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Monday, January 20, 2014

Don't Miss Home Tax Breaks

Published: January 10, 2013
Mortgage interest deduction
One of the neatest deductions itemizing home owners can take advantage of is the mortgage interest deduction, which you claim on Schedule A. To get the mortgage interest deduction, your mortgage must be secured by your home — and your home can even be a house trailer or boat, as long as you can sleep in it, cook in it, and it has a toilet. Interest you pay on a mortgage of up to $1 million — or $500,000 if you’re married filing separately — is deductible when you use the loan to buy, build, or improve your home. If you take on another mortgage (including a second mortgage, home equity loan, or home equity line of credit) to improve your home or to buy or build a second home, that counts towards the $1 million limit. If you use loans secured by your home for other things — like sending your kid to college — you can still deduct the interest on loans up $100,000 ($50,000 for married filing separately) because your home secures the loan.
PMI and FHA mortgage insurance premiums

Helpfully, the government extended the mortgage insurance premium deduction through 2013. You can deduct the cost of private mortgage insurance as mortgage interest on Schedule A — meaning you must itemize your return. The change only applies to loans taken out in 2007 or later. What’s PMI? If you have a mortgage but didn’t put down a fairly good-sized down payment (usually 20%), the lender requires the mortgage be insured. The premium on that insurance can be deducted, so long as your income is less than $100,000 (or $50,000 for married filing separately). If your adjusted gross income is more than $100,000, your deduction is reduced by 10% for each $1,000 ($500 in the case of a married individual filing a separate return) that your adjusted gross income exceeds $100,000 ($50,000 in the case of a married individual filing a separate return). So, if you make $110,000 or more, you lose 100% of this deduction (10% x 10 = 100%). Besides private mortgage insurance, there's government insurance from FHA, VA, and the Rural Housing Service. Some of those premiums are paid at closing and deducting them is complicated. A tax adviser or tax software program can help you calculate this deduction. Also, the rules vary between the agencies.
Prepaid interest deduction

Prepaid interest (or points) you paid when you took out your mortgage is 100% deductible in the year you paid them along with other mortgage interest.  If you refinance your mortgage and use that money for home improvements, any points you pay are also deductible in the same year. But if you refinance to get a better rate and term or to use the money for something other than home improvements, such as college tuition, you’ll need to deduct the points over the term of the loan. Say you refi for a 10-year term and pay $3,000 in points. You can deduct $300 per year for 10 years.  So what happens if you refi again down the road?

Example: Three years after your first refi, you refinance again. Using the $3,000 in points scenario above, you’ll have deducted $900 ($300 x 3 years) so far. That leaves $2,400, which you can deduct in full the year you complete your second refi. If you paid points for the new loan, the process starts
again; you can deduct the points over the term of the loan.   Home mortgage interest and points are reported on IRS Form 1098. You enter the combined amount on line 10 of Schedule A. If your 1098 form doesn’t indicate the points you paid, you should be able to confirm the amount by consulting your HUD-1 settlement sheet. Then you record that amount on line 12 of Schedule A.
Energy tax credits
The energy tax credit of up to a lifetime $500 had expired in 2011. But the Feds extended it for 2012 and 2013. If you upgraded one of the following systems this year, it’s an opportunity for a dollar-for-dollar reduction in your tax liability: If you get the $500 credit, you pay $500 less in taxes.
·         Biomass stoves
·         Heating, ventilation, air conditioning
·         Insulation
·         Roofs (metal and asphalt)
·         Water heaters (non-solar)
·         Windows, doors, and skylights
·         Storm windows and doors

Varying maximums
Some of the eligible products and systems are capped even lower than $500. New windows are capped at $200 — and not per window, but overall. Read about the fine print in order to claim your energy tax credit.
Determine if the system is eligible. Go to Energy Star’s website for detailed descriptions of what’s covered. And talk to your vendor. The product or system must have been installed, not just contracted for, in the tax year you'll be claiming it. Save system receipts and manufacturer certifications. You’ll need them if the IRS asks for proof. File IRS Form 5695 with the rest of your tax forms.

