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Keeping Current Matters

Wednesday, June 20, 2012

Maintain Your Vacation Home


  Maintain Your Vacation Home

By: Donna Fuscaldo


Plan to spend time and money to maintain your vacation home, no matter if you hire a property manager or local caretaker, or do the work yourself.

Property managers: Convenience at a price

Hiring a property management company for your vacation home can be costly, but it can save a lot of effort (and headaches) on your part. A property manager can open and close your vacation home, and screen and hire a staff to make sure your house is well-maintained inside and out. If you plan to rent out your vacation home, a property manager can advertise the rental, check in guests, and handle payments.

A property manager acts as your eyes and ears, doing regular drive-bys and responding in emergencies. This is especially important if you live far from your vacation home. Ask owners of nearby vacation homes for referrals. Membership in a trade group like the Vacation Rental Managers Association adds to credibility.

Property managers don't come cheap. According to Christine Karpinski of HomeAway, a vacation rental website, property managers typically get 20% to 60% of the rental income from your vacation home. So if your ski chalet rents for $1,000 per week, expect to hand over anywhere from $200 to $600 of that income to the property manager.

Local caretakers can be cheaper

A cheaper alternative to a property manager, especially if you don't plan to rent out the house or will handle rentals yourself, is hiring a local housecleaner or handyman to maintain your vacation home. Again, other homeowners are the best source for referrals. Even during the offseason, it's a good idea to have someone local who can go to the house once a month to turn on faucets, flush toilets, and inspect for damage.

How much you pay will vary by location and the nature of the caretaking tasks. A recent survey of cleaning fees put the cost between $69 for a 1-bedroom home and $199 for a 6-bedroom. A rule of thumb for calculating cleaning fees is to multiply the number of bedrooms and bathrooms combined by $20.

Since you're entrusting cleaners and handymen to go in and out of your home unsupervised, check references and ask for proof that they're bonded and insured. A fee-free option is to rely on a neighbor. Work out an arrangement to check on each other's properties regularly, rather than hiring someone.

Prepare for maintenance emergencies

Preventive home maintenance reduces the likelihood of emergencies, but a pipe is bound to burst eventually. As the owner of a vacation home, especially one that's hundreds of miles away, the most important thing you can do is be prepared for the inevitable.

If you don't have a property manager, caretaker, or year-round neighbor you can call, at least have a list of local repair companies at your fingertips. Invest three or four hours into assembling a list of plumbers, electricians, exterminators, and the like. Ask other homeowners for recommendations, or, if too few are forthcoming, turn to a service like Angie's List or even the phone book.

Having a keyless entry system for your vacation home is critical in the event of an emergency. A basic touchpad model costs less than $100. You can give the code to a repairman over the phone. A wireless system, which allows you to use a computer or cellphone to change the entry code, can cost three times that amount plus a monthly service fee of perhaps $10 to $15.

"Visit HouseLogic.com for more articles like this. Reprinted from HouseLogic.com with permission of the NATIONAL ASSOCIATION OF REALTORS®."

http://www.houselogic.com/.


Nancy M. Alexander Stone Harbor and Avalon NJ Real Estate

Saturday, June 16, 2012

Opening and Closing a Vacation Home



Opening and Closing a Vacation Home

By: Donna Fuscaldo HouseLogic.com 

Don't neglect to budget time and money for opening and closing a vacation home before the season starts and after it ends.

Opening a vacation home

When it's time to visit your vacation home for the first time, or start renting it out for the season, you'll need to get it ready. A ski chalet might require you to shovel snow and chop firewood, while a summer retreat by the shore might call for cleaning patio furniture and staining the deck.

Much depends on how well the house is maintained throughout the year. Opening your vacation home could be as easy as stocking the pantry, or if the house was neglected in the offseason, you could have multiple repairs on your hands.

