Taxes- What to Keep and for how long

With Tax day upon us I thought this would be a great reminder.

Taxes

Tax Returns- 7 years- Keep tax returns and all supporting tax docs. including W-2s, 1099 forms, property tax info, bank statements, mortgage interest statements, cancelled checks, receipts, home purchase, home improvement info.

Paycheck Stubs 1 year- Shred after confirming info matches W-2.

Home Ownership- Mortgage docs 10 years, After property has sold 7 years Mortgage statements 7 years, After property has sold 10 years, Repair bills/contracts 10 years.

Insurances- Home 5 years, Life of policy + 3 years, Medical 5 years

Investment/Retirement Accounts- IRA contributions permanently, 401K annual summaries- Keep until you close the account. Investment statements 7 years after last account is sold.

Permanently- Never Shred- Adoption/Guardianship Papers, Birth Certificates, Citizen/Naturalization,Health/Immunization, Lawsuits, Marriage/Divorce Decree, Pension Plan Docs.Veteran Papers.

If it is time to get rid of some of those old docs look for a shredding event near you. Here is one sponsored from BECU this Saturday.

 

You just bought a $300,000 house so how much interest do you pay?

Saving MortgageSaving MortgageSaving Mortgage

You have finally closed on your new home and with great rates and a beautiful home you can now relax all the hard work is over right? Not exactly. So get settled in and get use to a mortgage payment then, after a few months take a look on how you can get that mortgage down a bit faster.

Either right away, or in the future, there is a better way to pay that 30 year mortgage down quicker and build your equity faster.  Here is a current payment schedule based on a approximate 4 1/8% rate. As you can see the first few years you are paying an astronomic amount in interest. Just think of what just one extra payment a year could do for you.

Here is a link to a great site I give to my buyers and sellers. While I am not a mortgage broker (I work with some great ones) I do believe all of us Realtors should provide better tools  to our clients and be informed. After all, a home buyer, or seller, who understands the process is more comfortable with their home and their purchase.

Not only does this site have mortgage calculators. Check it out  there is every kind of financial calculator you can think of. It actually is a bit addicting so have fun with it!

Payment schedule

Year

Total
Payments
Principal
Paid
Interest
Paid
Ending
Principal
Balance
$300,000.00
1 $17,395.20 $5,192.05 $12,203.15 $294,807.95
2 $17,395.20 $5,408.99 $11,986.21 $289,398.96
3 $17,395.20 $5,634.96 $11,760.24 $283,764.00
4 $17,395.20 $5,870.37 $11,524.83 $277,893.63
5 $17,395.20 $6,115.61 $11,279.59 $271,778.02
6 $17,395.20 $6,371.14 $11,024.06 $265,406.88
7 $17,395.20 $6,637.34 $10,757.86 $258,769.54
8 $17,395.20 $6,914.62 $10,480.58 $251,854.92
9 $17,395.20 $7,203.53 $10,191.67 $244,651.39
10 $17,395.20 $7,504.47 $9,890.73 $237,146.92
11 $17,395.20 $7,818.00 $9,577.20 $229,328.92
12 $17,395.20 $8,144.63 $9,250.57 $221,184.29
13 $17,395.20 $8,484.91 $8,910.29 $212,699.38
14 $17,395.20 $8,839.40 $8,555.80 $203,859.98
15 $17,395.20 $9,208.70 $8,186.50 $194,651.28
16 $17,395.20 $9,593.44 $7,801.76 $185,057.84
17 $17,395.20 $9,994.27 $7,400.93 $175,063.57
18 $17,395.20 $10,411.80 $6,983.40 $164,651.77
19 $17,395.20 $10,846.79 $6,548.41 $153,804.98
20 $17,395.20 $11,299.97 $6,095.23 $142,505.01
21 $17,395.20 $11,772.08 $5,623.12 $130,732.93
22 $17,395.20 $12,263.90 $5,131.30 $118,469.03
23 $17,395.20 $12,776.27 $4,618.93 $105,692.76
24 $17,395.20 $13,310.07 $4,085.13 $92,382.69
25 $17,395.20 $13,866.14 $3,529.06 $78,516.55
26 $17,395.20 $14,445.46 $2,949.74 $64,071.09
27 $17,395.20 $15,049.00 $2,346.20 $49,022.09
28 $17,395.20 $15,677.73 $1,717.47 $33,344.36
29 $17,395.20 $16,332.74 $1,062.46 $17,011.62
30 $17,391.71 $17,011.62 $380.09

$0.00

#snohomishcountyrealestate  #mortgagecalculators


Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.

