When Are Mortgage Rates Lowest?

We’re all looking for an angle, especially if it’ll save us some money. Whether it’s a stock market trend, a home price trend, or a mortgage rate trend, someone always claims to have unlocked the code. Unfortunately, it’s usually all nonsense, or predicated on the belief that what happened in the past will occur again [&hellip

The post When Are Mortgage Rates Lowest? first appeared on The Truth About Mortgage.

Source: thetruthaboutmortgage.com

2020 Could Be an Unprofitable Year for Rental Properties. Here’s How to Handle the Taxes

beach house Darwin Brandis/Getty Images

Economic fallout from the COVID-19 crisis and civil unrest could cause many rental real estate properties to run up tax losses in 2020 and maybe beyond. This column covers the most important federal income tax questions and answers for rental property owners. Here goes.

What can I write off?

Nothing new here. You can deduct mortgage interest and real estate taxes on rental properties. You can also write off all standard operating expenses that go along with owning rental property: utilities, insurance, repairs and maintenance, care and maintenance of outdoor areas, and so forth.

What about depreciation write-offs?

For many rental property owners, the tax-saving bonus is the fact that you can depreciate the cost of residential buildings over 27.5 years, even while they are (you hope) increasing in value. You can generally depreciate the cost of commercial buildings over 39 years.

Example: You own a small apartment building that cost $1.5 million not including the land. The annual depreciation deduction is $54,545 ($1.5 million/27.5). The deduction can shelter that much annual positive cashflow from income taxes. So, depreciation write-offs are nice tax-savers, especially if you own an expensive property or several properties.

Variation: As stated earlier, commercial buildings must be depreciated over a much-longer 39-year period. Even so, the annual depreciation write-off for a $1.5 million commercial building is $38,462. The deduction can shelter that much annual cash flow from income taxes.

Can I claim 100% first-year bonus depreciation?

Yes, for qualified improvement property (QIP) expenditures on a nonresidential building. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) included a retroactive correction to the statutory language of the Tax Cuts and Jobs Act (TCJA). The correction allows much faster depreciation for commercial real estate qualified improvement property (QIP) that’s placed in service in 2018-2022. QIP is defined as an improvement to an interior portion of a nonresidential building that’s placed in service after the building was placed in service. However, QIP doesn’t include any expenditures attributable to: (1) enlarging the building, (2) any elevator or escalator, or (3) the internal structural framework of the building. Thanks to the CARES Act correction, you can write off the entire cost of QIP in Year 1, because it qualifies for 100% first-year bonus depreciation.

Alternatively, you can choose to depreciate QIP over 15 years using the straight-line method. That alternative might make sense if you expect higher tax rates in future years. Discuss your QIP depreciation options with your tax pro.

What else do I need to know about depreciation write-offs?

You ask such good questions. There’s more. The TCJA increased the maximum Section 179 first-year depreciation deduction for qualifying real property expenditures to $1 million, with annual inflation adjustments. The inflation-adjusted maximum for tax years beginning in 2020 is $1.04 million. The Section 179 deduction privilege potentially allows you to deduct the entire cost of qualifying real property expenditures in Year 1. I say potentially, because Section 179 deductions are subject to several limitations. Ask your tax pro for details.

The TCJA also expanded the definition of qualifying property to include expenditures for nonresidential building roofs, HVAC equipment, fire protection and alarm systems, and security systems.

Finally, the TCJA further expanded the definition of qualifying property to include depreciable tangible personal property used predominantly to furnish lodging. Examples of such property include beds, other furniture, and appliances used in the living quarters of an apartment house.

Can I claim the qualified business income (QBI) deduction base on my net rental income?

Maybe. For 2018-2025, the TCJA established a new personal deduction based on qualified business income (QBI) passed through to your personal Form 1040 from a pass-through business entity (meaning a sole proprietorship, LLC treated as a sole proprietorship for tax purposes, partnership, LLC treated as a partnership for tax purposes, or S corporation). The deduction can be up to 20% of QBI, subject to restrictions that kick in at higher income levels. For a while, it was unclear if you could claim QBI deductions based on net rental income passed through to you from one of the aforementioned pass-through entities. The IRS eventually issued taxpayer-friendly guidance that allows QBI deductions in most such cases, but you must follow complicated rules to collect the tax-saving benefit. As your tax pro for details.

