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Tax Snags that may Face Homeowners this Year

Tax season is here, and many homeowners may have questions about what they can and can’t write off under the new tax code.

One big change: Homeowners who used to write off property taxes and interest paid on their mortgage may no longer be able to entirely. But that doesn’t necessarily mean they’ll pay higher taxes. HouseLogic, the National Association of REALTORS®’ consumer-facing website, offers guidance and worksheets on the changes for homeowners.

Under the new law, the standard deduction every tax filer gets has nearly doubled ($24,000 for married couples who file jointly and $12,000 for single filers). That means most people likely will be better off taking the standard deduction than itemizing their write-offs.

However, the number of homeowners who will be able to deduct their mortgage interest under the new rules could drop by 56 percent—from 32 million to about 14 million, according to NAR. “This doesn’t necessarily mean they’ll pay more taxes,” Evan Liddiard, NAR’s director of federal tax policy, told HouseLogic. “It just means that they’ll no longer get a tax incentive for buying or owning a home.”

The new tax law caps the mortgage interest at $750,000, but loans that were in place by Dec. 14, 2017, are grandfathered in to the old plan, in which $1 million was the maximum amount. For homeowners who live in pricier housing markets, the new tax law could mean they will not be able to write off interest paid on debt over the $750,000 cap.

State and local tax laws also have been affected by the new federal tax code. Many state and local taxes can still be itemized and written off, which is referred to as the SALT deduction. Under the new tax law, tax filers cannot deduct more than $10,000 for all state and local taxes combined—whether the filer is single or married. Prior to the tax change, the majority of homeowners In about 20 states were writing off more than $10,000 in SALT each year.

“This is going to hurt people in high-tax areas like New York and California,” Lisa Greene-Lewis, a TurboTax expert, told HouseLogic. For example, homeowners in New York were taking an average of $22,000 per household in SALT deductions.

Source:

“Tax Deductions for Homeowners: How the New Tax Law Affects Mortgage Interest,” HouseLogic.com (2019) and “Are Closing Costs Tax Deductible Under the New Tax Law?” HouseLogic.com (2019)

Protecting your Home from Extreme Cold

I thought this article would be appropriate for the temperatures this week:

Here are a few tips from the experts to protect a home from the extreme cold:

Open cabinet doors. This may seem unusual, but HouseLogic, a home maintenance and remodeling website operated by the National Association of REALTORS®, suggests opening any cabinet doors covering plumbing in the kitchen and bathroom during cold weather. “This allows the home’s warm air to better circulate, which can help prevent the exposed piping from freezing,” the site notes. “While this won’t help much in pipes hidden in walls, ceilings, or under the home, it can keep water moving and limit the dangerous effects of freezing weather.”

Insulate. Keep drapes and blinds closed except when windows are in direct sunlight. Also, cover window air conditioners and insulate electrical outlets and switches on exterior walls with foam seals, which are available at home centers. Run paddle ceiling fans on low in reverse (clockwise when looking up) to help circulate more warm air, recommends “Today’s Homeowner With Danny Lipford.”

Turn the faucets on inside. Turn the faucets on occasionally to keep water moving through your system and slow down the freezing process. Aim for about five drips per minute, suggests HouseLogic.

Change filters on heaters. A heater needs to be checked annually to help prevent issues later on. But until you can schedule a checkup, change your filters, especially if you haven’t done so in a while. A clogged filter can prevent heat from getting into the home. “It’s no different than our vehicles that require preventative maintenance,” Steve Kistner, general manager at Kalins Indoor Comfort, told KTIV.com. “Our heating and cooling systems need the exact same things so they can work when we all count on them in this extreme cold. Eighty to 90 percent of the calls we go on right now are maintenance-related.”

Check outdoor connections. Make sure any outdoor spigots on all hoses have been disconnected and the spigots have been turned off and drained, advises the Madison Water Utility.

Shut off water immediately if pipes are frozen. If your pipes are already frozen, turn off the water immediately. Close off any external water sources, such as garden hose hookups. “This will prevent more water from filling the system, adding more ice to the pile, and eventually bursting your pipes—the worst-case scenario,” HouseLogic.com notes. “This will also help when the water thaws; the last thing you want after finally fixing your frozen pipes is for water to flood the system—and thus, your home.”

Read more tips on what to do to keep the pipes in your home from bursting at HouseLogic.com.

Reprint of an article from REALTOR® Magazine.

Questions to Ask When Choosing a Lender

I ran across this advice in REALTOR Magazine and thought it was worth passing on. Often times buyers, particularly first time buyers, don’t put enough effort into shopping mortgage lenders to find their best deal. You should contact at least 3 lenders and ask these questions to determine the best deal for you. Once you find the best mortgage product for your needs, obtain a pre-approval letter from your lender. Your REALTOR can incorporate your pre-approval letter with your offer, making your offer appear much stronger to a seller.

