What You Should Know About Your Home and Your 2013 Taxes By: Dona DeZube

Published: December 12, 2013

It’s the last year for three sweet home tax benefits, but the first for a way simpler home office deduction.



These days few things start a fight on Capitol Hill faster than taxes. Despite the fact that three important tax benefits used by millions of American homeowners are days from expiring, Congress is unlikely to do anything to re-up them any time soon.

So if you’re eligible, tax year 2013 is possibly the last time to claim the private mortgage insurance (PMI) deduction, the energy tax credit, and debt forgiveness benefit, all of which all expire on Dec. 31, 2013. 

At least there’s one piece of good news for homeowners: If you have a home office, there’s a new, simpler option for calculating the home office deduction for which you may qualify on your 2013 taxes.

Meanwhile, here’s what you need to know about those expiring benefits as you ready your taxes:

PMI Deduction

This tax rule lets you deduct the cost of private mortgage insurance, which is what you pay your lender each month if you put down less than 20% on a home. PMI protects the lender if you default on the home loan. Your deduction could amount to a couple hundred dollars depending on your tax bracket and other factors.

Find out if you qualify for and how to take the PMI deduction.

Energy-Efficiency Upgrades

This sweet little tax credit lets you offset what you owe the IRS dollar-for-dollar for up to 10% of the amount you spent on certain home energy-efficiency upgrades, from insulation to water heaters. On the downside, the credit is capped at $500 (less in some cases). But on the bright side, the right improvement could lower your utility bills indefinitely. 

Related: Take back your energy bills with these high-ROI energy-efficiency practices.

Debt Forgiveness

When you go through a short sale, foreclosure, or deed-in-lieu, your lender typically lets you off the hook for some or all of what you owe on your mortgage. 

That forgiven mortgage debt is income, on which you’d typically have to pay income tax. 

Suppose you’re in financial distress and your lender agrees to let you short-sell your home, say for $50,000 less than you owe on the mortgage, and forgive you for the balance. Without the protection of the Mortgage Debt Forgiveness Act, you’ll owe income tax on that $50,000. 

It’s likely if you had the money to pay income tax on $50,000, you’d have used it to pay your mortgage in the first place. 

New Simplified Option for the Home Office Deduction

This may be the last year for the benefits above, but a new one kicks in for the 2013 tax year. If you work from home, you may qualify to use a new, simplified option for claiming the home office deduction when you file your 2013 taxes.

How much simpler is it? It lets you claim $5 per sq. ft. for up to 300 sq. ft. instead of having to compute the actual expenses of your home office using a 43-line form. To calculate the square footage of your office, just multiply the length of two walls. For example, an 8-by-10-foot room is 80 sq. ft. And at $5 per, that’s $400.

Although using the simplified option is obviously easier, the basic requirements for claiming the home office deduction haven’t changed. Your home office still must be used for business purposes:

• Exclusively, and

• On a regular basis.

Related: Which Home Office Set-Ups Qualify for a Deduction?

Why Might the Tax Benefits Not Be Renewed?

Although the expiring tax benefits were renewed retroactively in past years, that may not happen in 2014 because many in Congress would like to see comprehensive tax reform rather than scattershot renewals of individual provisions. This could delay a decision on the homeownership tax benefits until the big picture budget and tax issues are resolved.

So if you can, enjoy them now!

On this week's Real Estate Today, it's our special show "The Best Year Ever to Own."

Organize Your Garage for Under $50By: Jan Soults Walker

Published: December 27, 2012

If clutter trumps cars in your garage, get organized (and make room for your vehicles) with these smart garage storage solutions, each costing less than $50.

• Hoist bicycles to the rafters with a rope-and-pulley system ($22) that makes it easy to raise the bike and lock safely in place. When you’re ready to ride, release the lock and lower your bike to the garage floor. You’ll need an hour or two and basic tools to secure the pair of pulleys to ceiling joists and thread the ropes. (Similar hoists are available for kayaks or small boats; $25.)

