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4 Home-Related Tax Deductions You Shouldn’t Overlook

Tax season is upon us, and if you’re a homeowner, you can claim some sizable deductions that may help reduce the amount you’ll owe.

Mortgage interest, property taxes and mortgage insurance premiums are just some of the deductions you can take if you have a mortgage on your home. Together, they can add up to thousands of dollars in savings on your tax bill.

Mortgage interest

Home mortgages are structured so that a huge chunk of each payment you make in the initial years of ownership goes toward paying down the interest on your loan and only a little goes toward the principal. The good news is that you can deduct the interest payments on your primary (and sometimes a secondary) residence — up to $1 million (or $500,000 if you’re married and filing separately).

Most homeowners count this as one of the largest deductions on their tax bill each year. It applies to home purchases and mortgage refinances, home equity lines of credit and home equity loans, sometimes called second mortgages. The deductible interest on home equity debt — regardless of how you used the money you pulled out — applies to loans of $100,000 or less throughout the year (or $50,000 if you are married and filing separately).
This deduction, filed with IRS Form 1098, can add up to thousands of dollars for most homeowners. The benefit: It reduces your taxable income so you don’t owe as much come tax time.

The key to taking advantage of the mortgage interest deduction is itemizing your deductions in meticulous detail, Poulos says. Your lender will send you a statement each year to let you know how much interest you paid; that will help you figure out if it’s worth your while to itemize.

Points

If you bought a home in 2015, there’s another deduction (score!) you get to include on your tax bill: mortgage points. Most borrowers pay for points, which come in two forms: discount points, which allow you to prepay some of your loan interest in exchange for a better mortgage rate; and the loan origination fee. One point is equal to 1% of your loan amount. Many homeowners completely overlook this deduction, Poulos says.
Let’s say you bought a home in New York using a $500,000 loan with a 1% origination fee. That’s $5,000 you can itemize as a deduction on your tax bill, and you want to get credit for each and every dollar you spent.

Your lender should provide you with a copy of your settlement statement, with the loan origination fee and discount points listed on it, in January. If you don’t receive a copy, ask for one and verify that this information is listed on it so you can take advantage of the deduction on Form 1098.

Property taxes

Another perk of homeownership is writing off your annual property taxes. You get to deduct these taxes in the year they’re paid, not the year they were due.

Your county’s property assessor’s office typically sends out a statement at the beginning of the year showing the amount of your property taxes. One more thing to keep in mind: If you bought a home and reimbursed the sellers for taxes they had already paid for the year, you’ll see that reflected on your settlement statement, not on your 1098.

Mortgage insurance

If your down payment was less than 20% of your home’s purchase price, you’re likely paying a mortgage insurance premium. Through the end of 2016, the mortgage insurance premium deduction includes policies provided by the Department of Veterans Affairs, the Federal Housing Administration and the Rural Housing Service, as well as private mortgage insurance from conventional lenders, issued after 2006.

The IRS treats your mortgage insurance premium payment as mortgage interest that you can deduct on Schedule A of Form 1040. Although the overall amount of your premium can be counted as an interest deduction, it phases out for high-income earners, Poulos says. For instance, you can’t deduct your mortgage insurance premium if you earn an adjusted gross income of more than $109,000 (or more than $54,500 for married couples filing separately).

Items you can’t deduct

Sure, you get some pretty sweet deductions as a member of the homeowners club, but there are some exceptions. Here are a few real-estate-related costs you can’t deduct:

Home and title insurance coverage (other than mortgage insurance premiums)
Depreciation
Utilities, such as gas, electricity and water
Most settlement costs (other than points)
Forfeited deposits, down payments or earnest money
Home improvements paid via a private loan, cash or credit card
Homeowners association fees
Transfer taxes (stamp taxes) in a personal home sale

Check out the IRS list of special situations and other nondeductible items related to homeownership.

Bottom line

One of the major benefits of owning your home has always been the tax write-offs that come with the package. Keep in mind, though, that if your itemized deductions don’t add up to as much as the standard deduction you’re eligible for, the standard deduction would be the better way to go.

If you have a complicated tax situation or you’re unsure about certain real-estate-related deductions, it’s a good idea to consult with a licensed tax professional for guidance. You don’t want to miss out on deductions that will lower your tax burden and keep more money in your pocket.

Homeownership can have some pain points along the way, but the tax benefits you reap help make the largest investment of your life pay off in the long run.

