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Tax Breaks for Homeowners

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Homeownership comes with a lot of advantages, especially when it comes to tax time. You can deduct many home-related expenses. These tax breaks are available for any type of home -- mobile home, single-family residence, townhouse or condominium. Make sure you’re not missing out on important home-related tax deductions. Consult your tax advisor to find out which deductions apply to you, but here are some common deductions that may be beneficial to you.

Deducting Loan Points Paid on a Purchase or Refinance
The points you pay on a loan for a home purchase are tax-deductible for the year you made the purchase. You can deduct the points you paid as well as those a seller paid on your behalf if you meet the following criteria:

  •   The loan is secured by your primary residence
  •   The loan was used to buy, improve or build the home
  •   Paying points is a common practice in your geographic area
  •   The points are calculated as a percentage of the loan principal
  •   The points are clearly outlined on the settlement statement; and 
      the amount of cash you put into the purchase of your home (down payment,   closing  costs  etc.) is at least equal to the amount you were charged for the points you paid on the loan.

Deducting Real Estate Taxes
Real estate taxes are deductible in the year paid. They are generally reported on Form 1098, Mortgage Interest Statement, the annual statement from the financial institution holding your mortgage, or on your county real estate tax assessment statement. You should also deduct any prorated taxes collected from you at closing. These amounts are not always included on Form 1098, but may be itemized on your real estate closing statement.

Casualty or Theft Loss
If your home is damaged from a sudden, unexpected event such as a fire, a storm, vandalism, or theft, the loss that is not covered by insurance is deductible subject to a $100 reduction and a 10% of adjusted gross income limitation. A deductible casualty or theft loss reduces the cost basis of your home by the amount claimed as a deduction. The deductible loss is calculated using Form 4684, Casualties and Thefts, and carried to Schedule A as an itemized deduction.

Going Green Means Tax Benefits
Homeowners who make their homes more efficient with energy-conscious purchases may be eligible for tax benefits. A recent tax law change provides a tax credit to improve the energy efficiency of existing homes. The law provides a 10 percent credit for buying qualified energy efficiency improvements. To qualify, a component must meet or exceed the criteria established by the 2000 International Energy Conservation Code (including supplements) and must be installed in the taxpayer’s main home in the United States.

The following items are eligible:
• Insulation systems that reduce heat loss/gain
• Exterior windows (including skylights)
• Exterior doors
• Metal roofs (meeting applicable Energy Star requirements)

In addition, the law provides a credit for costs relating to residential energy property expenses. To qualify as residential energy property, the property must meet certification requirements prescribed by the Secretary of the Treasury and must be installed in the taxpayer’s main home in the United States. The maximum credit for all taxable years is $500 – no more than $200 of the credit can be attributable to expenses for windows. Read more from the IRS on how you may be eligible to receive this tax break.

Everyone has a different situation and you may actually qualify for other deductions you were not aware of, so always check with your tax professional. For information on taxes and being a homeowner, visit the IRS where you can learn more about Tax Information for Homeowners.

Answers For The First Time Home Buyer

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Buying your first house is likely to be the greatest financial commitment you will ever make. While buying your first home is an exciting experience, it can also seem overwhelming and can leave you asking lots of questions.  There are many things to consider, from budgeting to choosing the house, and getting financing you want to make sure you have all the information you need to make smart decisions. Here are a few easy steps to get started!  

How Much Can You Afford?
Before you can start actually looking for a home, you need to set some basics, such as how much can you actually afford. There are two major factors that you need to consider, how much you can borrow and how much of a monthly payment you can realistically afford.  Keep in mind you will most likely be pre-qualified for an amount that may be unaffordable to your budget. As a general rule of thumb, your annual mortgage payment, taxes and homeowner's insurance shouldn't exceed 28% of your gross income.  Use this home buying worksheet to help you figure the costs.
In addition, you will also need to determine your closing costs, which can add up to 3% to 5% of your total home's value. This closing cost estimator will help to give you a better understanding of the costs.

Do Your Homework-Start Your Search Online
Almost 80% of all home searches today begin on the Internet. With just a few clicks of the mouse, yours can search through hundreds of online listings, view virtual tours, and sort through dozens of photographs and aerial shots of neighborhoods and homes.   With detailed knowledge about neighborhoods, school districts or any other factors that are important to you, you can narrow your search to find your perfect home even before you step foot outside!

How Long Will The Home Meet Your Needs?
When you do find some homes that you are seriously considering, ask yourselves these questions. What features do you require in a home to satisfy your lifestyle now? Five years from now? Depending on how long you plan to stay in your home, you'll need to ensure that the home has what you'll need. For example, if you are a young couple with no children just starting out and you found a two-bedroom home that you love, it may be perfect now. However, if you start a family, you will quickly outgrow the space. Best advice is to consider a home with room to grow. Could the basement be turned into a den and extra bedrooms? Could the attic be turned into a master suite? Having an idea of what you'll need will help you find a home that will satisfy you for years to come.

What To Look For In First Time Home Loans
Because there are several different mortgage programs available for as a first time home buyer, it can be confusing and difficult to decide what is best for your when faced with many different loan types. Use this list  to help you narrow down the choices to what is best.