• Avoid unintentional skateboard “tricks” with a specially designed wall rack that makes it easy for kids to hang up helmets and skateboards together; about $40. Secure this one to wall joists in less than an hour.

• Keep scooters and bikes out of the way with tool hooks installed on a length of 1-by-6-inch lumber. You’ll pay $3 for each pair of vinyl-coated screw-in tool hooks and $1 per foot for lumber. You’ll need only an hour or two to secure the lumber to wall joists and screw the hooks into place along the board.

Sporting Goods

Active pursuits require a lot of gear that ends up in the garage. These organizers help tidy up all those sports balls, rackets, bats, gloves, clubs, fishing rods, and other outdoor fun-related goodies.

• Bring together balls and bats on a convenient wire rack equipped with hangers that hold gloves too; $40. Or, mount one or more ball claws on the wall to securely grip sports balls of all kinds; $12.

• To keep your garage organization from going downhill, stash two pairs of snow skis, poles, and boots in one handy steel ski rack; $45. Securing this rack to wall studs helps it hold the weight of the equipment. If you can’t position it on studs, use wall anchors for a secure installation. You can do the task with or without anchors in an hour or two.

• Make a port for your fishing rods by suspending two wire shelves from your garage ceiling about 5 feet apart, then threading the rods through the openings. Use shelves left over from a project or purchase a 4-foot-by-16-inch vinyl-coated wire shelf for less than $9, and saw it in half crosswise (or clip with bolt cutters) to make two 2-foot shelves. Snip additional wires where you need wider slots to accept pole handles or reels.

Tools

With a little imagination, you won’t need specially designed storage to organize your tools.

• Conveniently hang wrenches and bungee cords using an ordinary vinyl-coated wire tie-and-belt rack, available at big box stores; $8.

• Metal tools cling to a magnetized rail, keeping items in view and easy to retrieve; $24. Simply screw the rail to wall studs to safely hold the weight of the tools (it’s an idea you may be drawn to.)

• Cushion and protect tools by padding your toolbox drawers with a soft, non-slip liner. The open-weave design keeps moisture away and prevents tools from rolling around. Enough material to line eight average-size drawers is $15. Just cut the liner to length to fit and slip it into the drawer.

• Organize small items — such as pencils, box cutters, and tape measures -- by stashing them in electrical junction boxes; 50 cents to $2 each (free if you have spares). Purchase a variety of sizes and shapes and secure them to studs or pegboard.

Yard and Garden Gear

Rakes, ladders, clippers, shovels, and sprays — a host of supplies keep your yard and garden looking lush and well-cared-for, but your garage? Not so much. Keep your garden and landscaping tools organized with these novel storage solutions.

• Transform an old cabinet into a nifty garage storage unit on wheels. Hunt down an old four-drawer filing cabinet for a few dollars at a garage sale. Remove the drawers, turn it on its backside, and use a couple afternoons to apply paint and pegboard sides. Less than $25.

• Hold heavy tools, long-handled implements, ladders, and more. Long steel rails with extruded holes mount high on the garage wall and secure to studs. Arrange a series of hooks and pegs on the rail to hang big tools. Two 48-inch rails sell for $22.

• Secure a wooden pallet to wall studs to create a pocket for holding long-handled garden tools. To find free wooden pallets, check with local businesses as well as online classifieds, such as Craigslist. Cost: Free.

• Keep bottles of fertilizers, repellants, and lubricants upright and easy to retrieve. A can rack ($15) prevents cans and bottles from tumbling off shelves.

7 Smart Strategies for Bathroom RemodelingBy: John Riha

Published: March 4, 2011

Here’s how to get the bathroom of your dreams without making your budget a nightmare.



