C'mon sweetie just a little closer, c'mon I have short arms. OK, here it comes, Yeah I'll knock that smile off your face.
Mold is a potential health danger for any family and also a legal liability for you and your clients. Because of the fear over mold contamination there are so many lawsuits flying around today that sales of resale homes are in jeopardy -- and insurance companies are scrambling to avoid liability, with some U.S. 1:country-region> insurers refusing to write any new homeowner policies. So what do you need to know about mold to best serve your clients and keep yourself out of trouble?
1. Molds are everywhere and have been around forever. Many people have the impression that this is a new problem -- think, "Attack of the killer molds!" -- and that we now must arm ourselves against the impending invasion. Nothing has changed, however, but the awareness of the presence of mold. Instead of fear -- we need to focus on total elimination, prevention and control. This is easy: Sunlight and ventilation are key.
2. Use common sense in your approach to mold. Examples of common sense? Reduce indoor humidity 30 to 60 percent by venting bathrooms, dryers and other moisture-generating sources to the outside; use air conditioners and de-humidifiers; increase ventilation; use exhaust fans for cooking, dishwashing, cleaning. Also, reduce condensation on cold surfaces by adding insulation (windows, piping, exterior walls, roof, floors, etc.). Excessive exposure can cause symptoms in anyone. Asthmatics and other people with sensitivities (such as infants and the elderly) will be particularly prone to increased asthma attacks, even with moderate exposure to molds. In particular, people with chronic obstructive pulmonary disorders should be particularly wary of molds. Be aware of their conditions and take the necessary precautions.
3. You cannot spot the feared "Toxic" or "Black" mold simply by looking at it. Most molds are black or dark green in color and the only way to determine its type is through laboratory testing. This type of mold is also known by its technical names of Stachybotrys Chartarum, or Stachybotrys atra.
4. Most of the media attention surrounding Stachybotrys is overblown. In statements surrounding mold in residential construction, the Center for Disease Control (CDC) does not believe that there is not any difference between Stachybotrys and any other mold. It just so happens that since this mold may grow more commonly on building materials, it is the one that happens to be most present in most homes. It's not any more toxic than other molds and the steps taken to remediate Stachybotrys should be the same as that for any other mold presence.
5. Mold can be cleaned and corrected. If you find mold on a hard, non-porous surface, it can be cleaned with a 1:16 bleach to water solution (only after first opening a window and wearing non-porous gloves and protective eyewear) as long as the area is less than 10 ft 2 in. If more than 10 ft 2 in needs to be cleaned, consult the EPA's guide titled, "Mold Remediation in Schools and Commercial Buildings" (You can also get it free by calling the EPA Indoor Air Quality Information Clearinghouse at (800) 438-4318). If the affected material is porous, it should be removed and thrown away. If the porous material mold is extensive, you should contact professionals to gather and remove. Lastly, NEVER and I mean NEVER mix household cleaners. Mixed chemicals can make toxic combinations.
6. Always get the home professionally inspected. While the information in this article is good and it's always smart to arm yourself with enough information to properly handle any situation, you are not to be mistaken as the mold expert. A professional home inspector will bear the responsibility of the mechanical, structural, and in most cases the environmental conditions of the home once they are hired by the client, releasing you from that burden. The inspector will assess the situation and put it into the proper prospective (believe it or not, I have seen a big deal made from some mold on a wall because some water was spilled from a fish tank when the home was vacated) for both you and your clients and make the call to refer it to the professionals if a "Red Flag" is discovered. So there you have it … the nuts & bolts to mold within our homes. Further information on mold can be found on the EPA website, by clicking here.
About the author:
Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of real estate in Orlando, Windermere, Winter Garden Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit www.JerrySellsOrlando.com for your real estate needs. Please give me a call if you have questions about the Orlando and Central Florida real estate market.
Jerry LaRose, P.A., ABR, GRI, e-PRO, CLHMS, REALTOR® 407-580-7011
(Copyright © 2008 By Jerry LaRose, P.A. All Rights Reserved.)
You might not hear much about them on TV or in the papers, but there are some economic signs popping up right now that are -- at the VERY least -- encouraging for housing and real estate.
Take the gold standard of all forward indicators for the U.S. economy -- the Conference Board's "Index of Leading Indicators," which is based on a broad survey of industry data and predicts economic activity three to six months down the road.
