It’s Almost Tax Time – Rental Property Deductions

Time to VOTE!

Time to VOTE!

It’s almost tax reporting time and some of you have been rental property owners for awhile and some have you have started!

Common business deductions on rental Properties include assessments and Condo fees are often allowable as maintenance expense and brokerage fees can be considered either marketing expense. If you have hired us as a property manager for your property that is also typically allowable as an operating cost to be deducted on your property against the rental income earned — This saves you time and headaches from dealing with the tenant on your own for various book keeping and maintenance issues.

If you have just started to be a rental property owner, be sure to keep good records of expenses so you have them ready for next year’s tax filings.

Other Common Expenses
In addition to repairs and depreciation, some of the other common expenses you can deduct are:

*Insurance
*Taxes
*Lawn care, Snow Removal or other landscaping related costs.
*Repairs and Maintenance (plumbing, electrical, etc.)
*Utilities: Gas, Electric, Telephone, Internet, etc. (if owner pays and tenant doesn’t or when property sits vacant).
*Tax return preparation fee
*Legal fees
*Automobile (mileage or actual costs) for usage while conducting business on your rental property.
*Office supplies, Postage
*Losses from causalities (hurricane, earthquake, flood, etc.) or thefts

As always, we recommend that you consult a tax preparation professional or CPA to find out what is allowable in your particular filing situation and what deductions might be better for you to take than others.

Let me know I can answer any of your real estate questions or you know of someone who would benefit for my services! Referrals are always appreciated!

Hints To Keep Plumbing In Working Order During Winter

When temperatures drop to freezing lows, plumbing problems are very common. There are many things that homeowners can do to prevent these problems that have the potential to cause severe damage to your home. Rescue Rooter® has provided the following tips to keep homeowners and their families throughout the nation and warm as freezing temperatures take over.

Avoid frozen pipes. Watch your water pressure this time of year because the first sign of a frozen pipe is restricted water flow. If you notice this, be sure to act quickly and call a professional.

Let cold water trickle from your faucets, slightly smaller than a pencil’s width, during the evening when the temperature is the coldest. This helps prevent freezing as moving water does not freeze.

Garden hoses can cause major damage if not disconnected. During cold snaps, if a garden hose is left connected, ice will form and pressure will build up in the water lines inside your home. Once this occurs, a water line leak or break is common. This can cause severe damage to the home. Disconnect garden hoses and drain outdoor pipes to prevent damage during the winter.
After disconnecting hoses, you should install an exterior, insulated faucet jacket. This will protect your outdoor faucets, as well as the connecting lines running into the home, from freezing temperatures. Also, be sure to utilize the shut-off valves located inside your home to drain water from pipes leading to outdoor hose bibs. These valves can typically be found under sinks, in crawl spaces or basements, near your water heater or your meter, but every home is different and some homes may not be equipped with these valves.

Circulating warm air helps keep pipes in the walls from freezing. Keep your house temperature above 55 degrees to prevent pipes from freezing and open cabinet doors under sinks and faucets and near exterior walls to help circulate warm air and keep pipes warmer.

Close crawl space vents and garage doors, especially if your water heater is in the garage.

Check to be sure that snow is not restricting your water drainage. Watch the area around your sump pump discharge line used to avoid flooding indoors, as this line drains from a basement to an outside area. If the drainage area is blocked by snow or flowing into a puddle, freezing could occur as well as water backing-up into the house.

If you do find leaks, even if it’s a small one, try to find the soure and remedy it as soon as possible. Call a plumber if necessary as the small leaks can end up causing big, costly damages if left un-remedied for a period of time.

Chicago Is Great for Tech Giants and Tech Start Ups

Willis Tower in the downtown financial district

Willis Tower in the downtown financial district

Chicago is often referred to as the capital of the Midwest. Many people from other Midwestern cities and neighboring states choose to have a residence or business presence here. Some of the giants in the area now including United Airlines, Google, Motorola, Groupon all have major technology headquarters around Chicago.

