Monday, February 25, 2013

Eight Tax Breaks for Homeowners


Taxes are due April 15, which means it’s time to start gathering your receipts and bank statements.

But before you sit down with your accountant, it’s important for you to know that merely owning a home could mean you qualify for tax breaks. In most cases, you need to itemize your taxes in order to take advantage of these deductions. Yes, it makes the tax-filing process seem impenetrable, but the benefits may outweigh the complications.
Here are a few of the tax breaks you’ll want to investigate:

Mortgage interest paid at settlement

Take a look at your closing statement; one item that’s generally listed there is home mortgage interest. On a mortgage of up to $1 million, you can deduct the interest that you pay at settlement if you itemize your deductions on Schedule A (Form 1040). This amount should be included in the mortgage interest statement provided by your lender.

Points

Did you pay points in order to obtain your home mortgage? These fees are included on the income tax deductions list and can be deducted as long as they are associated with the purchase of a home. If you refinanced your home, these points are still deductible, but it must be done over the life of the mortgage.

Property taxes

As long as they are based on the assessed value of the real property, you can deduct your state and local property taxes. However, if your money is being held in escrow for the purpose of paying property taxes, you cannot claim this deduction until the money is actually taken out of escrow and paid. If you do this, check your Form 1098 for the amount you may deduct. Be aware that if you receive a partial refund of your property tax, the amount of the deduction you can claim will be reduced.

Selling costs

If you sold a home in the past year, you may be able to reduce your income tax by the amount of your selling costs. These costs can include things such as repairs, title insurance, advertising expenses and broker’s fees. The IRS only allows the deduction of repair costs associated with selling if the repairs were made within 90 days of the sale. It’s also crucial that the repairs were made with the intent of improving your home’s marketability. Selling costs are deducted from your gain on the sale.

Home office

If you use a portion of your home exclusively for the purpose of an office for your small business, you may be able to claim a deduction on your taxes for costs related to insurance, repairs and depreciation. You may only claim this deduction if the space within your home is used exclusively and regularly as either your principal place of business or a place where you meet and deal with customers or patients. You may also be able to take advantage of this deduction if a portion of your home routinely is used for storing items (product samples, inventory, etc.) used in your business.
In tax year 2010 (the most recent year for which figures are available) nearly 3.4 million taxpayers claimed the home office deduction.

Mortgage insurance premiums

You may be able to deduct the premiums paid for private mortgage insurance for your principal residence and for a non-rental second home.
The deduction begins to phase out once your adjusted gross income reaches $100,000 ($50,000 for married filing separately). In general, you can deduct the premiums paid for the current tax year only. A qualified tax adviser can provide information about rules for mortgage insurance provided by the Federal Housing Administration, Department of Veterans Affairs and Rural Housing Service.

Home improvement loan interest

If you’ve taken out a loan to make improvements on your home, you may be able to deduct the interest on this loan. Qualifying loans are those taken out to add “capital improvements” to your home, meaning the improvement must increase your home’s value, adapt it to new uses or extend its life. New carpeting or painting are not considered capital improvements, while adding a garage, installing a water heater or building a deck are all examples of capital improvements.

Construction loan interest

If you take out a construction loan to build a home, you may qualify to deduct the interest. The IRS only allows a deduction for mortgage interest if the loan relates to a “qualified” home, which means it must either be your principal residence or a vacation home that you will use for personal purposes. You can only use this deduction for the first 24 months of the loan, even if the actual construction takes longer.
Tax codes can be confusing. You may want to consult the IRS website for information concerning deductions and credits. Additionally, consider meeting with a professional to ensure you’re not missing any deductions for which you’re eligible.

Friday, February 22, 2013

Housing Market Report

Investor activity reignited in Sydney, Brisbane and Perth through 2012 and is set to continue in 2013. Low interest rates for both mortgages and deposits will drive increased interest rates in bricks and mortar investment in these cities, accentuated by tight rental markets generating high occupancy rates, relatively high yields and emerging capital growth.