The latest Conference Board index registered its first increase in six months. Now I know that all we hear about these days is recession: it's either already here or it's about to happen. But the index suggests that there should be positive growth underway in the second half of the year, if not sooner. Look at the stock market, it’s starting it’s upward trend again.
The National Bureau of Economic Research which found that industrial production in the U.S. showed an unexpected uptick in March.
Here are some other noteworthy developments this past week:
Now, positive-sounding economic developments are not ballgame-changers for real estate. We've still got lots of housing inventory to sell before calling an end to the down cycle -- and total sales dipped 2 percent in March, according to the National Association of Realtors.
We're still dealing with a lack of confidence on the part of some consumers who are afraid that maybe prices still have a ways to fall.
But here's the point: It's undeniable that there are some glimmers out there that the underlying economy and financing marketplace, which after all are what support real estate activity, finally may be headed in a positive direction.
Orlando’s housing marketing experienced a month-over-month increase in the number of home sales, an increase in the number of pending sales contracts, and a decrease in the amount of inventory – all baby steps toward a market balanced between buyers and sellers.
The monthly statistical reports released by the Orlando Regional Realtor® Association revealed some additional interesting tidbits for the month of March:
The median sales price of a single-family home in the Orlando area decreased by 1.35 percent ($3,000) from $223,000 in February 2008 to $220,000 in March 2008. The median sales price for March 2008 is 8.33 percent below that of March 2007 ($240,000).
The decrease in the median home price to $220,000 means that the area’s affordability index increased in March to 102.35 percent. (An affordability index of 99 percent means that buyers earning the state-reported median income are 1 percent short of the income necessary to purchase a median-priced home. Conversely, an affordability index that is over 100 means that median-income earners make more than is necessary to qualify for a median-priced home.) Buyers who earn the reported median income of $51,506 can qualify to purchase one of 10,980 homes in Orange and Seminole counties currently listed in the local multiple listing service (MLS) for $225,170 or less.
The first time homebuyer affordability index held steady in March, at 72.78.
The number of sales in the Orlando area declined by 39.29 percent in March 2008 compared to March of last year (1,080 to 1,779), but the number of sales that took place in March 2008 increased by 13.56 percent compared to the number of sales that occurred in February 2008 (951).
There are currently 2,398 homes in the MLS with pending sales contracts (an indicator of future sales activity), up from 1,731 in January and 2,175 in February. The number of homes newly under contract increased by 142 in March, and the increase from January to February was 298.
The area’s average interest rate was 5.94 percent in March 2008, up from 5.87 percent in February but down from 2007’s high of 6.60 percent in August.
Homes of all types spent an average of 130 days on the market before being sold in March 2008; the average home sold for 93.53 percent of its original asking price. In March 2007 those numbers were 90 and 95.87 percent, respectively.
The majority of single-family homes (223) that changed hands in March 2008 were sold for between $200,000 and $250,000. Another 129 homes sold in March for between $250,000 and $300,000. Two hundred eighty-four homes sold for less than $200,000 in March, and 260 sold for more than $300,000. On the far ends of the scale, 31 homes were sold for $1 million or more (double the number sold in February) while only 10 homes sold for less than $50,000.
A new report by the National Association of Realtors shows the real reason why home sales don't crash for long -- rents. When purchase demands slow down, rentals speed up. Rents provide the floor that stops housing prices from major declines.
Home prices going down has been the big news lately, but in the shadows is a statistic that may surprise you. The first quarter of 2008 makes the 24th consecutive quarter that rental prices have escalated nationwide.
According to Reis Inc., a New-York based research firm, the soft home market and stricter loan terms are combining to turn more potential homebuyers into renters.
The troubling part is that renting isn't necessarily better for consumer pocketbooks than owning. A new report by the National Low Income Housing Coalition’s annual report "Out of Reach," suggests that one in seven U.S. households is using more than half their income for shelter. Low-income, minority and first-time homebuyers are the most impacted, suggests the study.
First-time homebuyers are approximately 40 percent of the housing market, so knocking them out knocks out move-up homebuyers who wish to trade up to larger and/or more expensive homes.