*This article has been edited. Original article appears on NerdWallet

Ridgefield Market Report : Year In Review 2015

Staying The Course

When reviewing the 2015 sales results, one can interpret that the real estate market is flat when compared to 2014. I think that is an accurate statement, but it is also safe to say that we are staying the course when it comes to market stabilization, avoiding the large swings in value or unit sales seen in previous years. Essentially, Ridgefield real estate sales showed 100 more homes sold than in 2009, and only 9 less than in 2014. In both 2014 and 2015 we did not experience a traditional spring market surge, partly due to the severe and extended winter weather, and consumer confidence still seems to be the driver in bringing buyers to the market. Observationally, when analyzing sales by price point, the typically consistent $1.5- $1.75 million struggled in 2015. Conversely, we had a nice uptick in the $2 million and higher category.

The Power Of Proper Pricing

Pricing your home properly from the start is one of the key factors in achieving the best possible outcome for sale. Buyers are savvy and intuitive and can easily determine if they need to act quickly or wait to see if a price adjustment is imminent. We are not seeing many low ball offers, therefore do not feel like you need to build in a cushion. An equally important factor is making sure that your home is “turn-key”. Focus on a few important rooms. For example, if you are a few years away from listing your home for sale and feel that your kitchen is in need of some updating – don’t wait! If at all possible – do the updates now, and enjoy living with them until you are ready to sell.

No Longer A Wild Ride

Since 2013, the Ridgefield real estate market has been steady in both price and unit sales. Fairfield County as a whole has experienced that same stability. Moving into 2016, I see a trend of increasing consumer confidence that real estate is once again a stable investment.

DOWNLOAD THE FULL REPORT HERE

http://108.179.243.173/~d5o7l0g4/wp-content/uploads/2016/01/2015-Year-End-Review-FINAL.pdf

Ridgefield Market Report : Mid-Year Review 2015

Putting Things Into Perspective

Nationally, as a result of improved consumer confidence, unit home sales are up nearly 10% when compared to the first six months of 2014. Fairfield County overall is up 9% during the same period. Although Ridgefield sales results are lower than 2014, this can again be attributed to the long and treacherous winter. The eight week loss of valuable market time in the typically brisk Spring selling season certainly impacts our mid-year results. However, there still is time to meet – and possibly surpass – 2014 sales, as the second half of the year outperformed the first half in both 2013 and 2014. The looming threat of rising interest rates should also bring more buyers to the table this fall and banks have begun to loosen their financing practices, which also makes the outlook more positive. The Luxury Market, which can be realized as $1.5 million and higher, is on target with 2014 in terms of unit sales, but has experienced a slight drop in value due to higher inventory levels. In-town and walk-to- town locations continue to be particularly popular, and tend to sell more quickly and at a higher price per square foot.

The Value Factor

Based on the Months Supply Of Inventory, 2015 seems to indicate that the market is slowing. However, this is not necessarily accurate as there have been many examples this year, across a number of price points, where multiple offer situations existed. As the market continues to be driven by value, proper pricing is critical. Today’s buyers also measure value based on the condition of the home and are responding most positively to homes that are updated and in pristine condition. When examining the inventory, there seems to be a discrepancy between the amount and the quality of the inventory. Buyers are ready to purchase, but they are still in the driver’s seat and want homes that are turn-key, almost without exception.

Looking Ahead

With no housing bubble in sight, we can expect moderate, sustainable sales growth. If you are in the market for a change, there’s no better time to buy up. If you are thinking of selling now or in the not too distant future, take the time to get your home ready for market or to just enjoy.

DOWNLOAD THE FULL REPORT HERE

http://108.179.243.173/~d5o7l0g4/wp-content/uploads/2015/07/2015-Mid-Year-Review-Letter.pdf

Ridgefield Schools Top Ranking Lists

Once again, the Ridgefield Public School system has proven to be one of the best in Connecticut, with the district’s high school earning a Gold Badge from U.S. News & World Report—the highest award possible. Another organization that ranks education systems, Niche, ranked Ridgefield High School as the 6th best in the state. The elementary and middle schools ranked similarly well: both middle schools are in Connecticut’s top 10 list, and all the elementary schools are in the top 30. Overall, the district was ranked the fourth best in Connecticut.

Ridgefield’s education system holds up on a national scale as well. Out of 8,738 school districts, Ridgefield was ranked 79th on Niche, putting it in the top 1% of districts nationally. On U.S. News & World Report, the high school was ranked #413 nationally out of 29,070 public schools.

