As summer approaches, a number of natural disasters become more prevalent and threaten thousands of Americans throughout the country. From hurricanes that impact the Atlantic Coast and Gulf Coast, to wild fires on the West Coast and heat waves throughout the country, the summer season is closely associated with devastating events caused by nature. Not to mention, hurricanes can often be accompanied by heavy rain and dangerous thunderstorms that produce floods, hail, landslides, mud slides and tornadoes which can affect areas located hundreds of miles inland and farther.
Natural disasters can be catastrophic and can happen at any moment without notice, so it is crucial to understand what precautions you can take to protect your home. Regardless of where you choose to weather the storm, executing the following preparation tips will help secure your home and hopefully, reduce the damage incurred to your property.
- Hurricanes and Tornadoes: Although many associate hurricanes with coastal cities and tornadoes with “tornado alley”, hurricanes can cause catastrophic damage beyond the coastline and tornadoes do not discriminate against their area of impact.
- Both hurricanes and tornadoes are characterized by damaging wind speeds, so it is important to secure your home. Fortify garage doors; add hurricane clips or straps to the roof and attach it to wall studs to help maintain structure; bolt walls securely to the foundation; protect windows with storm shutters, install double pane windows and replace old roofs with impact resistant ones to protect against hail; etc.
- Schedule a home inspection to check your home and roof. Make any recommended repairs.
- Install a safe room in your home or basement that can withstand extreme winds and debris.
- Secure large appliances with flexible cable, braided wire or metal strapping, as well as top heavy furniture with L brackets, corner brackets or aluminum molding.
- If time permits, gather and store items that pose more risk of destruction, such as tools, lawn furniture, trash cans, recreational equipment, etc.
- Trim trees and shrubs around your home to ensure they are more wind resistant.
- Clear loose and clogged rain gutters and downspouts.
- Shut off electricity, water, and utility switches if time permits before tornado.
- Store hazardous materials within a sturdy, locked cabinet and in a well-ventilated area.
- Move heavy or large items to lower shelves to reduce their chances of being projected.
- Flooding: Flooding is the most common natural disaster throughout the country. You should always have a plan mapped out with a route to transport your family and pets to higher ground in the case of a flood, and equip your home with the following accommodations to protect your home and family in case time does not permit evacuation:
- Seal basement walls with water proof compounds.
- Construct flood walls around your home to restrict water flow to your home.
- Purchase a battery operated sump pump to remove standing water, and keep a back up handy just in case.
- Elevate electrical components, water heater, washer, dryer, and furnace at least 12 inches above assumed flood levels.
- If building a new home in a flood zone, make sure it is elevated and reinforced.
- Install backflow valves or plugs on drains, toilets, and other sewer connections to prevent contaminated water from entering your home.
- Fill bathtubs, sinks, and large containers with clean water, and make sure that there is enough for the entire family to drink, flush toilets, and clean.
- Identify and secure any items that pose a potential threat, including fuel tanks, outdoor equipment or possessions, etc.
- In the case of fallen power lines or evacuation, make sure to turn off all utilities and electrical power at the main power switch, close the main gas valve, and disconnect appliances and the furnace to prevent electric shock in the presence of standing water.
- Wild Fires: Wild fires often start in forests, remote hills, mountain areas, or other woodland settings, but they can happen in any vulnerable drought area and spread rapidly. If you live in an area that is more conducive to wild fires, you can help spare your home with the following tips:
- Avoid using combustible material on the roof or other part of the home.
- Build your home with fire-resistant material, such as stucco or fiber cement. Any wood should be fire-resistant treated.
- Around your home’s perimeter, plant fire-resistant shrubs and other plants that help contain rather than fuel the fire.
- Create a 30 feet to 100 feet safety zone around your home, and move lawn furnishings and other items that can burn easily (dead limbs, leaves, twigs, flammable vegetation, vines, etc) outside of this “defensive space”.
- Invest in a hose that is long enough to reach around the entire house, and keep a ladder that will reach the roof.
- Maintain an adequate outside water source, like a pond, pool, or water well.
- Install a dual-sensor smoke alarm on each level of your home, test them monthly and replace batteries once a year.
- Place a 1/8-inch mesh screen beneath the home, porches, decks, floors, screen openings to floors, roof, and attic.
- Regularly clean roof and gutters, and mow the lawn.
- Inspect chimneys twice a year, and keep dampers in good condition. Equip chimneys and stove pipes with a spark arrester.
- Install freeze-proof exterior water outlets on at least two sides of the home and near other structures on the property.
