There is a little-known provision in the tax code that allows homeowners to rent their principal residence or second home for up to 14 days a year without having to recognize the income. In this situation, the taxpayer does not deduct the rental expenses associated with the income. There is no restriction on how much you earn. If your first or second home is in a desirable area where people are looking for short-term rentals, it could provide a windfall to the homeowner. In cities where any big sports championships are played, there could be a market for a temporary rental of a home. Events like PGA tournaments, college basketball tournaments, Bowl games, NFL playoffs and others can create a demand for this type of rental. For instance, there are people in Augusta, Georgia who rent their homes during the Master's Golf Tournament each year. There are not a lot of hotel rooms in the area relative to the number of people who usually attend in non-pandemic years and the homes can … Continue reading...
Before you pay cash for a home
Before you pay cash for a home, ask yourself if there is a possibility, at some point in the future, you might put a mortgage on the home and would want to deduct the mortgage interest on your federal tax return. Current federal tax law allows homeowners to deduct the interest on up to $750,000 in acquisition debt used to buy, build or improve a property. When a person pays cash for a home, the acquisition debt is zero. The only way to increase the acquisition debt is to make and finance the improvements to the home. As with many IRS regulations, there are exceptions to this rule. If a mortgage is secured on the first or second home within 90 days of the purchase closing, the debt is considered acquisition debt. The interest on the funds used to purchase the home can be deducted on up to $750,000 of the mortgage balance. Assuming a borrower has good credit, the ability to repay the loan and the home justifies the loan, lenders are willing to make mortgages for homeowners. It … Continue reading...
Event Calendar: April 2021
April 1st: Grand Teton National Park: Craig Thomas Discovery and Visit Center Opens Tasha & the Goodfellows @ The Silver Dollar Showroom Dave Nudo @ Million Dollar Cowboy Bar April 2nd: Thirsty Thursday @ Stillwest Brewery & Grill The Runaway Grooms @ The Silver Dollar Showroom Dave Nudo @ Million Dollar Cowboy Bar April 3rd The Runaway Grooms @ The Silver Dollar Showroom Dave Nudo @ Million Dollar Cowboy Bar April 6th Happy Hour @ Hatch Tacqueria & Tequilas 4 PM - 5 PM April 7th Wing Wednesday @ Hayden's Post April 8th Ashton Lee Trio @ Million Dollar Cowboy Bar April 9th Cook-N-Cowboys @ The Silver Dollar Showroom Ashton Lee Trio @ Million Dollar Cowboy Bar April 10th Karen Oatey Pole, Pedal, Paddle Race: Jackson Hole Ski Club Cook-N-Cowboys @ The Silver Dollar Showroom Ashton Lee Trio @ Million Dollar Cowboy Bar Closing Weekend @ Jackson Hole Mountain Resort April 11th Closing Day @ Targhee Resort April 13th One Ton Pig @ The Silver … Continue reading...
Homeowner Equity and Wealth Accumulation
National homeowner equity grew in the fourth quarter of 2020 by $1.5 Trillion or 16.2% year-over-year based on a CoreLogic analysis. The study was done on the six out of ten homeowners who have mortgages on their home. The fourth quarter of 2020 also saw the number of mortgaged residential homes with negative equity decrease by 8% from the third quarter. Compared to the same quarter in 2019, negative equity decreased by 21%. Equity is defined as the value of the home less the mortgage owed. Negative equity means that the homeowner's debt is more than the value of the home. Appreciation is the dynamic that is moving homeowner's equity to the positive position. On a national basis, according to National Association of REALTORS®, annual price growth for the last ten years has been 6.4%. In the last five years, it has grown at 7.3% annually. According to the CoreLogic Home Price Index, home prices in December 2020 were up 9.2% from the year before. Frank Nothaft, Chief … Continue reading...
Spring Cleaning in 5 Easy Steps
Spring has arrived making it the perfect time to organize and clean your home. Although it can seem like a daunting task there are some simple steps you can take to make spring cleaning an easier process. Start small. Pick a room, a closet, or even a drawer to begin. Getting started is always the hardest part. Make a keep, discard and donate pile. Making separate piles while you clean makes finishing the job so much easier. Work top to bottom, left to right. When cleaning or organizing starting from the top of an area and work down from left to right. This creates a system so no area goes untouched. Wash everything from drapes to sheets and even throw covers for pillows. This makes sure all the soft materials in your home get a revamp. Put away winter gear and get out spring and summer items. Get out the tables and chairs, barbeques, and décor and get your home ready for some warm and sunny weather. … Continue reading...
