and often throwing in additional incentives.

Perfect timing is rarely achieved

Although you should educate yourself and use caution when buying into a declining market, a buyer waiting for prices to hit absolute bottom, usually waits too long and then pays the cost of buying into a rising market with increased home prices. If you’re planning on staying put for a while, now is a great time to buy your first home because the market will eventually balance itself and turn once again to a seller’s market and when it does, your home’s value will increase too.

Interest rates are low

Recent Federal Reserve decisions have lowered interest rates yet again making the Federal funds rate drop to 2.25% (down from 5.25% a year ago) and the prime rate drop to 5.25%. And today a Bankrate.com index showed that the national overnight average for a 30-year, fixed-rate mortgage is being offered at 5.74% and a 15-year fixed at 5.09%, both of which are buyer-friendly rates.

Labor and materials are readily available

Even if you don’t qualify for enough financing to buy the home of your dreams due to tightening lending practices, it’s easier than ever to fix-up and maintain properties with the number of home improvement stores, tips, do it yourself classes and handymen readily available. And because new construction has slowed down in most markets and all trades that depend on it are eager for employment, buyers are likely to get better work, done faster and maybe a little cheaper in 2008 than at anytime in the future.  

A need to sell makes sellers flexible

Remember, sellers who don’t need to sell right now generally don’t have their properties for sale. And those who do need to sell tend to be more flexible in negotiations, so buyers should consider proposing terms that ask sellers to help make the deal work beyond just lowering their price. Sellers may have the ability to finance part of the purchase price to make it easier on the buyer, they may be able to fix or replace something that needs updating, and they can always pay more than the customary share of closing costs and taxes.

 

Happy House Hunting!! 🙂

Greetings everyone!

I wanted to take a moment and introduce myself. My name is Kelly Carlson, Marketing Manager for the Don Edam Group, and I’m going to be contributing to this blog (and to the real estate industry in general) in the days to come, from a completely new and different perspective than your typical real estate professional.

Hoping to utilize a trifecta of my favorite hobbies (trend hunting, exploring new places, and trying new things), as well as tapping back into the service journalism and editorial voice that my U of M education once afforded me, my intentions are to keep you posted on all the latest news, statistics, tips, and trends in real estate and to scope out and share with you all of the food and dining, shopping and style, arts and entertainment, health, education, and local events that make our Twin Cities neighborhoods unique and fabulous places to live!

Although I am relatively new as a licensed real estate agent, I’m excited to know that the combination my background, work and educational experience, and personal interests can lend something new to the industry. While my expertise (& nearly a decade of experience!) lies primarily in promotions, marketing, and trend research, I also have 2 years experience as a credit analyst for a local mortgage services company and 4 years experience in title insurance research, giving me a range of knowledge and skill that can only add to our clients’ success.

I get a kick out of being a social anthropologist and spotting changes in consumer behavior, scoping out new trendsetting products and services, and just about any super-smart thinking on where our societies are headed at large. I look forward to developing new and innovative ways of marketing your homes and neighborhoods so that others can see why you called it “home” for so long, and I hope you enjoy the information I can share with you about the people, places, and events that form our great Twin Cities communities.

In the meantime, happy house hunting and speedy sales to all! )

Kelly

government501.gif 

There’s really no sure way to avoid an audit. Most audited tax returns are selected for review either because the filer is part of a target group or because a computer program selects the return. The computer selects many returns randomly, but there are red flags that will draw the IRS’s attention.

The key is to minimize your exposure. Here are some suggestions from MSN Money on things you should try to avoid:

1. Math mistakes

The biggest reason people receive letters from the IRS is addition or subtraction goofs. Fortunately, math errors rarely lead to a full audit. Still, double-check your math before you send in your return.

And if you receive a letter from the IRS that says you owe them, check your numbers first. Sometimes, the IRS misreads one of your numbers, or the number is keyed incorrectly into the IRS computer. If it’s wrong, send a letter with a printout of your calculations.

