Colorado Real Estate News

TAKE ADVANTAGE OF THESE COMMON HOMEOWNER TAX BREAKS

Being a homeowner definitely has its advantages, and saving money on your taxes each year just might be at the top of the list. Make sure you’re taking advantage of these common tax perks as a homeowner:

1) Mortgage interest
One of the most common tax perks, you can deduct mortgage interest for your primary residence, and for a second home as long as you mean certain conditions. 

2) Equity loan interest
If you have a line of credit or home equity loan, you may be able to deduct some of the interest within IRS limits. 

3) Property taxes or real estate taxes
State or city property taxes are fully deductible from your income. Your mortgage lender may have required you to set up an escrow account, and in this case, you can only deduct escrow money held for property taxes when the funds are used to pay the property taxes. Keep in mind that if you receive a refund on city or state property taxes, this will reduce your federal deduction.

4) Points
On your fee schedule from your lender, you’ll probably notice some different charges. One charge is called, “points” and one point equals 1% of your loan principal. It’s common for home loans to have 1-3 points and you can deduct all points associated with a home purchase mortgage. If you have refinanced loan points, you can also deduct these, but only over the life of the loan, and not all at one time. If you refinance, you can deduct the balance of the old points and begin to amortize the new right away. 

5) Costs associated with moving for work
If you moved to a new home for a new job, you might be able to deduct some of your moving expenses. There are some stipulations to qualification, like your new job has to be at least 50 miles away farther from your old home than your previous job was. Some of the moving expenses you might be able to deduct include costs for storage, transportation, and lodging.

6) Home improvement loan interest
If you’ve completed some home improvements that are considered a “capital improvement” and took out a loan to cover the upgrades, you can deduct the interest on it, with no upper dollar limit. The home improvements can’t be for ordinary repairs like drywall repair, painting, fixing gutters or patching a roof–they need to be renovations that contribute to increasing the property value of your home. Items such as a new roof, pool, a garage, addition, landscaping, or insulation would all likely qualify.

7) Home office deduction
If you work from home and have a dedicated home office that you use exclusively for your work, you may be able to deduct a portion of your home costs such as a percentage of depreciation and insurance. 

8) Selling costs
If you sell your home, you might be able to reduce your taxable capital gain by the amount of your associated selling costs. Some of the selling costs that you can deduct from your profit include legal fees, inspection costs, title insurance, broker’s commissions, and title insurance.

9) Capital gains exclusion
If you’re married, file taxes jointly, and sell your home, you can keep up to 00,000 in profit on the sale of a home as long as it was your principal residence for at least 2 of the past 5 years. Married couples filing separately, as well as singles, can keep up to 50,000 each, tax-free. 

10) Buying a home for the first time
If you’re a first-time homeowner, you might be able to withdraw up to 0,000 from a traditional IRA without a penalty to help cover the costs of purchasing a home. 

 

Work with a tax professional to help maximize all the tax breaks for your unique situation. Need a recommendation for a tax professional or have questions? Get in touch!

Colorado Real Estate News

11 STEPS TO DOWNSIZING YOUR HOME

Nothing lasts forever — including a home where you raised a family or lived most of your working life. And it’s a fact of life that suddenly, a place that was perfect for you a decade or two ago might start to feel cavernous and empty (or just contain more square footage than you really want to clean regularly).

If you’re starting to dream about trading in your rambling old house for a smaller cottage or new condo, then it’s probably time to seriously consider downsizing from your current home. Before you start shopping and put your home on the market, though, there are a few things you need to think about and discuss with any family members who’ll be making the journey with you.

Consider your finances

It’s tempting to look up your home on a website like Zillow or Redfin and revel in how much money it’s worth today. So finances might not be top-of-mind when you’re thinking about downsizing — you may believe that you’re guaranteed to save money, but that’s not always the case.

Mortgage rates have been rising steadily, and if you bought or refinanced your home during the years of historic low rates, then you might get a bit of sticker-shock at how much you’ll pay in mortgage interest over the life of the loan. And even as your home’s value has increased, others have, too — so unless you’re also perusing the type of home where you’d ideally move after your downsizing, you might not be prepared to spend what’s necessary on a new place. Also, hopefully your credit score has been maintained or improved since you moved in, but if not, that’s something else you’ll have to consider.

Depending on where you want to move, there might also be homeowners’ association (HOA) restrictions and dues, new taxes to consider if you’re changing counties or moving to a new state, and a number of other fees and expenses that haven’t yet factored into your accounting. If you have a financial advisor, now would be a good time to talk to that person about downsizing and get some background on what it would mean for you financially.