One bright spot following the release of the report was the weekly mortgage applications survey from the Mortgage Bankers Association. The trade organization's Market Composite Index found that purchase loan applications increased 5.4 percent from a week earlier. And the Refinance Index found that refinance applications increased 3.4 percent.
Because mortgage interest rates rose slightly for the week, to 5.78 percent from 5.75 percent, the implication is that flat rates weren't the reason for the rise in applications, but that consumers may simply be moving off the bench for the spring homebuying season.
We'll know more as the weeks continue, if there is a relationship between rising rents, and rising home sales and mortgage applications.
Homeowners reluctant to sell because prices have fallen should do the math and realize that the market downturn could work in their favor.“People are finding houses at prices they thought they’d never see again,” I would like to point out that to potential sellers that if the house a buyer covets used to be $500,000 but its price has fallen 20 percent to $400,000, it is a deal, even if the buyer’s own home also has lost 20 percent of its value.In general, the toughest will be for people who bought within the last three years, at the height of the market. But even for these homeowners, selling now may make sense as long as they can at least break even, or their trade up property is down more than their current property. (ie., that $500,000 home 3 years ago that may be now worth $400,000, considering it’s down 20%, when your home 3 years ago was worth $450,000 and is now worth $390,000 down only 13%. That’s nearly an even trade considering you would be getting a bigger home in potential a better neighborhood.
Almost everyone forgoes something, and probably several things, that he or she wanted when buying a house. For instance, the home may be in the right school district but on a busy street. Or it may in a great neighborhood, but it’s a 2 story, not a 1 story. These are “unchangeables.”It’s a good time to sell if a seller can get rid of the most negative unchangeables in his current home and replace them with better unchangeables in a new home. Once the market really turns around, the growth will be bigger in the better house.
Basic Information on the Stimulus Payments
You've heard about it. Now find out how to get yours.
What is it? It's an economic stimulus payment that more than 130 million households will receive starting in May. It's not taxable, and it won't reduce your 2007 or 2008 refund or increase the amount you owe when you file your 2008 return.
Are you eligible? The vast majority of people who file a 2007 income tax return qualify, and many who don't regularly file a tax return may qualify as well. You're eligible if you have a valid Social Security Number (SSN), can't be claimed as a dependent on a tax return and have either an income tax liability or "qualifying income" of at least $3,000. Qualifying income includes any combination of earned income and certain benefits from Social Security, Veterans Affairs or Railroad Retirement. Additional information is below, and a full legal description is available in Revenue Procedure 2008-21.
Both people listed on a "married filing jointly" return must have valid SSNs to qualify for the payment - if only one has a valid SSN, neither can receive the payment.
Can you use an ITIN instead of an SSN? Taxpayers with an Individual Taxpayer Identification Number (ITIN) instead of an SSN are not eligible to receive a stimulus payment. Both people listed on a "married filing jointly" return must have valid SSNs to qualify for the payment - if only one has a valid SSN, neither can receive the payment.
Not eligible at the current time? If your circumstances change and you become eligible after you file your 2007 federal tax return, you can always file an amended return using Form 1040X. File the form after April 14, 2008, and allow 8-12 weeks of processing time before making any inquiries about your payment. See a sample with instructions.
If you're not eligible this year but you become eligible next year, you can claim the economic stimulus payment next year on your 2008 tax return.
How do you get it? Just file a a federal tax return for 2007, even if you normally don't have to because your income usually doesn't meet the filing threshhold. You can't get it if you don't file.
How much will you get? The actual amount depends on the information contained on your tax return. Eligible individuals will receive between $300 and $600. Those who are eligible and file a joint return will receive a total of between $600 and $1,200. Those with children will get an additional $300 for each qualifying child. To qualify, a child must be eligible under the Child Tax Credit and have a valid Social Security number. We have various examples for you check out.
The payments phase out at certain income levels, so those with higher incomes may receive a reduced payment or even no payment.
Can you estimate your payment? The IRS has created an online calculator that will allow you to answer a few questions and get a quick estimate of your payment amount.
How will you receive the payment? Be sure to choose direct deposit when you file your tax return, even if you aren't due a regular tax refund on your tax return. That way, the stimulus payment will go right to your bank account. Otherwise, we'll mail you a check.
