Renting Out Your House or a Room? Deduct Expenses!!

If you have an investment property or you just rent out a room of your house, practically every expense on that house or room is completely deductible. Repairs to the investment property, any improvement cost, or expense are completely tax deductible.

If you just rent out a room of your house you have to divide what is for the room and what is for the rest of the house. Items and portions only for the rented room are tax deductible. So if new carpet is needed in the whole house, only count the cost of carpet for the square footage for the rented room as a deduction. Same thing for blinds, painting, or even providing your tenant with furniture. All items for the rented room are tax deductible.

Expenses for your entire home must be divided between the part you rent and the part you live in. This includes your payments for:

• mortgage interest.
• repairs for your entire home; for example, repairing the roof or furnace, or painting the entire home.
• improvements for your entire home; for example, replacing the roof.
• homeowners insurance.
• utilities such as electricity, gas and heating oil.
• housecleaning or gardening services for your whole home.
• trash removal.
• snow removal costs.
• security system costs.
• condominium association fees.

If the entire home is rented out, this is all deductible in it's entirety if the payment is your responsibility. You can also deduct depreciation on the part of your home you rent.

Austin Ranked #2 Best Real Estate Investment Market

According to Inman News and Realtor.com, Austin, Texas ranked high in the latest top 10 investment markets.  Coming in at #2 on the list, outranked by only Tucson, Arizona, this is just one more achievement in Austin's long list of recent high survey rankings.

Built from Realtor.com data updated through February 2012, the report put Austin as the second highest current real estate markets to invest in. The top 10 list was built by analyzing the housing inventories, price trends and unemployment rates from the Bureau of Labor Statistics for 146 markets Realtor.com tracks.

Austin, Texas with a median list price of $229,500, boasted a 12 percent year-over-year increase, and low relative unemployment (6.3 percent as of December 2011). Kansas City, Baltimore, and Forth Worth round out the Top 5. Click on the link below for more details on the top 10 list:

http://www.inman.com/news/2012/03/23/top-10-markets-invest-in

To See More of Austin's Rankings and Achievements:

http://www.i-am-real-estate.com/austin-rankings-c23311.html

Survey Shows More Reasons to Buy Than Rent

According to the National Association of Realtors and Fannie Mae’s March 2012 National Housing Survey, 33% of Americans say they expect home prices to rise in the next 12 months, the highest level in more than a year.

The number of people who say now is a good time to buy is also on the rise, increasing to 73 percent—also the highest level in more than a year. The percentage who said it’s a good time to sell a home also increased one point to 14 percent in March.

Meanwhile, more Americans expect rental prices to rise and are projecting an increase by 4.1 percent over the next year, the highest number recorded to date.

“Conditions are coming together to encourage people to want to buy homes,” says Doug Duncan, Fannie Mae’s chief economist. “Americans’ rental price expectations for the next year continue to rise, reaching their record high level for our survey this month. With an increasing share of consumers expecting higher mortgage rates and home prices over the next 12 months, some may feel that renting is becoming more costly and that home ownership is more compelling house choice.”

Tragedy Precipitates Growth

It's impossible to try to predict events that occur in your life and the paths you'll be lead down as a result of them. It's all in how you respond to those events that comprise who we are as people. Whether that event was horrible, beautiful, depressing, or wonderful, you keep your head up and move forward regardless. Never forget the past because it helps shape us, but focus on the future and the bright things to come.

As many of my friends, colleagues, and client's know my son Madden passed away a year and a half ago. I received so much support from everyone. Even client's at the time, who were relative strangers extended warm sympathies that I will never forget. Many of them will be friends for life as a result. 

I had never experienced anyone in my life close to me passing away until he left me. I found it unbearable at times, especially when I had to put a smile on my face for work. A month after he passed, my grandmother on my mother's side passed away from pancreatic cancer. She had been fighting for so long and promised me she wouldn't give up until she met my son. It hurt immensely that I was never able to make good on that promise. I never got to introduce them, but I know she's taking care of him in heaven. 