Even more impressive, U.S. News & World Report says Ridgefield High School has one of the top 50 science, technology, engineering, and mathematics (STEM) programs in the nation. Workers in these fields are in high demand, with higher average salaries than non-STEM majors; this makes the Ridgefield school system a good investment in terms of getting a job later on in life.

The top rated Connecticut district was New Canaan. Eight of the top ten school districts in the state were from Fairfield county, including Ridgefield, New Canaan, Westport, Darien, Wilton, Weston, Greenwich, and Newtown. The top public high school in Connecticut was in Weston, while the best middle and elementary schools were both in New Canaan.

As Benjamin Franklin said, “An investment in knowledge pays the best interest.” Homes in areas with good education systems are lucrative, with 90% of homebuyers saying that school boundaries are a top concern when buying a home. Purchasing a house in an area with a good education system may equate to a higher selling price later down the line.

If you’re interested in moving to Ridgefield, sign up to receive the latest new home listings delivered right to your inbox, or contact me to see how I can work with you to find you a great home in Connecticut’s Number 1 ranked town.

Housing Market Is The Strongest In Years

According to the National Association of Realtors, a newly unveiled forward-looking housing index by Nationwide says the U.S. housing market is at its healthiest level since 2001. The Health of Housing Markets Report will analyze the housing health outlook on a quarterly basis throughout 373 metro areas.

The index’s current leading indicator score for the fourth quarter of 2014, was 109.8, the highest level in the 15 years of data already examined by the study’s authors. A reading of more than 100 suggests the national housing market is healthy and shows few signs of a housing downturn over the next year.

The healthiest housing markets in the country are Pittsburgh, Cleveland, and Philadelphia, according to the index. The report considers employment, demographics, the mortgage market, and house prices to determine the health of each market.

“The HoHM Report provides a look into the future instead of the rear view mirror,” says David Berson, Nationwide’s chief economist and senior vice president. “The quarterly report should serve as a resource to gauge how healthy housing markets are today but, perhaps more important, what to expect in the future and why.”

This week, the National Association of REALTORS® reported that its forward-looking index, which is based on signed housing contracts, showed pending home sales at the highest level since June 2013.

Our local housing market seems to be continuing this trend with healthy sales through February and March as compared to the same time last year. Buyers are out in force at most price points, and inventory is still relatively low. With mortgage rates also continuing to remain low, I expect the spring season to continue with strong sales. If you are thinking of putting your home on the market, now is a great time to sell. Buyers are ready – and we’re seeing more instances of multiple offer situations when homes that are in good condition and are priced well hit the market.

For more information about what your home’s worth, contact me today at 203-856-5534 or karla@karlamurtaugh.com

Ridgefield Market Report : Year in Review 2014

Holding Our Own

Diverse weather conditions delayed the 2014 Spring Market nearly 8 weeks, which was extremely difficult to recapture. Even though our unit sales volume fell short 14.7% when compared to the record 2013 sales levels, I feel we were able to protect much of the gains made. This forward movement also seems to be continuing as we enter the 2015 Spring Market. We must remind ourselves that 2014 posted the second best sales figures seen in Ridgefield over the past seven years.

Despite the decline in units, we experienced an increase of 1.8% in Median Sales Price, which supports our prediction for slow, steady growth going forward. This slight up-tick also suggests that there are more buyers in the market at higher price points.

Great Expectations

2014 proved that the market continues to be driven by value, therefore proper pricing is critical. Today’s buyer also measures value based on the condition of the home. Buyers respond most positively to homes that have been updated and are in pristine condition. The foundation of Real Estate is built upon the principle of “supply and demand.” There have been many examples this year, across a number of price points, demonstrating that when a home is in absolute turn-key condition, recently updated, and in a desirable location, multiple offers can be expected. Close-to-town properties continue to be particularly popular and tend to sell more quickly and at a higher price per square foot.

Positive Outlook

With increasing consumer confidence and strong financial indicators, I am optimistic that 2015 will continue the trend towards market stability and increased values. The recent dip in mortgage rates should bring more buyers into the market, especially as banks start to loosen credit and offer more programs for well qualified people.