What about the passive loss rules?

Ugh. If your rental property throws off tax losses (most properties do, at least during the early years and during years when the economy is suffering — like now), things can get complicated. The so-called passive activity loss (PAL) rules may come into play. Losses from rental properties will usually be classified as passive losses.

In general, the PAL rules only allow you to currently deduct passive losses to the extent you have current passive income from other sources, like positive income from other rental properties or gains from selling them. Passive losses in excess of passive income are suspended until you either have enough passive income or you sell the property that produced the losses. Bottom line: the PAL rules can postpone any tax-saving benefit from rental property losses, sometimes for years. Fortunately, there are several exceptions to the PAL rules that can allow you to deduct rental property losses sooner rather than later. Your tax pro can explain the exceptions and help you plan to become eligible, if possible.

Is that the end of the bad news?

Not exactly. Say you manage to successfully clear the hurdles imposed by the PAL rules for your rental property losses. So far, so good. But the TCJA established another hurdle that you must also clear to currently deduct those losses. For tax years beginning in 2018-2025, you cannot deduct an excess business loss in the current year. An excess business loss is one that exceeds $250,000 or $500,000 for a married joint-filing couple. Any excess business loss is carried over to the following tax year and can be deducted under the rules for net operating loss (NOL) carry-forwards. This loss disallowance rule applies after applying the PAL rules. So, if the PAL rules disallow your rental losses, this rule is a nonfactor.

COVID-19 Relief: Thankfully, the CARES Act suspends the excess business loss disallowance rule for losses that arise in tax years beginning in 2018-2020. That’s good news.

What’s the deal with net operation losses (NOLs)?

Say you manage to successfully clear both of the preceding hurdles for your rental property losses. Now we are talking, because you can generally use those losses currently to offset taxable income from other sources. If losses for the year exceed income from other sources, you may have a net operating loss (NOL) for the year.

COVID-19 Relief: The CARES Act allows a five-year carryback privilege for an NOL that arises in a tax year beginning in 2018-2020. So, you can carry an NOL from one of those years back to an earlier year, deduct it, and recover some or all of the federal income tax paid for the carryback year. Because federal income tax rates were generally higher in years before the TCJA took effect, NOLs carried back to those years can be especially beneficial. The TCJA kicked in starting with tax years beginning in 2018.

What if I have positive taxable income?

Eventually your rental property should start throwing off positive taxable income instead of losses, because escalating rents will surpass your deductible expenses. Of course, you must pay income taxes on those profits. But if you piled up suspended passive losses in earlier years, you can now use them to offset your passive profits.

Another nice thing: positive taxable income from rental real estate is not hit with the dreaded self-employment (SE) tax, which applies to most other unincorporated profit-making ventures. The SE tax rate can be up to 15.3%. Something to avoid when possible.

One bad thing: positive passive income from rental real estate owned by a higher-income individual can get socked with the 3.8% net investment income tax (NIIT), and gains from selling properties can also get hit with the NIIT. Ask your tax pro for details.

The bottom line

There you have it: most of what you need to know about the federal income tax issues that can come into play for rental property owners. The economic fallout from the COVID-19 crisis and recent civil unrest increase the odds that rental properties will suffer losses in 2020, but tax relief provisions may soften the blow.

The post 2020 Could Be an Unprofitable Year for Rental Properties. Here’s How to Handle the Taxes appeared first on Real Estate News & Insights | realtor.com®.

Source: realtor.com

5 Tips for a Memorable Holiday Card for Your Business

In a time when most communication takes place online, receiving a personal holiday card in the mail is a welcome treat—and one that can help build stronger business relationships while supporting your company’s brand.