Shortly after that, my grandfather on my father's side passed away from cancer in the scalp. It just seemed like one crushing blow after another over that year. I went from never experiencing tragedy to having three gigantic losses in the same year. Like I never had a chance to recover. It just kept stacking on top of my shoulders and eventually I didn't know how to handle it anymore. I just became so emotionally numb. I felt like crying, but I just couldn't anymore. I didn't feel anything inside. It made me hate myself that I was unable to externalize the emotions I knew I should have. I bottled it up and didn't share my pain with others, not even my wife. I can advise you now, that isn't the right thing to do. I've recognized that now.

It's true what they say, you really have this sense of invincibility until something bad really does happen to you. I never thought I would be the one who loses their child. It made me so bitter with life and the world for awhile. That people who don't even want a child and treat their bodies so horribly through pregnancy, so often get a healthy child. Then there is my wife and I, who do everything the way we were told. Don't stand next to the microwave, no fish with mercury. Full-term, baby born, looks beautiful, gone in 5 days from breathing complications. You just want to scream that it isn't fair. Why does something so beautiful have to be taken when you've done nothing wrong? But that's how life goes. Impossible to predict.

The important thing is to remember that life goes on and there are always brighter things on the horizon. God has a plan for our lives and sometimes that plan has a few bumps. Tragedy precipitates growth. Life will always throw you curveballs. Learn how to knock them out of the park and win the game of life. My wife is now pregnant with our second child. I am beyond excited. While I'll never forget Madden and how much I loved and wanted him, I look forward to my turn to have a child and people be happy for me instead of feeling bad for me. There is so much I can't wait to do. Pass on my sparkling personality and laugh with him/her over an inside joke that mommy doesn't get. Play in the park, read to them, tuck them into bed. Kiss them and tell them how much I love them. I can't wait for the future. 

Apple Creating 3,600 New Jobs in Austin!

Texas Governor Rick Perry announced Friday that Apple will create 3,600 new jobs and expand it's operations in Austin. A $304 million investment in a new campus will double the current size of Apple's workforce in Texas over the course of the next decade. The expansion will see most jobs in the customer support, sales, and accounting functions.

In order to entice Apple's commitment to Austin, the State of Texas has offered $21 million over 10 years through the Texas Enterprise Fund. Completion of contracts and local incentive agreements with the City of Austin and Travis County are contingencies of the agreement. Until the incentive deals are approved, both Apple and local business recruiters are being tight-lipped about the totality of expansion plans in the city.

Apple's official statement: "Our operations in Austin have grown dramatically over the past decade, from less than 1,000 employees in 2004 to more than 3500 today. We're looking forward to building a new campus in Austin, which will more than double the size of our workforce there over the next decade."

This is great for Austin's economy and real estate market. With 3,600 new jobs over the next 10 years, that's thousands of homes that will be purchased by employees. This will help preserve home values as inventory is kept in check and desirability of certain areas remains strong through the influx of a steady stream of buyers.

Quick Low-Cost Tips: Granite

Install Granite Tile Instead of a Slab

Everyone is hot for granite kitchen countertops, but that can be a $3,000-5,000+ upgrade depending on the type and square footage coverage. Instead, home owners can put in 12-inch granite tiles for about $300 in materials and get a very high impact for little money. Granite slab is always a higher grade addition, but when home prices in your community are lower and/or you won't see the return on investment, a granite tile alternative can provide a low cost upgrade to your home.

Is Your Tax Appraisal A Fair Assessment?

How to File a Tax Appraisal Protest

1. Your protest must be filed in writing
• The appraisal district has protest forms available but you don't need to use one. A notice of protest is sufficient if it identifies the owner, the property that is the subject of the protest and indicates that you are dissatisfied with a decision of the appraisal district. In some cases, online protests are even accepted such as in Williamson County.
2. Protests must be filed before May 31st
• File your protest before May 31st or no later than 30 days after the notice of appraised value, whichever date is later.
3. Support you protest
• Be prepared to support your protest with documentation, such as your closing statement, a copy of your purchase contract, other appraisals, comparable sales list, and engineer's reports.
4. An Appraisal Review Board decides if your protest is valid
• Appraisal Review Board (ARB): A group of citizens, appointed by the appraisal district's board of directors, authorized to resolve disputes between taxpayers and the appraisal district.