A mid-range bathroom remodel is a solid investment, according to Remodeling Magazine’s annual Cost vs. Value Report. An average bath remodel of $16,128 will recoup about 72.5% of those costs when it’s time to sell your home, and a more extensive $51,374 job returns about 63.6%. In addition, you can maximize the value of your investment by using these smart strategies, which will create a stylish yet budget-friendly bathroom.

1. Stick to a PlanA bathroom remodel is no place for improvisation. Before ripping out the first tile, think hard about how you will use the space, what materials and fixtures you want, and how much you’re willing to spend.

The National Kitchen and Bath Association (NKBA) recommends spending up to six months evaluating and planning before beginning work. That way, you have a roadmap that will guide decisions, even the ones made under remodeling stress. Once work has begun -- a process that averages two to three months -- resist changing your mind. Work stoppages and alterations add costs. Some contractors include clauses in their contracts that specify premium prices for changing original plans.

If planning isn’t your strong suit, hire a designer. In addition to adding style and efficiency, a professional designer makes sure contractors and installers are scheduled in an orderly fashion. A pro charges $100 to $200 per hour, and spends 10 to 30 hours on a bathroom project.

2. Keep the Same FootprintYou can afford that Italian tile you love if you can live with the total square footage you already have. 

Keeping the same footprint, and locating new plumbing fixtures near existing plumbing pipes, saves demolition and reconstruction dollars. You’ll also cut down on the dust and debris that make remodeling so hard to live with.

Make the most of the space you have. Glass doors on showers and tubs open up the area. A pedestal sink takes up less room than a vanity. If you miss the storage, replace a mirror with a deep medicine cabinet.

3. Make Lighting a PriorityMultiple shower heads and radiant heat floors are fabulous adds to a bathroom remodel. But few items make a bathroom more satisfying than lighting designed for everyday grooming. You can install lighting for a fraction of the cost of pricier amenities.

Well-designed bathroom task lighting surrounds vanity mirrors and eliminates shadows on faces: You look better already. The scheme includes two ceiling- or soffit-mounted fixtures with 60 to 75 watts each, and side fixtures or sconces providing at least 150 watts each, distributed vertically across 24 inches (to account for people of various heights). Four-bulb lighting fixtures work well for side lighting.

4. Clear the AirBathroom ventilation systems may be out of sight, but they shouldn’t be out of mind during a bathroom remodel.

Bathroom ventilation is essential for removing excess humidity that fogs mirrors, makesbathroom floors slippery, and contributes to the growth of mildew and mold. Controlling mold and humidity is especially important for maintaining healthy indoor air quality and protecting the value of your home -- mold remediation is expensive, and excess humidity can damage cabinets and painted finishes.

A bathroom vent and water closet fan should exhaust air to the outside -- not simply to the space between ceiling joists. Better models have whisper-quiet exhaust fans and humidity-controlled switches that activate when a sensor detects excess moisture in the air.

5. Think StorageBathroom storage is a challenge: By the time you’ve installed the toilet, shower, and sink, there’s often little space left to store towels, toilet paper, and hair and body products. Here are some ways to find storage in hidden places.

• Think vertically: Upper wall space in a bathroom is often underused. Freestanding, multi-tiered shelf units designed to fit over toilet tanks turn unused wall area into found storage.Spaces between wall studs create attractive and useful niches for holding soaps and toiletries. Install shelves over towel bars to use blank wall space.

• Think moveable: Inexpensive woven baskets set on the floor are stylish towel holders. A floor-stand coat rack holds wet towels, bath robes, and clothes.

• Think utility: Adding a slide-out tray to vanity cabinet compartments provides full access to stored items and prevents lesser-used items from being lost or forgotten.

6. Contribute Sweat EquityShave labor costs by doing some work yourself. Tell your contractor which projects you’ll handle, so there are no misunderstandings later.

Some easy DIY projects:

• Install window and baseboard trim; save $250.

• Paint walls and trim, 200 sq.ft.; save $200.

• Install toilet; save $150.

• Install towel bars and shelves; save $20 each.