When will you get your payment? Starting May 2, payments will be electronically transmitted to direct deposit accounts. Paper checks will be mailed starting May 16. The payments are based on the last two-digits of the mail filer's Social Security number. The IRS has issued a schedule for payments as direct deposits or paper checks.
Economic stimulus payments will be issued according to the last two-digits of the main filer's Social Security number. People who use direct deposit also will be among the first to receive the payments starting May 2. Paper checks will be put in the mail starting May 16.
PAPER CHECK
Last two SSN digits:
Payments will be mailed by:
00 through 09
May 16
10 through 18
May 23
19 through 25
May 30
26 through 38
June 6
39 through 51
June 13
52 through 63
June 20
64 through 75
June 27
76 through 87
July 4
88 through 99
July 11
People who file a return after April 15 will receive their economic stimulus payment, but probably about two weeks later than the schedule shows. A return must be filed by October 15 in order to receive a stimulus payment this year. See the online calculator for an estimate of the amount you will receive.
For more information go to:
http://www.irs.gov/newsroom/article/0,,id=179211,00.html
Just a note on perspective for some of the foreclosure news you are seeing.
Is it rough out there? Well consider this, in a news article today (see below) there are apparently frightening numbers on forclosure rates - " U.S. Foreclosures Jump 57%" . Awful state of affairs - right? How about this headline for the same article - "99.8% of U.S. Households NOT in Forclosure" Amazing? Can't be true? Check the math.
Use the numbers provided in the article - "More than 234,000 properties were in some stage of foreclosure, or one in every 538 U.S. households... ". Pull out your calculator and work out the percentage - .001859 or .1859% (1 divided by 538). Yep - that is LESS than two-tenths of one percent.
Well that is the national number, you might say, but Florida is much worse. You are absolutely right! Here is what the article says " Florida had the third-highest rate, one filing for every 282 households...". Yes much worse - .003546 or .3546%. LESS than four-tenths of one percent. So the Florida headline should read - "99.6% of Florida Households NOT in Forclosure".
This is not to diminish the real pain and financial peril faced by tens of thousands of homeowners in or facing foreclosure. There is a serious financial and market correction underway in housing and the broader economy. But it is not the end of the world. If you really want to see what a crisis is all about check the numbers from the Great Depression. Nearly 1 in 10 owners was in foreclosure in 1932 and 1933. In the 1920's there were over 40,000 real estate licensees in Florida - by 1941 the number was 1,200.
In 2008 there is no doubt we face a tough and challenging market. Is success still possible? YES. It will take very consistent, very focused, and very hard work to produce results. You CAN do this! But not if you let the headlines drag you down.
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Is there a difference between a Mortgage Pre-Qualification letter and a Mortgage Pre-Approval letter?
The reality is that most all buyers need to obtain a mortgage loan to purchase a home. Since mortgage approval is such an integral aspect of a home purchase, wouldn't it make sense that REALTORS® have a better understanding of the mortgage pre-approval process, since so few buyers are able to buy a home and pay cash.
These terms appear to be similar, but can be quite different. Not only do they cause confusion for home buyers, there seems to be many interpretations from those in the real estate and mortgage industry as well.
Speaking as a REALTOR®, the difference is in documentation and verification. In other words, is the buyer providing copies of income paystubs and bank account statements to the Mortgage Lender or is the Mortgage Lender simply relying on verbal information provided by the buyer? More often than not, the difference between the two terms is that one is issued without any verification of information and the other starts with the buyer providing written documentation of all information provided. While neither is a considered to be a mortgage commitment, nor a written mortgage guarantee, obtaining a Mortgage Pre-Approval letter is more preferred than obtaining a Mortgage Pre-Qualification letter.
Mortgage Pre-Qualification is generally a process where a buyer contacts a Mortgage Lender/Mortgage Representative, often on the telephone, who then asks the buyer to provide some information. The information requested involves a current address and how long living there, a social security number and permission to order a credit report, annual income and hopefully the amount of down payment.
After the credit check is ordered and received by the Mortgage Lender, the Mortgage Rep then estimates the amount of mortgage the buyer can afford and sends (via fax or email) a letter to the buyer with the title Congratulations, You Are Pre-Qualified, for a mortgage loan in the amount of $__ or Congratulations, You Are Pre-Qualified, for a mortgage loan in the amount of $__ and a purchase price of $__. This is usually done within a half hour or so of the initial phone call, and at best can be described as an estimate of potential mortgage ability and purchasing power, and not Mortgage Pre-Approval.
