5 Great Entertaining Features in a Home

Having a home that supports your activities makes all the difference in hosting an event which you can enjoy along with your family, friends, and guests. No matter the size of your home, introducing just a few easy elements can transform it into an entertaining haven.

Here are five key features that make a home ideal for entertaining:

  1. An Inviting Entryway

The entryway is the first impression your guests have of your home, so make it inviting and functional. No need to be over-the-top, but make sure it’s sizable enough to allow guests to enter comfortably and to remove their coats and shoes. If you have room add a lovely bench and have a coat rack readily available for guest.

  1. An Open Floor Plan

Over the past decade, an increasingly popular home trend has been an “open floor plan.” Essentially, this means an open space in the heart of your home, which creates a sense of togetherness throughout homes and make it easier to communicate. This open space gives plenty of room for guests to mingle, while not feeling closed off from any part of the party. If your house doesn’t have an open floorplan, don’t worry. Just clear out larger pieces of furniture, such as side tables, to make room for your guests.

  1. Multiple Seating areas

Entertaining is all about creating a comfortable space for guests to mingle and converse. The best entertainment environments maximize seating, creating large group and intimate seating arrangements for all types of conversations.Some guests may prefer to be in the center of all the action, while others may prefer a quieter area to catch up with friends. Having more than one space to entertain creates an atmosphere of easy interaction with a variety of choices. A living room with a grouping of couches and comfortable chairs is a perfect fit. A versatile dining area with neutral furnishings work well with all types of decorations, while extendable tables accomodate parties of all sizes.

  1. A Powder Room

While you may not notice this feature on a daily basis, a bathroom becomes noticeably important when entertaining! You can transform any half bath into a powder room by adding a small basket that holds lotion, hairspray or anything else someone may find themselves needing during a visit to your home. Powder rooms not only provide guests their own comfortable space, they’re wonderful opportunities to play around with decor by adding candles and special occasion hand towels or by using a bold wall color or artwork.

  1. Mood Lighting

Good lighting is everything when it comes to making a home feel inviting and cozy. Proper mood lighting is about making your guests feel comfortable while still being able to see each other. Play around with different types of lighting for adaptable levels of light and don’t forget to add candles for that extra coziness factor.

 

 

How 2012 Taxes Affect Home Loans

An important message from our friends at Cherry Creek Mortgage

 

Tax time is just around the corner! As you prepare to file your 2012 federal income tax return, I wanted share a few of the hot items to keep in mind; specifically when it comes to obtaining a home loan.

Until April of this year when the deadline approaches for taxes to be filed, lenders will use either 2010 and 2011 tax returns or 2011 tax returns (depending on loan type) to calculate income for your home loan. If you are currently pre-qualified, but have not yet found a home, it’s important to be aware of the items which may affect your pre-qualification once taxes are filed.

Below are a few items that can affect your home loan pre-qualification:

  • Declining Income from 2011 to 2012 – if your income has declined from 2011 to 2012, this may be a problem. Be sure to discuss with your lender.
  • Un-reimbursed Business Expenses (Form 2106) – such as uniforms, union dues, licenses or exams, travel expenses, car mileage, meals and entertainment. These will be subtracted out of your qualifying income.
  • Schedule C Filing (for those self-employed or who have a side business)  Income/Loss – this can affect you even if it’s not your primary form of income. See next week’s update when I’ll unveil the mystery behind how lenders calculate income for a self-employed borrower who files a Schedule C form on their tax returns.
  • Schedule E Real Estate – the purchase of additional properties or the conversion of a primary/secondary residence to an investment property will affect the income/loss numbers from the previous year.

Keep in mind, timing is important! Once you file your 2012 tax return, it can take the IRS 4-8 weeks to process the filing. If your home loan pre-qualification depends on the income reported on your 2012 tax return, lenders will require the return to be processed and verified by the IRS before the income can be used for qualifying.
This is most important for self-employed borrowers or those filing a Schedule C or Schedule E.
Also, if you file an extension, lenders will require a copy of the extension along with proof of any payment required at the time of the extension. If you are self-employed, lenders generally require a P&L (Profit & Loss) for the previous year (in this case 2012) and a year-to-date P&L for 2013.