So how can you be sure that your company’s holiday card earns a place on the mantel or card display and isn’t just tossed in the recycling bin? Start with a high-quality card from a well-known stationer like Crane, and then remember these tips.

1. Reflect Your Brand

Although sending a holiday card spreads cheer and acknowledges the spirit of the season, it’s a marketing tool ultimately, giving you a chance to thank your customers for their business and maintain top-of-mind awareness. Therefore, it’s important that the design you choose reflects your company brand and sends the right message to customers. Try to choose card designs that align with your brand colors, imagery, fonts, and overall corporate identity. That doesn’t mean you have to stick to boring or conservative designs, but you should consider the message you’re sending. Even conservative businesses like accountants or attorneys can incorporate whimsical or colorful designs into their cards when done appropriately.

2. Consider a Photo

Photo cards are among the most popular design choices for holiday cards. After all, who doesn’t love seeing the smiling faces of friends and family that they might see all that often? Photo cards are also appropriate for businesses and are likely to get the recipients to look more closely at them. Photo cards work well both for businesses where customers have regular contact with your team and for those where your customers might not see you and want to put faces to names. They are also a great choice for family businesses. Including a family photo on the holiday card supports your “family-owned” brand and a personal touch to the card.

3. Make it Personal

Speaking of adding a personal touch, the most memorable holiday cards are those that have a personal touch. Nothing will send your card to the bin faster than a preprinted card that was clearly a mass mailing. People want to feel special and acknowledged, and adding a personal touch to the card creates that feeling. Hand-signing cards is ideal, but not always practical, but many printing companies can add digital signatures that mimic the look of a signature. Another option is to have your team send cards to specific clients with a personalized message thanking them for their business or mentioning a specific memory or project.

Sending business holiday cards is a key part of your marketing, so take the time to do it right.

4. Take Care with Messaging

Understanding your customer base and being culturally sensitive is important all the time, but in particular during the holidays. It’s important to choose holiday cards and write messages that are sensitive to your customers' religious and cultural preferences. This means avoiding cards with overtly religious messages or focused on the religious aspects of the season, instead opt for more neutral designs and greetings. The primary exceptions are if your business is devoted to a specific religion (eg. a Christian bookstore), if you are certain that your customer base is of a specific faith, or if you’re sending greetings for a holiday you celebrate (for example, if you’re of the Jewish faith and sending cards for Hanukkah). Even then, it’s best to opt for cards that have more subtle religious imagery and messages. If you’re unsure, choose a more universal “Season’s Greetings” or “Happy Holidays” theme.

5. Mail Carefully

There’s no point in putting time, effort, and money into your holiday card only to have many of them returned undeliverable because you have incorrect addresses. Devote some time to updating your mailing list, adding new contacts, removing old or outdated addresses, and removing duplicates. If you’re sending cards to contacts and clients at other companies, make sure that the recipients are still with the company and that you have their titles correct.

This means that you should begin working on your holiday cards well in advance. You might not be thinking about the holidays yet in October, but it’s best to get your company cards in the mail as close to Thanksgiving as possible. Not only does getting your card in the hands of your contacts early make it more memorable—it’s not going to get lost in the pile of cards filling mailboxes the week before Christmas—but it also ensures that people receive them before they head out of the office for the holidays. Many people take time off in the days before and after Christmas, and if your cards are mailed late, they won’t be seen until after the New Year. If you are running late with your holiday cards, consider sending New Year’s greetings instead.

Sending business holiday cards is a key part of your marketing, so take the time to do it right. Your customers will be happy to receive them and remember your company in the year to come.

Source: quickanddirtytips.com

How to Use Your Wanderlust to Build Credit

Love to travel? Good news: There are ways to put that wanderlust to use with a travel rewards credit card.

Though travel rewards cards aren’t the easiest to get approved for as they require an excellent or good credit score, those who are able to snag one can use it to build better credit. (Just remember, before you apply it’s important to know where you stand so you don’t get turned down only to see your score suffer as a result of the inquiry.)

