Did you become a landlord this year by accident? Unforeseen circumstances like job relocation, downsizing, or home inheritance may have put you in this category. Now that tax season is underway, the Internal Revenue Service won't see your "accidental landlord" status as an accident. In fact, if you rent any space for 15 days or more, you'll need to report your rental property and earnings on your federal income statement, according to the IRS.

Here are three tips to help steer you in the right direction as you file your taxes as an "accidental landlord" this year.

1. Gather records of your income and expenses 

​Record your rental income earnings from the prior year and all cash-related expenditures on the property on IRS 1040 Form Schedule E. Things like property taxes, energy costs, association fees, maintenance and landlord insurance, legal fees (if a lawyer drafted your rental contracts), ad costs to rent the space, and repairs are now deductible because your home is a rental property and not a personal residence. In recent years, there's been an increase on rental property audits, so be sure you have receipts and proper documentation to support your deductions in case you're audited.

2. Exclude security deposits

If you have a hefty deposit that was returned during the taxable year, don't forget to leave that out of your statement.

3. Take depreciation

Tax pros who have real estate experience may be able to help you calculate your annual allowance for wear and tear. Taking depreciation helps offset any drop in property value.
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The IRS states that if you meet the following requirements below, your property is eligible for depreciation:

• You own the property.
• You use the property in your business or income-producing activity (such as rental property).
• The property has a determinable useful life.
• The property is expected to last more than one year.

Be sure to consult with a tax professional as each property and landlord situation is different. A study by the Government Accountability Office shows that about 25% of rental property owners over-reported their net income from rental real estate — you don't want to be part of that statistic!

THE MONEY
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Mortgage
A mortgage is a loan agreement between you, the home buyer, and a bank or other creditor. They lend you the money and you get a home. To repay the bank or creditor for providing this money, the home buyer agrees to pay back the amount they borrow to purchase the home (the principal) plus an additional amount of money as interest

A helpful Loan Calculator is located at http://www.calculator.net/loan-calculator.html

You can change the repayment terms on a loan by choosing a 15-year fixed rate mortgage instead of a 30-year fixed rate mortgage, which means you'll pay off the loan principal and accrued interest in 15 years instead of 30. This will increase your monthly payment, but will decrease the total amount of interest you pay over the life of the loan. Note: there are many different types of mortgages! While I only mentioned a 15-Year and 30-Year Fixed Rate Mortgage, there are also variable rate and alternative loan programs like FHA (Federal Housing Administration) and VA (Veteran Affairs).

Down Payment
A down payment is a percentage of your home’s purchase price that you pay up front when you close your home loan in addition to the money you borrow. Lenders often look at the down payment amount as your investment in the home. Not only will it affect how much you’ll need to borrow, it can also influence:

• Whether your lender will require you to pay for private mortgage insurance (PMI). Typically, you'll need PMI if you put down less than 20% of the home's purchase price.
• What type of loan is best suited to you, such as a fixed-rate or adjustable-rate mortgage.
• Your interest rate. Because your down payment represents your investment in the home, your lender will often offer you a lower rate if you can make a higher down payment.

Private Mortgage Insurance (PMI)
If you are unable to pay 20% down on your home purchase, private mortgage insurance may be required by your lender. PMI is a special type of insurance to protect a lender (the bank or creditor) against loss if a borrower (you) defaults on your obligation to repay the loan. This type of insurance is costly and is not required if you can afford a 20% down payment.

Even if your lender requires you to obtain PMI, you may not need to carry the PMI over the life of the loan. Check w/ your lender about your options to terminate the PMI once you have achieved a specified level of equity in your home.

Appraised Value
Many lenders require a formal appraisal by a licensed appraiser to ensure the value of your home is at least as great as the purchase price. This appraisal occurs between when your offer is accepted and when you close on the house. While you may have offered $180,000 on a house, if the appraiser returns and says the house is worth $170,000, you either have to pay that $10,000 difference in cash or ask the seller to reduce the purchase price to $170,000.

Learn more about what to do if your home appraised lower than the purchase price here.

Earnest Money
Earnest money is submitted with your offer to demonstrate your intent to follow through with the sale if your offer is accepted. The appropriate amount of earnest money varies from market to market; your realtor can advise on what is customary for your situation. Earnest money can be handled in many ways; the following are common scenarios:

1. Allocated to Down Payment or Closing Costs: If all contingencies on your offer are met and you proceed with the purchase of the home, you can allocate this earnest money to your down payment or closing costs.
2. Reclaimed: If one or more contingencies on your offer are not met, for instance the home appraises under offer price, or it fails inspection, you typically allowed to reclaim your earnest money.
3. Say 'Goodbye' (Surrendered): If all contingencies are met but you back out of the contract, you may not be entitled to get your earnest money back.