DOWNLOAD THE FULL REPORT HERE

http://108.179.243.173/~d5o7l0g4/wp-content/uploads/2015/01/150101-2014-Year-in-Review-v9OL-LETTER.pdf

The Truth About Mold

Mold is one of the world’s most successful organisms – it will find its way into any location, even unexpected ones. However, that is not to say that mold is an inevitable – or even likely – problem to arise in your home. Mold grows under very specific conditions, all of which are easy to prevent.

Mold reproduces with spores, which are invisibly small organic particles that float everywhere. Although these spores are in the always in the air, when mold begins to grow, the spores may rise to levels that cause health problems and increase the likelihood that it will become a problem and spread. Outside of bread and other foods, the most likely place in your home for mold and spores to grow is on a wet surface, as it cannot grow without some kind of moisture.

To defeat mold before it begins, check your home to see if there are areas of high moisture or areas with direct water leaks. Fixing these issues should keep your house free of mold indefinitely. Keeping the relative humidity to less than 60 percent is also a good rule of thumb in ensuring your home remains inhospitable to fungus. Introducing a dehumidifier into a moist area, such as a basement in the summer time, is often an effective method to curb problems.

Mold can also grow in ducts and other HVAC systems. If the air in your home is causing problems, resulting in an increased difficulty when breathing particularly for those afflicted with respiratory issues, have your ducts checked to see if they need cleaning. Advanced filtration systems can also be installed in places that are predisposed to mold, but for most homeowners, this is not necessary.

Once it becomes established, mold can affect your health in a number of ways. Inhaling large amounts of spores can exacerbate allergy problems or cause other irritation. Although mold is generally not particularly harmful some varieties of mold, such as black mold, produce directly toxic substances called mycotoxins. However, the primary concern with mold is their effect on respiratory health.

If there is already mold in your home, it may be possible to clean it yourself. According to the EPA if there is less than 10 square feet of surface mold, scrubbing it off a hard surface by using detergent and water is generally enough to get rid of the problem. Soft or porous surfaces that have mold on them will likely need to be thrown away. Carpeting or curtains can get mold in various crevices and spaces in the material, and may therefore be impossible to clean. Painting over mold is not an acceptable way to treat mold. While cleaning the mold, make sure to wear gloves and goggles and avoid breathing the spores by wearing a respirator. If there is mold on an item that is particularly valuable, or the area of mold measures more than 10 square feet, contact a professional.

Although there is plenty of buzz about mold these days, in reality, mold is unlikely to pose serious problems for most homeowners. Usually, few areas in a home are prone to mold growth. By keeping tabs on moisture around your home and taking a few simple precautions, you should be able to remain mold-free forever.

If you’re thinking of selling and are concerned about the possibility of mold in your home prior to listing it, contact me for more information. I would be happy to assist you to get home ready for the upcoming real estate market.

A User’s Guide To Fairfield County Wells

Compared to town water, owning a well may sound difficult or inconvenient. In reality, owning and operating a well system is as simple as following a few easy rules of thumb. Like most of the components in a modern house, wells are optimized to be relatively low-maintenance and easy to use.

Modern residential wells typically bottom out at around 60 feet below the ground. To combat potential surface contamination, wells are generally sealed with clay or another sealant material. The pipes that travel down to the water are usually of steel or PVC piping. However, the materials and specifics of each well will vary by driller. Generally speaking, the exact materials in your well will not affect the types of safety and maintenance precautions that you should take on a daily basis.

A yearly well check-up is the best form of preventative maintenance. Replacing the well pump alone can cost in excess of $4000 and a new well system can cost around $20,000 in areas with rocky soil like Ridgefield. The good news is that a well-maintained well will last more than 20 years. By following just a few simple tips, your well and the water it produces will remain potable and plentiful for years to come.

The yearly check-up should cover four basic points. It will test the flow and function of the mechanical components through checking pump performance, water levels, and the function of the pressure tank. Second, the system will be checked to ensure that it meets sanitation and local requirements. In addition, the water will be checked for a variety of contaminants such as bacteria, nitrates and non-biological contaminants like iron, manganese, high mineral levels, and sulfides. Finally, the inspector will give you a concise report of his findings that, by Connecticut law, will be given to you and archived by both the well company and government. Store your well records to ensure that you have proper documentation in the event that a problem arises.

Unlike a septic system, there are relatively few ways that the average homeowner can accidentally ruin his well. The most common way of disrupting the well’s function is by exceeding its capacity and running the well dry. Connecticut law proscribes a number of acceptable combinations of production and storage capacity. These regulations are designed to allow homeowners to use reasonable amounts of water without running their wells dry. Generally speaking, it is best to avoid doing multiple water-heavy activities at once. For example, avoid doing laundry, taking a shower, and using the dishwasher simultaneously.