Travel Rewards Cards & Credit

A travel rewards credit card lets accountholders earn points or miles that can be put towards hotel stays, airfare and other travel expenses. These rewards can help travelers lower the cost of vacations, and the card itself can be a good tool for building credit.

If you make payments on time, eventually your score will begin to rise because this behavior creates a positive payment history, an important factor in credit scoring models. The card’s credit limit will also count toward your credit utilization rate, which is another big factor in scoring models. Your credit utilization rate is how much debt you carry versus your total available credit. For best credit scoring results, it’s recommended that you keep your debt below 10% and at least 30% of your credit limit(s). So if you charge a vacation and then pay most or all of the purchases off right away, your score could benefit.

You can keep track of how your usage and payments are affecting your credit by signing up for Credit.com’s free credit report summary. Beyond seeing your credit scores, you’ll be able to check how you’re doing in five key areas of your credit report that determine your credit score, including payment history, debt usage, inquiries, credit age and account mix.

Since interest rates for travel rewards cards tend to vary depending on creditworthiness, you’ll want to be mindful about carrying a balance. Doing so could hamper your credit goals, and the interest you pay could exceed whatever you’ve managed to glean from rewards. Many travel rewards cards carry annual fees, too, so you’ll want to make sure your spending habits justify the potential cost. (You can read about the best travel credit cards in America here.) Of course, making purchases on your card and paying them off quickly (and on time) will generally boost your credit.

Remember, if your credit is looking a little lackluster and you’re having a hard time qualifying for any type of credit card, you may be able to improve your scores by disputing errors on your credit report, paying down high credit card balances and limiting new credit inquiries until your score bounces back.

[Offer: If you need help fixing errors on your credit report, Lexington Law could help you meet your goals. Learn more about them here or call them at (844) 346-3296 for a free consultation.]

 

More on Credit Cards:

  • Credit.com’s Expert Credit Card Shopping Tips
  • How to Get a Credit Card With Bad Credit
  • An Expert Guide to Credit Cards With Rewards

Image: Geber86

The post How to Use Your Wanderlust to Build Credit appeared first on Credit.com.

Source: credit.com

How to Use a Grocery Price Book to Get the Best Deals

The post How to Use a Grocery Price Book to Get the Best Deals appeared first on Penny Pinchin' Mom.

Have you ever wanted to learn how to find out when those items you need will be on sale?  Believe it or not, stores usually cycle sales on schedules.  By learning how your store does this, you can always get the best deals and know when to stock up, and when to pass on those deals.  The secret is learning how to use a pricebook.

A price book is also called a grocery price book.  And, it is just what it sounds like – a book which tracks the prices of the items you need at the stores where you shop.

A Price Book is a list of the products you purchase and the prices you pay
to watch for sales trends and cycles.

It will take time to create yours, but once you have it set up, it is easy to maintain and will help you know when those prices are at their lowest, allowing you to stock up and save as much as possible.

 

How Do I Make a Grocery Pricebook?

You want to make sure that what you use is simple enough that you can maintain it.  If you are a techy person, you might want to use something on your smartphone.  If you are a paper list maker, then you might want to go with an easier method like a spiral notebook or binder with inserts.  You can even create a spreadsheet on your computer.   The way you track does not matter.  What matters is that you just do it.

You will want to keep the list organized, however, by breaking it down by the department or possibly even product.  For instance, you will want one sheet for your dairy items, one for meat, one for produce, one for breakfast foods, etc.  That way, when you need to find the prices (and update it), you can easily find it.

 

What Do You Include in the Book?

No matter which method used to create your book, you will want to make sure to keep track of the products you purchase.  These will include:

  • Date
  • Store
  • Product/Brand
  • Size (oz, product count, etc)
  • Price
  • Per unit price

You can create your own form, can print one out below.  Just click the image to learn how you can get one that you can use.

How Do I Create My Price Book?

The simplest thing to do is to start keeping your receipts.  Once you shop, write down the information based on what you purchased.  It takes a little work up front to get started, but eventually, the book will be easy to maintain and you’ll get the hang of it.