The roller coaster ride for first home buyers is set to continue in 2013 with subdued activity levels expected compared to 2012. Changes to state government first home buyer incentive schemes created a surge in activity at various stages in 2012 as demand was drawn forward from this group. As a consequence first home buyer activity in Victoria, Queensland and New South Wales tapered off towards the end of 2012 and is set to remain quiet early in 2013. Increased market confidence, low interest rates, a solid economic performance and high rents will however see first home buyer activity rise through 2013, albeit from lower rates.

Prestige housing markets remained subdued in 2012, although the Melbourne market bucked the national trend recording healthy buying activity from a low base. Buyer activity in prestige markets should gradually improve through 2013, particularly if the recent solid growth in the local stock market is sustained. The Sydney prestige market has been dormant over recent years and began to show some early signs of life late in 2012. Buyers are set to recognise the value opportunities that Sydney's prestige housing markets are currently offering, particularly in the Northern Beaches.

Tuesday, February 5, 2013

RBA KEEPS RATES ON HOLD


At its first board meeting for 2013, the Reserve Bank has decided to leave the official cash rate on hold.
Earlier today, the board judged that it was prudent to take a wait and see approach to rates, leaving the cash rate stable at three per cent.
Speaking about the Reserve Bank’s decision, RP Data’s national research director Tim Lawless said the RBA was “reasonable satisfied” with how the housing market has played out since it embarked on the rate cutting cycle back in November 2011.
“Since that time dwelling values across the combined capital cities of Australia have increased by 0.8 per cent, and values are up 3.1 per cent since bottoming out at the end of May last year,” he said.
“Most other indicators are also showing some subtle improvements, albeit from a low base.  
“Consumer confidence has shown some improvement, commodity prices are once again on the rise, and share markets have shown some consistent gains as well.  
“The big wild card remains the labour market; how high will unemployment go and at what level will the RBA react with a further cut to the cash rate.”
LJ Hooker deputy chairman, L Janusz Hooker, says mortgage holders should receive some extra relief during the coming months, even with a more buoyant housing market during January.
He predicts cuts of around 50 basis points during the first half of this year, but says it was premature to make a move in February.
"Interest rates here are at three per cent and, while at historic lows, most of the developed world has rates below one per cent, so there is plenty of room to move,’’ Mr Hooker says.
"The RBA are going to have to start making cuts sooner rather than later if they want to see results in the second half of the year.’’

Source: http://www.rebonline.com.au

The 10 reason why Australian property prices will rise 5% to 10% in 2013






Leading Sydney estate agent ‎John McGrath has listed on his Facebook page the 10 reasons why he believes the residential market will be 5% to 10% higher by the end of 2013.

1. The Australian share market is recovering quickly, and this will generate (and replenish) great wealth for many Australians.

2. China is on the surge with an 8% anticipated growth rate this year (and beyond), and we will benefit more than any other country.

3. We have record low interest rates, with existing and new borrowers reaping the benefits making property more affordable.

4. We have a nationwide housing shortage and will for some time, so demand will outstrip supply in an improving sellers market.

5. Cash and term deposits are becoming far less attractive, and many people will see the time is right to switch from cash into growth assets.

6. Rents will continue to climb in the face of the housing shortage providing investors increasing yields over the next few years.

7. Self-managed super funds (SMSF) investing directly in residential property is the biggest change I’ve seen in the last 12 months

8. Luxury homes are back by 20%-40% in value and will provide great buying for the recovering professional market buyers (read Palm Beach weekenders are about to become mega popular again!).

9. Most experts are tipping a landslide change in federal government, which will give great confidence to the business community.

10. As all the above happens in our connected community we’ll see a surge of confidence and FOMO (fear of missing out), which will stimulate continued investment over the next three- to five-year cycle



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