- Clear space around propane and barbecue pits, and place a screen over the grill.
- Store gas, oil and flammable items in approved safety cans, and place them in a safe location away from the base of buildings.
- Stack firewood at least 100 feet away and uphill from the home.
- In a warning, keep all windows and doors shut, turn off the gas, wet the roof, and evacuate as instructed.
- Heat Waves: Induced by stagnant atmosphere conditions and poor air quality, heat waves are extended periods of extreme heat. This can be dangerous and even life threatening, as the body must work extra hard to maintain normal body temperatures. As the hot summer months approach, it is imperative that your home possesses the necessary accommodations for your family.
- Make sure that any window AC units are installed snugly and insulated.
- Check AC ducts for proper insulation.
- Install temporary window reflectors that reflect heat back outside. Try cardboard with aluminum foil wrapped around it.
- Weather strip doors and sills to hold air inside.
- Cover windows that receive morning or afternoon sun with drapes, shades, awnings or louvers.
- Keep storm windows up all year.
- Limit the use of the stove or oven, especially in the warmer periods of the day.
- Stock your refrigerator with plenty of drinking water and less sugar-filled drinks that dehydrate you.
- Cool off your body with cold showers if there is an AC shortage.
- Landslides: Most landslides are caused by natural forces or events, like heavy rain and snowmelt, earthquakes, volcanic eruptions, and areas burned by forest and brush fires. These disasters can threaten almost every state, so it is important to maintain your home accordingly.
- Contact a private consulting company that specializes in earth movement for opinions and advice on landslide problems and on corrective measures you can take. Taking steps without consulting a professional could make your situation worse.
- Plant ground cover on slopes and building retaining walls.
- Build channels or deflection walls to direct the flow around your home.
- Avoid building near steep slopes, close to mountain edges, near drainage ways or along natural erosion valleys.
- Get a ground assessment of your property.
- Install flexible pipe fittings to avoid gas or water leaks.
- Earthquakes: Earthquakes are largely unpredictable and do not limit their activity to the summer months, as they occur when tectonic plates in the earth shift, break and slide together. While they are often associated with the West Coast, 45 states are actually at risk.
- Secure heavy items to the wall or floor, including water heaters and large appliances.
- Inspect your home for cracks in the foundation and defective wiring, and make repairs as quickly as possible.
- Bolt your home to the foundation.
- Fasten shelves securely to walls, and store breakable items, china, glass, and bottled foods in low, closed cabinets with latches or locks.
- Brace overhead light fixtures.
- Install flexible pipe fittings to avoid gas or water leaks.
- Install an automatic gas shut-off valve that is triggered by strong vibrations.
- Store weed killers, pesticides and flammable products in closed cabinets with latches.
- In an earthquake warning, turn off gas and electricity to prevent explosion, invest in a supply of food, water and supplies for a minimum of three days, make sure your important documents are stored in a fire proof safe, and lock doors and windows.
While your home can be impacted by other catastrophic events caused by nature, the combination of those listed affect millions of Americans every year. Each emergency is unique, and it is important to recognize and acknowledge the appropriate actions to take for each threat in order to prepare your home accordingly. If you need more preparations tips, visit http://www.ready.gov/.
A representation of achievement and a symbol of the American Dream, purchasing a home is considered one of the largest financial decisions and obligations one will encounter in their lives. However, eager to move into their dream home and begin the next chapter of life, even seasoned buyers can let the excitement and chaos cloud their judgment. If crucial components are not executed properly or neglected altogether, you invite a number of complications to the transaction that are not only detrimental to the outcome, but can also negatively impact you for years to come.
Avoid these common mistakes to facilitate the process, protect your investment, eliminate unnecessary stress, and secure a favorable outcome.
Neglecting to Hire a Professional:
Buying a home is a complex and tedious process, and a major financial investment, so it is crucial to work with the appropriate professionals. Opting to forgo a Realtor, Mortgage Professional, Licensed Home Inspectors, and Licensed Title Agencies, etc, can result in higher costs and unnecessary worry. A Realtor connects you to the right professionals and guides you through the process so that you can execute the proper steps and enjoy the most favorable outcome.
Starting Without a Plan:
When buying a home, it is imperative that the entire process is a thought out plan so that you can remain organized and in control. Know the type of home you are looking for, the area(s) you are interested in living, who is going to help you, and what steps you will need to execute. Without a realistic idea of these essential components, you may encounter a number of difficulties.