To calculate your per unit prices, you will need to make sure you know the product size.  That might mean extra notes when you shop or updating the price book as you put your groceries away.  To determine a per unit price, take the price and divide that by the size.  For example, if you are looking at diapers you would calculate the price per diaper as follows:

$17.49 / 84  = $0.20 per diaper

You can simplify this even more by updating a price book while you shop.  Most stores have the per unit price listed right on the shelf for you.  That makes it simpler for you as you can just write down the price in your book.

Do I Ever Change the Price?

Yes!  That is the reason a Price Book works!  As you shop, you might have a price for an item listed in your booklet, but you find it on sale for less.  You will want to update that price in your book as that means there was a sale.

When you see it on sale again the next time, you might start to learn the sales cycle, such as every six weeks or every 12 weeks.  Doing this is how you learn when to shop for the items you need.

How Do I Make the This Work for Me?

Before you shop, you will want to consult your pricebook to see if the items on sale are the lowest price or if you know you can get a better deal.  If your Price Book shows a lower price, it doesn’t mean you shouldn’t buy that product.  It just means only purchase whatever amount you need to get by until the item goes on sale again at the lower price.

On the flip side of this, if you find that the price in the weekly ad is lower than what you show in your price book, it might mean that you not only need to update your price book pricing, but it also will let you know that it is a good time to stock up at this low price!

Does the Book Do More Than Share Sales Cycles?

It sure does!  If you find a great coupon, you will know in advance about what you will pay at the store.  Your price book helps you determine which store you want to shop at so you can use the coupon for the best deal.

A price book can also help with your budget.  If you find that you’ve got “too much month and not enough money” left until your next payday, you can make your list and know ahead of time what you can expect to pay at checkout.  This way, there are no surprises, and you can adjust your shopping list before you shop!

grocery pricebook

The post How to Use a Grocery Price Book to Get the Best Deals appeared first on Penny Pinchin' Mom.

Source: pennypinchinmom.com

Math Tips for Smart Shopping

Calculator in a Shopping CartI recently ran across a 2012 article from The Atlantic called The 11 Ways That Consumers Are Hopeless at Math. The title of this article hooked me, and as I began reading I found that there are indeed a few ways in which consumers misunderstand math – and pay the price as a result.

But I also found that most of the so-called “math tricks" that people get caught up in are really better described as number-based psychological hacks, which marketers use to extract every last penny from us that they can.

So it's not so much that consumers are hopeless at math as they are susceptible to being tricked. Which is precisely what a savvy shopper knows how to avoid.

What are some of these mathematical misunderstandings that you should be aware of? And what are some of the most common number-based psychological hacks? Those are exactly the questions we’ll be looking at today, as we finish up the year with a resolution to become even smarter shoppers in the new year.

Sponsor: This episode is brought to you by NatureBox. Discover smarter snacking with a new NatureBox each month. Get your first box FREE when you go to naturebox.com/qdt.

How Much Bang For Your Buck?

The article I mentioned from The Atlantic begins with an anecdote that nicely points out one of the biggest flaws in the way the average consumer shops. Namely, that when it comes to pricing and deals, most people go with their gut instead of taking a few seconds to think things through.

Here's the story: Imagine you walk into a coffee shop, take a look at the day’s specials, and see a sign that says, “Today only, your choice—get 33% more coffee for the regular price, or pay 33% less for the regular amount of coffee!” If you were presented with these two options, which would you choose?

In truth, choosing the best deal isn't always just a question of numbers. For example, if you really wanted more than your regular amount of coffee that day, then the extra coffee option would be a fine choice. But that’s not really what I’m talking about here, so let’s rephrase the question a bit to focus on the math.

The real question is this: Which option is the better deal in terms of dollars spent per ounce of coffee? After all, that’s what we’re really talking about when we speak of being a savvy shopper—getting the most bang for your buck.

Most people's gut instinct is that the two deals are about equally as good.

