Minnesota Commercial Property | MN Commercial Property
April 2013

Shifting Debt to Tax Deductible-Something To Discuss With Your Tax Professional

April 22, 2013 by · Leave a Comment 

The Mortgage Interest Deduction is available to homeowners for up to $1,000,000 of acquisition debt on the combination of their first and second home. They can also deduct interest on up to an additional $100,000 of Home Equity debt.

While Acquisition Debt is used to buy, build or improve a principal residence, the Home Equity Debt can be used for any purpose. It can be used for educational or medical expenses, to purchase a personal car or boat, consolidate debts or pay off credit cards.

A homeowner with $15,000 of credit card debt at 19% and sufficient equity in their home could replace it with a home equity loan at much lower interest rate. Not only would the interest rate on the home equity loan be about 1/3 of the rate paid on the credit card, it may now be tax deductible.

If the taxpayer was in the 28% bracket, the net interest on a 6.5% loan would be 4.68% after tax benefits are considered.

Shifting personal debt to Home Equity debt can result in an interest deduction and probably, a lower interest rate. For more information see IRS Publication 936 (http://www.irs.gov/pub/irs-pdf/p936.pdf) page 10 and consult your tax professional. Your tax person can analyze your personal situation and interpret whether or not you will qualify for various deduction strategies.



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When to Sell the Temporary Rental-Twin Cities Area Accidental Landlords

April 19, 2013 by · Leave a Comment 

Some homeowners, who were not able to sell during the recession, chose to rent their homes instead. In some cases, they didn’t need to sell their home at the depressed prices and opted to rent it until the market recovered.

It’s a valid strategy but there are time restrictions that could have serious tax implications for some homeowners.

The section 121 exclusion for gain in a principal residence requires that the home is owned and used as a main home for at least two years during the five year period ending on the date of the sale. This allows a homeowner to rent their home for up to three years and still have some part of the exclusion available.

The sale of a home with a $200,000 gain that qualifies as a principal residence would result in no tax being paid by the owner. Comparably, a rental property with the same gain could have a $30,000 or higher tax liability depending on the length of ownership and tax brackets of the investor.

The housing market has dramatically improved in the last year. If you have a gain in a home that has been your principal residence and it has been rented less than three years, you might want to consider selling it while you qualify for the exclusion.

If you are considering a sale on your principal residence that has been rented, consult with your tax professional for advice on your specific situation. For additional information, see IRS Publication 523 <http://www.irs.gov/pub/irs-pdf/p523.pdf .



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Boomerang Buyers-This is the gas on the fire for the continued boom of the Twin Cities Real Estate market

April 16, 2013 by · Leave a Comment 

It’s estimated that 10% of the homes sold in 2013 will be to buyers who lost a home in the past five years. Approximately 500,000 buyers who may have thought they wouldn’t own a home anytime in the near future will be homeowners again.

It’s estimated that several million of these previous homeowners will purchase again in the next eight years. This kind of activity will contribute significantly to the housing recovery.

Some people thought that the housing crisis would cause a shift in values placed on owning a home but the boomerang buyers definitely don’t support that theory. Having a home of your own, where you can raise your family, share with your friends and feel safe and secure is still part of the American Dream.

The rising rents, increasing prices and low, low mortgage rates are also influencing buyers into the market. In many cases, it is cheaper to own that to rent.

All new buyers, including those who have experienced foreclosures or bankruptcies, must have good credit history and the ability to repay the loan. It just may not take as long to reestablish the credit as some would-be buyers might have thought. Are you curious to see if you are eligible to purchase again? Call me to discuss the options that might exist for YOU.

Read more about Bidding Wars This Spring , Spring’s Wild Card and Boomerang Buyers .



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Bunch Your Property Taxes and Save-An Idea To Think About

April 15, 2013 by · Leave a Comment 

One of the drawbacks to low mortgage rates is that the total interest and property taxes paid for the year may be lower than the standard deduction. A little planning might be able to help you at least every other year.