I realize this topic is complex, however it is so important this time of the year. Educating our clients on how tax returns can impact their home loan pre-qualification is a key ingredient to understanding the home finance process. This way we can possibly avoid the tragic “well, you were qualified but now you’re not because of your tax filing” discussion. Knowledge is good – share it! ~Kelly

 

Mortgage Debt Relief Act Expiring

WASHINGTON — Beginning on Jan. 1, people who lose their home to foreclosure will be required to pay federal taxes on any unpaid mortgage the bank can’t recoup through an auction. The same will be true for homeowners whose loan principal is reduced by a mortgage modification, with the wiped-out loan being treated as taxable income.

The new tax obligation will hit because the Mortgage Forgiveness Debt Relief Act expires at the end of the year. The 2007 law was passed to save struggling homeowners from getting whacked twice, first by the sagging housing market and second by the Internal Revenue Service. Its expiration could push more people to remain in homes worth less than their mortgages, slowing the housing market’s recovery.

“The housing market is in its first stages of recovery, making now the worst time to take this exemption away from homeowners,” Rep. Jim McDermott (D-Wash.) told HuffPost. McDermott has introduced one of the bills geared toward extending the exemption.

“This exemption allows homeowners to write down their mortgages and refinance without incurring a hefty tax bill,” he added. “This ultimately lowers monthly mortgage payments, leaving more money in the hands of homeowners at a time when they need it most. If Congress does not act, the gains the housing market has made will be wiped away.”

The Washington Post reported on Friday that a number of former White House economic advisers and other economists consider the sagging housing market to be one of the greatest obstacles to recovery. Yet Treasury Secretary Timothy Geithner and others in the administration think there is little more they can do to help struggling homeowners, according to the Post.

Extending the tax exemption would help. The exemption, which can be as much as $2 million per household, covers individuals who negotiate a principal reduction on their existing mortgage, sell their house short (i.e., for less than the outstanding loans), or participate in a foreclosure process.

Under normal circumstances, homeowners who sold their house for less than the balance of the mortgage — and were forgiven the difference by the bank — would have to pay income tax on that windfall. Negotiating a reduction in the mortgage principal would also generate tax liability.

For example, an individual who owed a $400,000 mortgage might decide to sell the house, now worth $300,000 on the local market. If he sold the property short and the bank forgave the extra $100,000 — an arrangement that benefits the lender because it recoups more of the original loan than would a foreclosure — the IRS would consider that amount as income, on which the borrower could owe thousands of dollars in taxes.

“This has the effect of pulling people up with one hand, and hitting them in the face and knocking them over the cliff with the other,” Sen. Jeff Merkley (D-Ore.) told reporter David Dayen back in August.

An extension of the tax exemption would appear to be a common-sense means to help stabilize the housing market, but the political turmoil around the fiscal-cliff negotiations means common sense may not win out.

“The challenge is that a single-issue tax provision of this type — of any type, frankly — just simply doesn’t move on its own,” said Linda Goold, tax counsel for the National Association of Realtors. “It will be part of a package or it will not move. … It is really tied to the future of what happens with the big deal and then whatever they come up with after that relating to the provisions that either have or will be expiring.”

For more information, please see the IRS website with detailed information about the act.

2009-2010 Home Buyers Tax Credit

Homebuyer Tax Credit Extended and Expanded!

Last week, a new Homebuyers Tax Credit bill was signed into law. The bill extends the tax credit for first-time homebuyers (FTHBs), as well as opens it up to current homeowners who are looking to buy. And even if you aren’t looking to purchase – pass on this article to anyone you think might be in the market to do so. This is information that might benefit them greatly, and I’ll be happy to be of service to them.

Here is a brief overview of the Homebuyers Tax Credit – and its benefits – based on the new bill.

Tax Credit for First-Time Homebuyers

FTHBs (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Tax Credit for Current Homeowners

The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines?

In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010. Those in the military do have some special extensions on the timelines available.

What’s So Great About a “Tax Credit”?

The benefit of a tax credit is that it’s a dollar-for-dollar benefit, rather than a “tax deduction”, or reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a first-time homebuyer who qualified for the entire benefit were to owe $8,000 in income taxes and would qualify for a tax credit of $8,000, she would owe nothing.

Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little or no income tax liability. For example, if a first-time homebuyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she can still receive a check for the remaining $4,000!

Higher Income Caps

The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible.

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

Maximum Purchase Price

Qualifying buyers may purchase a property with a maximum sales price of $800,000.