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Homeowner Tips |
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Please scroll down for:
Ten Common Mistakes In Do It Yourself Painting
Five Homeownership Tax Myths
Buying or Selling Your Home-or Should You Stay Put?
Five Energy Saving Myths
Utility Contacts |
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PAINTING YOUR HOME YOURSELF?
AVOID THESE COMMON MISTAKES |
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| 1) Not Asking for Samples |
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| No one is going to argue that picking out paint is incredibly difficult. There are thousands of different shades of the same color carried by dozens of manufacturers. That’s why you should never buy any paint without sampling it first. |
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| Paint samples are available from most home improvement centers. Choose a couple of different shades and apply them to large, blank canvases. Hang them on the wall and test them for a couple of days. As morning turns to night you’ll see the colors change—as well as your feelings toward them. It’s true; some colors just don’t look like how they did in the store. If it is a custom color you are after, have the salesperson write down the color combination they made for you. That way if you like it the next person will have the formula. |
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| 2) Failing to do Simple Math |
| We can’t decide what is more frustrating: running out of paint mid-project or buying too much and letting the surplus go to waste. Find the length and width of your space, answer a couple of easy questions and you’ll never have to worry about buying the wrong amount of paint again. |
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| 3) Playing it Safe |
| Enough with the white paint already! If you are going to paint, add a little color. The best thing about paint is how inexpensive and versatile it is; so go wild and get a fun shade for once. Go really crazy and get two. |
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| 4) Not Giving Yourself Ample Room |
| Moving furniture is never fun, but it’s imperative when you’re painting a wall. Many people think that just a foot of two is ample space to maneuver, but it’s not. Clearing enough space gives you the room to do the project properly, instead of trying to paint in an obstacle course. This is a recipe for an accident. |
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| Taking the furniture outside of the room you are working on is ideal, but if it’s not possible then simply push it to the center of the room. Once it’s all gathered, toss plastic sheeting or a drop cloth over it and tape it down. After this is over and done with, you’ll have the rest of the room to cover… |
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| 5) Not Protecting Surfaces |
Even the tidiest of do-it-yourselfers have accidents. With paint, it’s inevitable. Drips, smudges and specks of paint will turn up in places never even graced by your paintbrush. For this reason alone it’s critical that you cover all visible surfaces, especially the floor.
Invest in plastic sheeting or drop cloths and blue painter’s tape and cover everything in sight. Protecting the outlying areas will take some work, but is well worth the extra time. You’ll really resent that cornflower blue when it winds up on your white floor. |
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| 6) Donning the Wrong Get Up |
Again, we can’t emphasize the need for protection. This time we are turning the focus to you. Besides wearing clothing intended for Goodwill, you’ll want to cover your feet (we’ve heard of people painting in flip flops) and hair. If you’ve never had paint in your hair, consider yourself lucky. It takes dozens of washes to get it out and you are just better off picking it out one strand at a time. Who has time for that?
One last tip: if you are using a paint sprayer, you’ll want to wear a face mask and goggles too. |
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| 7) Skipping Priming and Sanding |
Priming will not only extend the life of your paint job, it will make for a much better end result. Many people opt not to prime because they feel it’s unnecessary, but if you are going through all of the trouble of painting, why not prime too? You will save yourself the trouble of scraping peeling paint off of your walls in a couple of years.
Okay, so sanding isn’t always necessary, but when it needs to be done, do it. This is especially true with furniture that has been previously painted. The logic behind the step is that the existing surface needs something to grab onto and sanding provides that rough texture. The good news is that you don’t need to sand it down to bare wood; just give it enough elbow grease to rough up the surface. |
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| 8) Using the Wrong Tools |
| If you want to mess up a home improvement project big time, go at it with the wrong tool. The same goes for painting. It’s easy to think that a paintbrush is well, just a paintbrush, but they are not all created equal. Neither are rollers. Their shape, size and ergonomics have everything to do with how easy or difficult your project will be. Before you plunk down hard cash on supplies, as the store salesperson about what kind of tools you need. |
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| 9) Using the Wrong Sheen |
Even more important than the color is the sheen. Paint comes in several finishes intended for different purposes. High-gloss paint is easy to clean, so it’s frequently used in high-traffic areas.
We’ve heard of a very misguided painter using a flat paint in a bathroom resulting in a major headache for the occupant of the house. Matte finishes will work in a bedroom or in places that have little contact with dirty fingers or moisture. |
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| 10) Getting Ahead of Yourself |
Sometimes these goofs can be attributed pure excitement. Jazzed about introducing that new color into our lives, we forget painting takes more prep time than most other do-it-yourself projects. That’s why we end up with paint in our hair, on the floor, on the couch and on the cat. If you are planning on breathing new life into that old dresser or are going to give your living room a makeover, go for it but take your time! Like grandma said, “Haste makes waste,” and she was right.
