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Do's and Dont's of Homebuyer Incentives

by Phil Lande

Homebuyer incentives can be smart marketing or a waste of money. Find out when and how to use them.

 

Be sure you're sending the right message to buyers when you throw in a homebuyer incentive to encourage them to purchase your home.

Be sure you're sending the right message to buyers when you throw in a homebuyer incentive to encourage them to purchase your home.

 

 When you're selling your home, the idea of adding a sweetener to the transaction -- whether it's a decorating allowance, a home warranty, or a big-screen TV -- can be a smart use of marketing funds. To ensure it's not a big waste, follow these do's and don'ts: Do use homebuyer incentives to set your home apart from close competition. If all the sale properties in your neighborhood have the same patio, furnishing yours with a luxury patio set and stainless steel BBQ that stay with the buyers will make your home stand out.

Do compensate for flaws with a homebuyer incentive. If your kitchen sports outdated floral wallpaper, a $3,000 decorating allowance may help buyers cope. If your furnace is aging, a home warranty may remove the buyers' concern that they'll have to pay thousands of dollars to replace it right after the closing.

Don't assume homebuyer incentives are legal. Your state may ban homebuyer incentives, or its laws may be maddeningly confusing about when the practice is legal and not. Check with your real estate agent and attorney before you offer a homebuyer incentive.

Don't think buyers won't see the motivation behind a homebuyer incentive. Offering a homebuyer incentive may make you seem desperate. That may lead suspicious buyers to wonder what hidden flaws exist in your home that would force you to throw a freebie at them to get it sold. It could also lead buyers to factor in your apparent anxiety and make a lowball offer.

Don't use a homebuyer incentive to mask a too-high price. A buyer may think your expensive homebuyer incentive -- like a high-end TV or a luxury car -- is a gimmick to avoid lowering your sale price. Many top real estate agents will tell you to list your home at a more competitive price instead of offering a homebuyer incentive. A property that's priced a hair below its true value will attract not only buyers but also buyers' agents, who'll be giddy to show their clients a home that's a good value and will sell quickly.

If you're convinced a homebuyer incentive will do the trick, choose one that adds value or neutralizes a flaw in your home. Addressing buyers' concerns about your home will always be more effective than offering buyers an expensive toy.
More from HouseLogic Setting the right home price

Using an appraisal to set your home price

Choosing the right offer on your home
G.M. Filisko is an attorney and award-winning writer who gritted her teeth and chose a huge price decrease over an incentive to sell a languishing property--and is glad she did. A regular contributor to many national publications including Bankrate.com, REALTOR? Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

 

When It's Time to Get an Accountant to Do Your Taxes

by Alaina Tweddale

When It's Time to Get an Accountant to Do Your Taxes

By: Alaina Tweddale

 

Do you need a CPA? Or will a regular accountant do?

 

You are soooo dreading doing your taxes this year. Gone are the days when you used to sit down with a glass of wine and fill out your 1040 EZ. Remember that time you finished and hit the "submit" button just as you swallowed the last sip?

Not this year. Unless you want to pay a ton in taxes, you're going to have to itemize. You did it last year, and it wasn't too bad. But this year, you did some freelancing. And you moved. And it's going to take a whole lot more time than one glass of wine. 

Maybe it's time to hire a pro. But do you really need a certified public accountant? And can you justify the expense?

The Differences Between CPAs and Other Tax Experts

First you need to know there are different types of tax experts. And not all accountants are CPAs. So if you're thinking that an independent CPA and someone at H&R Block or Jackson Hewitt (or your buddy who studied accounting in college) are pretty much the same, don't count on it. Basically,

  • An accountant is someone who studied accounting.
  • CPAs are accountants who pass rigorous testing from their state board on a regular basis. The designation usually requires a degree. Not every CPA specializes in taxes.
  • An "enrolled agent," or EA, is an accountant who has received certification from the IRS. Being an EA doesn't require a degree like CPA. But it does verify they know tax law.
  • A tax preparer at pop-ups like H&R Block or Jackson Hewitt is trained on tax software to help taxpayers file their returns. They aren't required to be CPAs or EAs.
  • Only CPAs and EAs can legally represent you if the IRS challenges your return.

There's nothing wrong with visiting a pop-up preparer like H&R Block if your return isn't all that complicated, says Cathy Derus, CPA and founder of Brightwater Accounting in Illinois.

"It's when you start generating other income — perhaps you launch a business or own rental property — [or experience a big financial change] when it makes sense to ask for a little extra help," she said.

When It's A Good Idea to Hire a Tax Pro

When you buy your first house. Many of the expenses related to buying a home and having a mortgage are deductible. But only if you itemize. And that's what the experts are best at.

When you move to a new state. There's a good chance you'll have to file two state returns for the year you move. And each state is a little bit different in terms of state tax owed — zero in some states, a flat amount in others, and graded by income bracket in most.

When you become a landlord. "When you own investment property, you become a small business owner," says Tai Stewart, accountant and owner of Saidia Financial Solutions in Houston. That means new records to keep and a new tax form, Schedule E, to complete.

When you buy a vacation property. Especially if you rent it. And especially if it's in a different state.