Short and Sweet Mortgage & Real Estate News you can use~ for the Puget Sound Region

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Thanks to one of the wonderful Title and Escrow companies I use here are some great tips and articles I wanted to forward to all my readers. Great information!

MORTGAGE & FINANCE news

Tips for preparing your 2013 taxes:

Top 10 Mortgage Tips for 2014:

King County home prices rise 10.5% for 2013:

REAL ESTATE news

Why 2014 is a good year to buy a home:

Dont forget I am here when you are ready to buy or sell!

Tips for downsizing:

LOCAL news

Steady job growth in 2014

Have a wonderful Wednessday! Half way through the week already…… and GO HAWKS! 

www.snohomishcountyhomes4u.com

How the shutdown will affect Home loans

Hello everyone,

As a Real Estate Broker I was very curious this morning on how the Government shut down may effect all of us and of course concerned. I was also wondering how this may effect my in process buyers and my sellers looking for pre-approved buyers. Below is an update that I received from one of the lenders I work with and wanted to get out to everyone that is in the middle of purchasing a home, starting the loan process or considering purchasing a home.

At this time here is how the shutdown will affect Home loans.

The biggest problem is that every loan needs a 4506T which is verification from the IRS to confirm the buyer’s income tax filings over the last two years. Since the IRS is not working, we will be held up from closing if the 4506T has not yet been processed. For our loans in process this usually gets ordered very early in the process and is then out of the way. If it has not been ordered yet then we can do it late in the transaction but we need the IRS to get back to work before we can receive the results of the 4506T form.

USDA is also a problem because we need their approval before closing these loans and they are not working during the shut down.

HUD / FHA: The FHA should not be significantly impacted, providing the shutdown is brief. HUD has provided the following information that applies to our daily operations:

FHA will be able to endorse single family loans, however, only a limited number of FHA staff will be available, so the process may take longer.

Should FHA run out of commitment authority during a shutdown, then all lenders’ Lender Insurance approval will be temporarily suspended.

VA: Continue originating VA loans; the Department of Veterans Affairs (VA) will continue to operate if there is a government shutdown.

Rural Housing / USDA:

1) On Friday 9/27, USDA Rural Development issued notice that the existing eligible areas will be preserved until further notice. This is good news! When the Continuing Resolution (CR) passes the eligible areas will remain eligible through the expiration of the CR allowing congress and others more time to find a permanent solution.

2) Regarding the CR, now that the government is partially shut down, the USDA employees have been furloughed – Conditional Commitments and Loan Note Guarantees won’t be processed. If it’s a short shutdown then the impact should be minimal, if at all. If it’s an extended shutdown then this will affect turn-times, lock expiration’s, and purchase contracts because Conditional Commitments won’t be issued.

Internal Revenue Service (IRS):

The IRS has indicated that they will not process any forms, including the issuance of tax return transcripts (Form 4506T) during a government shutdown, which will delay loan processing.

We will keep you informed as we learn more about the government shutdown and its implications on the mortgage and Real Estate industry.

www.snohomishcountyhomes4u.com

Know of anyone thinking of a Short Sale?? Important changes coming.

I am a Short Sale negotiator but I am not a lawyer and cannot give legal advice so for my short sales I team up with a law firm which has worked out great for my sellers. I thought I would share one of their most recent law updates with you as so many people do not realize the changes that are coming their way.  If you, or you know of someone, that is thinking of a short sale send them this information and tell them to get in touch with me so we can help.  Its a long read but remember from a Law firm and great info!

