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End-of-Year end Housing Tips – How to Save Your Money Using Your Home – Video with Alex Charfen on Fox and Friends
January 3, 2012
I want to circulate this video interview on Fox and Friends that featured Alex Charfen because as I was watching it, I realized it is a very complete 5 minute overview of the housing market today. This is some great information for buyers, sellers, investors and realtors. I have recapped his main points in case you don’t have the time to watch the video.
Video link: http://youtu.be/fd7LHQV4y9A
Main points:
Tip #1: This is PRIME time for home buyers and investors: Alex points out that we are at record or near-record low interest rates and property values have dropped between 30% and 50%. We are only expecting single digit decline in the first part of 2012. “Buying at the bottom” is something that only happens if you are truly lucky and we are at bottom by all accounts.
Tip #2: Review your property tax bill carefully: if the value of your property has come down – you should only be paying taxes on the value. There are services that can help you change the property tax value or you can approach your town yourself with an abatement request.
Tip #3: Take advantage of home energy tax credit programs: consult with your tax accountant to see what energy improvements you made to your current home during 2011 will qualify for a tax deduction on your federal return.
Tip #4: Right size your space: Up until about 2007 the thought was “bigger was better” but that has reversed and people are looking for smaller spaces. The thought behind this is that it’s not just the purchase price of the square footage but it’s also the insurance, heating and cooling costs that go into maintaining a larger amount of square footage. If you can “right size” your space, then you can lower your overall expenses.
Tip #5: Be water wise: some areas have very expensive water bills so watch your appliances, washing machines and landscaping. Zero-scaping is a concept that has zero water usage for landscaping. The overall cost of owning a home can be reduced by being “water wise”.
Short sales and Foreclosures: Foreclosure is absolutely the last alternative and worst-case scenario for a troubled home owner – a record number of short sales were approved in 2011 and banks are more willing than ever to work with these deals. Chase, Bank of America and Wells Fargo are, in some cases, paying the home owners to short sale and move on to a different property.
On average, all the banks have improved their short sale processes and the transaction is almost as fast as a normal transaction. Short sales a dignified solution to a traumatic financial crisis for many homeowners. Find a real estate agent that understands short sales (easily identified with the CDPE designation) and that will shorten the process as well.
2011 Energy Tax Credits: What You Need to Know to Collect
November 26, 2011
Washington is giving you less green for going green, as the feds reel back the 2011 energy tax credits from a lavish $1,500 to a paltry $500.
2011’s federal energy tax credits of up to $500 for various home improvements are a far cry from what they were last year. But if the limits and other fine print—which we’ll get to—doesn’t dissuade you and you really need to upgrade one or more of the following systems, take advantage of the energy tax credits.
The energy tax credits are small, but at least a credit is better than a deduction:
- Deductions just reduce your taxable income.
- With a credit, you get a dollar-for-dollar reduction in your tax liability: If you get the $500 credit, you pay $500 less in taxes.
Other limits on energy tax credits besides $500 max
- Credit only extends to 10% of the cost (not the 30% of yesteryear), so you have to spend $5,000 to get $500.
- $500 is a lifetime limit. If you pocketed $500 or more in 2009 and 2010 combined, you’re not entitled to any more money for energy-efficient improvements in the above seven categories. But if you took $300 in the last two years, for example, you can get up to $200 in 2011.
- With some systems, your cap is even lower than $500.
- $500 is the max for all qualified improvements combined.
Certain systems capped below $500
No matter how much you spend on some approved items, you’ll never get the $500 credit—though you could combine some of these:
| System | Cap |
| New windows | $200 max (and no, not per window—overall) |
| Advanced main air-circulating fan | $50 max |
| Qualified natural gas, propane, or oil furnace or hot water boiler | $150 max |
| Approved electric and geothermal heat pumps; central air-conditioning systems; and natural gas, propane, or oil water heaters | $300 max |
And not all products are created equal in the feds’ eyes. Improvements have to meet IRS energy-efficiency standards to qualify for the tax credit. In the case of boilers and furnaces, they have to meet the 95 AFUE standard. EnergyStar.gov has the details.
Tax credits cover installation—sometimes
Rule of thumb: If installation is either particularly difficult or critical to safe functioning, the credit will cover labor. Otherwise, not. (Yes, you’d have to be pretty handy to install your own windows and roof, but the feds put these squarely in the “not covered” category.)
Installation covered for:
- Biomass stoves
- HVAC
- Non-solar water heaters
Installation not covered for:
- Insulation
- Roofs
- Windows, doors, and skylights
How to claim the 2011 energy tax credit
- Determine if the system you’re considering is eligible for the credits. Go to Energy Star’s website for detailed descriptions of what’s covered; then talk to your vendor.
- Save system receipts and manufacturer certifications. You’ll need them if the IRS asks for proof.
- File IRS Form 5695 with the rest of your tax forms in 2012.
This article provides general information about tax laws and consequences, but isn’t intended to be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice, and remember that tax laws may vary by jurisdiction.
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