When you work from home. There's a lot of potential money-saving deductions that can vary widely depending on the type of business and how much space it takes up in your home. “If you have a {{ start_tip 21 }} home office, {{ end_tip }} you can deduct for the square footage you use for work as well as a portion of your utilities, mortgage interest, and property taxes," says Stewart.

When you make home improvements. Energy-efficient upgrades like installing a new heating and cooling system, water heater, or insulation may qualify for tax credits. But that can change depending on the year. Same goes for medically necessary home improvements that aren't paid by your employer or insurance.

When your home's value is reassessed.The tax man doesn't always get it right, and sometimes your home may be valued at more than it should be. An expert will be able to pull the data together to appeal it.

So, How Much Do Accountants Cost?

H&R Block will do your taxes for about $150, while a CPA or EA may add $100 or more to that fee ($260 on average last year).

You can definitely DIY all these tax scenarios and save the fees, but with CPAs and EAs, the extra cost may be worth it. Especially if you run your own business. Or you own more than one home. "An accountant can help you analyze your spending choices and even act as a consultant," says Stewart. Best of all, they'll be by your side if the tax man ever comes after you. That alone could be priceless if the time comes.

Oh, and one last tip: If you decide you want to hire a CPA or EA, best not to wait until the last minute. You may not find one.

How to DIY Your Taxes — and Not Miss a Single Deduction

by Alaina Tweddale

How to DIY Your Taxes — and Not Miss a Single Deduction

By: Alaina Tweddale

Tips on choosing tax preparation software to help get all the homeowner benefits.

 

Ready or not, the tax man's coming. Filing your taxes yourself may not be your idea of a fun night at home, but even so, it doesn't really have to be that bad. Yes, even if you own a home. Even if you itemize your deductions. Even if you're scared of making a mistake.

We turned to the tax pros and nailed down their top tips to make DIY tax filing as easy and painless as possible — as well as how to ensure you don't miss any possible deductions. Here's what they said:

Pick the Right Software

Unless you qualify for a free version (more about this below), software prices are all over the place. Still, you get what you pay for. TurboTax is pricey at almost $60 for the Deluxe version, but both our tax experts agree: If you're going the DIY route, it's their favorite option.

"It's user-friendly," says Cathy Derus, founder of Brightwater Accounting, who, despite being a CPA, admits she's used the program herself in the past. "It offers an online questionnaire. Then, it walks you through exactly what you need to do." That questionnaire does a good job of helping you identify possible deductions.

But it's not fail-safe, she added. It's only as good as the information you feed into it.

To really make sure you're aware of all possible deductions, get a copy of Form 1040, Schedule A, (and Schedule C if you're a sole proprietor for your own business), says Derus. Then, "scan the forms and take note of any items you think you might be eligible to take."

If you're a homeowner, here are some examples of deductions you can take:

 

  • Mortgage interest
  • Property taxes
  • Some costs of buying a new home
  • Some costs of selling a home

For a full list of your possible homeowner deductions, go here.

Free Software Can Be Ok, Too

If your adjusted gross income is below a certain threshold — typically $62,000 — you may qualify to use one of about a dozen free software options. TurboTax has a free option, but its income threshold is lower at $31,000. H&R Block, Jackson Hewitt, and TaxACT also have free versions.

Some companies also impose other restrictions, such as age and state of residence, to qualify for a free version. That's because for some firms, the free offering is a way to find clients who might be willing to pay for other services.

Watch for extra costs:Some companies will file your federal return for free, but then charge you for the state return, to e-file, or ask questions of a live person.

Filing for an Extension Can Be a Smart Thing to Do

If you find yourself butting up against the tax filing deadline, you can always request an extension, “so you're not stressed out," says Derus.

Most people don't fully understand how extensions work, and often make mistakes that cost a bundle. Here's what you need to know:

How to file a tax extension: 

  1. File an extension anytime before or on April 15. You'll avoid the late filing penalty, which is a whopping 5% of your outstanding balance, due for every month you've failed to file.
  2. If you owe money, pay as much as you can by April 15 to avoid the late payment penalty of 0.05% interest. (A whole lot less than the late filing penalty, though!)
  3. Make arrangements to complete your tax filing by the October 15 deadline to avoid adding extra interest payments.

Get the Benefits of E-Filing

You've probably already been e-filing your taxes, but are you aware of the benefits?

Why it's better to e-file:

  • 24 hours after you e-file, you can start checking on your return via the IRS's "Where's My Refund" online tool or IRS2Go app.
  • You'll get any refund due to you faster.

You're also more likely to know if you filed your forms correctly, avoiding a scary encounter with the tax man. Because if you e-file, you've got to use software. And these programs "run a check for questions that need to be answered, numbers that don't add up, and missing Social Security numbers," says Tai Stewart, accountant and owner of Saidia Financial Solutions in Houston. Those mistakes tend to flag your return for a close-up review.

You'll also wait up to six weeks for your return if you use snail mail.

So, what are you waiting for? "Fill a pot of coffee, and get to work," encourages Derus.

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Contact Information

Photo of Phil Lande’s Atlas Group Real Estate
Phil Lande’s Atlas Group
RE/MAX Legends
5645 Castle Creek Parkway N.
Indianapolis IN 46250
3173397653
Fax: (317) 841-7204