Real Estate and All That Jazz: November 2009

Income Tax Considerations When Renting Real Estate

 This blog post is worth reading if you have any questions about income property and taxes.

Via Charles Perkins (Charles G. Perkins, CPA):

 

Income tax considerations when Renting Real Estate

Rental Income

For IRS purposes rental income is taxable income in the year received.  There are some exceptions and special considerations for some income.

 

Example:

Sam is a landlord that has rented out a single family residence for several years to one family for $1,000/mo.  In Feb of the current year the family gives notice that they will be moving out at the end of the month.  The tenant has paid timely each month and has the balance held as last month’s rent applied to February.  The tenant was refunded $300 of his $700 damage deposit.

Sam quickly is able to fill the vacancy and the new tenant moves in on March 15. The new rent remains at $1,000/mo.  Sam collects first, last and a damage deposit.  The damage deposit is $700.  This tenant pays timely each month except December.  In December he is unable to pay the rent until December 30th.  At that time you collect a $50 late charge and accept a credit card payment.  The payment is processed right away but the funds are not available to you until January 2nd.

 

Calculation of taxable rental income

taxable rental income

 

Charles G. Perkins, CPA

Servings Small Businesses in the Puget Sound Area

 

Cell: (206) 422-5504

Office: (206) 228-1988

email: charles@charlesperkinscpa.com

website: www.charlesperkinscpa.com

 

Charles G. Perkins, CPAI look forward to meeting your business and tax needs.  I also have many partners in business that can meet your other business needs.  These include contractors, insurance agents, investment advisers, financial planners, mortgage advisers, and many others.

Deborah A. Stone, Realtor  Integrity-Solutions-Results-

Hogue and Belong Realty-Bankers Hill

San Diego, CA

"Representing clients with the experience of an investor"

1 commentDEBORAH STONE • November 22 2009 05:17PM

Rental Income Rules for Security Deposits

 

Via Charles Perkins (Charles G. Perkins, CPA):

 

Rental Income rules for security deposits

 

General Rules

 

Each state has slightly different rules regarding deposits collected when a new tenant moves in.  Deposit can be collected for utilities, cleaning, damages, last month rent and some other purposes.  Deposits can be refundable or nonrefundable in some cases.  The rules will vary from state to state. 

A deposit is a liability.  In other words this is money that you may have to return at some future date.  Because of this many states have enacted rules regarding what can and cannot be done with these funds.  In Washington State, these funds must be deposited in a separate bank account and that information disclosed to your tenant.  These funds must be held in trust.

http://www.rentlaw.com/securitydeposit.htm

 

Federal Income tax rules applying to deposits

 

For tax purposes it is important to know the purpose of any deposit.  Money that is being held in trust to pay for any future damages or refundable cleaning  must be returned within a certain number of days unless written notice is provided as to why any amount has been withheld.  This money is not considered income at the time it is received for tax purposes. 

When the tenant moves out any portion of the damage deposit not returned to the tenant is considered rental income.  Of course generally this is offset by rental expenses that were listed on the written notice provided to the tenant at move out.

If a landlord collects a nonrefundable cleaning deposit or advance rent payment this is considered rental income in the year received. 

State income rules generally are similar to the federal rules, but you should consult with your tax preparer.

 

Charles G. Perkins, CPA

Servings Small Businesses in the Puget Sound Area

 

Cell: (206) 422-5504

Office: (206) 228-1988

email: charles@charlesperkinscpa.com

website: www.charlesperkinscpa.com

 

Charles G. Perkins, CPAI look forward to meeting your business and tax needs.  I also have many partners in business that can meet your other business needs.  These include contractors, insurance agents, investment advisers, financial planners, mortgage advisers, and many others.

Deborah A. Stone, Realtor  Integrity-Solutions-Results-

Hogue and Belong Realty-Bankers Hill

San Diego, CA

"Representing clients with the experience of an investor"

1 commentDEBORAH STONE • November 22 2009 05:13PM

Interest Rate Update 11/14/09

Via Ralph Gorgoglione (EcoBroker Certified - John Aaroe Group, Inc.):

Conventional Loans:

30 Year Fixed Conforming---$417,000 and Below: 4.875% with 1 Point

30 Year Fixed High Balance Conforming---$417,001 to $729,750: 5.0% with 1 Point

30 Year Fixed Jumbo---$729,751 to $1,000,000: 5.625% with 1 Point

5/1 ARM Jumbo---4.875% with 1 Point-amazing for Jumbo product

 

FHA Loans:

FHA 30 Year Fixed---$417,000 and Below: 5.0% with 1 Point

FHA 5/1 ARM---$417,000 and Below: 3.75% with 1 Point

FHA 30 Year Fixed High Balance---$417,001 to $729,750: 5.25% with 1 Point

FHA 5/1 ARM High Balance---$417,001 to $729,750: 3.75% with 1 Point

Deborah A. Stone, Realtor  Integrity-Solutions-Results-

Hogue and Belong Realty-Bankers Hill

San Diego, CA

"Representing clients with the experience of an investor"

0 commentsDEBORAH STONE • November 22 2009 05:02PM

Metro San Diego Neighborhoods: NORTH PARK

In the past 13 years since I have been living in in So Cal, Metro San Diego neighborhoods have experienced increased revitalization. North Park is one of these areas.

 

North Park has always been a “diamond in the rough”. North of Balboa Park and just adjacent to upscale Hillcrest North Park has gone through some growing pains, only to emerge as an ethnically and economically diverse area with a downtown center that is hip and flourishing. There is also a vibrant arts scene, and many chic new eateries.The 805 is the backbone of this area, and one can get to just about anywhere in San Diego County in 20 minutes.