7. Choose Low-Cost Design for High Visual ImpactA “soft scheme” adds visual zest to your bathroom, but doesn’t create a one-of-a-kind look that might scare away future buyers.

Soft schemes employ neutral colors for permanent fixtures and surfaces, then add pizzazz with items that are easily changed, such as shower curtains, window treatments, towels, throw rugs, and wall colors. These relatively low-cost decorative touches provide tons of personality but are easy to redo whenever you want.

On this week's Real Estate Today, it's our special show "The Best Year Ever to Build." 

7 Smart Strategies for Kitchen RemodelingBy: John Riha

Published: May 30, 2013

Follow these 7 strategies to get the most financial gain on your kitchen remodel.



And if done right, a kitchen remodel can recoup much of its cost. Kitchen remodels in the $50,000 to $60,000 range recoup about 69% of the initial project cost when the home is sold.

A minor kitchen remodel of about $18,500 does even better, returning more than 75% of your investment, according to the most recent Cost vs. Value data from Remodeling magazine.

To maximize your return on investment, follow these 7 strategies to keep you on budget and help you make smart choices.

1. Plan, Plan, Plan

Planning your kitchen remodel should take more time than the actual construction. If you plan well, the amount of time you’re inconvenienced by construction mayhem will be minimized. Plus, you’re more likely to stay on budget.

How much time should you spend planning? The National Kitchen and Bath Association recommends at least six months. That way, you won’t be tempted to change your mind during construction and create change orders, which will inflate construction costs and hurt your return on investment. 

Some tips on planning:

Study your existing kitchen: How wide is the doorway into your kitchen? It’s a common mistake many homeowners make: Buying the extra-large fridge only to find they can’t get it in the doorway. To avoid mistakes like this, create a drawing of your kitchen with measurements for doorways, walkways, counters, etc. And don’t forget height, too.

Think about traffic patterns: Work aisles should be a minimum of 42 inches wide and at least 48 inches wide for households with multiple cooks.

Design with ergonomics in mind: Drawers or pull-out shelves in base cabinets; counter heights that can adjust up or down; a wall oven instead of a range: These are all features that make a kitchen accessible to everyone — and a pleasure to work in.

Related: Test Your Ergonomic Design Knowledge

Plan for the unforeseeable: Even if you’ve planned down to the number of nails you’ll need in your remodel, expect the unexpected. Build in a little leeway for completing the remodel. Want it done by Thanksgiving? Then plan to be done before Halloween.

Choose all your fixtures and materials before starting: Contractors will be able to make more accurate bids, and you’ll lessen the risk of delays because of back orders.

Don’t be afraid to seek help: A professional designer can simplify your kitchen remodel. Pros help make style decisions, foresee potential problems, and schedule contractors. Expect fees around $50 to $150 per hour, or 5% to 15% of the total cost of the project.

More tips on planning a kitchen remodel:

Keep the same footprint
Get real about appliances
Don't underestimate the power of lighting
Be quality-conscious
Add storage, not space
Communicate clearly with your remodelers

2. Keep the Same FootprintNothing will drive up the cost of a remodel faster than changing the location of plumbing pipes and electrical outlets, and knocking down walls. This is usually where unforeseen problems occur.

So if possible, keep appliances, water fixtures, and walls in the same location. 

Not only will you save on demolition and reconstruction costs, you’ll cut the amount of dust and debris your project generates.

More tips on planning a kitchen remodel:

Plan, plan, plan
Get real about appliances
Don't underestimate the power of lighting
Be quality-conscious
Add storage, not space
Communicate clearly with your remodelers

3. Get Real About AppliancesIt’s easy to get carried away when planning your new kitchen. A six-burner commercial-grade range and luxury-brand refrigerator may make eye-catching centerpieces, but they may not fit your cooking needs or lifestyle.

Appliances are essentially tools used to cook and store food. Your kitchen remodel shouldn’t be about the tools, but the design and functionality of the entire kitchen.

