Top 6 Home Tax Deduction Mistakes: North Shore Real Estate

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Across the nation and of course here on the North Shore of Chicago that time is upon us….tax season-2018!  For North Shore real estate homeowners, home sellers, or prospective first time North Shore home buyers, having a basic understanding of tax guidelines can potentially shield you from Taxbreaksfinancial heartache and can help to ensure you’ll benefit from many of the exceptional tax benefits of property ownership. Below are the top 6 tax deduction misconceptions.

Note: Due to the various restrictions and conditions regarding real estate tax benefits, it is important to consult with one’s financial advisors or accountants to fully understand the benefits and opportunities of tax benefits to those who own North Shore real estate. The tips provided give general information about tax laws and consequences, but shouldn’t be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice; tax laws may vary by jurisdiction or location.

See a list of available North Shore tax preparers and financial advisors HERE . Or, let us know who you recommend for tax preperation on Chicago’s North Shore!

Schedule A is the part of Form 1040 commonly used to list myriad deductions, and the more details, the more prone someone may be to misinterpretation with their taxes. To save time and money, four tax experts weigh in on the following 6 most common Schedule A concept mistakes homeowners may make.

Concept #1: Line 6 – real estate taxes

Your monthly mortgage payment often includes money for a tax escrow, from which the lender pays your local real estate taxes.
The money you send the bank may be more than what the bank pays for your taxes, says Julian Block, a tax attorney and author of Julian Block’s Home Seller’s Guide to Tax Savings. That will lead you to putting the wrong number on Schedule A.
Example:

  • Your monthly payment to the lender: $2,000 for mortgage + $500 escrow for taxes
  • Your annual property tax bill: $5,500

Now do the figures:

  • Your bank received $6,000 for real estate taxes, but only paid $5,500. It may keep the extra $500 to apply to the next tax bill or refund it to you at some point, but meanwhile, you’re making a mistake if you enter $6,000 on Schedule A.
  • Instead, take the number from Form 1098—which your bank sends you each year—that shows the actual taxes paid.

Concept #2: Line 6 – tax calculations for recent North Shore buyers and sellers

If you bought or sold a North Shore home in the middle of 2013, figuring out what to put on line 6 of your Schedule A Form is tricky.
Don’t simply enter the number from your property tax bill on line 6 as you would if you owned the house the whole year. If you bought or sold a house in midyear, you should instead use the property tax amount listed on your HUD-1 closing statement, says Phil Marti, a retired IRS official.
Here’s why: Generally, depending on the local tax cycle, either the seller gives the buyer money to pay the taxes when they come due or, if the seller has already paid taxes, the buyer reimburses the seller at closing. Those taxes are deductible that year, but won’t be reflected on your property tax bill.

Concept #3: Line 10 – properly deducting your points

You can deduct points paid on a refinance, but not all at once, says David Sands, a CPA with Buchbinder Tunick & Co LLP. Rather, you deduct them over the life of your loan. So if you paid $1,000 in points for a 10-year refinance, you’re entitled to deduct only $100 per year on your Schedule A Form.

Concept #4: Line 10 – HELOC limits breakdown

If you took out a home equity line of credit (HELOC), you can generally deduct the interest on it only up to $100,000 of debt each year, says Matthew Lender, a CPA with EisnerLubin LLP.
For example, if you have a HELOC for $200,000, the bank will send you Form 1098 for interest paid on $200,000. But you can deduct only the interest paid on $100,000. If you just pull the number off Form 1098, you’ll deduct more than you’re entitled to.

Concept #5: line 13 – Private mortgage insurance

You can deduct PMI on your Schedule A Form, as long as you started paying the insurance after Dec. 31, 2006. Unless Congress acts to extend the PMI deduction, however, 2011 is the last year for which you can take this deduction. (Also, this is also a good time to review your PMI: You might be able to cancel your PMI altogether because you’ve had a change in loan-to-value status.)

Concept #6: line 20 – casualty and theft losses

You can deduct part or all of losses caused by theft, vandalism, fire, or similar causes, as well as corrosive drywall, but the process isn’t always obvious or simple:

  • Only deduct losses that are greater than 10% of your adjusted gross income (line 38 of Form 1040).
  • Fill out Form 4684, which involves complex calculations for the cost basis and fair market value.  This form gives you the number you need for line 20.