The pre-qualification letter always includes varying type disclaimer information, such as: Subject to a formal mortgage application and payment of an application fee, subject to verification of employment, subject to verification of assets, subject to credit review, subject to mortgage underwriting guidelines, interest rate to be the prevailing rate of interest for the mortgage type applied for, among many other "subject to"-like statements. In other words, we will give you a mortgage when we see that the information you provided is correct and meets certain qualifying standards.
What problems could arise when a formal mortgage application is submitted by a buyer after they've obtained a Mortgage Pre-Qualification letter like that? The mortgage application process involves somewhat standard underwriting criteria and guidelines for each particular type mortgage, whether the mortgage is VA, FHA or Conventional. The varying underwriting criteria involves guidelines, whether Fannie Mae, Freddie Mac or the Lenders specific qualifying criteria, for verification of income, income qualifying ratios, verification of down payment, cash reserves after closing, credit check scores and work history, among others.
Yes, it is possible that the buyer provided correct information, and will obtain a mortgage commitment when a mortgage application is submitted. However, there are many circumstances where even though the information verbally provided is accurate, certain other details are not mentioned which may have a negative impact on the mortgage approval process. Details like income being received off the books, down payment being borrowed (not gifted from a family member), and savings for the down payment but no other assets for closing costs or inconsistency in work history, to name just a few situations that can cause problems in obtaining mortgage approval.
While Pre-Qualification letters like the previous example are common, not all Mortgage Lenders provide them in that manner. Many Mortgage Lenders require a more thorough process in providing Mortgage Pre-Approval. In addition to obtaining a credit report, many Lenders require the buyer to provide proof of two years of work history, pay-stubs or income tax forms, copies of bank statements for source of funds verification and copies of charge card statements.
When the documentation is provided, it is then submitted to the Mortgage Underwriter for review and approval. The Mortgage Pre-Approval letter is worded something like this: Congratulations, You Are Pre-Approved for a mortgage loan in the amount of $__ and a purchase price of $__ subject to a Contract of Sale and a satisfactory Bank Appraisal on the home being purchased. While more time consuming than the previous pre-qualification practice discussed above, it is more thorough and more reliable, shortens the formal mortgage application and approval process and provides the ability for a fast closing if one is desired.
Consider the advantages of this type Mortgage Pre-Approval. First of all, the buyer and REALTOR will have confidence in a price range and confidence in obtaining mortgage approval. In submitting offers, sellers will know they have a serious buyer who has taken the time to arrange for mortgage financing first. And just as important, the buyer will be more relaxed in spending money to hire an Attorney for contract review, providing the earnest money deposit, hiring a home inspector to perform the home inspection, termite inspection, radon inspection plus any other required inspections and paying for the mortgage application and appraisal fee. Why? They are concentrating on the home they have purchased, and not worrying about the mortgage approval process.
Needless to say, I can't even count the number of real estate transactions I've noticed fall apart after a buyer has paid all those fees for the home they hoped to purchase, only to find out they were not able to obtain mortgage approval, even with a Pre-Qualification letter. These are the financial ramifications for a buyer, but what about the ramifications for the others involved in a lost real estate transaction, the selling agent, the listing agent and the seller. Consider the time, energy, emotional strains and on and on. Real estate is a people business, a service business. Not much good can occur when a real estate transaction is cancelled for mortgage denial, especially when it occurs a month or so after contract acceptance.
Provide better service to your buyer clients, review their Mortgage Pre-Qualification letter with them, and don't be afraid to ask questions. Provide better service to your seller clients, read the Mortgage Pre-Qualification letter the selling agent is providing at the contract presentation, and don't be afraid to ask questions. Better yet is require a Pre-Approval letter when you receive an offer for your seller. Believe me in this market today it is very difficult to obtain a mortgage, so ask for the pre-approval up front.