Closing Costs
These are the costs incurred for the various expenses involved in the home buying transaction like title insurance, loan origination fees and appraisal fees. These costs vary widely from transaction to transaction. Your realtor and lender can assist you with learning more about the closing costs for which you will be responsible, but you can safely assume an average between 2%-5% of the purchase price.

Remember, you as a buyer are responsible for paying your closing costs in addition to your down payment. So while you might have $30,000 saved up for a 20% down payment, you will also need additional funds to afford closing costs.

THE TACTICS
Closing Date
The closing date is the date sign all the documents necessary to officially purchase a house. This is typically about a month after your offer is accepted. However, do not confuse this date with possession date, which is defined below.

Possession Date
At closing, you officially own the property. However, you may have agreed in your purchase agreement to allow the former owners to keep possession of the property until a later date. This means that although you have paid the down payment, paid closing costs, and are now responsible for the mortgage, you still do not have the right to move into your new home.

Possession dates that don't line up with the closing date generally occur because the sellers need time to find a new place to live. However, the buyer must agree to a later possession date as part of the purchase agreement in order for the seller to retain possession of the property after the closing.

Inspection
A home inspection is a non-invasive, examination of the condition of the house that is designed to identify any problem areas with the property. The home inspector typically looks for evidence of insect, water or fire damage that may affect the value of the property. They will likely check heating, cooling, electrical and plumbing systems. They also may check structural items like the floors, walls and ceiling as well as the roof and attic. If your house has a basement, it should be examined for leaks and to make sure it has the proper supports in place. Remember, a home inspection is an examination of the property's condition, and is not the same thing as a home appraisal (see definition above).

If your inspector finds damage in the home, you may be able to negotiate that the seller fix the issues or agree to a lower purchase price.
Buying a house is complicated! But once you find the one that makes you feel at home, the headaches seem to be worth it. Best of luck to you all!

Souce: https://blog.foremost.com/what-those-big-words-mean-buying-your-first-home.asp

There are a handful of variables that contribute to a financial plan's success, including a household budget, emergency savings, retirement savings, and - insurance! It is highly recommended to review the important parts of your insurance financial plan annually to make sure protections are in place.

Protect Your Assets!
Your first thought when it comes to insurance should be protecting what you have, such as repairing your vehicle after an accident and replacing your belongings after a flood. When reviewing your financial plan, confirm that all of your valuable assets, such as vehicles, motorcycles, boats, ATV’s, homes, expensive jewelry and/or fine artwork, etc., are properly protected. Also, in reviewing your set protections, make sure you have a reasonable deductible and full replacement cost coverage. (Don’t panic! We explain all the details)

Protect Your Funds!
It’s unfortunately true - the most important coverage is usually the most misunderstood. When you are held responsible for an accident, your assets and money are at risk!  What if your dog bit someone and you were sued?  What if your teenager caused a major accident and you didn’t have enough liability coverage? Having proper insurance in place ensures that you are prepared for whatever may happen and the most important step is to look at how much you have to protect, or your total assets, and then create a plan to protect everything.

Protect Your Family!
​Making sure your assets have proper protections is important but life insurance and disability income give utmost protection to your family if something happens to you. With these options, you can plan to pay off debt, pay for college, or anything else that is important to you so that it doesn’t become a burden on your family to take care of alone.


We understand that all of this might seem like a lot for you to think about, but it doesn’t have to be!  You can meet with our great local insurance agents once a year, or as often as needed when experiencing certain life changing events, and trust that all of these things are taken care of.  Why not take a few minutes to schedule an insurance financial planning review with one of our agents?  Call us today!


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Harris Reed & Seiferth Insurance Group 
​Office: 561-768-8176
www.harrisreedandseiferthinsurancegroup.com

Welcome to our new insurance agency blog!
 
This is our very first post. We're not quite sure what we're going to write about here, but the plan is to create helpful content for customers and prospective clients about information that is relevant to you.
 
We hope you'll come to view this as a top resource for keeping your family and your finances safe.
 
Here are a few of the topics we may be writing about:

• Answers to clients' frequently asked questions.
• Helpful information about insurance shopping.
• Safety and Health Tips and Ideas.
• Local Community Information.

 
Stay Tuned!