Every home improvement project comes with goof-ups and painting is no exception. However, make disasters less likely by planning carefully, equipping yourself properly and taking your time. And if you do mess up, take heart. Even pros make mistakes. The important thing is getting over them so you can take on the next bigger and better project. |
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FIVE HOMEOWNERSHIP TAX MYTHS |
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By Kay Bell, Bankrate.com
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, we've narrowed it down to five which, if you buy into them, could cost you. |
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| 1. My mortgage interest will reduce my tax bill. |
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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 2006 tax returns, the standard deductions will be $5,150 for single taxpayers, $7,550 for head-of-household filers and $10,300 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 non-home 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 LLP in Aurora, In these cases, where you make only a few payments in a tax year, 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." |
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| 2. All costs related to my home are deductible. |
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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 is private mortgage insurance, which your lender probably required if your down payment was less than 20 percent. And you can't 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," Tollaksen says, "these costs will affect the property's tax basis."
A home's basis is critical when it comes time to sell (more about that below). And selling is also a tax area in which many people fall for myth No. 3. |
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| 3. I must use money from my home sale to buy another residence. |
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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, almost 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 percent 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." |
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| 4. Putting my child on my home's title is a smart tax move. |
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Worries about taxes on a residence can 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, the son or daughter won't get the $250,000 or $500,000 residential tax break when the child later decides to sell, says Tollaksen. 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.
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. |
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| 5. If I take a capital loss when I sell my home, I can write it off. |
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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. |
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BUYING OR SELLING YOUR HOME--OR SHOULD YOU STAY PUT? |
| By Cybele Weisser |
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| Thinking of selling? |
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Go ahead, sell. If you want to move on in the next year or two, consider selling sooner rather than later. Obviously, don't cut and run in a panic. But if you're fairly sure you won't want to be in the home -- you're on the cusp of retiring, say, or the kids are leaving the nest --it can't hurt to pocket your gains. "Prices aren't likely to go up from here," says Wellesley College economist Karl Case.
Same goes for investment property you don't think you can afford to hold on to during a sustained period of slow to no growth. Price it right. Just because the neighbor sold his house for $450,000 six months ago doesn't mean yours can fetch $500,000 today. "In a seller's market, you can push the envelope on pricing," says agent Robert Byrne of Needham, Mass. "But if there's a lot of competition, you need to look like a good value."
Crowd psychology can be crucial, so consider pricing a notch under what comparable homes in your area have sold for lately. "Properties that are undervalued get pushed up to value or above because there will be more than one person interested," Byrne says. "Once buyers get drawn into a negotiation, they get focused on winning the house and often lose track of the price they pay." |
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| Thinking of buying? |
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Go ahead, buy. Whether the housing market is up, down or sideways shouldn't be the deciding factor for purchasing. "Think of a home as another consumer durable, like a refrigerator," suggests Case. "When you need to buy a new fridge, you think about the service it'll give you, not whether the price is going to go up or down while you own it."
If something in your life is pushing you to buy now -- baby on the way, job transfer -- do so with peace of mind. In a flat market, you're still getting value out of your home simply by living there. Even if prices plummet, all's well as long as you can keep making your mortgage in tough times. "The people who get hurt in a falling market are the ones who need to sell as it's falling," says ReMax chairman Dave Liniger.
Again: Price it right. You no longer need assume a seller's asking price is the final price. But don't expect a slew of fire-sale bargains right away. As long as the local economy is in good shape, sellers are typically in no hurry and can hold on for months before dropping their prices.
"Unless you know from recent comparable sales in the area that something is really mispriced, offering 20 percent less than asking will often just piss off the seller," saysNew York City real estate consultant Kathy Braddock.
Adds Roy Grimm, a Sedona, Ariz. broker who only represents buyers: "If something is priced well, I'm delighted to settle at 3 percent to 4 percent off the asking price." |
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| Thinking of staying put? |
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Cash out with caution. When interest rates were low and home prices soaring, you could cash out a big chunk of equity and get much of it back (on paper, at least) within a few months. Kiss that good-bye. If you're going to borrow against the value of your home in the near future, make sure it's for things that create long-term value, like a child's education, not a TV.
Don't bet your retirement on the ranch. Pouring your savings into real estate instead of stocks may have seemed smart when home prices were soaring in the double digits. But historically, real estate has appreciated at a lower rate than stocks -- 5 percent to 6 percent a year, only a percentage point or two above the rate of inflation.
