Home Improvement – How to Recession-Proof Your Home Improvement Plans

As the 2008 recession lingers into its fourth year, many consumers have closed their wallets to a long list of “big ticket” purchases, and home improvements appear to be riding the top of that list.

According to a 2010 Bigresearch.com study, home owners are throwing their home improvements plans out the window like burnt toast. Over 20% of those surveyed said they were putting-off all forms of home improvement indefinitely. Interestingly, this percentage ranked second highest among all survey questions, with only “vacation travel” showing a higher figure (25%).

With cash reserves at a premium, many home owners have simply decided to wait on making improvements, and understandably so. Faced with record unemployment, higher costs of living, rising taxes and a dim view of any short term changes for the better, who could blame them?

Worse yet, home improvements have historically yielded very low returns when compared to their actual cost. In fact, Remodeling Magazine’s 2009-10 “cost vs. value” report reveals that home owners, on average, recoup less than of 65% of the money they invest in their home improvement projects.

But before you conclude that your home improvement plans should be scraped, let’s take a step back.

There are very few home owners who wouldn’t admit to needing some measure of improvement to their home. Whether it’s as simple as repairing the leaky faucet gasket that drives you crazy with its relentless dripping, or an unreliable front porch light fixture that leaves you fumbling around in the dark when you return home from a long day at work. Every house has its deficiencies.

But with a recession in full bloom, and statistics showing little to no hope of ever getting your money back, why would anyone bother with a home improvement project?

Though at first it may seem like a lost cause or verging on lunacy, there are simple solutions that many consumers are using to solve this problem.

First, let’s address the big one. The statistics from Remodeling Magazine and other similar resources, assume that a building contractor is being paid to perform all the labor and to supply all the materials. And if you assume, on average, approximately 50% of the total costs of most home improvement projects will be attributable to labor and fees, you can literally transform the investment returns by performing the majority of the work yourself. What was once a 35% loss becomes a 30% gain by simply providing your own labor force. Not a bad return in any economy.

Second, although the IRS does not allow deductions for most voluntary home improvements, they do allow you to add the costs of your improvements to the cost basis of your home. And for tax purposes, this will help minimize any tax burden you might face when you sell your home. I don’t claim to be a tax expert, but you can easily verify your cost basis and tax deduction options by talking with you’re tax accountant.

So how do you perform the work yourself? If you think tackling your home improvement project is beyond your ability, you’re in for a surprise. It’s not!

Like many things, the more you do something the more proficient you become, but construction is not terribly complex. It doesn’t require years of schooling and technical expertise to comprehend. It’s not brain surgery. It’s arguably more art than science. In fact, if you can draw a straight line, read a measuring tape and you don’t mind getting a little dirty you’re a perfect candidate for tacking your own home improvements.

Minimizing the more difficult projects like relocating load bearing walls, or changing roof lines, can make the project much easier and less costly. And you may need a licensed electrician, plumber or other skilled craftsman along the way, but if you use them sparingly and only when absolutely required, you’ll save a tremendous amount of money.

There are plenty of free resources you can use to estimate material costs, determine the right tools to use, and establish the right strategy for actually getting the work done efficiently.

So start with online resources. There are thousands of them. You’ll find estimating tools, materials suppliers and hundreds of “how to” manuals. Even the “Dummies Store” can be a great resource. And don’t hesitate to talk with the professionals at your favorite material supply store when you need advice. Asking for assistance and opinions from someone you trust (a neighbor or relative) can also be extremely helpful. Most of the expertise you need is at your fingertips, and it won’t cost you a penny.

Don’t forget to check with your lender, your city officials (construction permitting) and any governing HOA for the requirements they may have related to your planned improvements.

And if you don’t have the tools you need to complete a specific part of the project, remember tools can be rented. And you can find them in most pawn shops for pennies on the dollar. Don’t assume you have to buy “new” tools.

The benefits of this straightforward strategy are multi-faceted. Not only can you enjoy the convenience of your improvements, but you can enjoy a tremendous return on investment at the time of re-financing or sale.

And in light of the economy, it’s not a bad way to get the family, friends and neighbors involved in something productive, something everyone can contribute to and something everyone can enjoy for years to come.

