Reduce Taxes By Owning Property?

Many people erroneously view owning property as an increase to their tax burden. Measure 50, approved by Oregon voters in 1997, ties property taxes to assessed value instead of market value. This causes property taxes to increase only three percent per year, which means that your assessed value is most likely still below the market price.

Even despite property tax increases, there are still many tax advantages to owning a home. For example, a homeowner with a 30-year fixed rate mortgage of $200,000 could expect to pay about $10,000 in interest, with an additional $2,400 in property taxes. By itemizing these payments on their income taxes, they can reduce their taxable income by $12,400. The homeowner’s gain is even higher if appreciation on the property is added.

In the Housing and Economic Recovery Act, a first-time homebuyer is currently entitled to an $8,000 tax credit. This credit will reduce taxes or even provide a refund unless the home ceases to be the homeowner’s principal residence within three years from the date of purchase. In addition, a long-time homeowner may now qualify for a $6,500 credit if a replacement home is purchased after November 6th, 2009. This creates a credit for divorced individuals buying new homes.

If you are planning to buy a home in the near future, be sure to calculate the amount of appreciation and tax savings. Just remember that these examples are intended to provide a general idea of how home ownership might be applied to taxes and income. You should always consult with a tax advisor for information relating to your specific circumstances.

Expert Advice for Real Estate Transactions

Many clients own a primary residence, a vacation home, or a rental property which they wish to sell or refinance. In February 2010, Stahancyk, Kent & Hook presented “Crisis or Opportunity – Real Estate Perspective From the Professionals,” a continuing legal education program for members of the Washington County Bar Association.

The panel presented a wealth of information for those considering buying, selling, or refinancing a home, which we will now share with you. An important step in selling a home, especially in the course of divorce, is obtaining an appraisal. Because the market changes rapidly, it is important that appraisers rely on recent comparable sales. Sean Kelly of Par Appraisal Group advises that, if possible, no comparable sale older than three months be used. It is also important that you and your attorney communicate all litigation needs and concerns regarding the property early in order to obtain an accurate and helpful appraisal.

The housing crisis also affected the refinancing process. Rules for obtaining a loan are becoming more stringent. This problem is exacerbated by the fact that, while the applicant used to have ample opportunity to explain personal circumstances, loans are now approved by underwriters who strictly apply the rules. One important change to these rules is that you must now collect spousal support for three months before it will be considered as income on your loan application.

Finally, during the divorce process many clients wish to sell a residence through short sale. A short sale is when a property is sold with no expectation of getting any equity back, and can be very important if you owe more on your home than it is worth. Short sales can protect your credit and help in negotiating loan forgiveness. Both you and the bank must consent in order to sell a property under short sale.

For more information, contact your attorney or one of our panelists, Sean Kelly, Curtis Aimonetto, and James Rostel, may be contacted at:

Sean Kelly, Par Appraisals: sean@parappraisals.com
Curtis Aimonetto, Mortgage Advocates, Inc.: CurtisA@mtgadvocates.com
James Rostel, Orenco Realty: Jim@JimRostel.com

Cycling Safety

The Northwest has two natural phenomena that make this region a beautiful place to live: trees and rain, both of which create extra challenges for people who commute to work by bicycle. As the days get shorter, early sunsets make it hard to see and even harder to be seen. Wearing bright colors helps, however the use of lights and reflectors makes a drastic difference. Wearing two lights, one for the front and one for the back of your bike or coat, allows others to see you and judge their distance from you. Having lights is not only the smart choice, it can also be the only legal choice — many cities have laws that require lights when riding in the dark.

Autumn leaves turn beautiful colors then fall the ground, and wet leaves make for very slick riding conditions. When riding over leaves, never make sharp turns. Wet leaves can cause your tires to slip out from under you. A fall from a bike, especially in traffic, can leave you with broken bones or worse.

This brings us to another important point: safety equipment. Never ride without a helmet. It is proven that helmets can help save lives. Remember that with helmets size does matter; wear one that is the right fit for you and don’t forget to adjust the straps correctly. It can’t protect your head if it flops around.

When riding, take a proactive approach. You need to be aware of everything around you. Cars, people, dogs, trees and rocks are all possible safety hazards. Also, limit your distractions. Don’t use headphones while riding. If you get a phone call, pull over to the side and stop before answering. The more focused you are, the faster you can react.

You can’t be too safe when cycling out on the roads. Remember to take caution when it’s wet outside and even more when it’s dark. Wear the proper safety gear and limit you’re distractions. Cycling is fun; keep it fun by being safe.

Domestic Partnership

Many people wonder what would happen if they simply do not marry their partners. By avoiding marriage, can one avoid the hassle of a divorce? While this may seem like a tempting proposition, there are legal implications you should consider.

Even if a couple never marries, either person may seek help from the state in dissolving the relationship. The person must show the intent of the couple, express or implied, to share assets or offer continued support. This is sometimes referred to as an “unregistered domestic partnership.” Oregon law allows same-sex couples to register domestic partnerships, and a registered domestic partnership comes with most of the same rights as marriage. Unlike a registered domestic partnership, an unregistered domestic partnership provides only the rights the couple expressly or implicitly agreed to provide.

An unregistered domestic partnership is by no means the same thing as a marriage. For marriages the court presumes property acquired during the marriage is joint; conversely, in an unregistered domestic partnership the court begins with the assumption that all property is separate. A partner must then prove the intent was to share property. For example, the partner might produce a written agreement between parties or show that the couple treated a house as joint property by both paying towards the mortgage.

Therefore, while a few marriage-like rights can be applied to unregistered domestic partnerships, be aware that there are many important rights that come only with marriage. For example, marriage gives partners the right to file joint federal taxes, collect a spouse’s social security under certain conditions, and receive continued support from a spouse in the case of unemployment or disability, among many others.

Your lawyer can help you foresee and avoid other pitfalls specific to your situation and discuss other options, such as executing a prenuptial agreement.

Search Engines

The Internet has become a vital part of our daily lives. For many people, Google is nearly synonymous with the Web, and it’s easy to see why. Google has a clean, clear design and seems supernaturally able to find what you’re looking for. However, while Google is a great search engine, it’s not the only one, and sometimes others may be better.

All search engines automatically browse the Web and create an index of the text. When you search, the engine checks the index for pages with the text of your search. Part of Google’s strength is that it indexes more pages,but this “data harvesting” is the easy part. The real key is sorting the thousands of results. Google’s algorithms are clever enough to make good guesses about which pages you actually want, and which ones have just the right words. They also have millions of previous searches and know which results were most popular.

Because of its strength, many of Google’s competitors have fallen by the wayside, but not all. Yahoo! is still operating, and Microsoft recently entered the search engine market with Bing. Microsoft claims that Bing is better at finding the results you actually want, even suggesting sites that aren’t exact matches. You may find that Bing delivers results similar to Google, so the most interesting search may be Bing Vs. Google (www.bing-vs-google.com). This site presents results from both Bing and Google in a split screen. You can decide for yourself which one is best.

Another good approach for searching the Web is to use the search function of an individual site. Google and Bing searches often take you to Amazon or Wikipedia, but you can search those sites by themselves. The Mozilla Firefox browser can even add site searches to the search bar, so you don’t need to load the site first. Searching for a topic within a specific site, rather than the entire Web, will narrow your search, targeting the results to exactly what you need.