A well-maintained vacation home shouldn't take more than a day to get in shape for the season, assuming no major repairs are needed. Here are some typical opening chores:


Turn on utilities
Clean and stock kitchen and bathrooms
Look for evidence of plumbing and roof leaks
Cut lawn and trim shrubs/trees
Clear walkways and driveway
Set up outdoor furniture
Change lightbulbs and smoke detector batteries
Replace furnace filters
Check for signs of pest infestation

Closing a vacation home

Closing a vacation home also takes about a day to complete. The emphasis should be on safeguarding your home against the elements as well as fire risks. Here are some common closing tasks:
Turn off nonessential utilities
Secure all windows and doors
Turn on alarm system
Close storm shutters
Dispose of trash and perishable foods
Adjust furnace settings for climate
Bring in outdoor furniture
Unplug appliances and electronics
Drain water lines to prevent freezing (in cold climates)
Request mail-forwarding service

To deter vandalism and theft, consider installing a home security system. You can also put in automatic indoor lights that turn on at dusk or outside flood lights that are motion-activated.

If the house is only going to be vacant for a couple of months, call your utility providers to see if discounted "vacation rates" are available. It might be cheaper than turning off services and paying a reconnection fee a few weeks later.

Property manager vs. caretaker

It's costly to hire a property management company to maintain your vacation home, including opening it and closing it. If you plan to rent out your vacation home, a property manager typically gets 20% to 60% of the rental income, according to Christine Karpinski ofHomeAway, a vacation rental website.

A less expensive alternative is hiring a local housecleaner or handyman to open and close your vacation home, and keep an eye on the property during the offseason. A good rule of thumb for calculating cleaning fees is to budget $20 for each bedroom and bathroom, so a 3-bed/2-bath home would cost $100 to clean.

If you live far from your vacation home, you may have little choice but to hire local help. Ask owners of nearby vacation homes for referrals. Look for a property manager or caretaker with good references who has been in business locally for an extended period of time. And no matter who you end up hiring, be sure that anyone coming onto your property to do work is bonded and insured.

Visit HouseLogic.com for more articles like this. Reprinted from HouseLogic.com with permission of the NATIONAL ASSOCIATION OF REALTORS®."
http://www.houselogic.com/.

Buying or Selling a home in Stone Harbor or Avalon, or if you need a Summer Rental, it would be my pleasure to help you with your Real Estate needs. Have a question about a Stone Harbor or Avalon homes or want to talk about selling yours? Contact me now to learn what's selling and how your home compares to others in your market.

You can reach me by e~mail me at
Nancy@NancyMAlexander.com or Call me! I love to talk Real Estate!
Call my cell 609.425.7521. I return calls and e-mails within hours, usually in just minutes!



Please Join my Facebook Page:
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Nancy M. Alexander Stone Harbor and Avalon NJ Real Estate

Monday, June 4, 2012

Tax Deductions for Vacation Homes

Tax Deductions for Vacation Homes



A vacation home offers a break from the daily grind, but it can also offer a break from taxes. The IRS allows most owners to lower taxable income by taking tax deductions for vacation homes. What’s deductible depends on a number of factors, especially how often you visit and whether you allow renters.
You can rent out a vacation home for as many as 14 days per year without paying taxes on your rental income.

Don’t limit your notion of a vacation home to a beach cottage or a mountain cabin. Even RVs and boats can count, as long as there are sleeping, cooking, and bathroom facilities. Tax deductions for vacation homes are complex, so consult a tax adviser.

Is your vacation home a vacation home?

If you bought your vacation home exclusively for personal enjoyment, you can generally deduct your mortgage interest and real estate taxes, as you would on a primary residence. Use Schedule A to take the deductions.

The IRS even allows you to rent out your vacation home for up to 14 days a year without paying taxes on the rental income. You might be able to deduct any uninsured casualty losses too, though you can’t write off rental-related expenses. (More on those below.) If the home is rented for more than 14 days, you must claim the income.

Now, if you own what you consider a vacation home but never visit it, or only rent it out, other tax rules apply. Without personal use, the home is considered an investment or rental property by the IRS. Time spent checking in on a house or making repairs doesn’t count as personal use.