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A Real Discussion About The Home Office Deduction

Home-based businesses are indeed on the rise. Working at home definitely has its advantages. Imagine a commute down the stairs, through the kitchen for goodies, with a leisurely look at television to catch up with the news of the day. And what if there is a sleepless night and an urge to get some work done comes about. Working would be better than viewing all of the get rich quick schemes monopolizing late night television. Owning a business can be very rewarding as the entrepreneur turns his or her own passion into a profit seeking venture. What of the cost savings associated with running a business from one’s very own home? Is this an advantage or a hindrance? Is the goal of this new business to expand, or just provide additional income? What are the tax benefits and consequences of running a business from our personal residence? As always my friends, I will leave no stone unturned as we embark on a journey of finding the truth in running a home-based business. Who’s way is better? My way is better friends. Read onward and explore the never before discussed issues of running your business from home, at least not in such creative and practical detail.

Working from home is a great way to keep overhead costs lower at the beginning. Imagine having to go out and secure office space and buying all new furniture and equipment. Saving these costs is desirable at the start of a new business venture. These cost savings, however, can create a problem, believe it or not. I am going to offer one of my classic examples to illustrate a very important point. Enter one start up electrical contractor setting up office from home. The key word in this sentence is start up. The intent of this particular contractor is to expand over time, hiring more electricians and eventually being able to lease warehouse space for tool and truck storage. Why is this an important consideration? Because my friends, bidding jobs is very important to this electrical contractor. With the goal of wanting to expand, it becomes necessary to factor in costs that will actually be present when the contractor is able to move the office. The new business owner should get the costs of future expansion and build it in to the current cost model. Bidding jobs with the lower cost model of running a business from home, may allow for our new contractor friend to beat the competition and secure new jobs. The competitors in the market place will likely have more costs built in to their respective bidding models. Ultimately, the home office business owner will move out and will also face a higher cost bidding model. The new home-based business owner should factor in costs that he or she expects to incur in the future, as well as actual expenses in existence currently. Customers should be exposed to higher rates currently as opposed to getting rate increases at a later date because cost structure has changed. This is true regardless of the business or industry one is entering. If expansion is the desire, factor in future costs to build reserves for expansion and get customers accustomed to higher rates from the very beginning.

Cost structure aside, what is tax deductible in a home office situation and how is the deduction determined? First, let us note that the home office deduction is its own separate calculation away from the other expenses of the business. The home office deduction will include: mortgage interest or rent, real estate taxes, utilities, maintenance expenses, insurance (mortgage and homeowners), capital improvements, and depreciation. In order to be eligible for this deduction, the home office must be used exclusively for business purposes. The business purpose includes seeing customers or patients (the revenue function takes place in the home office) , or the performance of administrative functions (bookkeeping, billing, customer service) because there is no other place to perform these tasks. The home office deduction is calculated after the profit fro the business id determined. Suppose that a business has a profit of $3,000 before taking the home office deduction. If the home office deduction is calculated to be $5,000, then only $3,000 of the home office expenses will be allowed during the current year. The remaining $2,000 will be carried forward. The home office deduction will not be permitted to create or increase a loss. If the business made $10,000 in the year as opposed to $3,000, then the entire $5,000 would be deductible as home office expense. IN this situation, the home office deduction reduces income tax exposure as well as the exposure to the self-employment tax.

To find out more about the home office deduction and how to calculate, go to my website at [http://www.mwibonline.com] and order my audio book on the home office deduction.

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Color Your Dream With Online Home Improvement Loan

In this expensive world, having a dwelling is rare! Generally, people opt for rented one. However, for those you have a home of their own and want to go for some or the other improvement have a wider choice with online home improvement loans.

Home improvement loan is taken for both interior and exterior. It can be for either roof repairs, remodeling, central heating fitted, construction of new room, getting the house painted and many more. Online home improvement loan is nothing but searching for a suitable lender through World Wide Web. This makes your search fast and convenient.

Online home improvement loan can be either secured or unsecured. Unlike other credit, the interest paid to secured online home improvement loan is tax deductible. To get tax deductibility the ownership of resident must be primary. The interest rate in secured home improvement online loan is low as it increases the equity on the home. Even the loan term is stretchable as the loan taken is secured one and come up with low monthly repayment.

Unsecured online home improvement loan do not require any collateral but requires you to fulfill some requirements relating to monthly income, employment, and residential proof. The interest rate comes bit high, as lender has no security for the loan amount.