Vacation home tax deductions

The rules on tax deductions for vacation homes are complicated. Do yourself a favor and keep good records about how and when you use your vacation home. If you’re the only one using your vacation home (you don’t rent it out for more than 14 days a year), you can deduct mortgage interest and real estate taxes on Schedule A. Rent your vacation home out for more than 14 days and use it yourself fewer than 15 days (or 10% of total rental days, whichever is greater), and it’s treated like a rental property. Those expenses get deducted using Schedule E. Rent your home for part of the year and use it yourself for more than 14 days and you have to keep track of income, expenses, and divide them proportionate to how often you used and how often you rented the house.
Home buyer tax credit

There were federal first-time home buyer tax credits in 2008, 2009, and 2010.
If you claimed the home buyer tax credit for a purchase made after April 8, 2008, and before Jan. 1, 2009, you must repay 1/15th of the credit over 15 years, with no interest. If you used the tax credit in 2009 or 2010 and then sold your house or stopped using it as your primary residence, within 36 months of the purchase date, you also have to pay back the credit. Example: If you bought a home in 2010 and sold in 2012, you pay it back with your 2012 taxes. That repayment rules are less rigorous for uniformed service members, Foreign Service workers, and intelligence community workers who get sent on extended duty at least 50 miles from their principal residence. Members of the armed forces who served overseas got an extra year to use the first-time home buyer tax credit. If you were abroad for at least 90 days between Jan. 1, 2009, and April 30, 2010, and you bought your home by April 30, 2011, and closed the deal by June 30, 2011, you can claim your first-time home buyer tax credit. The IRS has a tool you can use to help figure out what you owe.

Property tax deduction

You can deduct on Schedule A the real estate property taxes you pay. If you have a mortgage with an escrow account, the amount of real estate property taxes you paid shows up on your annual escrow statement. If you bought a house this year, check your HUD-1 Settlement statement to see if you paid any property taxes when you closed the purchase of your house. Those taxes are deductible on Schedule A, too.
This article provides general information about tax laws and consequences, but shouldn’t be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice; tax laws may vary by jurisdiction.

Friday, January 10, 2014

Let's go SKIING!

A Snowy Start to 2014 Leaves Colorado with the Best Ski Conditions In North America
  • With over 11,000 acres of skiable terrain open and snowfall 105 percent above average at Vail, Beaver Creek, Breckenridge and Keystone, skiers and riders have access to fantastic conditions 
BROOMFIELD, Colo. — Jan. 10, 2014— The new year is off to an epic start with powder days and above average snowfall at all of Vail Resorts’ Colorado mountains including Vail, Beaver Creek, Breckenridge and Keystone. Since Jan. 1, our Colorado resorts have received up to four feet of snow, with even more forecast to fall this weekend.
Current snowfall totals as of Jan. 1 and acreage:
-       Vail: 32” of snow with nearly 5,000 acres of open terrain and 30 lifts.
-       Beaver Creek: 26” of snow with 1,776 acres of terrain open and 24 lifts.
-       Breckenridge: 46” of snow with 2,382 acres of open terrain and 33 lifts.
-       Keystone: 21” of snow with 2,328 acres of open terrain and 19 lifts.

Just weeks after the historic opening of Peak 6, and with nearly four feet of snow this month, Breckenridge is more than half way to its average January snowfall total with three weeks still to go! At Beaver Creek, the recent storms have allowed Ski Patrol to open the renowned Stone Creek Chutes, a favorite area of the mountain among expert skiers and riders.

Monday, January 6, 2014

Beaver Creek to get combo Gondola, chairlift

From the Vail Daily:

BEAVER CREEK — Gondola or chairlift? Beaver Creek will be giving skiers and riders a choice next season.