Bottom line on line 20: If you’ve got extensive losses, it’s best to consult a tax pro. “I wouldn’t do it myself, and I’ve been dealing with taxes for 40 years,” says former IRS official Marti.

Get more tax tips HERE

Real Estate Outcomes October2014: Chicago’s North Shore

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Prices

Monthly Market Update (Click to Play)

Monthly Market Update (Click to Play)

Confirmation of Late autumn ongoing North Shore Chicago progress…The Median Sales Price in October was up 15.1% from price-points in October of 2013 and up 5.7% from last month. The Average Sales Price in October was up 14.6% from market action reporting in October of 2013 and up 10.5% from last month. October 2014 ASP was at highest level compared to October of 2013 and 2012.

Selling Price vs Listing Price

The Selling Price vs Listing Price reveals the average amount that North Shore Sellers are agreeing to come down from their list price. The lower the ratio is below 100% the more of a Buyer’s market exists, a ratio at or above 100% indicates more of a Seller’s market. The October 2014 Selling Price vs List Price of 95.6% was up from 95.3% last month and down from 95.8% in October of last year.

Property Sales

Chicago North Shore October Property sales were down -4.4% compared to market action reporting in October of 2013 and -5.7% lower than sales last month. October 2014 sales were at a mid-level compared to October of 2013 and 2012. October YTD sales totals are running -11.5% behind last year’s year-to-date sales final market outcomes.

Inventory & MSI

The Total Inventory of North Shore Properties available for sale as of October was down -7.6% from last month and up 15.2% from totals in October of last year. October 2014 Inventory was at a mid-range compared to October of 2013 and 2012.

A comparatively lower MSI is more beneficial for sellers while a higher MSI is better for buyers. The October 2014 MSI of 5.3 months was at a mid-range compared with October of 2013 and 2012.

OctMarketReport-2014-GM

Inventory / New Listings / Sales

The summary North Shore-Chicago view of the market combines monthly inventory of North Shore Properties for sale along with New Listings and Sales. The graph shows the basic annual seasonality of the market as well as the relationship between these items. The number of New North Shore Listings in October 2014 was down -24.6% from final totals reported last month and up 10.2% from final figures recorded in October of last year.

A steadfast, top producing, Chicago-North Shore real estate resource for over 25 years, Gloria Matlin is known as the consummate professional. Clients praise her and provide ongoing feedback on her sense of staying ahead of market outcomes, an extensive top performing background in marketing, invaluable North Shore community insight, and a high-ranking client focused desire to make North Shore real estate dreams a reality. Visit Gloria Matlin HERE and HERE to review testimonials and for an online introduction; or simply stop by her exceptional residential real estate office-Coldwell Banker, 640 Vernon Avenue in Glencoe, Illinois, 60022.

4th of July Events and Fireworks: North Shore Chicago Real Estate

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North Shore Chicago real estate is an ideal topic, but for holiday sake, so is the 4th of July on Chicago’s North Shore! This year’s July 4th holiday falls on a Friday, which makes the celebration that much sweeter, with ongoing celebrations well into the fourth-of-july-picturesweekend.Local North Shore sights, sounds and events are boundless options this holiday. Below are top rated ways to celebrate Independence Day, as well as a list of North Shore community things to do, places to go and events to experience..Enjoy!

Find a Fireworks Show
Instead of driving neighbors and dogs crazy this year with at-home fireworks, attend a public display.

July 4th Events/Fireworks Shows for Glencoe, Winnetka, and Northfield:  

North Suburban and Chicago holiday events:

Shop ‘Til You Drop
There’s no better time to shop than on the 4th of July when Chicago North Shore retailers offer firework-worthy sales and other merchandise incentives; one of the best ways to avoid a battle with the crowd at the mall or outlet center:

Local shopping options

Plan a Cook-out or Picnic
Take your family or significant other on a picnic, by a lake or at the park near your home. Prepare your own finger foods and side dishes with traditional 4th of July grub. Download a few printable games to pump up the fun, which may include Independence Day trivia and a scavenger hunt for the kids.

Get Active
Organize a fun day of softball at a local field or park with family and friends. Assign blue and red (or white) teams and request that members wear the appropriate colors. Otherwise, pick up some cheap tees, pack a cooler with beverages, sandwiches and snacks, and let the games begin!

