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Invest Your Tax Refund In Your Home

Wednesday, February 21, 2024
by Tucker Robbins


If you are planning on doing some homework with your refund, here are a few suggestions on how best to spend that money! 

 

$1,000 or Less 

  • Add or improve your front walkway.  Whether you plan on putting your home on the market soon or not, a new walkway will improve the curb appeal.  

  • Replacing the front door is an expensive job, but you can create a whole new look for the front exterior of your home just by having a new front entranceway. 

  • Install new light fixtures, especially if you’re tired of the builders-grade fixtures. If you shop smart, you can get stylish new flush-mount lights for every room. 

  • Do a minor bathroom renovation:  replace the toilet, faucets, and lights, and give the tub/shower a makeover with a refinishing kit. 

  • Paint the kitchen cabinets, replace the hardware, and add a tile backsplash. You won’t believe what a difference those three minor renos will make! 

  • Upgrade one kitchen appliance.  
     

$1,000-$2,000 

  • Any repairs that you’ve put off because of cost should be done before any improvements to renovating is done. Protecting your investment is more important than new bathroom tile. 

  • If your front lawn is a black canvas, hire a landscape designer to create some improvements.  

  • Have your “popcorn” ceilings removed by a pro and add new crown molding.  

  • Tankless water heaters, whether you choose whole-house or single-point, are worth the investment as you’ll see a difference in your electric bills. 

  • If you’re handy, you can take on a DIY job and save money: paint your home’s exterior, install new flooring, add wainscoting, or install kitchen countertops. 

 

As much as you’d like to see something physical after spending your tax refund, paying any accumulated debt down or investing it will pay you back in the long run. Check out these ideas from Investopedia,  and take off some of that financial load you may be bearing! 

 

Courtesy of New Castle County DE Realtors Tucker Robbins.   

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Tax Tips for New Homeowners in New Castle County, DE

Wednesday, February 22, 2023
by Tucker Robbins

It’s tax time, and many dread the prep and thought of paying them.  There are some deductions homeowners can take, so if this is your first time filing as a homeowner, make sure you get the maximum tax benefits out of your new home. 

 

  • - Homeowners can claim their mortgage interest for a tax deduction. On the chance that you’re using tax return software, it will calculate your deduction after you answer questions about your home purchase.  If you’d rather use an accountant or tax prep service to help you, they can answer all your questions. 
     

  • - If you moved more than fifty miles because of your job, or starting a new one, your expenses are tax deductible.  There are some time stipulations as well, according to number one in this guide from taxact.com;  make sure you meet the requirements before taking this deduction.
     

  • - Making your home more energy efficient by installing a solar energy system or solar water heater make you eligible for a thirty percent credit for parts and labor.  Unfortunately, the credit for geothermal heat pumps and small wind turbines has expired. https://www.energy.gov/savings/residential-renewable-energy-tax-credit 
     

  • - Are you self-employed and use a room or section of your living area for a home office?  There’s a deduction for that.  The IRS has a couple of requirements, and if you don’t want to go through figuring up the standard deduction, they offer a simplified deduction, but choose which method takes more off your tax responsibility. 
     

  • - Did you pay “points” to the bank to get a better interest rate? If so, that money is tax deductible. Since points are usually 1% of your home loan, if your loan was $250,000, your tax break would be $2,500 for paying down one point. 
     

  • - Any property taxes are tax deductible, beginning the official date that you purchase the home, which is usually on your settlement statement you receive at closing. 
     

  • - Hopefully, this hasn’t happened in your first year in your new home, but if you’ve had something unfortunate happen that insurance didn’t cover, there is a casualty loss deduction for out-of-pocket expenses.  The repair cost must be more than 10% of your gross income. 

 

Don’t let all this information scare you away from doing your own taxes!  No matter how you decide to file, gather everything you would normally use to file taxes, but make sure you have the 1098 mortgage interest form from the lender, property tax receipts, and any paperwork you saved from the casualty loss repairs or alternative energy installments. Home ownership has many benefits for the homeowner, and you should take advantage of every penny you have worked so hard for to put into your new home. 

 

Courtesy of New Castle County DE Realtors Tucker Robbins and Carol Arnott Robbins.   

