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Tax Assessment/Appraisal: How Do I Know What My Home is Worth?

Feb 6

Posted by admin in Real Estate

If you are in the home buying or selling market, it’s important to understand the difference between tax assessment and appraisal value. Concentrate on the appraisal value because this determines your asking price.

Understanding Tax Assessment

The tax assessment is a tool local governments use to exact a property tax rate on residents. The local government determines your home’s worth by reassessing the homes in the area you live in periodically. Some areas reassess every 2-3 years. But with today’s booming real estate market, the National Association of Realtors estimates 60-70% of U.S. tax assessments do not reflect the escalating market value on home sales. This is why the tax assessment is not always an accurate gauge of true home worth.

Tax assessment offers a general idea of home value. If you are curious about whether your tax assessment office is keeping up with the local market, telephone your local real estate board and local tax assessment office. Ask them about the local appreciation value on homes to determine if they are up-to-date.

Focus on the Appraisal Value

Home sellers should concentrate on the appraisal value, because a mortgage lender will write a loan on the home for this amount. Location is the prime factor in appraising a property. An appraiser will look at three homes that sold during the previous three-month period to determine what similar properties have sold for in the same neighborhood. If your home is in a rural area, or if the sales in your area have been sluggish, the appraiser can go within a five mile radius to locate similar homes for comparison. If there is home value inflation in the area, the appraiser will factor this in. A good appraiser will contact the realtor who sold the homes he or she is using as a comparison.

What Do Appraisers Look For?

An important rule of thumb of real estate is: location, location, location. Appraisers are mainly focused on the following to determine home worth:

  • square footage
  • condition and age of the home
  • location
  • lot size
  • number of bedrooms
  • number of bathrooms
  • total number of rooms
  • garage(s)
  • decks
  • screened porches
  • fireplaces

Secondary Enhancements Help a Home Sell

There are other bells and whistles the appraisers may factor in, but their impact on home value is marginal. Although these improvements do help the home sell, they do not impact the appraisal significantly.

Here are some examples:

  • ceramic tile
  • hardwood floors
  • crown molding
  • chair railing
  • specialty counter tops, cabinetry
  • sprinkler system
  • wainscoting
  • upgrades in light fixtures
  • upgrades in faucets, sinks, tubs and showers
  • swimming pool

Sell Your Home Quickly

Do not be mistaken – upgrades are worthwhile because they will help sell your home quickly. For example, eye-catching landscaping will lure people in to look at the home, because 80% of homebuyers decide if they like a house when they first drive up to the property.

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Tax Preparation Software: The Good, the Bad and the Ugly

Jan 24

Posted by admin in Taxes

The medium is the message, it’s sometimes said. Think of Franklin D Roosevelt and his “fireside chats” to the nation. In a pre-TV era, the radio was the perfect medium to ?have a conversation with the American people?. He could get his reassuring message right into folks’ homes, and become a part of the family. A different medium, for example a grandstanding speech, wouldn’t have got the message across as effectively as an intimate radio chat. The medium most surely was the message.

But let’s come back to the 21st.century and something close to all our hearts: tax preparation, or, to be exact, tax preparation software. Unfortunately, this particular medium seems to be giving out mixed messages, although software programmers and vendors would reassure us that we can complete tax programs quickly and accurately, click ?print? and produce a tax return destined to meet the IRS’s requirements.

Seems clear enough, so why the mixed messages? One of the main criticisms levelled at tax preparation software is its ?one-size-fits-all? approach. Its critics, businessmen in the main, ask how it’s possible to condense an extraordinary number of codes and regulations into a half-hour interview process. Irrespective of the claims made by software programmers, critics point out that only the most general set of credits and deductions can be incorporated into tax software, which means that you’ll be the loser. It’s these sins of omission, or the questions they don’t ask, which work to your detriment and the advantage of the IRS.

Imagine this scene for a moment. A medium is holding a s?ance. She’s trying to put you in touch with the other side who also want to get in touch with you. She’ll ask leading questions and, reading between the lines, make statements general enough to apply to anyone, but those present will interpret them as applying to themselves as unique individuals. A ?plant? in the audience will bolster her authenticity further and convince you that the entire process will bring you good news from the other side.