In addition to guidelines for water usage, remember these tips about maintaining the safety of your water. Find out precisely where your well is and avoid storing and using toxic chemicals within 50 feet of the well. Paint, fertilizer, pesticides, and motor oil are just a few examples of materials to be avoided. In addition, avoid back-siphonage by keeping hoses out of receptacles that are being used to mix contaminating materials such as lawn fertilizers. Also, ensure that your home, waste systems, chemical storage, and well are properly separated. Periodically check that your well cap has remained properly sealed. When rodents or other small creatures become lodged in the system, the quality and taste of your water may be compromised. Also keep your well cap clear of excess snow, leaves, and other detritus.

By following just a few simple guidelines about the care of your well, you are sure to enjoy plenty of high-quality water for years to come.

For official documentation about well specifications and stipulations, please see the following laws, hosted by the University of Connecticut.

For additional information about wells and their maintenance, see this article from On Tap.

Should You Buy A Home With A Septic System?

Septic systems are ubiquitous in Ridgefield and the surrounding towns and are simple enough to maintain that anyone can successfully navigate one. Often, the idea of a septic system may be unfamiliar – and even daunting – to new buyers, but in truth, following a few basic rules will keep your system healthy for years to come. Having a detailed home inspection – including checking the septic system – will ensure it is in good working order when you purchase the home. Here are 5 tips every septic system owner should follow:

1. There is a large financial incentive to maintain your septic system as yearly maintenance generally costs around $200-300 per year, while replacing a whole septic system usually costs up to $15000 or even more depending on the size and location of the system. An average system should be pumped every 2-3 years depending on the size of the tank and number of people in the house. Calling a reliable septic company will ensure your tanks are properly attended to.Poorly maintained septic systems can create hiccups in selling a home and may delay sale or require fixing to meet code.

2. Avoid introducing large amounts of water into the system at once. Draining a hot tub, for example, can disrupt the chemistry of the system and should be avoided or done slowly. The same goes for long showers, doing multiple loads of laundry in sequence, or any other water-heavy activity.

3. Do not send certain chemicals and materials down the drain. The rule of thumb to use is that only water, toilet paper, and waste should be flushed. Most house cleaning supplies are also okay when used in moderation and according to the product guidelines. Drain cleaners, though, must be universally avoided as they can destroy the delicate chemical balance of your septic system almost immediately. In addition, many products that you might have around the house, such as paint, varnish, or antifreeze can ruin your system’s chemistry and should not enter the system. Septic systems rely upon the health of their bacteria, so anything that will disrupt the lives of these simple organisms, even unexpected things such as chemotherapy drugs or large quantities of anti-bacterial soap, can cause problems.

4. You should know about your septic system’s location. If the system was constructed in the last 30 years, the town should have files that will show you the locations of each of the components. It is important to know where your leaching field and main tank are. Waste flows into the main tank, where materials that are lighter than water rise to the top and materials that are heavier than water sink to the bottom. In between is a layer of mostly water. Every time one gallon of water enters the system main tank, another gallon will exit out into the leaching field, which is a set of underground pipes that drain water into the ground. In a properly maintained system, only liquids will ever leave the tank. However, when certain elements are introduced into the system, it can fail, causing solids to either back up or enter into the leaching field. Fixing a malfunction such as this can be very expensive.

5. Your septic system’s health is not merely a function of what enters it. Most importantly, the leaching fields require special attention. Avoid planting plants directly above the leaching fields. Roots, for example, can enter the field and disrupt its functioning. Also try to avoid driving over the field as this can compress the soil and make it difficult for water to leach out. During the winter months, avoid shoveling snow off of the leaching field. Snow acts to insulate the ground, making the field less likely to freeze and fail. The leeching field can also be damaged directly, such as by accidentally severing one of the pipes or other physical damage. Knowing the location of each of the system’s components is vital to maintaining the system.

Although septic systems may seem difficult, in reality they are quite simple to maintain and own. Maintenance is as easy as keeping some simple rules in mind and calling a septic company to inspect and pump the system regularly. Although transitioning to a more rural suburban life might be tough at times, your septic system will be a breeze. For more detailed information about the maintenance and science of your septic system, you can consult the following in-depth sources from the New Hampshire DES and West Virginia University’s National Environmental Services Center.