Most people’s gut instinct is that the two deals—33% more coffee for the same price or the same amount of coffee for 33% less money—are equally as good. After all, they both have the same 33% in them. But let’s do the math to see if this assumption is really true.

Imagine your usual 8 oz. cup of coffee costs $2. In this case, the first option gives you about 1.33 x 8 oz. = 10.6 oz. of coffee for $2, while the second option gives you your usual 8 oz. of coffee for a price of 0.67 x $2 = $1.34. That means you pay $2 / 10.6 oz. = 18.9 cents/oz. with the first option, but only $1.34 / 8 oz. = 16.8 cents/oz. with the second.

So, clearly, the second option is a better deal. While it's tempting to get something "free" for the same amount you usually pay (the first option), in this case, getting the amount you actually want for less money is a better deal—especially if you don't really need that extra coffee anyway. And, as always, the math is there to back you up.


What’s the Best Deal?

People prefer to make choices between similar and easily-comparable options.

As I mentioned at the outset, most savvy shopping skills are really less about math and more about avoiding the number-based psychological hacks that marketers (would love to) play on you. While perusing the news this week, I found an article discussing a perfect example of this kind of sneaky hackery.

This example was originally described in Dan Ariely's book Predictably Irrational, in which he talks about running across an advertisement to subscribe to the magazine The Economist. The advertisement lists 3 possible deals:

  1. Web-only subscription for $59/year
  2. Print-only subscription for $125/year
  3. Print + web subscription for $125/year

If confronted with these options, which would you choose? If you’re anything like the 100 MIT students that Dan Ariely posed this question to, you’d pick the print + web subscription for $125/year; 84% of the MIT students chose that offer, while 16% chose the cheaper web-only subscription.

Not surprisingly, nobody chose the middle print-only option. After all, it’s a pretty bad deal compared to the third option, which gives you the same thing plus something extra, all for the same price. But if that middle option is such a bad deal, why did the marketers even bother to include it?

To answer this question, Dan Ariely removed the second option from the list and presented the two remaining options to another group of 100 MIT students. This time, with just the $59 web-only and $125 print + web subscriptions to choose from, 68% chose the cheaper web-only subscription and 32% chose the print + web subscription. Remember, when all three options were available, 84% of students chose the more expensive option and only 16% chose the cheaper subscription.

So why did the marketers include that strange print-only subscription option? Because they also figured out that more people would choose the more expensive subscription if the print-only option was there.

What’s the math behind this? There isn’t any—this one is purely psychological. Sure, there are numbers involved, but all they’re really doing here is pointing out that people prefer to make choices between similar and easily-comparable options – so when they’re given the opportunity to do so, they will.

It may not be rational, but it is very real. And knowing how to spot this kind of trick is a big part of learning how to use math—or at least numbers—to be a more savvy shopper.

Wrap Up

Okay, that’s all the math we have time for today.

For more fun with math, please check out my book, The Math Dude’s Quick and Dirty Guide to Algebra. And remember to become a fan of The Math Dude on Facebook, where you’ll find lots of great math posted throughout the week. If you’re on Twitter, please follow me there, too.

Until next time, this is Jason Marshall with The Math Dude’s Quick and Dirty Tips to Make Math Easier. Thanks for reading, math fans!

Calculator-in-a-shopping cart image courtesy of Shutterstock.

Source: quickanddirtytips.com

Budgeting Help

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How Mint offers budgeting help

Ready to start budgeting and tracking your money? See our article Budgeting Tips from Mint — and subscribe to our blog for more budgeting help.

Budgeting Calculators

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Value of Reducing or Foregoing Expenses. Small changes in your daily routine can add up to big budget savings. Find out how much.

How Much Does Inflation Impact my Standard of Living? How much will you need in 5, 10 or 30 years to maintain your standard of living?

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The post Budgeting Help appeared first on MintLife Blog.

Source: mint.intuit.com

Stop Saving for retirement. Start Investing for Retirement Instead.

Here’s why saving money will never get you to retirement — and here’s what you should be doing instead.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Source: thepennyhoarder.com