To find out more information about protesting your tax appraisal visit:

Hays County: www.hayscad.com

Travis County: www.traviscad.org

Williamson County: www.wcad.org

Importance of Property Insurance

Last week around 3:30 am, I awoke to see an orange glow emanating from our blinds. I sprung up, looked out the blinds, and saw the home behind us engulfed in flames. A moment of terror shuddered through my body as I felt a panic rush through me. Previously, I had thought about what I would grab in a moment like this where I had but seconds to think of what was most important to me. In this moment, my mind was blank.

I called the police and was informed that the fire had already been reported and I heard the fire trucks park and the commotion begin to extinguish the flames. Fortunately, it had been raining most of the day, so the ground and trees were soaked. The next day, we would find out through a neighbor that the firemen informed her that if it hadn't been raining all day, the trees between our properties would have spread the fire to all the surrounding homes, including our own. The only thought processed was that this was a miracle.

We have this somewhat innate feeling inside that bad things can never happen to us, until they do. I cannot stress enough to not skimp on your property insurance coverage and if you are unaware of the coverage details, pull it out and look. If you have any questions, contact Mike Carroll with Carroll & Delaune Insurance Services at (512) 828-7010 or Mike@Carroll-Delaune.com or your insurance advisor. They can examine your coverage and let you know if you are adequately protected.

The above is a video of the house behind me burning down that I filmed after I knew we were reasonably safe from immediate danger. Listening to my wife, it may seem that we are going to die of carbon monoxide, but I assure you we were safe. She can be an extreme worrier.

2012 Austin Housing Market Forecast: Positive Trend to Continue

According to the Fourth Annual Housing Forecast held by the Austin Board of Realtors and Home Builders Association, the housing market in Austin will continue to see improvement in 2012. Austin’s housing market saw growth in 2011 and that trend is expected to continue in 2012. 

Austin’s job growth, increasing population and tightening rental market should result in higher demand for housing in Austin and surrounding areas, according to Eldon Rude with Metrostudy.  

Texas experienced a 2.2% increase in job growth when comparing November 2010 to November 2011. One out of seven jobs created in the US have been in Texas. As a result, Texas consumer confidence is much higher than the overall south central region of the nation. The Austin/Round Rock/San Marcos MSA saw a 1.2% increase in job growth year over year which meant 9,600 new jobs. 

Texas had over 63,000 housing permits pulled for new construction in 2011. This is double the amount of the next highest state, California with over 33,000 new housing permits.  For 2012, Eldon Rude expects new home production in the Austin region to increase for the second straight year. There were 6,115 new home “starts” in the Austin region in 2011 which represents a nearly five percent increase in starts from 2010. The starts barely exceeded closings so inventory is declining....which is a good sign. Demand must be met by supply so builders must start building to meet that demand.  

Home starts in 2011 were up over 2010 levels in every price range except under $150,000, with the strongest increases in the move-up price points between $200,000 and $300,000.  

A factor that might limit new home starts in 2012, especially in more high demand areas, is a lack of developed lots to accommodate new home construction. Weather and water resources are also major concerns for homebuilders. 

According to 2010 and 2011 migration patterns, Texas nets more people moving into the state versus moving out. The IRS information census shows a strong population growth trend in the Austin MSA over the past 10 years.   

In 2011 the Austin MSA population was approximately 1.763 million. By 2020, Eldon Rude with Metrostudy predicts a population of approximately 2.304 million. This growth of 540,000 in population is equivalent to 31% total growth which is 3.4% per year. At 60% home ownership the result is 13,333 new homes per year in Austin. 

The upcoming Presidential election should generate confidence that the economy will improve, reflecting in many home buyer's decision to purchase. Due to continued job growth, a strong rental market and strong inward migration, we should experience a housing market that continues to improve in 2012.

Obama Sets a Plan to Help Home Owners Refinance

President Obama urged Congress in his State of the Union speech on January 24th to pass a plan to help millions of underwater home owners refinance into loans with historically low interest rates by charging banks a fee to help expedite the transactions.

"I'm sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage by refinancing at historically low rates," Obama announced. "No more red tape. No more runaround from the banks. A small fee on the largest financial institutions will ensure that it won't add to the deficit and will give those banks that were rescued by taxpayers a chance to repay a deficit of trust."

This isn't the first time Congress considered a proposal to charge banks a fee to help homeowners who remain underwater, but it's not clear from the details Obama provided how similar this plan is to the one Congress has previously looked at.

If you're looking for help refinancing your current loan with your existing lender and have questions, I'd be happy to help!