All the equity you've accrued over the past few years won't suddenly disappear, but you should temper your expectations for how much more you'll see in the future.
Don't over-renovate. In a soft market, a top-shelf renovation isn't going to pay for itself. There's nothing wrong with buying a high-tech European dishwasher if you like and can afford it, but do so for yourself, not because you think it'll add $5,000 to the value of your home.
Make sensible improvements to your home -- and then sit back and relax. "Enjoying your house and community," says Gabriel of USC, "is the most important, legitimate reason to be a homeowner." |
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Five Energy Saving Myths |
| by Gerri Willis |
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Finally there's some good news about your energy bill. It won't be as expensive as you may think, according to the Energy Department. Costs are expected to increase only slightly, making your air conditioning bills a bit less painful.
Here's five tips we're going to help you cut your bills even more by debunking common energy saving myths. |
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| 1. Get your TV dinners ready |
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Getting ready to warm up last night's lasagna? If you want to save energy, stick it in the microwave as opposed to heating it in the oven. Using kitchen appliances that are sized to the task at hand will help you cut down on your energy costs.
In fact, you could save 30 to 40 percent of energy costs, according to the American Council for an Energy-Efficient Economy.
If you're only cooking for one, you should think about using smaller pots when preparing meals. If you have an electric stove, use a smaller burner for a larger pot. And this really makes sense if your air conditioner is pulling double duty.
To be even more energy-conscious, drag out that crock pot. Appliances that concentrate heat are big savers. |
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| 2. Little things add up |
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Think about all those gadgets we keep plugged in day in, day out. Things like your cell phone charger, your iPod charger, the digital clocks on your stove or your coffee pots, the computer monitor, your TV, and even your night light uses energy when you're not actively using it.
It may not seem like much, but consider, if you keep your computer monitor on all the time, that will cost you $.60 cents a day, or $18 a month. And if you fall asleep watching television, you'll find that you'll pay about $6 a month for the privilege. (This is considering you pay about $.10 a kilowatt and sleep eight hours on average).
Keeping your cell phone and battery charger plugged in may cost you $1.50 a month and the night light? That'll cost you $.50 a month if you keep it on 24/7. On a national scale, the Alliance to Save Energy estimates that on a national level, these vampire devices use about 5 percent of our energy and cost consumers more than $8 billion annually.
To figure out what wattage your appliances are using, check the label. The amount of power the product uses should be marked clearly according to John Drengenberg of the Underwriters Laboratories. |
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| 3. Be moderate with the thermostat |
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If you're just sweltering in the heat and you want to adjust your thermostat, don't turn the thermostat to lower temperature thinking the house will become cooler more quickly. Thermostats run at the same level until they reach the temperature setting you indicate. And you could run up a pretty hefty bill if you turn the thermostat down low and forget to return it to the usual setting.
Of course, setting your thermostat a few degrees lower when you're out of the house does help to cut down on your energy expenses. This can save you about $100 each year, according to the Alliance to Save Energy. But keep in mind that to really see a dent in your bill, you'll have to be out of the house for at least 8 hours. |
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| 4. Try the cold cycle |
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| You don't need hot water to kill the germs anymore. You can save a load of energy if you use warm or cool water instead of hot water in your washing machine. That's because between 80 and 85 percent of the energy used to wash clothes comes from just heating the water alone. |
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| 5. Be wary of efficiency labels |
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We all gravitate toward the Energy-Star labels of appliances when we're out shopping. But you may want to take these labels with a grain of salt.
The benefits of this label are under fire after an investigation by SmartMoney magazine claimed the Energy Star Program is not well monitored and uses outdated test procedures. For their part, the Environmental Protection Agency and the Dept. of Energy deny these findings.
But either way, you should make sure the cost-savings will be worth it if you do decide to invest in an Energy-Star appliance.
As Harvey Sachs of the American Council for an Energy-Efficient Economy says about the energy-star label, "You may not be getting the most efficient product, but you're getting something that is better than run of the mill without doing the research." |
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Utility Contacts: Electric
Omaha Public Power District
(402) 536-4131
Water/Sewer
Metropolitan Utilities District
(402) 554-6666
Natural Gas
Metropolitan Utilities District>
(402) 554-6666
Aquila
(800) 303-0752
Cable TV, Telephone, Internet
Cox Communications
(402) 933-3000
Qwest Communications
(800) 491-0118 |
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I wish to thank you again for visiting my website. Please feel free to contact me, so I can save you both time and money in all your real estate endeavors. |
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