North Park definitely has an inescapable “pulse” and on my recent visit there, I could see that previously vacant stores were replaced by some very unique businesses.

 

 

 

  Claire de Lune Coffee house in North Park.You can even find poetry  readings by locals here!

 

 

 

 

 

 

  Off the Record sells a huge selection of 33 rpm records...like The Beatles!

 

 

 

 

 

 

 

 

 Get your shoes repaired.......

 

 

 

 

 

 

                                         Or get a tattoo...

 

 

 

 

 

 

 

 

 

  North Park Beauty Supply...with a seriously huge selection                   

 

 

 

 

 

 

 

 

 

 

 

 Local color:  skateboarding..........

 

 

 

 

 

 

 

 

                  Checking in with the office...........

 

 

 

 

 

 

 

 

  Taking a much needed energy drink break.............

 

 

 

 

 

 

 

 

 

 

 

                On a peaceful midday stroll in North Park....

 

 

 

Condos in North Park are still priced very reasonably. On a recent search of homes for sale in metro San Diego you can find one BR condos in the low $100K's all the way up to homes over $1,000,000. A recent search of the MLS showed 25+ condos on the market between $100K and $150K. If you are a young professional renting an apt. than now may be the time to purchase a condo in this Metro San Diego neighborhood.These are great prices for urban digs within 10 minutes drive of downtown San Diego. Public transportation is available too.

Check out my profile on Active Rain

 

Deborah A. Stone, Realtor  Integrity-Solutions-Results-

Hogue and Belong Realty-Bankers Hill

San Diego, CA

"Representing clients with the experience of an investor"

4 commentsDEBORAH STONE • November 10 2009 03:53PM

10 Painless ways to Save Money......

Sure, I can:

Ride my bike instead of my car. (try riding a bike on the So Cal freeways). Eliminate Starbuck's from my daily routine (aww, this hurts). Brown bag it daily (hate making sandwiches in the morning). Sit in my dark, cold house with no lights on.....(enough said)!!

But I have found 10 painless ways to save money in San Diego:

1. Use the clothes dryer for 2 minutes to "fluff" the fabric, then hang on a rack in the sun.

2. Change all light bulbs to "low energy".

3. Recycle plastic grocery bags to use in the trash.

4. Check fees at your bank. I did some comparison shopping for small business accounts and even though there was only $20/difference a month,it's money in my pocket, not theirs.

5."Sun-blocking" curtains & ceiling fans reduce heat (and cold) thus lowering energy costs substantially.

6.Check your cell phone carrier & cable t.v. providers regularly. They don't want to lose you to the competition, and often have "new programs" to offer you. I just saved $20/month from my Verizon wireless bill, & $30 from my cable bill, with not much difference in my old service plan.

7. Sign up for SKYPE, and lighten up your monthly cell minutes. For $2.95 month, you can call unlimited within the USA, and for a bit more, all through Europe. Check out www.skype.com

8. Stop paying high prices for "processed" foods. You will not only save significant $$, but you will be much healthier.

9. Stop buying bottled water. My refrigerator has a “filtered water system”. If you do not have this, you can purchase Brita Water Filtration System at Target and filter your own water. Or use both and have double-filtered water.

10. Stop buying software. I found Avira (anti-virus) and Open Office org. (replaces Microsoft Office) both online for FREE. Google.docs now offers FREE web-based templates

Using the above methods I save over $100/month.............. and I have some of the lowest utility bills in my San Diego neighborhood. Check out my profile on Active Rain


Deborah A. Stone, Realtor  Integrity-Solutions-Results-

Hogue and Belong Realty-Bankers Hill

San Diego, CA

"Representing clients with the experience of an investor"

19 commentsDEBORAH STONE • November 09 2009 05:31PM

At Risk Teens.......there may be an answer!

DIEGO HILLS CHARTER SCHOOL


It's been awhile since I have been in High School. I know I am dating myself with tales of school marms in long dresses and grey hair pulled back in a bun....not a glimmer of a smile on their faces. Always holding the deadly wooden ruler in their hand. In those days a “rap” across your knuckles was not out of the question.

 

School for me in Boston was torture. I attended Girls' Latin School, one of the srictest and most regimented in the nation. I was not a good student, and had way too much energy. But I managed to graduate and go onto college and professional school, so I must have learned something.


I know times have changed.While I was out today, I walked by an open house at a local shopping center of the “Diego Hills Charter School” in San Diego CA. I was intrigued by their sign which said “One on One” and “Independent Study” and “Attend as little as 3 hours/week”. Diego Hills Charter School in San Diego CA is a brand new public school. Any high school student (age 14-19) can enroll FREE. The workload is geared to each individual student while taking into account obligations and unusual family circumstances. Some teens just work better in a more personalized environment.There is also independent study and free tutoring.



The mission of Diego Hills Charter School in San Diego CA is to engage students who are no longer a part of the traditional High School setting. If a student needs to make up classes to graduate, this may be the place for them. Of course the student would have to be pretty self-motivated to embark upon a curriculum like this, but what a great way to “rescue” at risk youths and allow them to finish their education.

All I know is that I would  love to have had the option to attend a school like this when I was in my teens. This just may be the answer for a teen in transition or one who has dropped out and is a fearful of going back to a traditional setting. With so much support, it seems to be a recipe for success.

If you have a teen in transition, call Diego Hills Charter School in San Diego CA at 619-286-0312 or check out their web-site www.DHCharter.org

Check out my profile at Active Rain

Deborah A. Stone, Realtor  Integrity-Solutions-Results-

Hogue and Belong Realty-Bankers Hill

San Diego, CA

"Representing clients with the experience of an investor"

2 commentsDEBORAH STONE • November 03 2009 04:17PM