In addition, here are a couple of tips and guidelines:
1. Flexibility - Make sure you get a program that offers a monthly payment you can really afford. Be honest with your mortgage broker if your payment seems out of reach. You may be able to obtain a three or five year ARM mortgage with a lower interest rate and lower payments or an interest only loan to get you into your home without giant mortgage payments.
2. Down payment assistance. If you are unable to pay a down payment there are programs available to help you.  Down Payment Assistance Programs  are loan programs designed to assist first-time home buyers with the required down payment and closing costs.
3. Long Term Goal - Are you planning on staying in this home forever, for three years, for five years? Communicate your goals to your lender because in situations like these they may have several mortgage options from which you can choose

Purchasing your first home does take research and work, but buying a home is the American dream and you can fulfill your dreams. While it can be exciting to look at different types of homes, don't be tempted into excess when first time home buying. Don’t purchase a home that is really more than you can afford and you need to be strong and stay within your budget. For more information on all the aspects involved in purchasing a home from start to finish, click here.

Conserving Water In Your Home

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According to water conservationists, the average U.S. household consumes 125-150 gallons of water every day. That is about 40% more than needed. The first step in understanding how to conserve water in your home is to know where water is used. Find out how much water your family actually uses with this water budget calculator. http://www.h2ouse.org/.  Below are some are a number of easy things you can do to help conserve water and reduce your water bill.

  • Ensure that everything is in working order. It is important to regularly inspect your plumbing. A dripping faucet with just a small leak can waste up to 20 gallons of water per day; larger leaks can waste hundreds of gallons.  Many times the problem is an old washer, but replacing it is easy and inexpensive. In addition, check for toilet tank leaks by adding food coloring to the tank. If the toilet is leaking, color will appear within 30 minutes. Check the toilet for worn out, corroded or bent parts. Most replacement parts are inexpensive, readily available and easily installed. (Flush as soon as test is done, since food coloring may stain tank.)
  • Reduce your water use. Many of us use more water than we should simply because we don’t think about it. Running the water while brushing your teeth is a common waste of water. By turning off the water while brushing your teeth can save a family 5 to 10 gallons per day. Make sure that the dishwasher or washing machine has a full load before starting. By making these small changes, you can save a lot of water-up to 1000 gallons a month! Do whatever you can to minimize the amount of water you expend.
  • Upgrade to water saving fixtures. Replacing fixtures doesn’t have to be expensive, and even if you do decide to spend a little more on an upgraded faucet, the money you save will more than pay for the expense. Because such a huge percentage of the water you use is used in the bathroom, that's where water conservation efforts should focus. You can install a few simple, inexpensive devices in the bathroom that can save a lot of water with no change in your lifestyle or your present habits. Many hardware and plumbing supply stores stock these items. Check out these ideas below:
  • Water saving showerheads. Three billion gallons of water flow through showerheads every day in this country--half of it unnecessarily. Most showerheads use twice the water needed for a typical shower. By installing a low-flow showerhead, you can reduce the amount of water used up to 50%. Keep in mind low flow doesn’t mean you loose any pressure, because these showerheads increase the velocity so the shower feels the same.
  • Water efficient toilets. A low- flow toilet uses half the water that a normal one does in flushing. Older toilets use five gallons per flush; newer ones often reduce this to 1.6 gallons per flush. When you multiply that by uses per day, per week, it adds up!
  • Install faucet aerators. You can save around 25 to 40 percent on the hot and cold water running out of each faucet you aerate. Aerators restrict the flow of water, compressing it into a higher-pressure discharge than regular faucets. They also introduce air bubbles into the water, making it feel like there is a larger water flow. They reduce water flow by about 50 percent or more.

There are many other ideas that easy to implement, for more information on what you can do inside your home to save water visit http://www.earthshare.org/tips/waterconservation.html.  Keep in mind just because the fixtures save water does not mean they are not stylish; you will be surprised how beautiful and functional they are. Visit your local home improvement store for some ideas today!

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Photo of Masha Halpern - Boutique Real Estate Real Estate
Masha Halpern - Boutique Real Estate
Keller Williams Realty
101 Cosgrove Avenue, Suite 200
Chapel Hill NC 27514
Direct 919-951-1780
Toll Free 877-478-4669
Fax: 919-928-9030




Masha Halpern of Keller Williams Realty provides real estate services in the Chapel Hill, Carrboro and Durham, North Carolina area including real estate services for buyer, sellers and those relocating to the surrounding areas of Apex, Bahama,Cary, Efland, Hillsborough, Holly Springs, Mebane, Raleigh, and Wake Forest. Search for homes in Chapel Hill, Carrboro, Durham or the surrounding communities.  Request a market analysis for your North Carolina property.  I list and sell residential real estate, investment property, vacant land, lots for sale in Chapel Hill, Carrboro and Durham, North Carolina area.

Chapel Hill, Carrboro and Durham, North Carolina real estate and homes for sale in North Carolina - Masha Halpern & The Smart Move Team

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