The resort announced plans on Thursday to replace the existing Centennial Express Lift (Chair No. 6) with a new high-speed, state-of-the-art combination lift. The combo lifts, seen at some European resorts as well as at Northstar in Tahoe, Telluride and Sunday River in Maine, are also called hybrid lifts, telecombis, Telemixes and chondolas. The new lift will increase uphill capacity by 35 percent through the use of alternating gondola cabins and six-person chairs and is expected to be in place for the 2014-15 ski and snowboard season. Last season, the resort had announced its intention to replace the Centennial lift with a traditional six-person chairlift. However, after further consideration and discussions with the lift manufacturers, resort officials went with the combo lift, calling it a “more robust, flexible and guest-oriented approach.” The new lift will have the same capacity as a six-person chairlift, but it gives choices to every level of skier. Beginners and ski school kids tend to prefer the less-intimidating option of boarding the gondola, while people who prefer to keep their skis on can board the chairs. Chairs and cabins will be loaded from two separate lines. The new combination lift will transport 3,400 people per hour, up from the current capacity of 2,800 people per hour. “The unique and dramatic benefits to our guests to be able to install a combination lift with gondola cabins and chairs and replace one of the most utilized lifts at the base of Beaver Creek Mountain are tremendous and completely in line with the Beaver Creek brand promise to deliver high-quality guest experiences,” said Doug Lovell, vice president and chief operating officer for Beaver Creek Resort. “After careful consideration, we believe this is exactly the right solution to position Beaver Creek for the future and address the resort’s continued growth and diverse guest needs.”

Coaster changes
Also, by having gondola cabins as part of the new lift, guests will have easier access to the Spruce Saddle area for nighttime and summertime dining and recreational activities. In coming seasons, those Spruce Saddle activities may also include an alpine coaster (named a Forest Flyer), ropes course and tubing hill. The year-round activities had been planned for an area closer to the base at the top of the Buckaroo Express Gondola, but nearby homeowners filed a lawsuit this fall opposing the project, calling it an “amusement park” and eyesore. Vail Resorts also announced on Thursday that they had reached a settlement with the Beaver Creek Property Owners Association and Greystone Condominium Association regarding the project. Under the agreement, the associations will request that the Beaver Creek Metro District purchase a permanent restrictive covenant from Vail Resorts for $5 million. The restrictive covenant will prohibit certain new recreational activities on much of the land at the base of Beaver Creek Mountain in perpetuity. Under the agreement, the metro district must fund the purchase of the covenant through a bond issue that would be subject to approval by voters in May, meaning that the cost of the protective covenant would be passed on to Beaver Creek homeowners and businesses. In return, the homeowners will support an application by Vail Resorts to the U.S. Forest Service to build the project in the area surrounding the Spruce Saddle restaurant. If the bond issue doesn’t pass, then the property owners have agreed to dismiss their lawsuit and not object to the construction of recreational amenities at the base of the resort.

Weighing in
Those are some major upgrades, but the jury is still out on whether the improvements will be a hit with skiers and snowboarders. Avon skier and former lift operator Dan Gorin said he personally prefers to take the chair, but he said there’s no question that the lift needs to be replaced. “If it stops less and gets people up faster, I’m all for it,” he said. “It definitely needs to be replaced. It’s the oldest lift on the mountain and also the most used.” Others said they saw it as a convenience for families with children. “(My kids) are pretty good skiers, so they don’t have a problem with the chair,” said Ann McCormick, of Eagle-Vail. “But especially with a cold or windy day, it definitely would help families out on the ride up to have a gondola.” Still, others questioned if the convenience was worth the cost. One Edwards woman, who declined to be named, said she worried the cost would be passed onto resort guests. “I guess for guests it’s a different thing, but local kids know how to ride a chairlift,” she said. “It’s so expensive to ski here, and I think this is part of the problem. It’s stuff like this and adding escalators that raises the prices. Do we really need that?” Construction on the combo lift is slated to start in June. Resort officials said they haven’t yet decided which lift company they will use, but those details will be announced soon.