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How to Move While Practicing Social Distancing

So it’s the middle of a pandemic and you find yourself having to move soon, how do you do it appropriately and safely? There are a few routes to take, whether it’s professional help or just family and friends, but you still need to practice social distancing. Here’s how.
The post How to Move While Practicing Social Distancing appeared first on Homes.com.
Source: homes.com
Steps to Set Up a Successful Mentorship Program

Source: themortgageleader.com
2020 Could Be an Unprofitable Year for Rental Properties. Hereâs How to Handle the Taxes
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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) thatâs placed in service in 2018-2022. QIP is defined as an improvement to an interior portion of a nonresidential building thatâs placed in service after the building was placed in service. However, QIP doesnât 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. Thereâs 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 â 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. Thatâs good news.
Whatâs 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. Hereâs How to Handle the Taxes appeared first on Real Estate News & Insights | realtor.com®.
Source: realtor.com
5 Unwelcome Financial Surprises to Watch Out for in 2021
The last thing anyone wants to do right now is reflect on this year.
It was dreadful. Letâs move on.
Before you do, though, itâs a good idea to take stock of how your finances may have changed during the last 12 months and make any needed adjustments.
Here are five areas of your finances to check on so you donât get any unpleasant surprises in 2021.
Student Loans
If youâve been taking advantage of student loan forbearance since March â when all payments and interest on federally held student loans were suspended â itâs time to resurrect those payments.
Forbearance ends Jan. 31, 2021, at which point you start owing and accruing interest on your student loans. Donât delay reaching out to your student loan servicer.
If youâre on the standard repayment plan and are unable to make the payments, apply for an income-driven repayment plan, which could substantially reduce your monthly payments when the forbearance period ends. If youâre already on an income-driven plan, update your income to modify your monthly payment.
Credit Cards
Donât let the ghost of credit card purchases past haunt you in 2021.
If you want to start putting a dent in your credit card debt, we have plenty of options, including debt avalanche, debt snowball, debt snowflake and debt lasso methods.
However, if youâre having problems making payments, you should reach out to your lender to ask them about assistance or hardship programs.
Start by looking for a customer service number on a copy of your bill for your mortgage, credit card, auto loan or other loan. When you call, have your account number and a clear explanation about why you will be unable to pay the bill. Be sure to ask about all your options as well as how your payments, balance, interest rate and credit score could be affected.
Early Retirement Withdrawals
If you took a CARES Act withdrawal from your retirement account, you wonât owe the 10% penalty youâd usually owe on an early distribution before age 59 ½. Be prepared for the tax bill, though.
Normally, youâd owe income taxes on the entire withdrawal when you file your return for the year, but the CARES Act lets you spread the bill over three years. That means you need to be ready to pay one-third of the taxes by April 15, 2021.
Unemployment Taxes
If you received unemployment compensation in 2020, you may be in for a shocker. Your unemployment benefits are taxable, but more than one-third of Americans didnât know it.
If you didnât have taxes withheld from your jobless benefits, make sure you file a 2020 tax return even if you canât afford the bill. You can work out a payment plan with the IRS, and you may even qualify for certain tax credits that can offset the amount you owe.
Payroll Taxes
The IRS says employers that stopped withholding payroll taxes for the last four months of 2020, as ordered by President Trump, will have to collect those taxes during the first four months of 2021. That means if youâve been getting a bigger paycheck as a result of the temporary tax holiday, start preparing for a smaller paycheck now.
Make a bare-bones budget, and set aside any extra money you can so youâll be ready to live on less.
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
New Home Anxiety: Helping our Furry Friends Adjust

Making the decision to move isn’t easy, it comes with months of planning, finding your dream home, unexpected bumps in the road, and sometimes a lot of stress. If you’re moving with your furry friend, check out these tips to make the process a bit easier on your pup.
The post New Home Anxiety: Helping our Furry Friends Adjust appeared first on Homes.com.
Source: homes.com
Ask The Expert: How Do I Get Back to Focusing on Purchases in 2021?

Source: themortgageleader.com