2. Mismatched interest and dividend reporting

If the amounts reported in supporting documents don’t match the amounts on your return, you will get a letter.

There are lots of possible errors here. Sometimes, the IRS will enter the Form 1099 information into its computer and erroneously keystroke the income amount or the Social Security number of the recipient. If the income isn’t yours, get a letter from the bank or other payer and forward that letter to the IRS. If the amount is incorrect, send a copy of the Form 1099 mailed to you by the payer.

3. You’re on the IRS hit list

Those who receive much of their income in cash are traditionally on the radar screen of IRS agents looking for unreported income. Recently, the IRS has also pinpointed small-business owners and the self-employed in its bid to find more of the estimated $345 billion in uncollected taxes.

4. You’ve got a big mouth

Never brag about how you put one over on the IRS. Internal Revenue Service informers can earn a reward of between 15% and 20% of the additional tax collected, including fines and penalties and interest. Whistleblowers can file Form 211 or call the IRS hotline at 1-800-829-0433. Everyone else: Zip it, and keep your accounting strategies to yourself.

5. You’re exceptional

An IRS computer program compares your deductions to others in your income bracket and weighs the differences. This secret IRS formula, called the “DIF Score,” is used to select returns with the highest probability of generating additional audit revenue.

The IRS is coming
If you are facing an audit, don’t panic. An audit is merely a process where the IRS asks you to substantiate the numbers on your tax return. Here are some survival strategies:

Call your tax professional. Or get one. If the audit is simple – to prove your charitable and interest deductions, for example – you can do it yourself by mailing in copies of your substantiation. For all in-person audits, I strongly suggest professional representation.

Plan your taxes to preempt an audit. If, say, you have a huge medical deduction that you feel would increase your chances of being audited, attach copies of your medical bills to your return. The IRS computer will still kick out your return, but when a real person looks at it, the reviewer will recognize that you know the rules. This may actually reduce your odds of a full audit.

Keep records for three years. The IRS can audit you for three years after you file your return. In reality, however, most returns are audited within 18 months. This gives the IRS time to do the review and request the appropriate substantiation before the statute of limitations (usually the three-year period) ends.

Once the deadline has passed, the IRS normally cannot audit your return and your expenses are insulated from examination.

File at the last minute if you are concerned about a potential audit. It won’t hurt and might decrease your chances of being selected. The good news is, if you are audited one year with a refund or no change, it decreases your odds of being audited in subsequent years. In fact, if you are audited on the same items two years in a row with no additional taxes due, the IRS manual specifically recommends that they not audit you on the same items for a third year. Full Story

1111.jpg 

Owning a home tops the dream list for most Americans, and for plenty of good reasons. It’s a shelter for your family, a gathering place for your friends and a good long-term investment.

Tax breaks are also frequently cited as motivation for moving from renting to owning, and there are many ways a home can cut your tax bill.

But, as is often the case with the U.S. tax code, homeownership tax benefits are not always clear-cut. That frequently leads to some bad information floating around.

While myths, half-truths and misconceptions may abound, Bankrate.com has narrowed it down to five that, if you buy into them, could cost you.

1. My mortgage interest will reduce my tax bill.
This is true for the majority of homeowners, but not for all. And this tax break won’t work forever.

To take tax advantage of your home loan’s interest, you must itemize and come up with a total that exceeds your standard amount. On 2007 tax returns, the standard deductions are $5,350 for single taxpayers, $7,850 for head of household filers and $10,700 for married couples who file jointly. These amounts increase a bit each year to account for inflation.

“Given home prices these days, most owners are itemizing,” says Mark Luscombe, principal tax analyst with CCH of Riverwoods, Ill. By the time they count mortgage interest, property taxes and other nonhome deductions, such as state taxes and charitable gifts, their itemized totals easily surpass their allowable standard deductions.

But most is not all.

Taxpayers who buy a home late in the year, for instance, might find the standard deduction is more beneficial, at least initially, says Kathy Tollaksen, a CPA at Sikich in Aurora, Ill. In these cases, where you make only a few payments in a tax year, depending on your loan you might not pay much interest, at least not enough to exceed standard amounts.