Think about space

A lot of people really love the idea of living in a tiny home, but in practice, it’s not always as fun as it sounds. You might be well aware that the amount of house you have is in excess of what you really need, but if you don’t think hard about the right amount of space for you at this time in your life, then wherever you land might also be too big … or too small, on the other end of the spectrum.

Talk to any family members coming with you, if applicable, about what your needs are right now. If you aren’t sure what might feel “right,” then visit some open houses for smaller homes (warning: you might be tempted to buy one — resist!) or, if there’s an IKEA handy, head there for an afternoon and walk through some of the showroom examples. Wherever you go, bring a notebook or use an app on your phone to record the square footage of the home and a few sentences or words to help you remember whether you felt like it was too big, too small — or just right.

In addition to interior space, you’ll want to think about lot size. Do you really want an acre of lawn to maintain, or on the flip side, will you miss having a bit of grass to mow? See if you and any moving partners can come to some kind of resolution about the ideal space guidelines for this new leg of your life.

Ask yourself: Can you change enough to stay?

Another option to consider while you’re examining your finances is the opposite of downsizing: remodeling and staying put. It’s an increasingly popular solution to the too-much-house problem, and it’s possible that it could be right for you.

Maybe you can convert one floor of your home into a small unit and rent it out, for example. Maybe you need wider stairs, or maybe the bathroom needs an update and some adjustments. If it’s not really the space that’s the issue, but instead it’s the features of the home, then it’s very possible you might be able to get away with updating and revamping some things and then staying where you are.

Talk to a contractor or possibly even an architect (depending on the scope of changes) about what to do and get a ballpark figure for what it might cost, realizing that it’s likely to go over-budget. Then decide whether a big change might be enough to keep you where you are.

Decide where to go

If you’re bent on moving out of your current place, then the obvious next question that everyone is going to ask — from your relatives to your real estate agent — is “where are you going?”

Maybe you know you want to stay in the same general area, but you want to be a bit closer to amenities like the park or the grocery store. Or perhaps you have it in your head to shift gears entirely and move to a different city or state, or even a different country.

It’s not enough to just want a change — you need to have a goal, a reason for the change, because moving is never fun, and downsizing can be especially taxing. Think about where you’ve always wanted to live and why, and then decide where you’re going to plant your roots for the next set of life adventures.

Factor in cost-of-living changes

While you’re thinking about your finances, it’s a good idea to also consider whether you’ll be accruing any additional cost-of-living changes. This is best done after you know where you’ll be moving — cost of living might not fluctuate all that much within a city or a county, but if you’re moving to a different state, or from the suburbs to the city or the city to the suburbs, then there might be some additional costs that you’re not used to and therefore aren’t considering.

It might not be a bad idea to talk to a real estate agent or people you know who live where you want to move. Ask them how much groceries and gas cost, what they pay for utilities and parking, and whether they can share any tips or insight into other costs of living. You might discover that it costs an arm and a leg to call up a ride-share car on your phone like you’re used to doing, but that there’s a reasonably priced train that’s very accessible — so increased cost of living items might not be dealbreakers, but they’re still something to understand and consider.

Find a place to land

Now that you’ve got an idea of where you’re going and how much it will cost, it’s a good idea to start looking more specifically at your housing options. Even if you don’t buy a house or condo immediately, you’ll want to familiarize yourself with how big the homes are in the area where you want to move, and to get a ballpark feel for how much space you’ll have to work with in the new place. If it’s possible, you may also want to get specific measurements for a typical room (including floor-to-ceiling height).

This way you’ll have what you need to evaluate all your stuff — your furniture, your kitchenware, even your clothes — and to start making the tough decisions about what’s going to stay and what has to go.

Replacing and shedding furniture

You probably already know that you’re going to be getting rid of some furniture — they don’t call it “downsizing” because you’re adding new items. But knowing exactly what to bring and what to purge can be difficult, especially if you love a particular item of furniture but can’t see its future in your new home.

There are companies that can help you with this exercise (such as everythingbutthehouse.com), and if you decide to go solo, there are also lots of tips on how to furnish a smaller space. First, prioritize your own current furniture by considering its size, its function, and its daily usage. Eliminate any duplicate items — for example, the ten-person dining room set is probably unnecessary if you have a four-person dinette that’s tucked in the breakfast nook.