Parks and recreation options  

More info HERE

Top Ideas for Spring Break 2014: North Shore-Chicago Real Estate

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With warmer weather and vacation time close at hand the specific focus on North Shore real estate shifts slightly to subjects like places to go, places to stay, traveling abroad, and things to do for spring break 2014! Some will start looking at destination clubs or FirstDayOfSpringspecific places to visit; others will embrace a “staycation” concept and explore all that Chicago’s North Shore has to offer. Provided below are options to satisfy everyone this year:

Staycation-North Shore/Chicago, Illinois Style!

North Shore Events/Restaurants

Top Things to do Around Illinois/Chicago

One day deals

 

Top Destination Clubs & Travel!

Recommended club locations

Travel for students

Travel for families

Our Chicago North Shore Coldwell Banker office located in downtown Glencoe, Illinois-60022, can provide help with local vacation homes for rent, homes for sale, local North Shore directions, maps, events happening for spring break, places to visit, or simply just to recommend places to dine around the North Shore communities.  Our 46+ years of optimal neighborhood service can be put to use to help plan and sustain a wonderful spring break for 2014.  We look forward to assisting/seeing you. Have a fun and fantastic Spring Break. Enjoy!

We Believe!

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Happy First days of Fall/Autumn! See the video that captures, and certainly can represent the comforts of home as well as this special time of year…

Agent Horizon

Coldwell Banker® has one of the best ads on tv.  It emotionally connects with the true value of a home, by showing friends celebrating, kids baking and jumping on the bed, and many of the other moments we enjoy in our home.  Sometimes agents get caught up in the numbers and “the market” dictating value in a home, and this commercial reminds us that regardless of numbers, the real value is in the memories and moments we create.

The newest addition to this campaign is the Coldwell Banker International Film Festival.

From September 9-27 the festival will showcase films on the value of home from around the world!  Brazil, Mexico, India, South Africa, China, Portugal, US and the United Arab Emirates will all be showcased.  An avid film fan myself, I am so excited to showcase these films in our new client lounge at the Coldwell Banker Horizon Realty…

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Summer Real Estate Trends to Follow-North Shore-Chicago Real Estate

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As the North Suburban market in Chicago heats up and sellers as well as buyers regain control, here are a couple of trends to review and consider:

North Shore Summer Trends 2013

Summer

Glencoe-North Shore Market Trends: Update March-April2013

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Great News! Home sales statewide, including Chicago North Shore have posted monthly year-over-year volume gains since July 2011; per information recently released by the Illinois Association of REALTORS®.

So far North Shore sales volume has been encouraging. The first two months in a year are traditionally slower in terms of real estate progress, but this year to date the market is off to a robust start. North Shore Market appeal is strongly supported by ongoing attractive mortgage rates and ideal turn-around time-frames for sellers; a win-win combination for all involved in the Chicago North Shore real estate transaction process. The future looks bright for April 2013 North Shore home sale projections.

Station-NorthShore

The monthly average commitment rate for a 30-year, fixed-rate mortgage for the North Shore-North Central region was 3.49 percent in February 2013, up from 3.40 percent during the previous month, according to the Federal Home Loan Mortgage Corp. Last February it averaged 3.91 percent. In the nine-county Chicago Primary Metropolitan Statistical Area (PMSA), home sales (single-family and condominiums) in February 2013 totaled 5,935 homes sold, up 20.2 percent from February 2012 sales of 4,936 homes.

Forty-seven (47) of 102 Illinois counties reporting to IAR including the North Suburban area showed year-over-year home sales increases in February 2013. Lake, up 7.4 percent Cook, up 4.7 percent.

Sales and price information is generated by Multiple Listing Service closed sales reported by 31 participating Illinois REALTOR® local boards and associations including Midwest Real Estate Data LLC data as of March 7, 2013 for the period Feb. 1 through Feb. 28, 2013. The Chicago PMSA, as defined by the U.S. Census Bureau, includes the counties of Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry and Will.

The Illinois Association of REALTORS® is a voluntary trade association whose 41,000 members are engaged in all facets of the real estate industry. In addition to serving the professional needs of its members, the Illinois Association of REALTORS® works to protect the rights of private property owners in the state by recommending and promoting legislation to safeguard and advance the interest of real property ownership.

Find Illinois housing stats, data and the University of Illinois REAL forecast atwww.illinoisrealtor.org/marketstats.

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