Timing also could reduce or eliminate other home-related tax breaks.

“Quite a few states have real-estate taxes that are calculated in arrears. That is, they have already been paid or mostly paid (by the seller) by the time you buy,” says Tollaksen. “In the first year, you’re seeing taxes that are someone else’s responsibility so you’re not getting the full tax value of your real-estate taxes.”

The benefit of mortgage interest also could be a myth if you’ve lived in your home for a long time. In this case, you likely are paying more toward your loan’s principal instead of interest. So homeowners at the end of a loan term don’t get much, if any, from this tax break.

Or, as Bob D. Scharin, senior tax analyst and editor of Warren, Gorham & Lamont/RIA’s monthly tax journal “Practical Tax Strategies,” puts it, “Every deductible expense you incur may not produce a deduction.”

2. All costs related to my home are deductible.
There are no two ways about this one. It’s flat-out false.

“Some buyers think, hope, they can write off everything connected with the house,” says Tollaksen. “Not so. Association fees and property-insurance costs are not deductible.”

Neither, in most cases, is private mortgage insurance, which your lender probably required if your down payment was less than 20%. However, a new law changes the deductibility of PMI for mortgages originated or refinanced between Jan. 1, 2007, and Dec. 31, 2009.

If you got your mortgage and policy in that time frame, you might be able to deduct your insurance-premium payments. The law also extends beyond private insurance to others, including FHA, VA and rural housing.

There are some limits, though. The PMI deduction is phased out for taxpayers with adjusted gross incomes exceeding $100,000 and is totally eliminated once adjusted gross income reaches $110,000.

Don’t try to deduct basic maintenance, repair or home-improvement costs either.

Tollaksen says, “I’ve had people say, ‘I put a new roof on my home; can I deduct that?’ No.”

If you try to write off these expenses, expect to hear from the Internal Revenue Service and to pay a higher tax bill (and possible penalties and interest) after you refigure your taxes without the disallowed deductions.

However, you still need to keep track of these expenses.

“If you convert the home to rental property or sell it,” she says, “these costs will affect the property’s tax basis.”

A home’s basis is critical when it comes time to sell. And selling is also a tax area in which many people fall for myth No. 3.

3. I must use money from my home sale to buy another residence.
This used to be the only way to get around a tax bill on a home sale. Even then, you were only able to defer taxes by purchasing a new residence of equal or greater value with the profits from your other house. When you sold your final house, you’d owe those long-deferred taxes you had rolled over throughout the years. Home sellers age 55 or older were allowed a once-in-a-lifetime tax exemption of up to $125,000 in sale profit.

But on May 7, 1997, home-sale tax law changed. Still, a decade later, many homeowners are confused about the tax implications of selling.

“I recently heard some neighbors talking about having to buy another house when they sell to avoid the taxes,” says Scharin. “If the last time you sold the house was before 1997, you’re thinking of those old rules.”

Don’t worry. Most taxpayers still get a nice break. Now, if you live in the house for two of the five years before you sell, the IRS won’t collect tax on sale profit of up to $250,000 if you’re single or $500,000 if you and your spouse file a joint return.

“The law change has really affected people’s behavior,” says Luscombe. “Before, it didn’t really matter much whether you sold frequently or held onto your home for a long term. You basically could roll over the gain into a larger home and people could avoid tax until they sold for the final time without putting it into a replacement home.

“Now the law rewards people who sell frequently. In this current market, people who sell every couple of years can get and keep their gain,” Luscombe says. “But people who buy and hold might find they have reached the point where the gain exceeds the exclusion.”

That means they face unexpectedly high tax bills, even at the lower 15% capital-gains rate. The profit could also push them into a higher overall tax bracket, meaning they would make too much to claim some deductions, credits or exemptions. They also might even end up owing alternative minimum tax.

Another problematic consequence, says Luscombe, is that when the new rules took effect, people basically quit keeping records related to their homes.