8 Quick Fixes to Increase ValueWith buyers scarcer, sellers must up the ante to convince them that their property offers what many want most — top value for dollar expended. Here are eight fast fixes:1. Buff up curb appeal. You’ve heard it before, but it’s critical to get buyers to want to look on the inside. Be objective. View listings from the street. Check the condition of the landscaping, paint, roof, shutters, front door, knocker, windows, house number, and even how window treatments look from the outside. Add something special—such as big flower pots or an antique bench — to help viewers remember house A from B.2. Enrich with color. Paint’s cheap, but forget the adage that it must be white or neutral. Just don’t let sellers get too avant-garde with jarring pinks, oranges, and purples. Recommend soft colors that say “welcome,” lead the eye from room to room, and flatter skin tones. Think soft yellows and pale greens. Tint ceilings a lighter shade.3. Upgrade the kitchen and bathroom. These make-or-break rooms can spur a sale. But besides making each squeaky clean and clutter-free, update the pulls, sinks, and faucets. In a kitchen, add one cool appliance, such as an espresso maker. In the bathroom, hang a flat-screen TV to mimic a hotel. Room service, anyone?4. Add old-world patina. Make Andrea Palladio proud. Install crown molding at least six to nine inches in depth, proportional to the room’s size, and architecturally compatible. For ceilings nine feet high or higher, add dentil detailing, small tooth-shaped blocks used as a repeating ornament. It’s all in the details, after all. 5. Screen hardwood floors. Buyers favor wood over carpet, but refinishing is costly and time-consuming. Screening cuts dust, time, and expense. What it entails: a light sanding, not a full stripping of color or polyurethane, then a coat of finish. 6. Clean out, organize closets. Get sorting—organize your piles into “don’t need,” “haven’t worn,” and “keep.” Closets must be only half-full so buyers can visualize fitting their stuff in. 7. Update window treatments. Buyers want light and views, not dated, fancy-schmancy drapes that darken. To diffuse light and add privacy, consider energy-efficient shades and blinds. 8. Hire a home inspector. Do a preemptive strike, since busy home owners seek maintenance-free living. Fix problems before you list the home and then display receipts and wait for buyers to offer kudos to sellers for being so responsible.
Are you self-employed or a partner in a small professional practice? If so, you're probably very familiar with all the different challenges of running a business. Ultimately, you're responsible for attracting and retaining customers, providing them with quality services or products, getting paid for your work, and then paying your employees and vendors—all before ever paying yourself a penny.
Then, from the remaining profits, the government wants their "fair share" of your success. Fortunately, with some knowledge and planning, you can take steps to minimize the taxes you end up paying. Here are five ways that self-employed individuals and Realtors® can cut their tax bill.
1. Employ your child
While you get to deduct the wages you pay to your son or daughter as a business expense, your child doesn't pay any federal income taxes on the first $5,350 of wages earned (in 2008). Plus, if your business is a sole proprietorship or a two-person partnership consisting of the child's parents, wages paid to your child under the age of 18 are exempt from social security and Medicare taxes as well. Using the wages paid to your child to fund a Roth IRA is another perk of employing your child . The maximum IRA contribution is $4,000 in 2007, increasing to $5,000 in 2008. Imagine 60 years or more of tax-free growth within your child's Roth IRA.
For example: Let's say you're in the top tax bracket, and you pay your child who is under the age of 18 wages of $5,000 in 2008.
Cost
No cost if you're a sole proprietor. Otherwise, the cost is $765 for social security and Medicare taxes
Benefit
A tax savings of $1,895, plus the opportunity to contribute to your child's Roth IRA
2. Employ Your Spouse of Other Family Member
If your practice has a 401(k) plan or SIMPLE IRA in place, consider paying your spouse or other family member over the age of 21 enough in wages to max out their allowable salary deferrals, provided he or she isn't already doing so through another employer. For 2007 and 2008, a person can contribute up to $15,500 ($20,500 if 50 or older) into a 401(k) plan, and up to $10,500 ($13,000 if 50 or older) into a SIMPLE IRA. Remember, money contributed into these plans grows tax deferred and is usually protected from your creditors too.
Note: Be aware that there are some costs to you. Expect to pay social security and Medicare taxes at a rate of 15.3 cents for every $1.00 of wages paid to your spouse or family member. You'll generally owe unemployment taxes and workers' compensation insurance on their wages as well.
For example: Let's say you're in the top tax bracket, pay your spouse $17,000 in wages, from which your spouse contributes $15,500 into a 401(k) plan through salary deferrals.