Event Calendar: March 2021
Here are some fun events happening in and around Teton County this March! March 10: Wing Wednesday at Hayden’s Post Yonder Salmon Dusters - Bluegrass @ The Center for the Arts Theater March 10-13: Paul Cleckler @ Million Dollar Cowboy Bar March 11: Yonder Salmon Dusters - Bluegrass @ The Center for the Arts Theater Doc Powell @ Silver Dollar Showroom March 11-13: Jackson Hole Playhouse presents “The Love Shack” March 12: Chris Thompson & Alex Johnstone @ Silver Dollar Showroom March 12-13: Jackson Hole Moose Hockey Games @ Snow King Sports & Events Center March 12-14: Jackson Hole Downhill @ Teton Village March 13: Jackson Hole Food and Wine’s 5th Annual Winter Fest - Taste of Teton Village To-Go @ Teton Village Chris Thompson & Alex Johnstone @ Silver Dollar Showroom March 14: Aaron Davis @ Stillwest Brewery & Grill March 16: One Ton Pig @ Silver Dollar Showroom March … Continue reading...
Skip the Starter Home
For generations, people have begun their homeowner experience with a "starter" home. Part of the logic may be that by beginning with a smaller home, they can learn what it takes to run the home and discover some of the unexpected costs that come along with it. A slightly longer view into the future could suggest a different strategy. As of March 4, 2021, the average 30-year mortgage rate according to Freddie Mac was 3.02%; up .37% from the week of January 7th this year. At the same time, in 2020, the rate was 3.29% and in 2019, it was 4.41%. That is a difference of 28 and 139 basis points. The principal and interest payment on a $300,000 mortgage would have been $236 higher two-years ago and $44 more one-year ago. Today's low mortgage rates are saving buyers lots of interest especially when you factor in the median tenure for sellers is approximately ten years. Even though prices have increased over the last two years, some people may be able to afford more now with the lower … Continue reading...
Your Refund Could Open the Door
One of the silver linings to filing your income tax return is finding out that you are going to receive a refund that could literally open the door to owning a home. If you happen to be one of these fortunate taxpayers, your next decision is what to do with it. With the average tax refund near $3,000, it could be the ticket to buying a home sooner rather than later. Regardless of the size of your refund, it can be used toward the down payment or closing costs of the home. Most people think it takes 10% or more down payment to purchase a home, but actually, it is much less because of several low down payment mortgages . There are VA and USDA mortgages that allow for no down payment for qualified buyers. FHA has a 3.5% down payment program and FNMA and Freddie Mac have 3% down payment mortgages for qualified creditors as well as 5% down programs. Closing costs for originating new mortgages can easily range from two to three percent of the purchase price but most lenders will … Continue reading...
Transferring Property Prior to Death
Sometimes, as people approach the inevitable, they start trying to get their things "in order". They may even have a will, but they decide to transfer title to real estate prior to their death which could be an unnecessary expense for the would-be heir. Generally, when property is passed through direction of a will, the heir will receive a stepped-up basis which means that the fair market value of the property at the time of death becomes the cost basis for the heir. If the property were sold for that fair market value, there would be no gain and no capital gains tax due. However, if the property is gifted prior to death of the donor, along with the title to the property comes the cost basis of the property. The transfer of title does not trigger the capital gains tax but when the property is sold, the gain is calculated by subtracting the basis from the sales price leaving a capital gain subject to tax. In other words, the person receiving the gift does not get the stepped-up … Continue reading...
Is It Time to Cancel the Mortgage Insurance?
Mortgage insurance benefits the lender if a borrower with less than a 20% down payment defaults on their loan. Most conventional mortgages greater than 80% and all FHA loans require the borrower to have this coverage. Private mortgage insurance on conventional loans can range from 0.5% to 2.25% based on the loan-to-value and the credit worthiness of the borrower. A $350,000 mortgage would have a monthly mortgage insurance premium of $146 a month at the low-end of the scale and over $600 on the high-end. You may request that your mortgage servicer cancel the PMI when the principal balance reaches 80% of the original value at the time the loan was made. You should have received a PMI disclosure form when you signed the mortgage documents stating the date. If you have made additional principal contributions, it will accelerate the date. Other criteria considered to cancel the PMI on your loan is: The request must be in writing. You must be current on your payments with a … Continue reading...