“They thought: Since we’re never going to be taxed on the sale, there’s no need to keep track of what we paid and what improvements we made,” he says. The improvements add to your home’s basis, which you subtract from the sale price to determine your profit and whether any of it is taxable.

“Now with inflation in the housing market, a lot of people are selling homes in excess of the gains without any way to show that their tax bill should be less,” says Luscombe.

4. Putting my child on my home’s title is a smart tax move.
Worries about taxes on a residence sometimes lead homeowners to fall for this myth. It’s a particularly tricky one, because it combines confusion about residential taxes with the even more complex estate-tax area.

“Sometimes we’ll hear about taxpayers who, in doing some quick back-of-the-envelope estate planning, decide to put their home in the children’s names,” says Tollaksen. “The thinking is: My son or daughter won’t have to worry about this when I die.”

The goals: Avoid probate, keep the home in the family and get the property out of the parent’s estate for those tax purposes. Such a move, however, could produce other tax problems for your children.

Unless the child moves into the newly deeded house with the parent and lives there long enough (two of the previous five years) to make the house the child’s main residence, too, says Tollaksen, the son or daughter won’t get the $250,000 or $500,000 residential tax break when the child later decides to sell. Without establishing primary residency in the house, either before or after the parent passes away, the child’s ownership is viewed as an investment property.

Other parents opt to simply add a child’s name along with theirs on the title to the house, known legally as a joint tenancy. It doesn’t mean that all the owners live in the home, but simply that two or more people hold title to the property.

This, too, can produce tax complications.

Generally, when someone inherits a property, its value is stepped up. That means when the owner dies, the property becomes worth its fair market value that day.

But if the child co-owns the property with his parent, the child doesn’t get to fully use stepped-up basis. Tax law considers the addition of the child’s name to the title as a gift. And, along with that half of the home, the child receives half the basis that his or her parent has in the property.

This is known as the property’s carry-over basis. And it could be costly.

Consider, for example, that you bought your house many years ago and your basis in the property is $50,000. You add your daughter to the title. When you die, she inherits your half of the home, which by then is worth $250,000. A buyer offers $300,000 for the home.

Pretty good deal, right? From a real-estate perspective, yes. But not when it comes to your daughter’s tax bill on the sale.

Rather than owing taxes on just $50,000 more than the house’s stepped-up market value, your daughter will owe on three times that amount. Here’s the math:

Parent owns home with a basis of: $50,000
Parent adds child to title, “giving” child carry-over basis of: $25,000
At parent’s death, house is worth $250,000, producing on the inherited half a stepped-up basis of: $125,000
Home subsequently sells for: $300,000
Child’s total adjusted basis (line 2 plus line 3) is: $150,000
Taxes due on sale profit (line 4 sale price less line 5 basis) of: $150,000

What had been done with the best parental intention turned out to carry a big price because of this homeownership tax myth.

5. If I take a capital loss when I sell my home, I can write it off.
This myth, like No. 2, was probably started by wishful homeowners. Sorry, it’s just as wrong.

It is true that real estate, like any other asset, has the potential to go down as well as up in value. But unlike most of those other holdings, you cannot write off any loss you suffer if you must sell your main residence for less than what you paid.

That’s because your residence, under tax law, is considered personal property.

“When you sell your home for a loss, it’s not like other capital items,” says Scharin. “You don’t get to deduct personal property that you sell for a loss.”

“It’s the same as any personal property that declines in value,” says Luscombe, “like that old TV you sold to the neighbor kid so he could take it to college. You sold it for much less than you paid, but you can’t take a loss.”

You do, however, have to pay tax on gains you make when selling personal property.

But at least you now know the difference between fact and fiction when it comes to your residential property, which will help you make appropriate real-estate and tax decisions in the future. Full Story

architect.jpgI

t takes flexibility, communication and realistic expectations to work successfully with an architect. Here’s a round-up (by MSN Real Estate) of some tips from architects and homeowners.