It might also be worth considering replacing some of your furniture — a bed with drawers underneath the mattress platform could be a better investment than the luxurious but space-hogging four-poster. Make sure you’re taking measurements of anything you buy and comparing it against what you know about your new place so that you don’t wind up cramming way too much furniture into a smaller space.

Getting rid of excess baggage

Apart from furniture, you’ll need to think about all your stuff, the books and decorations and clothes and kitchenware and appliances. The kitchen is another good place to demand multitasking from your gadgets, especially if you’ll be losing cabinet space in the move. There are new appliances that might be a worthwhile investment because they’ll help you get rid of two or three existing appliances, so do a little bit of research before you start making serious decisions there.

This is probably the hardest step, all in all, because there’s a lot that you might want to keep but just doesn’t make sense with your new lifestyle. Instead of considering it a loss, try to think of the baggage-shedding as an opportunity to free yourself from these possessions and find them a new home where they’ll be more appreciated and loved. 

Understand your storage options

Some condos have a storage closet where you can stash overflow, and if you’re moving into a new house, there might even be a garage, basement, or attic where your boxes can lurk. Whatever the case, think about all your options — including renting a storage unit — and make sure you factor in anything that you currently have in storage and aren’t willing to let go of just yet.

Speaking of renting a storage unit, you should know this: It’s a popular option when downsizing, but if you find yourself with a giant stash of things that you’re going to store, ask yourself how likely it is that you’ll ever go to visit that stuff, pull it out, look at it, or enjoy it in any way. The idea of just putting everything away but still possessing it can be very seductive, but realistically, most of the time you’re just creating another headache for yourself and potentially for the executors of your estate. If you like it, but not enough to keep it in the house with you, then maybe it’s time to say goodbye.

Organize, organize, organize

Chaos is part of any move, and downsizing can be especially fraught because there are more moving parts to the process. The more organized you can be at every level, the better this move will go.

Make sure your finances are well-organized to start with, then start applying that focus and detail-orientation to everything else. If you can, sometimes it’s easiest to move yourself out first with anything you know you’re taking with you, then ask your family and friends to help themselves to whatever they might want. After that, you can sell the rest — either in bulk to a company or service like everythingbutthehouse.com or piecemeal, depending on your preferences — or donate it; there are many donation services that will come pick things up from your house so you don’t have to cart them into a donation center.

“A place for everything and everything in its place” is an aspirational goal for many of us, but when you’re downsizing, try to make it your (at least temporary) mantra. It will guide you through the downsizing process and help keep you organized to boot.

Make the move

When it’s finally time to execute, it’s very common for downsizers to be seized with second thoughts. Will you like your new home as much as your old one? Will you miss your things too much to fathom? What if you’re making a huge mistake? What if you change your mind?

The good news is that humans, despite hating the idea of change, are highly adaptable creatures. Make a list of all the things that you don’t like about your about-to-be-downsized house and lifestyle, and refer to it often throughout the process. You can even pull it back up in the new place to remind yourself why you moved if something is frustrating or annoying you. But within a few weeks or months, it’ll be hard to imagine how you ever managed before downsizing, so in the meantime, trust the process and find a solid team that can help you get from your oversized starting line to the just-right finishing line.

Colorado Real Estate News

CHECKLIST TO ASK PROPERTY MANAGEMENT COMPANIES

Picture of City Hall Lit Up With Columns of Light

Checklist to Ask Property Management Companies

Purchasing a house or an apartment can be one of the wisest investments you can make in your lifetime. Rental prices are unlikely to fall, not to mention the steady, unending stream of people migrating to the Mile High City, meaning there are always going to be new potential tenants. .

But owning a rental property isn’t just about having a secondary form of income; it’s also critical that you can handle the logistics and awaiting challenges of being a landlord.

The Challenges of Owning a Rental Property

Owning a rental property means that you need to be available 24/7 to handle the many challenges of having tenets. A pipe bursts as your family is sitting down for Christmas Dinner, guess who’s getting the call? You are boarding a flight for a much-deserved vacation to the Bahamas and the dishwasher backs up, guess who’s a responsibility?

So you might say, “hey that doesn’t sound like something that interests me!” But before you talk yourself out of owning an investment property, there are some things you should know…

 

The Right Property Management Company Can Help

If you are worried about being a landlord but still want to reap the financial and investment benefits of owning a rental property then there is a viable solution at your fingertips. Hiring a reputable property management company, such as Denver Rental, allows you to live your life stress-free without having to worry about the logistics of owning an investment property.