$2,601 in social security and Medicare taxes
A tax savings of $5,918, plus $15,500 growing in a tax-advantage, creditor-protector 401(k) account
3. Consider an HSA
With the rising cost of health insurance, high-deductible plans are becoming more attractive to healthy professionals. The rules now allow you to combine a high-deductible plan with a tax-advantaged Health Savings Account (HSA).
Here are the basics about HSA's:
For 2008, people with family coverage can contribute up to $5,800 into their HSA, while people with individual coverage are capped at $2,900. The government really wants HSAs to succeed, so you should be able to find an adequate high-deductible health insurance option within your state.
For example: Let's say you switch to a high-deductible health insurance plan and contribute $5,800 into a Health Savings Account.
Higher out of pocket costs associated with the high deductible health insurance plan
Tax savings of $2,030, plus $5,800 growing tax-deferred within your HSA to fund your family's medical expenses now and/or your retirement later
4. Incorporate Your Business
Once the profits in your business exceed $230,000 (in 2008) per owner, you could save some taxes by incorporating. That's because you avoid paying the 2.9% Medicare tax on money withdrawn from your practice as S-Corp dividends instead of as salary.
Why is $230,000 the magic number? That's the maximum amount of salary that you can use to calculate your retirement plan contributions in 2008.
Beware of the costs of incorporating, however, including having an accountant prepare your corporate tax return, additional payroll taxes and worker's compensation insurance now that you'll be on the company's payroll, and a variety of minimum taxes and filing fees assessed by many states.
For example: Let's say you change your business structure from a sole-proprietor to an S-Corporation, earn $330,000 in profit, from which you take a salary of $230,000 and S-Corp distributions of $100,000.
$1,000 or more in additional fees and taxes
Save $2,900 in Medicare taxes on your S-Corp distributions
5. Set up a More Sophisticated Retirement Plan
From what I've seen, most practices have relatively basic retirement plans in place, such as a SIMPLE IRA or a Safe-harbor 401(k) plan. While these plans are generally more than adequate, you should be aware that there are more sophisticated plans that you can establish that allow for increased annual contributions for you and your partners, without requiring you to contribute more money into the plan on behalf of your staff. You'll want to find a retirement plan specialist to help you design the best type of plan to fit the specific needs of you and your practice.
Potentially higher retirement plan contributions on behalf of your staff
The ability to contribute more money into your retirement account each year.
Five Ways To Save
Check with your Tax Professional to see if it makes sense to institute any of these five tax-saving strategies early in 2008. By investing some time now, you could earn substantial dividends in the form of reduced taxes down the road.
One of the best places to live in the Orlando area is in the Southwest area of Orange county. In Windermere Florida on the Butler chain of Lakes. You’ll love the system of canals that connects eleven lakes known as the Butler Chain of Lakes comprised of Lake Down, Little Lake Down, Wauseon Bay, Lake Butler, Lake Louise, Lake Isleworth, Lake Chase, Lake Pocket, Lake Tibet, Lake Sheen, and Fish Lake.
The only public access to the Butler Chain is at the R.D. Keene Park located on Chase Road in Windermere and during the summer months the 47 parking spaces fill up by the early morning hours. The Lake Down ramp does provide another place for access but there’s no place to park so what’s the point.
This chain of lakes makes waterfront living in Windermere the premier location to live in Southwest Orlando. Windermere was given its name from Dr. Stanley Scott, whose father purchased 160 acres in this picturesque location in 1885. Dr. Scott built his home on the shore of Lake Butler, and it is believed by many that he named this town after England’s Lake Windermere. Today, more than 2,300 people inhabit the Town of Windermere. Did you know that Windermere Florida is a sister city of Windermere England? In England Windermere is known as the Lake District and it would make sense that Windermere Florida is a sister city as it is also set amidst the Butler Chain of Lakes.
Real Estate has historically been more valuable by lakefront settings and Windermere Florida is no exception. Lots starting at a million dollars and up are not unusual especially for the Butler Chain of Lakes if you can find anymore.
Thanks to the surrounding Butler Chain of Lakes the lakefront lifestyle is a top choice for the Windermere home buyers.
If you are interested in finding out more about living on the Windermere Butler Chain of Lakes please feel free to give me a call. 407-580-7011 or visit my website at http://www.JerrySellsOrlando.com