Most homeowners know they can deduct their qualified mortgage interest and property taxes on their Schedule A of their 1040 tax return or to take the standard deduction if it is greater.

Deductions are taken in the year that they’re actually paid. If a homeowner paid their 2012 property taxes in 2013, they would not be deductible on their 2012 tax return. Then, if the 2013 property taxes were paid in 2013, both the 2012 and 2013 taxes could be deducted on the 2013 Schedule A.

By delaying the payment of the 2012 taxes until 2013, the combination of the 2012 and 2013 taxes might exceed the 2013 standard deduction and provide a higher deduction.

Other Schedule A expenses such as charitable contributions and medical expenses may be bunched also. From a practical standpoint, since most mortgage payments are due monthly, the mortgage interest would not be bunched.

This information should be discussed with your tax advisor to see how it might apply to your individual situation. The key is you must be aware of the strategy early to be able to use it.



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Different Real estate for Sale

April 12, 2013 by · Leave a Comment 

This was an interesting story I happened to come across by accident. Did you know various people have claimed ownership of the moon? Of course, they then built a business around selling the associated real estate. Read more this at Wikipedia and then watch the video. Was PT Barnum correct? You decide. http://en.wikipedia.org/wiki/The_Man_Who_Sold_the_Moon



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Where can you get a credit report?

April 10, 2013 by · Leave a Comment 

I am often asked about where you can obtain a credit report. There are MANY places and most will have a charge associated with the report. The only one that I am aware of that is free is at http://www.annualcreditreport.com This site is actually sponsored by the three bureaus-Equifax, Transunion, and Experian. It is my understanding that the “annual credit report” free option doesn’t provide a three bureau score unless you pay a fee, but they do show how the trade lines are reporting. So, you can monitor if things are being reported correctly. I recently took a look at my own report and DID find an incorrect reporting that I have subsequently had them fix. There are other sites such as http://www.identitymonitor.citi.com/ or http://www.Myfico.com These other two options mentioned will provide a three bureau score for a charge. The “identity monitor” has a 30 day trial for $1, so that may be all you need. I am not endorsing any of these products or services and I am sure there are many others that you could investigate as well. It is very wise to review your credit annually, as you may find that your credit score has been lowered by the reporting of incorrect information. Credit scores will have a direct bearing on your ability to obtain a loan and hence purchase a home or investment property.



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Minneapolis St Paul Foreclosure Trends

April 9, 2013 by · Leave a Comment 

As a subscriber to Realty Trac, I offer a monthly newsletter that they compile with local market data. Would you like to read it? Simply visit http://www.realtytrac.com/MarketTrends/NewsLetter.aspx?guid=754f6e36-211e-40b5-93c6-2beba87b2b46 and read the report. I can data mine the MLS and create a custom search for you should you be interested in purchasing a distressed sale. The market is stronger than last year, but there are STILL opportunities. I encourage you to act sooner rather than later. I also have MANY great investor resources for you. One is the book I wrote about investing in real estate called “Reality Based Real Estate Investing”. I have analysis sheets/software to assist you in a property analysis as well. Call me and let’s get started!



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Disclaimer: This communication is provided to you for informational purposes only and should not be relied upon by you. RE/MAX Results is not a mortgage lender and so you should contact a mortgage broker or lender directly to learn more about its mortgage products and your eligibility for such products. Regarding specific blog postings, external links and any other information found on this site, neither John Mazzara nor RE/MAX Results assumes any responsibility nor guarantees the accuracy of this information and is not engaged in the practice of law nor gives legal advice. It is strongly recommended that you seek appropriate professional counsel regarding your rights as a homeowner. John Mazzara and RE/MAX Results are not associated with the government, and our service is not approved by the government or your existing lender. Even if you accept this offer and use this site and/or our services, your lender may not agree to change your loan should you decide to pursue a short sale or any other change involving your loan or loan terms and conditions. If you should decide to engage our services in marketing your home as a short sale, there will be no up front cost to you and you may cancel our listing contract at any time. · Each Office Independently Owned and Operated

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