A competent property management company can greatly help in several key areas including longer rent cycles, timely rent collection, application processing, and shorter vacancy cycles.

Additionally, property management companies tend to have better tenet retention because of the continual engagement with the property through regular maintenance and repairs.

Having a high tenant turnover rate is one of the biggest stressors for landlords because there is more than goes into the turnover process than simply finding new tenants. Changing the locks, household repairs, cleaning, replacing old or dirty carpet, are just to name a few of the on-site logistics. Not to mention, strategic advertising and competent showings on the marketing side.

But you might be asking yourself, how do I differentiate the good property management companies versus the bad…

Checklist of Things You Should Ask When Choosing a Property

Management Company

● How many units do you currently have in your portfolio?

● Are you able to handle more units to your portfolio? This is an important question to ask because most companies tend to not turn down business even when then they cannot handle the increased quantity.

● What types of properties do you manage?

● How often do you do exterior inspections of the property?

● How often do you do interior inspections of the property?

● What is your emergency protocol?

● Do you find tenets or do I? Do you perform background reports, credit checks, etc?

● What is your eviction rate? What is your protocol for eviction?

● Do you send monthly reports for the income and expenses of my property?

● Have you ever been in a lawsuit from either a client or a tenet?

● Do you outsource your cleaning and maintenance crews or it is done in-house? If you do

outsource, can you please provide the names of the contractors and reviews?

● Are you insured?

● How long have you been in business?

● What are your management fees?

● What is your cancellation policy?

The professionals at Denver Rental ensure that your tenants will be treated with the respect they deserve and you will never have to worry about the headaches of being a landowner. If you think it’s time to purchase an investment property, turn to the experts who will help you manage it.

Colorado Real Estate News

MAKE THE MOST OF YOUR DENVER METRO KITCHEN SPACE! 7 TIME-TESTED ORGANIZING TIPS

Out of all the rooms in your home, your kitchen gets the most traffic. Whether you’re getting ready to stage and sell your Rocky Mountain home, or you’re unpacking kitchen items into your new home, you’ll want to have it perfectly organized to suite your life.

Here are some smart and simple tips to get the most out of your kitchen organization:

  1. Declutter. If the contents of your kitchen are overflowing, the first thing to do is get rid of what you don’t need. The best way to figure out what stays and what goes? Empty the contents of your kitchen drawers into a storage bin. If you use an item from the bin, it goes back in the drawer. After about a month, donate what’s left in the box to charity.
  2. The perfect pantry. Organize your pantry based on how frequently you use each item. Things like your slow cooker or roasting pan can stay on the top or bottom shelf, while you’ll want to have easy access to everyday items. Purchase a single brand of airtight clear containers to hold dry goods like pasta, grains, and cereal, so you can easily see what you have on hand. If you have children, place snacks at a kid-friendly height. Also, store canned goods with the labels facing outwards, with the nearest expiration dates at the front.
  3. Kitchen counters. Counters are your workspace, and when you’re showing your home, they need to be completely clear-yes, this means nothing should be stored on your countertops. If you’re not selling your home anytime soon, your counters should still be kept clean. Keep small appliances out and ready that you use daily like the coffee maker or toaster but stow away items you use less frequently such as a food processor or stand mixer.
  4. Dishes and cutlery. Think of your kitchen in terms of workstations. If you usually plate your food straight from the stove or oven, storing plates, bowls, and utensils nearby will save you time. Serveware and dishes that you only use a few times a year, can be stored out of the way in cabinets or in your pantry.
  5. Pots and pans. You can save money instead of purchasing that pot rack that displays your pots and pans for all your company. This is generally a no-no. Potential buyers don’t need to see your used pots and pans. For easy cooking, store pots and pans in lower cabinets near the stove, and use the cabinet door space, or a magazine holder to keep lids in order.
  6. Spices. Similar to your pantry, store spices according to the ones you use most often. The best place for spices is a drawer near the stove (but not right next to it, because heat can spoil them). Keep the spices you use frequently near the front of the drawer and label the tops with their contents for quick cooking.
  7. Refrigerator. There are ideal spots for each kind of food. Store meat at the bottom, where it’s coldest, so leaks can stay contained. Keep dairy products on the upper shelves where the temperature is most constant, and stow bottles in the doors where it’s not as cold. Keep items that need to be eaten first near the front of the fridge, so you can enjoy these before they spoil.

Not sure where to start? For more storage or organization questions, get in touch with your local realty expert!