How a charlatan operates in a s?ance is exactly how critics see the operation of tax preparation software. These programs are designed for all businesses but with the same basic tax deduction questions being asked, albeit modified slightly, in every case. You might think you’re being treated as a unique individual as you’re asked to state the nature of your business before beginning the interview process. This isn’t the case, however, even though software vendors try and plant in your mind that, by purchasing their top-notch programs, you will be able to check all credits and deductions.

Believe that, say the critics, and you’ll get what you think is good news in terms of credits and deductions. But, as with the self-fulfilling prophecy of the charlatan medium, you’re only getting what you’re looking for. You need to think ?out of the box?, and hire the services of a professional who really can read between the lines to ensure you don’t overpay your taxes. So, the critics’ verdict on tax preparation software as a medium? – ?I’ll be getting in touch… with my accountant?.

For some folks, then, all tax preparation software is bad. If you think they’re good then you’re thinking yourself out of thousands of dollars. An active investor, running his own business and having a substantial portfolio of stocks, might disagree. There are very good programs available, either web- or PC-based, which can handle multiple entries very effectively. Only in exceptional circumstances, that is in unique tax situations, would it be necessary to get a tax accountant to do the job for you. For investors, the software or medium is essentially good, it’s more a question of ‘means well but not quite all there?.

If you’re filing straightforward tax returns, and perhaps you’re in receipt of dividends from mutual funds and W-2s from your job, tax preparation software is readily available to calculate your returns quickly and accurately. Your returns are calculated, and you’re informed of any possible problems. Good tax software will enable you to e-file a federal and state return for less than $16. You can happily tick the boxes as a unique individual who’s not in a unique tax situation.

Things can turn very ugly, though, when the tax preparation software you’re using doesn’t provide easy-to-follow, in-depth help for the new or relatively inexperienced tax filer. The help needs to be as jargon-free as possible, and a good program will provide the necessary tools and capabilities enabling you to complete the return accurately. This means the program should have helpful drop-down menus and icons, together with a quick and easily-accessible online service. The best-documented programs should offer a combination of helpful customer service and useful financial tax tips and advice.

Unfortunately, using some of the free tax preparation software available, suitable mainly for folks filing simpler tax returns with adjusted gross income of $34,000 or less, can be a self-defeating exercise. While some are fast and easy to use, with both interview-style and forms-based input, others are not. When you buy tax software the vendor often provides technical support to the purchaser, but this key element is missing in the free software. Users of free software tend to be less computer-literate and are, therefore, more likely to find things turning ugly. Their verdict on this indifferent medium? – ‘means well but has lost the plot?.

So, good, bad and ugly: the messages are mixed for tax preparation software. Take out the ugly, and most would agree that this method of filing your tax return is fast, accurate and practically error-free. For some die-hards, though, this software will never be the medium of choice for communicating with the IRS.

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Calling Your Way Out Of Debt

Dec 9

Posted by admin in Debt Consolidation

Debt is a four-letter word we all want to avoid. However, the cost of living alone is so demanding that debt follows us wherever we go. We have to pay bills, pay for clothing, food, gasoline, taxes, rent, mortgage, car payments, college, etc, that sometimes it is next to impossible not to find yourself humming this four-letter word.

Debt is a four-letter word we all want to avoid. However, the cost of living alone is so demanding that debt follows us wherever we go. We have to pay bills, pay for clothing, food, gasoline, taxes, rent, mortgage, car payments, college, etc, that sometimes it is next to impossible not to find yourself humming this four-letter word.

The best way to solve debt is to sit down and find solutions. Solving problems is the first step you will need to take to find a way out of debt. Once you start to see you have options, you can find it easier to cope with your stress and debts. If you cannot find new ideas to help you find ways out of debt, visit your local library and look for debt solutions and guides that walk you through steps in getting out of debt.

Having many resources can help you to pull up new ideas that lead to solving problems. Rather than allowing problems weigh you down, take action now and find solutions that will reduce your stress and your debts.

If you have access to the Internet, search the engines to find relevant links that guide you into debt relief. Stay away from companies that offer to get you out of debt for a high monthly fee. The concept of getting out of debt is to relieve self of extra burden, such as a new bill. For the most part, you can call your creditors and make payment arrangements. The creditors are often glad to hear from you. Rather than have the hounds from hell hunt you down, the creditors would rather keep you as a friend, since they want you to pay your debt and incur future debt with their company.