Google just signed a lease in the a building in the West Loop Fulton Market District where an El station was just opened within the past two years. New restaurants and galleries are opening next to what used to be a cold storage building and it’s convenient to existing West Loop Restaurant Row along Randolph Street. They are in the process of designing their new space and expected to occupy the new space in 2015.

United Airlines has a technology and operations center located in the Willis Tower (formerly Sear’s Tower) which also houses several small technology start up firms.

The Merchandise Mart

The Merchandise Mart

Groupon starting their business model here in Chicago and have made River West their headquarters in a technology building that was formerly the Montgomery Wards Catalog Distribution Building. This building was converted into mixed use space with high end technology amenities and condos.

Several technology start up firms share space in 1871 which is a technology incubator space housed in the Merchandise Mart Building. This historic building was once owned by the Kennedy Family and was exhibit space and show rooms for various house and decorating shows.

Cold storage building in West Loop's Fulton Market District being converted to Class A Office Space in which Google will be a primary tenant

Cold storage building in West Loop’s Fulton Market District being converted to Class A Office Space in which Google will be a primary tenant

There are many more example to be found all over town, but with two major international airports which provides flights to every state in the nation within 2-4 hours, the ample and convenient public transportation options and plenty of housing stock and fun neighborhoods to choose from, Chicago is a great place to live, work and setup your technology business.

Saving for a down payment to buy

There are some great deals out in the market for first time loft/home buyers or event folks who would like to upgrade their residence and/or get into a better neighborhood. But on thing gets in the way for the first time home buyer(s) — that is having enough saved for a down payment.

A savings and down payment is important because most residential lenders are looking for “Stated Loans” where you provide your income supporting documentation, the W2 or pay stubs from work (typically past two months worth) or your 1099’s and past tax filings (typically past two years). The underwriters want to make sure that you can 1) Afford the loan and have enough cushion to avoid default and/or foreclosure and; 2) Make sure that that the income stated on your income is accurate and that it meets their debt-to-income ration qualifications.

Here are some simple ways that will help you save:
1) Take Public transit – it’s fairly east to do in most Chicago neighborhoods and you can be on the monthly flat fee plan. Some employers can also pay for this through payroll deduction so you get to pay for it with pre-tax dollars. Some employers also subsidize it. Not owing a car can save you about $6,000 per year if you figure $500 per month for car payments, insurance and parking for the average car owner.
2) Reduce eating out and buying coffee from Starbucks or Dunkin Doughnuts. On average most folks spent $5-15 per day just on the coffee purchases and for eating lunch out (another $10-15 per day average). That’s at least $100 a week if you pack your own lunch or at least $50 a week if you eat out only half the week.
3) Reduce your alcohol intake – It’s good for your health and vital organs long term, but it also saves you a lot of money. If you go out with clients or other co-workers frequently, you can also just reduce the amount of drinking (at least the ones you pay for on your own). An average night out for me is at least $25 one a week which would provide a $1,300 savings a year. And not drinking as much also avoids those late night post drinking food cravings so that’s additional $$ that you are saving. You can also choose to reduce the amount going out you do to every two weeks or once a month if you are really on the savings track — think of all the new furniture you can afford with the savings.
4) Have a change cup or bucket – I use only dollar bills when I use cash for purchases and put the change in my cups and take them into the bank every month or two. This has allowed me to put at least $100-200 in savings per month and you’d be surprise with how quickly they add up.

These few savings will yield a $12,500 savings for down payment just within a one year (12 month period). This is equivalent to a 10% down payment on a house purchased at $125,000 range. Of a 3% down payment on a loft/home that’s around $415,000. Yes, there are still 3% and 5% down payment loans out there for first time home buyer(s) and if you have a FICO credit score of 700 or above.

Let me know your comments and thoughts or other examples that you have to save money on a regular baiss.