Tax deductions for rental owners

As an exclusive rental property, you can deduct numerous expenses including taxes, insurance, mortgage interest, utilities, housekeeping, and repairs. Even towels and sheets are deductible. Use Schedule E. You can also write off depreciation, the value lost due to the wear and tear a home experiences over time.

Treat the rental property like a business, says Mark Steber, chief tax officer at Jackson Hewitt Tax Services. Keep detailed records and maintain a separate checking account. Figure you’ll spend a couple of hours a week, on average, over the course of the year managing the property.

To maximize deductions you need to be actively involved in the rental property. That means performing such duties as approving new tenants and coming up with rental terms. You also need to own at least 10% of the property. See IRS Publication 527 for details.

If your modified adjusted gross income (same as adjusted gross income for most people) is below $100,000, you can deduct as much as $25,000 for rental losses — that is, the difference between your rental receipts and your rental expenses. The deduction gradually phases out between a modified adjusted gross income of $100,000 and $150,000. You can carry forward excess losses to future years or offset losses to offset gains when you sell.

Mixed use of a vacation home

The tax picture gets more complicated when in the same year you make personal use of your vacation home and rent it out for more than 14 days. Remember, rental income is tax-free only if you rent for 14 days or fewer.

The key to maximizing deductions is keeping annual personal use of your vacation home to fewer than 15 days or 10% of the total rental days, whichever is greater. In that case the vacation home can be treated as a rental, meaning you get the same generous deductions. To avoid going over the 10% limit, essentially you shouldn’t use your vacation home more than one day for every 10 days you rent it.

Make personal use of your vacation home for more than 14 days (or more than 10% of the total rental days), however, and your deductions may be limited. An example: Your rental receipts are less than your rental expenses. You can’t offset the loss against other income sources, such as salaries and pensions. There’s a worksheet in Publication 527that can help you determine which expenses you can carry over to the following year.

Another big blow: The IRS requires you to divide expenses between personal use and rental use. Let’s say you have a vacation home you personally use for 25 days and rent for 75 days. That’s 100 total days of use. You can only write off 75% of the expenses as rental expenses—75 rental days divided by 100 total days of use works out to 75%. Some of the personal expenses, such as mortgage interest and real estate taxes, may be deductible on Schedule A

IRS closes tax loophole

A popular strategy used by owners of vacation homes to avoid paying capital gains on a sale was to convert a vacation home into a primary residence. This was accomplished by living in the home for two years out of the previous five before selling. Doing so qualified the sale for an exclusion from taxes for a profit of up to $250,000 for single filers and $500,000 for joint filers.

While the exclusion remains available, the IRS closed a loophole for vacation homes. For 2009 and later years, you pay regular cap gains taxes on the portion of the gain that’s equivalent to the time you used the home as a vacation home after 2008.

Let’s say you bought a vacation home on Jan. 1, 2002, and it becomes your primary residence on Jan. 1, 2010. Two years later, you qualify for the cap gains exclusion and decide to sell on Jan. 1, 2012. You’re liable for capital gains taxes on 10% of the gain. Why? Because in 2009 the place was a vacation home. The exclusion is available for the other nine years — 2002 to 2008, when the old rules applied, and Jan. 1, 2010 to Jan. 1, 2012, when the place was used as a primary residence.

This article provides 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.

By Donna Fuscaldo

Donna Fuscaldo has written about personal finance for more than decade for Dow Jones Newswires, the Wall Street Journal, and Fox Business News. She’s currently a freelance writer with her own home office.

Buying or Selling a home in Stone Harbor or Avalon, or if you need a Summer Rental, it would be my pleasure to help you with your Real Estate needs. Have a question about a Stone Harbor or Avalon homes or want to talk about selling yours? Contact me now to learn what's selling and how your home compares to others in your market.

You can reach me by e~mail me at
Nancy@NancyMAlexander.com or Call me! I love to talk Real Estate!
Call my cell 609.425.7521. I return calls and e-mails within hours, usually in just minutes!



Please Join my Facebook Page:
https://facebook.com/NancyMAlexanderRealEstate



Nancy M. Alexander Stone Harbor and Avalon NJ Real Estate