You have recourses when it comes to finding ways out of debt. Debt elimination is not an option, since when you get rid of one debt another will follow. You get the point. The solution is getting out of the past debts you owe, set a budget and avoid spending more than you can afford. Pay off one debt at a time, until gradually you find relief.

To avoid incurring additional debt, stay away from credit cards. Only use your credit cards to pay bills, and payoff your credit card as soon as possible to avoid high interest rates. Stay away from payday loans also, unless you see that you can avoid late fees and can payoff the loan right away. Keep in mind however, that payday lenders often attach a steep fee.

The above tips are just some of the many ways to keep out of debt and manage the debt that you already have. If you can manage your debt effectively you can save a massive amount of money over the years in interest.

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Penalties For Not Filing Tax Returns

Dec 6

Posted by admin in Taxes

Many good folks each year fall behind in filing their tax returns. The largest reasons for not filing are fear of not knowing how to file and the thought of not being able to pay the balance due. Even if you are unable to pay you should file your return to avoid future penalties for not filing.
Penalties for not filing can reach up to 25 percent of the amount due. If you are due a refund from the IRS there is no penalty for not filing. However, you should file as soon as possible to avoid losing your refund. After three years from the tax return due date you will not be eligible to collect a refund or claim tax credits on your return.

To help those who can’t afford to pay the balance due IRS does offer installment agreements to pay off your debt. The downside to installment agreements is that you will continue to pay penalties and interest because you did not pay your yearly taxes in full.

If your debt to the IRS is so large that an installment agreement will not help and there is reason to believe that paying would place you in a financial hardship there is the option to file an offer in compromise. In the case that you believe you may qualify to file an offer in compromise you should consult with an experienced professional first.

To help ensure that you do not end up with a large tax bill at the end of the year make sure you are withholding enough tax from your regular paycheck or making estimated tax payments throughout the year if you are self employed. Events such as an increase in earnings or change in marital status may call for the need to change your withholding amount. As long as the taxpayer has paid the same amount of taxes from the prior year or they have paid 90% of the current year’s tax, whichever is smaller, they will not be penalized.

After not filing one year it seems the chances of filing the next year go from slim to none. If you are years behind in filing you should consult with a professional to help you file all your returns correctly. The sooner you file; the better. Penalties and interest will continue to accrue until you decide to do something about them.

Finding someone who is knowledgeable in tax law and IRS procedures will help take the stress off of your shoulders. You can sign a power of attorney to allow that person to communicate with the IRS directly on your behalf. In the event that you owe the IRS money and you have made no effort to arrange for payment the IRS may take action through issuing a tax levy (such as garnishing your wages) or serving you with a federal tax lien. A garnishment of wages, or wage levy, takes place by notifying your employer of your debt and forcing them to send a portion of your wages to the IRS.

As for tax liens, the IRS often file them to protect their interest. If you have a tax lien filed against you it will destroy your credit. For all debts besides secured mortgages, the IRS becomes the next lien holder and they will not release the lien until you have fully paid off the debt or an offer in compromise case has been settled.

Although most cases with the IRS are handled in civil court the consequences for not filing and complying with IRS laws can be brutal. It can be a crime to willfully not file a return. To avoid being investigated you have to make an effort to file your return or make arrangements to begin the process of filing (such as hiring a tax professional) before you receive a letter stating that you are under criminal investigation.

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Self Employed mortgage Getting a Mortgage when you are Self Employed

Nov 7

Posted by admin in Loans, Taxes

When you’re self-employed, you can write off all your reductions on your taxes. But, these are some things to understand that will help you make the mortgage process run smoothly when you’re self employed.

When verifying earnings – usually, lenders would like to see at least two years of self work history, infrequently they need to see three years. They are going to want to see this history determined in tax returns, sometimes. Occasionally the lenders will figure your earnings as being the average revenue you announced on your earnings taxes as profit, not your gross business revenue. Sometimes the bank will figure your earnings as the lowest of the 2 years and infrequently as the highest of the 2 years. Occasionally lenders will figure a little of your write-offs or deductions into your earnings. There are ideas of alternative routes a bank may be in a position to confirm your earnings and if you are self employed it will help you to be in a position to show a more of your revenue. Use bank records as evidence of earnings Find a bank who will accept 1-2 years of bank records as evidence of earnings. This way generally works better in establishing revenue than going off your tax returns, as you can mostly prove a load more money flow than tax returns will show. On your tax returns you sometimes take away each business cost before you claim any profit. Do a stated revenue or no doc loan These kinds of loans are done all the time, where you want no explanation of revenue, you only state on a form what your revenue is, and you don’t need to confirm it. These are some things to recollect when moving forward in the application process to get your house loan.

