Susan Hanson

Tax breaks that have been reduced for 2012

1. Bonus depreciation: During 2011 taxpayers can deduct in one year 100 percent of the cost of most types of personal property they buy for their businesses and place in service during the year. This amount is scheduled to lower to 50 percent for most types of property placed in service during 2012. However, it is possible that 100 percent bonus depreciation will be extended through 2012.

2. Section 179 expensing: For 2011, the maximum Code Section 179 deduction is $500,000, the highest it has ever been. The maximum Section 179 deduction will be reduced to $139,000 for 2012. Moreover, the 2012 limit will have to be reduced dollar for dollar by any amount by which the cost of Code Section 179 property placed in service during 2012 exceeds $560,000.

3. Employee transportation benefits: For 2011, an employer can provide up to $230 per month in tax-free transportation benefits -- this includes transit passes or reimbursement for commuting to work by vanpool. Starting in 2012, the limit will be reduced to $125 per month.

Tax breaks that have been eliminated for 2012

1. State and local sales tax deduction: For 2011, taxpayers can elect to deduct as an itemized deduction on their Schedule A (itemized deductions) state and local sales taxes, instead of state and local income taxes. This deduction is eliminated starting in 2012. This is bad news for taxpayers who live in states with no state income tax.

2. $4,000 education expense deduction: For 2011, taxpayers with modified adjusted gross income of $65,000 or less ($130,000 or less for joint returns) may deduct up to $4,000 of qualified education expenses paid during the year for themselves, their spouses, or their dependents.

Such expenses include tuition and mandatory enrollment fees to attend any accredited public or private institution above the high school level. This deduction is eliminated entirely for 2012.

3. Charitable Contributions: IRA (individual retirement account) owners age 70 1/2 and up can directly transfer up to $100,000, tax free, to eligible charities during 2011. This option, created in 2006, is available for distributions from IRAs regardless of whether the owners itemize their deductions. This provision is eliminated for 2012.

Tax breaks that have been expanded or extended

1. Hire a veteran, get a tax credit: If you hire an eligible unemployed veteran for your business during Nov. 22, 2011, through Dec. 31, 2012, you'll qualify for an expanded work opportunity tax credit. This is a tax credit against income tax of up $5,600 (more for disabled veterans).

2. Reduced Social Security Taxes? During 2011, Social Security taxes are reduced to 10.4 percent up to the annual income ceiling, instead of the normal 12.4 percent. The U.S. Senate passed a two-month extension of the 2 percent reduction, but the House rejected the Senate bill.

However, most people believe that -- one way or another -- the 2 percent reduction will be extended through the end of 2012.

(per Stephen Fishman, Inman News) 

PLUMBING HINTS

• Galvanized pipes have a coating on the inside that protects them from rusting. Over time harsh drain cleaners will eat away the coating and eventually the pipe itself.

• Fix a slow drain: pour in 1/2 cup of baking soda, add 1/2 cup white vinegar and follow with a pot of hot water when it stops bubbling.

• Tubs and showers should be fitted with strainers that catch hair and soap chips. Clean the strainers regularly.

• In a plumbing emergency, you'll need to stop the flow of water quickly. To do this, you and each member of your family need to know the location of the shutoff valve for every fixture and appliance, as well as the main shutoff valve for the house, and how they operate. Operate these valves at least once a year to prevent seizing.

• Garbage Disposal
  
  No bones and always use cold water
  Use small pieces of citrus fruits to freshen
  Though ice does not sharpen the blades as commonly mistaken, it does
  _ knock off debris and keeps it cleaner.
  Freeze lemon juice and grind small pieces in the garbage disposal -   smells good and disinfects, too.
  (from Nations Home Warranty)

Did You Know?:

Why is my Buyer giving the seller credit for taxes?

When buying your next home, changes to your credit (additional accounts, closing accounts, fluctuating credit card balances) can result in the lowering of your credit score. If your credit score changes, that can affect your interest rate and even the loan approval itself. Therefore, it is imperative that there are no major changes to your credit and information provided, during this process.

In order for your loan to reach final approval and fund, you'll want to adhere to the following:

1. DO NOT charge any new items on your charge cards (higher balances will lower credit scores).
   
2. DO NOT apply for any new charge cards or loans (new credit trade lines and credit inquiries can lower credit scores).
   
3. DO NOT buy or lease any new major purchases especially cars, furniture, appliances,
   etc (even "no interest" loans as they appear as new credit trade lines and will affect your debt to income ratio).
   
4. DO NOT co-sign for anyone's loans for any reason.
   
5. DO NOT allow anyone to check your credit unless in the shopping process and even then, know the consequences (each inquiry may lower your credit score).
   

   Some other notable tips would include:
   

6. DO NOT change employment may result in loan denial.
   
7. DO NOT start any new remodeling jobs.
   
8. DO continue to make all payments on time
   

A new credit report will be pulled before closing to make sure no new credit has been established and any inquiries will have to be verified to that effect. Following these simple rules, will ensure a stress free loan process from the standpoint of your credit report.

Many clients today are interested in the foreclosure market.  What may confuse some is the difference in who owns those foreclosed homes--sometimes you see that a bank is the seller, other times it says "HUD".  Here is an excerpt from the HUD (Housing and Urban Development) website to clarify:

"There is nothing extraordinary about HUD homes other than the fact that the mortgage used to purchase it was insured by the FHA. Whether a single-family residence, condominium  or townhome, the specifics of the room count, parking, amenities, etc. none of it matters. What does matter, however, is that the price of the home fits within the guidelines to qualify for the FHA insurance program and that the lender you use is approved to offer FHA insured loans.

It is in fact these homes ones that are originally purchased using an FHA insured loan that become what can be referred to as HUD homes when the borrower defaults on the loan. Since the FHA has guaranteed the loan on behalf of the federal government, when the foreclosure process is completed, FHA pays off the lender of record. So, instead of the property going back to the lender as in a normal foreclosure situation, it goes back to its owner (which in this case is HUD) as the responsible party for all FHA insured loans.

Like a lender, HUD does not want to own a real estate portfolio. Part of the agencys responsibilities lie in promoting affordable homeownership and equal opportunity for all citizens to own their share of the American Dream."

Real estate agents are engaged to list foreclosures for the banks as well as for HUD, so you will find both when you search your local multiple listing service.  It will benefit you great to have an agent check into these homes for you as they can see any "private remarks" in MLS that the listing agent has made and thereby help you understand the procedure that particular seller requires for making an offer.