WE ARE AT THE TIME OF YEAR THAT WE REALLY NEED TO FOCUS ON THE ISSUE OF FORGIVENESS OF DEBT TAX

I am not convinced that Real Estate Professionals are taking this type of tax into enough consideration as we progress through the rest of 2013. Heck it’s almost over as far as a typical short sale is concerned.

This is a real tax and a tax that needs to be analyzed with each and every seller with whom you encounter. I am concerned as I hear real estate professionals consistently talk of the end of the year as a deadline for the special law that eliminates the tax for many taxpayers, but not for everybody.

I DON’T THINK WE HAVE BEEN SERIOUS ENOUGH IN BRINGING THIS ISSUE TO SELLERS’ ATTENTION

This is a tax law that has allowed many homeowners to escape thousands of dollars of tax liability based upon their meeting certain criteria.

In my practice of dealing with distressed homeowners, THIS IS A HUGE MATTER each time I meet with a seller. It is an important matter handled in each and every consultation. Not all sellers qualify for the exception. I am concerned as some are Brokers are sloppy and have it apply to almost everybody. It was not designed to protect everybody or even benefit everybody.

THIS SPECIAL TAX BENEFIT HAS A HIGH LIKELIHOOD OF ENDING THIS DECEMBER 31ST!!!

I don’t like to always bring up fear, but if I am advising clients that may qualify for this rule I am advising them to take advantage and SELL SHORT RIGHT NOW as it becomes more dangerous as we get closer and closer to the end of December. As we often say: “There is nothing short about a short sale”.

I am not convinced that it will be extended. Frankly, I fear that it won’t  and I think, as a result, that I would encourage taking short sale action NOW as opposed to waiting until later on this year. A word to the wise.

I ALWAYS TALK TAX WITH EVERY DISTRESED HOMEOWNER I MEET

Now as we are already almost into September, this whole subject takes on new importance. I am writing this message today to make sure that you Brokers out there are taking this tax matter seriously. TODAY…….NOT FOUR MONTHS FROM NOW!!!!!

Why worry, you say, about something happening four (4) months from now? You should worry. You should plan now and change your methodology dramatically for the rest of this year.

I AM ENCOURAGING SELLERS TO ENGAGE “NOW” IN THEIR SHORT SALE… NOW IS A TIME NOT TO WAIT

So we are suggesting that sellers really engage and start moving forward and listing and selling. It makes good sense if they want to take advantage of the forgiveness of debt tax before the end of the year. You have to get going now to make sure the deal gets closed before the end of the year. In fact, that is asking for a lot to happen in a very short time. As we all know, there is nothing short about a short sale.

A SHORT “CLIFF NOTES VERSION” OF THIS TAX RULE

Every real estate licensee out there that is talking with any distressed homeowner about doing anything for those folks has to at least know that this tax exists. It’s simple really, but most sellers have no clue about it and, frankly, don’t understand it at all.

I see their eyes glazing over every time I bring it up to a typical client, but I get their attention when I tell them the tax is easily over $28,000.00 unless they pay close attention. They wake up immediately. You see that is the tax on $100,000.00 of debt forgiveness, which is a pretty typical amount in our practice. That is a serious tax consequence. Have you thought about that in relation to that listing you just took?

I tell short sale sellers that in most cases we are able to have an exception because of special rules that assist homeowners who have lived in their primary residence property for a prescribed period of time. There are exceptions, but in many cases THEY CAN TOTALLY AVOID THAT TAX AND DO A SHORT SALE!!

EVERY SHORT SALE ALWAYS PRODUCES SOME DEBT FOREGIVENESS [YOU CAN COUNT ON THAT!!]

You can count on debt forgiveness in every short sale. It comes with the territory. The key factor is whether it will adversely affect your seller or not. In many cases it won’t. However, one has to go through that tax law with a fine tooth comb and account for each and every refinance that your sellers did on their home during their time of ownership. Many used their property as cash registers!!! We do all those calculations in our consultation.