Many banks will tell you that you aren’t going to get licensed anywhere and that if they can not help you, no-one can. All home-loan brokers have access to absolutely different mortgage programs and some brokers are way more creative in their financing methodologies than others. Look for creative methods to get financing and contact as many brokers as possible. Day trading coaching. Her internet site has articles and an inventory of commended mortgage banks for many different sorts of mortgage loans.

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Still Waiting For Your Tax Refund?

Nov 1

Posted by admin in Taxes

I am constantly amazed when I speak with people and they tell me they are still waiting for tax refund checks after six or twelve months. If you are in this position, you may be in for a surprise.

Still Waiting For Your Tax Refund?

Preparing and filing taxes is one of those things almost nobody likes to do. Much like spring cleaning, it is something to be done and then forgotten about. If you are due a tax refund, however, this can result in some problems. This is particularly true with the IRS.

Every year, the Internal Revenue Service reports that it cannot get refund checks to a large number of taxpayers. No, it does not try to hide this fact. It actually will publish news releases and contact media outlets to get the world out. This year, the IRS is trying to find almost 100,000 people that it has refund checks for. The total dollar figure for outstanding refunds is over $92 million dollars. That is almost a grand per person the IRS cannot find.

Why can’t the IRS find you? Well, there can be a variety of reasons. The most common is you have moved since filing your tax return, but did not tell the IRS. As a result, the IRS sent the refund check to your old address. Another situation that can arise occurs when a marriage happens and the IRS is not notified of any new address or name change. Contrary to what you may have heard, the IRS does not keep tabs on you every day. If you move, you have to let the agency know.

If you are still waiting for a tax refund check, you should get proactive. You can go to the IRS web site and use the ?Where is my Refund?? link on the home page to find out the status of your refund. You can also pick up the phone and call the agency at 800-829-1954.

Listen, we all hate preparing and filing our taxes. If you have suffered through the process and generated a refund, don’t lose it. Take action and contact the IRS to get your money today.

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Take Expenses Now To Limit Your 2006 Business Taxes

Nov 1

Posted by admin in Taxes

As we roll towards the end of 2006, you are probably thinking about the holidays and gifts you need to buy. Well, it is also time to give yourself a tax gift.

Take Expenses Now To Limit Your 2006 Business Taxes

Take a moment to think back to last April. Do you remember the anguish of writing a check to the Internal Revenue Service? Did it seem a bit more than it should have been? Did you have to scramble to put together the funds? If you do not recall, go check the ledger in your check book or your accounting system. Bring back bad memories? If you want to avoid this situation again, you need to start following the simplest of tax strategies.

A time-tested and incredibly effective tax strategy is expensing everything you possible can before the end of the year. Now, the expenses need to be legitimate, but you can do some serious positive damage to your tax bill next year if you take this step. Remember, legitimate business expenses reduce your gross profit, which results in a reduction of your tax bill.

Most small businesses have a very interesting balance sheet around the end of December each year. If you took a look at it, you would think the company was nearly bankrupt. Why? A business that plans ahead will use all available cash to pay for expenses in an effort to ?buy down? their profit. A company that otherwise might show a $100,000 profit for the year suddenly shows a $10,000 profit. Of course, it may also have a bevy of new equipment, office supplies and so on.

So, what areas should you focus on? Well, every business is different, so you need to consider the nature of yours. Try to focus on expenses you know will come up in January and February of next year. This can be the most basic of things such as office supplies to more complex expenditures like new office equipment. Make a list of these items and determine what you can buy now instead of next year. Importantly, make sure you understand how much cash you will need in January so you don’t have cash flow problems if you over expense.

If you want to limit the damage of your tax bill in April, the time to act is now. Taking such action is like giving yourself a nice gift, but you have to wait till April to open it.

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