Bad credit borrowers can go for online home improvement loan with or without placing collateral. However, in case you stick to your repayment term then your credit history is improved.

As such while going for online home improvement loan you need to be extra cautious, as the information you provide is sensitive in nature. See that the site of the lender is securely accessed. Even while making a firm decision regarding the choice of lender compare various quotes, repayable term, low monthly repayment etc. then click for online home improvement loan.
In this expensive world, having a dwelling is rare! Generally, people opt for rented one. However, for those you have a home of their own and want to go for some or the other improvement have a wider choice with online home improvement loans.

Home improvement loan is taken for both interior and exterior. It can be for either roof repairs, remodeling, central heating fitted, construction of new room, getting the house painted and many more. Online home improvement loan is nothing but searching for a suitable lender through World Wide Web. This makes your search fast and convenient.

Online home improvement loan can be either secured or unsecured. Unlike other credit, the interest paid to secured online home improvement loan is tax deductible. To get tax deductibility the ownership of resident must be primary. The interest rate in secured home improvement online loan is low as it increases the equity on the home. Even the loan term is stretchable as the loan taken is secured one and come up with low monthly repayment.

Unsecured online home improvement loan do not require any collateral but requires you to fulfill some requirements relating to monthly income, employment, and residential proof. The interest rate comes bit high, as lender has no security for the loan amount.

Bad credit borrowers can go for online home improvement loan with or without placing collateral. However, in case you stick to your repayment term then your credit history is improved.

As such while going for online home improvement loan you need to be extra cautious, as the information you provide is sensitive in nature. See that the site of the lender is securely accessed. Even while making a firm decision regarding the choice of lender compare various quotes, repayable term, low monthly repayment etc. then click for online home improvement loan.

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Home Improvement Tips: Financing Home Repairs and Improvements

Finding funding may be a project itself, depending on the scope of your home improvement plans, For smaller projects, you may be able to save for it from your regular household budget. But for major projects, you will probably need financing. It may be possible to borrow against the cash value of your life insurance policy. Talk to your life insurance agent for information about this option.

Contact your bank, savings and loan, or credit union for information about home improvement loans. Compare interest rates, repayment options, and penalties from a few lending institutions before selecting one of the following options:

Second mortgage: A second mortgage is loan against the equity in your home, in effect, an additional mortgage. Typically, financial institutions let you borrow up to 80% of the appraised value of your home, less the balance on your original mortgage. For example, if your home is appraised at $100,000 and your current mortgage balance is $70,000, you may be able to obtain $10,000 by a second mortgage. You may also have to pay all the fees normally associated with a mortgage, including closing costs, title insurance, and any fees. Your tax advisor can tell you if the interest on a second mortgage is tax-deductible.

Refinancing: This option pays off your current loan and takes out a new mortgage on your home. Generally, you’ll need to have equity in your home, a solid credit rating, and a steady income. Again, you’ll incur all the closing costs that you’d pay on a new mortgage. Unless your remodelling project is extensive and you can get an interest rate at least two points less than you currently pay, refinancing may not be a good choice for you.

Home Equity Line of Credit: A home equity loan-like a second mortgage-lets you tap into up to about 80% percent of the appraised value of your home, minus your current mortgage balance. Since it’s set up as a line of credit, you won’t have any interest charges until you make a withdrawal, but you will pay closing costs. You can make withdrawals as needed when you start paying contractors and suppliers. The interest rate is usually variable and may be based on the outstanding balance.

Make sure you thoroughly understand the terms of the loan. For example, if your loan stipulates that you need to pay interest only for the life of the loan, you’ll have to pay back the full amount borrowed at the end of the loan period or you could lose your home. Ask your tax advisor if the interest on a home equity loan is deductible.

Unsecured Loan: Although the interest rates on unsecured loans are frequently higher and you generally won’t get a tax deduction for the interest you pay, the costs of obtaining an unsecured loan are usually lower. And the relative ease of getting this kind of loan may make it a good choice for small projects of $10,000 or less. The lender will evaluate your application based on your credit history and income.

You’ll be happier with the outcome of your home improvement project if you plan carefully and do your homework. The information in this article and a realistic idea of your needs and budget will help you make your home closer to your dream of perfection.

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