I have to tell all of you that tax advice is not part of your license as a real estate professional and I am happy to give you information in this outline of the tax law. I am NOT suggesting that you all go out and apply it to your sellers’ situation. There are a lot of traps for the unwary here folks.

EVERY CONSULTATION MY ATTORNEYS CONDUCT INCLUDES TAX ADVICE…REMEMBER NOT ALL ATTORNEYS INCLUDE TAX ADVICE

It’s part of what we do. We discuss tax matters in everyone on of our $150.00 Consultations. So you don’t have to send your seller to their CPA. We can handle that AND include all the law and credit aspects as well.

An integral part of our practice is tax. We attorneys are happy to talk tax. Be cautious as many attorneys do NOT include tax as part of their consultations, and as a result, your client has to also see a CPA or tax accountant. We are a one stop shop.

NOW IS THE TIME TO PLAN…WHAT HAPPENS IF THE CONGRESS DOES NOT FURTHER EXTEND THIS FAVORABLE TAX TREATMENT?

This favorable tax law that allows your clients to avoid this tax on debt forgiveness expires in about four (4) months on December 31st. I monitor this daily through our Bar Association Committee on Taxation back in Washington, D.C. Very little is happening on that front and conventional wisdom indicates that there is a likelihood of this tax law NOT being extended!!

We need to prepare now. We need to change the “talk track” you have with your sellers. Sellers are coming in to me now with this issue on their mind as many have been informed by others about the adverse consequences if the tax law goes out of existence at the end of the year.

HECK….WE ARE ALREADY DOING IT!!!! WE ARE PREPARED ALREADY

You see, F.H.A. deals take a long time. For us they typically are about a year from the first meeting with the seller and the day of closing. They are government deals and they take a long time in most cases. So I am talking tax to folks who are asking what is going to happen if they don’t pass that law.

WE HAVE ANOTHER TAX LAW…THIS ONE WILL NOT EXPIRE ON DEC. 31ST!!!

Some of you have heard about it. Most haven’t. Don’t feel bad. It is kind of the domain of attorneys and CPA’s. It can get a bit complicated and it requires some credentials that are really beyond the scope of your license out there my friends, but I want you all to be aware that it exists and then get your seller in for a consultation with one of our attorneys and we are happy to go over all their tax issues.

THE INSOLVENCY EXEMPTION FROM THE INTERNAL REVENUE SERVICE IS AN INTEGRAL PART OF OUR TAX PRACTICE

This exemption has been a part of the tax code for a long time. This exemption does NOT expire on December 31st. This exemption is useful even if your seller is not occupying the subject short sale property.

We ALWAYS go over the insolvency exemption when it applies in each of our consultations. We have a whole raft of literature including worksheets and the like to allow sellers to feel comfortable EVEN IF the Congress sits on its hands and does nothing.

Thanks as always to McFerran Burns and Stoval for the great info!

What Do I Keep For Taxes Again?

With tax season in full gear, you may have questions about what you have to keep and for how long? Here’s a list to get you started!

Tax Returns    7 years
Keep tax returns and all supporting tax documents including W-2s, 1099 forms, property tax info, bank statements, mortgage interest statements, cancelled checks, receipts, home purchase, home improvement information.

Paycheck Stubs    1 year
Shred after confirming info matches your W-2

Home Ownership
Mortgage docs     10 years
After property has sold     7 years
Mortgage statements     7 years
After property has sold    10 years
Repair bills/contracts 10 years

Insurances
Home        5 years
Life        Life of policy + 3 years
Medical    5 years
Investment/Retirement Accounts
IRA contributions    permanently
401K annual summaries- Keep until you close the account
Investment statements    7 years
After last account is sold

Permanently- Never Shred
Adoption/Guardianship Papers
Birth Certificates
Citizen/Naturalization Papers
Health/Immunization Records
Lawsuits
Marriage Certificates/Divorce Decree
Pension Plan Documents
Veteran Papers

Wow! That’s a long list but a good one to keep around for a reminder.