Not Getting Pre-Approved:
Obtaining pre approval should be a top priority when starting the home buying process. Buyers need to know where their credit stands and how much they can afford. Also, being pre approved will strengthen your offer when you submit one, and it will secure your interest rate to protect yourself from increasing rates.
Expecting to Find a Home with Everything on Your Wish List:
There will most likely be some non-negotiable features that you consider essential elements in your new home. However, it is difficult to find a home that encompasses every single component desired. Make a list that ranks the most important qualities to the least important, and keep your options open.
Unfamiliarity with the Neighborhood or Area:
Location is everything in real estate! Buyers need to search for homes in an area that possesses the best location and amenities that accommodate their family’s lifestyle. Then, understand the neighborhood you are considering moving into. Consider Home Owners Associations, dues, and restrictions. Inquire about the neighborhood’s amenities and property taxes, and evaluate its proximity to schools and activities. Visit neighborhoods during various times during the day and week to get an accurate portrayal of it prior to narrowing down your choices.
Limiting Your Search Options:
While you can find a lot of information about a home online through various websites, the information can be limited or expired. Take advantage of every platform available to you so you don’t miss out. If you use a Realtor, you will have access to the MLS, and can possibly benefit from their industry connections.
Exceeding Your Budget:
You need to have a realistic concept of your budget and what you can afford. Don’t convince or allow yourself to exceed that budget. Again, working with the right professionals will help you avoid this mistake.
Failing to Evaluate Hidden Costs and the Importance of a Home Warranty:
Homes require a certain amount of maintenance and repair work, which can often be costly and stressful. Factor in these unexpected occurrences, and prepare by saving extra money to accommodate. Make sure to buy a home with a warranty to avoid some costly repairs, as well. If it doesn’t include a warranty, your Realtor can request that the seller provides one during negotiation. In addition, factor in other costs, including property taxes, HOA dues, and other applicable fees that accompany the neighborhood.
Not Obtaining a Comparative Market Analysis or Considering the Resale Value of the Home:
Buyers need to have an idea the property’s market value prior to submitting an offer to avoid over paying. Obtaining a Comparative Market Analysis will show comparable properties in the area, their sale price, and recent price trends. If you pay too much, you are likely to lose on the investment when it is time to sell. Purchasing a home for the right price and employing the right professionals will help protect you and your investment.
Disregarding the Importance of a Home Inspection:
Avoid major costs down the road by obtaining a home inspection by a licensed, reputable provider. Any recommended repairs should be completed by a licensed contractor. Then, the home should be re-inspected before closing.
Purchasing an Expensive Item Prior to Closing:
Credit requirements for loans have become strict. If you need to buy furniture or appliances for your home, a new car, or other costly items, wait until after the house closes, as financing these expensive items can affect the closing. Work with a credible mortgage broker to avoid jeopardizing the closing.
Home buyers who avoid making these mistakes will undoubtedly reduce the risk of complications or financial strain down the road; however, buying a home is still an overwhelming time. It is imperative that buyers find a professional real estate agent who will guide them through the process, facilitate every facet of the transaction, and provide assurance that each step is executed properly, efficiently, and in the client’s best interest!
As April approaches, Americans across the country are consulting with their accountants and claiming their deductions to ensure they take advantage of the various tax benefits that may be availalbe. Whether writing off a business expense, calculating charity contributions, or deducting your mortgage interest rates, filing taxes can be an overwhelming, stressful, tedious process to those who are looking to maximize their return and reduce what they owe.
Homeowners receive plenty of advantages during tax season when claiming deductions. In fact, the U. S. Tax Code is designed to offer incentives to homeowners. Whether your home is paid in full or financed with a mortgage, there are several tax-saving opportunities that may accompany home ownership. If any of the following tax perks are applicable to your situation, we recommend that you address your inquiries to an accountant or tax professional who can determine your tax liability based on certain qualifications and regulations.
1. Mortgage Interest Rates: Deducting your mortgage interest is often the biggest tax break offered to homeowners, especially early in the home’s loan.
- The standard mortgage amortization schedule is front-loaded with mortgage interests, which means annual interest payments on a 30-year loan term exceed annual principal payments until the loan’s tenth year. In other words, your mortgage payments during this time are primarily on the mortgage interest, which can be deducted.
- Interest from second mortgages, refinances, home equity loans, and home equity lines of credit may also be tax deductible. However, there are restrictions if the mortgage debt extends beyond the property’s fair market value. Generally, equity debt of $100,000 or less may be fully deductible.