So unless you’re an exceptional cook who cooks a lot, concentrate your dollars on long-term features that add value, such as cabinets and flooring. 

Then choose appliances made by trusted brands that have high marks in online reviews and Consumer Reports.

More tips on planning a kitchen remodel:

Plan, plan, plan
Keep the same footprint
Don't underestimate the power of lighting
Be quality-conscious
Add storage, not space
Communicate clearly with your remodelers

4. Don’t Underestimate the Power of LightingLighting can make a world of difference in a kitchen. It can make it look larger and brighter. And it will help you work safely and efficiently. You should have two different types of lighting in your kitchen:
 
Task Lighting: Under-cabinet lighting should be on your must-do list, since cabinets create such dark work areas. And since you’re remodeling, there won’t be a better time to hard-wire your lights. (Here’s more about under-cabinet lights.) Plan for at least two fixtures per task area to eliminate shadows. Pendant lights are good for islands and other counters without low cabinets. Recessed lights and track lights work well over sinks and general prep areas with no cabinets overhead.

Ambient lighting: Flush-mounted ceiling fixtures, wall sconces, and track lights create overall lighting in your kitchen. Include dimmer switches to control intensity and mood.

Related: How to Choose the Best Bulb for the Job

More tips on planning a kitchen remodel:

Plan, plan, plan
Keep the same footprint
Get real about appliances
Be quality-conscious
Add storage, not space
Communicate clearly with your remodelers

5. Be Quality-ConsciousFunctionality and durability should be top priorities during kitchen remodeling. Resist low-quality bargains, and choose products that combine low maintenance with long warranty periods. Solid-surface countertops, for instance, may cost a little more, but with the proper care, they’ll look great for a long time.

And if you’re planning on moving soon, products with substantial warranties are a selling advantage.

Related:

Kitchen Remodeling Decisions You'll Never Regret

White: The Savvy and Chic Kitchen Color Choice

More tips on planning a kitchen remodel:

Plan, plan, plan
Keep the same footprint
Get real about appliances
Don't underestimate the power of lighting
Add storage, not space
Communicate clearly with your remodelers

6. Add Storage, Not SpaceStorage will never go out of style, but if you’re sticking with the same footprint, here are a couple of ideas to add more: 

Install cabinets that reach the ceiling: They may cost more — and you might need a stepladder — but you’ll gain valuable storage space for Christmas platters and other once-a-year items. In addition, you won’t have to dust cabinet tops.

Hang it up: Mount small shelving units on unused wall areas and inside cabinet doors; hang stock pots and large skillets on a ceiling-mounted rack; and add hooks to the backs of closet doors for aprons, brooms, and mops.

Related: Storage Options that Pack More Space in Your Kitchen

More tips on planning a kitchen remodel:

Plan, plan, plan
Keep the same footprint
Get real about appliances
Don't underestimate the power of lighting
Be quality-conscious
Communicate clearly with your remodelers

7. Communicate Clearly With Your RemodelersEstablishing a good rapport with your project manager or construction team is essential for staying on budget. To keep the sweetness in your project:

Drop by the project during work hours: Your presence broadcasts your commitment to quality.

Establish a communication routine: Hang a message board on site where you and the project manager can leave daily communiqués. Give your email address and cell phone number to subs and team leaders.

Set house rules: Be clear about smoking, boom box noise levels, available bathrooms, and appropriate parking.

Be kind: Offer refreshments (a little hospitality can go a long way), give praise when warranted, and resist pestering them with conversation, jokes, and questions when they are working. They’ll work better when refreshed and allowed to concentrate on work.

More tips on planning a kitchen remodel:

Plan, plan, plan
Keep the same footprint
Get real about appliances
Don't underestimate the power of lighting
Be quality-conscious
Add storage, not space

"On this week's Real Estate Today, it's our special show "The Best Year Ever to Sell." "

On this week's Real Estate Today, it's our special show "Great Ideas."