Loan terms, rates, and products can vary significantly from one company to the next. When shopping around, these are a few things you should ask about.

General questions:

What are the most popular mortgages you offer? Why are they so popular?

Are your rates, terms, fees, and closing costs negotiable?

Do you offer discounts for inspections, home ownership classes, or automatic payment set-up?

Will I have to buy private mortgage insurance? If so, how much will it cost, and how long will it be required?

What escrow requirements do you have?

What kind of bill-pay options do you offer?

Loan-specific questions:

What would be included in my mortgage payment (homeowners insurance, property taxes, etc.)?

Which type of mortgage plan would you recommend for my situation?

Who will service this loan—your bank or another company?

How long will the rate on this loan be in a lock-in period? Will I be able to obtain a lower rate if the market rate drops during this period?

How long will the loan approval process take?

How long will it take to close the loan?

Are there any charges or penalties for prepaying this loan?

How much will I be paying total over the life of this loan?

7 Home Inspections Myth

I recently came across this article and thought it was good information for both home buyers and sellers. Let me know your thoughts.

An estimated 70 percent of all homes sold annually receive a home inspection. Still, confusion persists over what the process does, and doesn’t, involve. Here are seven common misconceptions:

1. Licensing ensures a professional home inspection. Wrong. Currently, 29 states have some form of inspector regulation—but state requirements vary widely. Verifying the inspector’s credentials, experience, and adherence to professional standards is still important, even in a state with licensing.

2. A home inspection is designed to identify problems that might be the basis for renegotiating the purchase offer. Wrong. The inspector’s service is primarily one of education, providing buyers with a better understanding of the physical condition of the home and giving them the knowledge to make smart decisions. The inspector’s observations or recommendations might help to dispel buyer anxieties and provide useful home repair and maintenance suggestions. When areas of concern or problems are identified, the inspector should play no role in fixing them or addressing them with the seller.

3. Home inspections are needed for existing homes only. Wrong. New construction is often the most in need of a thorough inspection. Many professionals offer “phase inspections” in which the property can be checked at various stages of completion.

4. Having an appraisal, code inspection, and termite or other hazard inspection eliminates the need for a separate home inspection. Wrong. While each of these inspections is valuable, these should never be used in place of a complete home inspection. Similarly, a home inspection should never take the place of other prescribed inspections. To suggest otherwise is dangerous for your client and creates serious risk for you.

5. Home inspections are for the buyer. It’s true, most inspections are conducted on buyers’ behalf during the purchase process, but prelisting inspections for sellers also can be beneficial. Prelisting inspections can identify areas of concern to be addressed before the sale and can assist in disclosure matters. The American Society of Home Inspectors recommends that a home be inspected every 10 years, regardless of whether a sale is taking place.

6. Home inspectors are too nitpicky and will identify every little problem in the home. A professional home inspection is an objective examination of the condition of the visible and accessible components of a home on the day of the inspection. Professional home inspectors don’t point out every small problem or defect in a home. Minor or cosmetic flaws, for example, should be apparent without the aid of a professional.

7. All home inspector certification and credentialing programs are equal. Some organizations for inspectors offer credentials in return for nothing more than an annual payment, while others are new or exist mainly online. When selecting a home inspector, look at the background, history, and reputation of the person’s certifying organization.

Source: American Society of Home Inspectors, Des Plaines, Ill., www.ashi.org

The Big Snow Last Weekend

We had one of the biggest snow storms last weekend we have ever had this early in the season. Most of the areas around Maggie Valley had 14 inches plus of heavy wet snow. The above picture is the side yard at my home on Utah Mountain. We were snowed in from Saturday night until Monday afternoon when the HOA plowed our road.

One of the benefactors of the snow fall was Cataloochee Ski Area. As of yesterday, they had all their trails open including the Meadow, which is a trail from the top of the mountain (accessed by the double chair lift) out of the woods into the horse pasture. The trail is wide open pasture that curves around the mountain and comes back in above the triple chair lift. This trail is only open with natural snow, so most years it is not open. Cataloochee is reporting a 45 to 73 inch base with 19 trails open for skiing and boarding. Cataloochee Tube World in Maggie Valley is also open for tubing. Tube World is down in the valley, across from the Ghost Town parking lot.

The weather forecast is for a bit of rain today and tomorrow with highs in the 50’s for most days next week. Come on up and check out the mountains in winter.

Tips for Buying your First Home

First, hire a Realtor to represent you. If your Realtor is representing the seller, his fiduciary duty is to the seller, not to you. If you hire a buyers’ agent, the buyers’ agent has a fiduciary duty to you, not to the seller. This means the agent is looking out for your best interest, not the sellers’ best interest. This could save you big bucks in a negotiation.

Second, before you even start looking for a home, find a bank or mortgage company you are comfortable with, and get pre-approved for a loan. Being pre-approved gives your offer added weight if a seller is entertaining more than one offer.