- Interest from a second home, boat or RV may also be considered deductible. As long as the property has cooking, sleeping and bathroom facilities, even if you rent it out as a second property, there may be tax perks!
- Consult with a tax professional or accountant to examine your personal situation and evaluate your options.
2. Discount Points: This is a one-time fee that occurs at closing in order to allow the borrower access to mortgage rates that are below the current market rates.
- Discount points are treated as “prepaid mortgage interest” by the IRS, which may make them eligible for tax deductions.
- As long as discount points are paid in conjunction with a home purchase, the cost may be deducted in full (dollar-for-dollar) in the year they were paid.
- If you are refinancing your home or taking out a line of credit, discount points paid will be amortized over the life of the loan. Therefore, any eligible deductions may depend on the amortization schedule, rather than deductible in full the year it was paid. For instance, the cost of one discount point on a 30-year loan may be deducted at 1/30 of its value in a calendar year.
- Verify that your loan meets the qualification requirements and ensure that you are deducting the right amount by consulting with a tax advisor or accountant.
3. Real Estate Taxes: As a homeowner, you pay annual real estate taxes to local and state entities.
- Any taxes paid to local or state entities may be deducted in the year which they are paid.
- To deduct your real estate taxes, file your annual statement with your federal tax return.
- Speak with an accountant or tax advisor to execute the steps properly and verify your liability.
4. Home Improvements: Various types of home improvements may be considered tax deductible.
- If you or a family member living in your home has a medical issue that requires modifications to your home, the costs of those modifications may be up to 100% tax deductible.
- Any repairs and improvements made for aesthetic purposes may not be tax deductible. However, keep your receipts, as these improvements may be deducted from the profit when you sell your home!
- Of course, should you need any clarification regarding your situation, consult with a tax professional or accountant!
5. Home Offices: If you work from home, you may be allowed to deduct the expense of maintaining a qualified home office.
- These tax benefits may include renovations to the room, the addition of a separate telephone line and the cost of heating, cooling, and lighting the room.
- There are special requirements of what constitutes a “home office” for tax purposes. To avoid increasing your risk of being audited, make sure you address your home office with your accountant or tax professional to understand the benefits and liabilities!
6. Selling Costs: When you sell your home, you may be allotted several possible tax deductions that include:
- Agent commission, title insurance, legal fees, any advertising costs incurred, administrative costs, escrow fees, and inspection fees.
7. More Tax Benefits When Selling Your Home: Since 1997, $250,000 in sales gain (or $500,000 if married, filing jointly) may be considered tax-free IF:
- The owner owned the property for at least two years and lived in it for two out of the last five years prior to selling.
- If the home was sold before meeting ownership and residency requirements, tax must be paid on any profit, unless the move is due to health, employment or unforeseen circumstances.
- Ask your accountant or tax professional to be sure you are meeting these requirements.
8. Home Improvement Deductions for Sellers: When you sell your home, you may lessen the tax burden on profits that exceed $250,000 (or $500,000 if married, filing jointly) by deducting any home improvement costs from the gain.
- Deduct the improvement costs from the gain (gain = home’s selling price – selling costs + tax basis).
- Your gain – the home improvement costs will determine your tax liability from the profit of the sell.
- Remember to seek counsel from your accountant or tax advisor, as these rules and regulations can be tricky!
9. Moving Costs: If you are moving because of a new job, you may be eligible to deduct your moving costs if your situation meets several IRS requirements.
- One requirement is that your new job must be 50 miles farther from your old home than your previous job was.
- If you meet all IRS requirements, you may be allowed to deduct travel and transportation costs, lodging expenses, storage fees, and other expenses related to your move.
- See your accountant or tax professional for expert advice in regards to your individual situation and requirements.
10. Non Deductible Expenses: To avoid confusion, there might be a few expenses that may not be considered tax deductible. Prior to meeting with your accountant or tax professional, understand that the following expenses may not be eligible to receive tax deductions:
- Insurance, including private mortgage insurance, may not be deductible unless you meet the requirements under a special PMI Law. This is because you are paying this insurance as a result of not fronting enough money for a down payment.
- Property hazard insurance premiums may be non-deductible, even though coverage is required as part of the home loan and included in your monthly payment.
- HOA dues.
- Additional principal payments.
- Home depreciation.
- Closing costs.
- Local assessments that increase neighborhood value, such as sidewalks and street lamps.
- Miscellaneous home repairs (see accountant or tax advisor for further details).
It is important to note that Connect Realty provides the information in this article for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation.
In addition, this article is not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.