Pay attention to personality. Most people hire an architect only once in their lives. Searching for one is akin to finding a financial planner, architects say. Look for an architect who has designed projects that are similar in style and scope to yours. “There’s no substitute for experience,” says Todd Strickland, a partner with Historical Concepts, an Atlanta architectural firm. Because designing a home is such a personal project, it’s important that you feel able to communicate with your architect.

Liza Nugent, 41, and her husband needed an architect to combine their apartment on Manhattan’s Upper East Side with a neighboring unit; they got referrals from friends. The first architect they called made a snippy remark about how “unsophisticated” co-op boards in buildings on side streets such as theirs make renovations difficult. “I thought, with that kind of attitude, we definitely wouldn’t get along,” Nugent says. After calling two more architects and interviewing three others, the Nugents picked a longtime acquaintance who had creative design solutions for their project.

Enlist an architect early. Most architects will do their best to design a structure to work with whatever plot of land you have to build on. But they also can help scout prospective land purchases. With a general vision of your house and a budget in mind, the architect can evaluate the pros and cons of a location that a client might overlook, such as whether a site is big enough to accommodate the dwelling or whether a neighbor’s right to a view will preclude building the 12-foot ceilings you want.

Is the site free of utility constraints? What about topographical features that could increase the cost of building? Paying for four or five hours of evaluation is likely to save money in the long run.

Bring visuals. Pictures help an architect understand your vision, whether it’s a rough sketch you’ve made, magazine photos of homes you like, or a coffee-table book featuring interiors by your favorite designer. Snapshots of specific lighting fixtures or cabinet styles are helpful, but so are pictures that convey intangibles: the sense of place created by sunlight streaming through a skylight, or a library room with a “warm” feeling.

Dallas architect Marc McCollom, who designs modern houses, says clients also should bring pictures of things they don’t like. Architects will regard the client’s visual portfolio as a cue for whether they’ll make a good team. “If they show me pictures with crown molding and decorative wallpaper, I shouldn’t take that job,” McCollom says. “I’m not going to be happy, and we shouldn’t work together.”

Find a listener. A relationship with a designer is like a marriage: Go with someone who listens, cut your losses with someone who doesn’t — or risk getting a house you don’t want to live in. When Jim Jenkins began a $1.5 million renovation of his Alamo, Calif., home, he hired a local who had designed other houses in the neighborhood. But 18 months into the process, the architect still hadn’t produced a design that the Jenkinses liked or that could get past the local homeowners association.

“He wouldn’t design what we were looking for,” Jenkins says. “My wife’s looking for something Caribbean and he kept thinking California Ranch.”

Jenkins pulled the plug on that designer and hired a Berkeley architect, Robert Nebolon. “He read the codes, had some creative ideas and within six months I got what I was looking for,” Jenkins says.

Clients need to listen, too. Telephones, faxes and e-mail aren’t the best ways to communicate about home design. Avoiding in-person meetings will delay construction. A good architect won’t act on any part of a project without clear approval.

Talk money upfront. A flat fee may be appropriate for projects whose scope is very defined. But construction projects often include unforeseen challenges, and for that reason most architects prefer to charge by the hour or by a percentage of building costs. Some architects charge by the hour in the concept stage and then charge fees ranging from 8% to 18% of construction costs after hiring. For projects costing $1.5 million plus, expect fees to range from 12% to 18%, says James P. Cramer, chairman of Greenway Group, a design-industry consulting firm.

Some architects ask clients for a wish list of features, fixtures and qualities along with an estimated budget. “Sometimes people’s expectations aren’t realistic, given what their budgets are,” says Manhattan architect Darby Curtis.

Consider full service. Architects will be as involved as you want them to be. They can simply do design conception and deliver drawings. Or they can visit sites, coordinate contractors and observe construction. Many architects advise clients to retain a designer through construction. “In the long run you’ll save yourself from headaches and extra construction,” Curtis says.

Have a strong marriage. Architects offer this last bit of advice in all seriousness. Money tends to cause stress in a relationship, and building a home involves a lot of money. Building a house together, McCollom says, “is not going to save your marriage.” Full Story

Next Page »