Third, when you have your pre-approval, and have selected a buyers’ agent (Realtor) to represent you, shop for that home, but have some fun with it. This may sound off-subject, but I have worked with buyers who put so much pressure on themselves to purchase that perfect home, they did not enjoy looking for their home. Also remember, no one ever finds the perfect home. Usually during the purchasing decision, you will make some compromises from your original wish list.

Fourth, when you find the home, and have a contract on your new home, don’t forget to give your home a physical exam. Hire a home inspector to inspect the home during your inspection period. Home inspectors can also do a check for radon gas, arrange a termite inspection, and other services. Your buyer’s agent can give you some names of licensed home inspectors.

Lastly, move into your first home, invite some friends, and celebrate being a new home owner.

A Sincere Wish for a Happy Thanksgiving

Instead of our normal real estate blog this week, we wanted to take this opportunity to wish a very “Happy Thanksgiving!” to all our friends and clients. We had one of our best years ever, and that would not have been possible without your support and referrals. As Realtors we live or die by our reputations. Many of our sales come from previous clients and friends as referrals. There is no better way to thank a Realtor for his or her service than a referral to one of your friends or neighbors. When we get a referral, we truly feel honored.

As we sit around the dinner table next Thursday having dinner with our friends and family, we will be thinking of you all and wishing you a very “Happy Thanksgiving.”

More on Fall Colors and Halloween

The above photo was taken on the Blue Ridge Parkway on Sunday, October 18th. Colors were brilliant in this cove below the parkway, but many areas were still green while others were past the peak, or completely gone. In other words, I had to search for good colors. Now, the colors are still fairly good here in Maggie Valley at the lower altitudes. However, it is extremely windy today, with a cool front coming in. We are expecting about 1 inch of rain total from this afternoon through tomorrow morning. I am sure this weather will blow a lot of leaves off the trees. All in all, this has been a peculiar year for leaf color. We had lots of rain this year. (We have a surplus of 24 inches of rain this year compared to normal rainfall.) Then we had extremely warm weather in October, actually the warmest October weather on record. It seems that the excess of rain, combined with a warm October gave us a leaf color show that was about 10 days later than normal.

Here at the office we gave out lots of candy to the little trick ‘r treaters last evening. Many businesses here in Maggie Valley decorated for Halloween and gave out candy. In downtown Waynesville the town blocked off Main Street and had a Halloween block party. Loads of little ones dressed in costume, as well as some adults. If you get up this way often, you will find that we look for excuses to celebrate every holiday. If there is no holiday, we make up one, or just have a craft show. Come on up, we’ll leave the open sign on for you.

Update on Fall Leaf Color in Maggie Valley

In previous posts I had guessed that we would be around full Fall color around the 20th of October. Well…. I was wrong. I don’t know if it has been the extremely warm Fall we have had so far (mid to high 80’s the first week of October), but the leaves seem to be hanging in there as green for the most part. This may be the latest Fall color I have ever seen. I am looking out the window of the office right now, and all I see on the mountains across the way are green leaves. It would appear now that full color here in Maggie Valley will be delayed to late October, if not early November.

We took a brief ride on the Blue Ridge Parkway. There is some color at the highest elevations, but not much yet. So, come on up to Maggie Valley later this month to get that Fall feeling in your bones. The weatherman said we are going to have one morning this week with temps dropping into the 30’s, and next Sunday, the 21st, he is predicting a high in the 50’s for Asheville. Hopefully with those cooler temps the leaves will get on the program and start changing!

Home Sales Prices Remain Strong

Here in Haywood County, according to the best information I can glean, home sales prices remain very strong. Our average sales price (comparing August 2017 with August 2018) has increased 12.7 percent. This brings the average price of all homes sold through our multiple listing service in Haywood County to $216,328, up from $191,890 a year ago. In September 2018 the number of homes sold actually dropped from 116 in September 2017 to 92 in September 2018. This decrease was not due to fewer buyers, but to a tightening inventory of homes for sale. This is a particular problem in the lower price ranges, up to $300,000. In some lower price ranges, buyers are finding it a challenge to find the home they want due to a shrinking inventory of homes for sale.

Tomorrow, we are beginning October. Traditionally we have a fairly large influx of buyers in October and early November, due to vacationers coming to these gorgeous mountains to see the leaves change color. This influx of buyers will undoubtedly cause our inventory of available homes for sale to shrink again. Also, the price of homes should continue to rise, particularly in the lower price ranges.

We have had an abundance of rain this year and there are lots of leaves on the trees. Hopefully this will be another gorgeous year for leaf looking. Come on up to the mountains and enjoy nature’s leaf show this October. The leaves will begin changing color in early October at the highest elevations, with color descending the mountains into the valleys around October 20th to the 25th. Keep in mind the leaf predictions are my opinions based on past year observations. (My predictions are deemed reliable, but not guaranteed.)