 

Photo credit: realtor.com

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Tax Benefits of Home Ownership

Wednesday, December 16, 2020
by Tucker Robbins


When listing pros of owning a home in comparison to renting one, many think of things like lower monthly payments for the roof over their heads, the freedom to renovate or simply paint as they desire, or the opportunity to finally have a garden of their dreams. Tax benefits, however, are not something many consider; learn about some of the main tax-related advantages homeownership can bring: 
 

  • Tax deduction on mortgage interest:  when a homeowner’s mortgage is no greater than $750,000, the interest on that mortgage is tax-deductible. 

  • - In 2017, the IRS made changes to this deduction, reducing the mortgage limit. If your mortgage was taken out before December 2017 and is $1 million or less, this deduction applies to your situation as well. 

  • - Having a home equity line of credit (HELOC) that meets the above standards will receive the interest tax credit as well. 

  • - In case a homeowner has two mortgages that are each less than the $750,000 limit, but the total of those mortgages exceeds the limit, not all interest is deductible.  Learn more from the IRS Newsroom. 

  • When the home was purchased, were mortgage points used as part of the loan transaction? This may qualify for a tax credit. Use this handy worksheet from the IRS to determine eligibility. 
     

  • Many have used their homes for office space this past year, but not everyone qualifies for a home office tax credit.  Those who are independent contractors or self-employed are the only taxpayers allowed this credit. 
     

  • Your lender is required to include property taxes paid on the 1098 form they send at tax time.  Property taxes paid up to $10,000 are eligible for a tax deduction. 
     

  • If you are paying private mortgage insurance (PMI), the law to receive a tax credit for this has been reinstated as well as being retroactive. House Logic has more information about the changes and benefits. 
     

 

Do not miss out on these tax deductions!  Normally, hiring a professional tax preparer will get the most benefits for you if you give them all the necessary paperwork.  Keep in mind that using an online tax prep service will ask homeowner-related questions as you work through your return, and self-tax prep is generally less expensive, depending on the software company you choose.   
 

Courtesy of New Castle County DE Realtors Tucker Robbins and Carol Arnott Robbins. 

Photo credit: Desmond Wealth Management 

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Why Your Mortgage Payments Change

Wednesday, March 18, 2020
by Tucker Robbins


Your mortgage payment is probably the largest one in your monthly budget, and you assume it will be the same amount for the next 30 years. That may not always be the case, however, and that depends on a few factors. Be prepared for changes, and understand those changes: 

 

  • If you paid less than a 20% down payment, you are required to have Mortgage Insurance with FHA and USDA loans, while Private Mortgage Insurance is required with other lenders. In some cases,, these can be removed, and your mortgage payment will reflect the change. 
     

  • An Adjustable Rate Mortgage (ARM) has a set interest rate for a certain amount of time, and after that time is up, the interest rate will vary. When the rates change, your payments will, too. Learn more about ARMs from Investopedia. 
     

  • Changes in escrow are almost unavoidable. What is escrow? The Consumer Financial Protection Bureau’s definition: “An escrow account...is set up by your mortgage lender to pay certain property-related expenses.”  When property taxes or insurance premiums increase, your current payments won’t reflect that change, and that results in an escrow shortage. The shorted amount will be added to your loan payment, plus the new amount for adjusted increases. To avoid paying extra every month for the shortage, pay the amount in full as soon as you receive your annual escrow statement. 
     

  • What if you don’t have an escrow account on your mortgage, and you don’t pay your property taxes?  Lenders don’t want to foreclose on a home because of delinquent property taxes. To protect their money, they can add the amount to your current loan payment or open an escrow account for your loan. 
     

  • Homeowners insurance is a requirement when you have a loan on the home. If yours lapses, or you don’t have enough insurance on the house, lenders have the right to purchase a policy, called “forced-place insurance.” They will send you the bill for the premium, which is probably more expensive than your current payment.  

 

While escrow accounts aren’t always a requirement, it would benefit your budget to request one when you are applying for the mortgage. Keep an eye on your insurance information as well as your property taxes so you won’t be surprised when your monthly payment increases. Having an emergency savings account can help ease any of these burdens.   

 

Courtesy of New Castle County DE Realtors Tucker Robbins and Carol Arnott Robbins.   

 

Photo credit: interest.com

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Tucker Robbins
Berkshire Hathaway HomeServices
3838 Kennett Pike
Wilmington DE 19807
(302) 777-7744 (direct)
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