With this special day in mind, I thought I’d share an interview from NPR that I heard today on NPR regarding how Veterans have applied for loans and are sometimes charged more. It is brief yet has good information in it so I thought I’d share the link to the interview here. It also is a great message for everyone and why I like to encourage my Buyers to consider more than one lender as they often offer different loan vehicles and the costs and rates will usually vary a bit from one to another.
A re-post of an article written by FIDELITY VIEWPOINTS – 09/14/2020. The original may be found at the link provided at the bottom of this post.
A good estate plan can save your family a lot of stress and money.
– Deciding what you’d like to do with a home is a decision that is financial, emotional, and logistical.
–Be sure to discuss your plans with your family to avoid discord and costly mistakes.
–There are many ways to transfer a house, including by will, revocable trust, transfer on death, and deed, among other options.
For many families, deciding what to do with a home can often be the most complex part of an estate plan: A house is potentially worth a significant amount of money, can be complicated to inherit, and may also be wrapped in memories and emotion. For these reasons, it is particularly important to come up with a specific strategy for the role a home plays in an estate plan.
3 things to know before getting started
1. Input from everyone involved can make planning easier
To prepare for a smooth and efficient transfer of a home, start by thinking about your goals and your financial situation. First ask: What would you like to see happen with the house? After understanding your goals, be sure to discuss your wishes with your family.
Your children may have different ideas about whether they would want to live in, sell, or keep the property for investment purposes. It can be difficult to have these conversations, and you may want to have someone neutral help facilitate the conversation, but it is very important.
For example, consider a couple who was planning to leave a vacation home to their 2 children equally so that the children could continue the long tradition of family vacations. However, one child lived far away and already owned a vacation home in that area. Leaving the home equally would have created issues regarding maintenance cost, property taxes, and upkeep. If the siblings decided not to share the house and executed a transfer of ownership, it might have increased taxes and created transaction costs. Disagreement on whether to continue shared ownership could also have caused hurt feelings and disrupted what was otherwise a good relationship. A family conversation helped them realize that a shared inheritance didn’t make sense.
2. Your heirs could end up owing money
If the person who inherits the home doesn’t want to keep ownership of it, they may incur legal fees, taxes, and other transaction costs. In addition, several states have estate tax exemption limits far below the federal level. If the value of the home exceeds that limit and there aren’t other assets from the estate available to pay the taxes, the heir may face a state estate tax bill and may have insufficient funds to pay it. That could force a sale of the home or force the heir to seek financing options to pay the bill. If they do sell the house, it will be taxed based on the value at the time of the original owner’s death.
3. The mortgage might become due
Most mortgages have a “due on sale” clause that may be triggered at death. If so, other liquid assets in the estate would need to be used to pay off the debt, the inheritor would need to qualify for a mortgage on their own, or the home would need to be sold.
6 options for passing down your home
Let’s look at a number of different ways to make passing down a home as smooth as possible.
One common idea that people have about passing the home to kids is seemingly simple: Just add the heirs as co-owners on the current deed. If the deed lists someone else as a joint tenant, they will become co-owners at the time the deed is changed, and they will automatically take ownership of the home at the time of the original owner’s death.
There are some downsides to this approach, however. First of all, if a child is added as a co-owner, there are gift tax considerations. There is a limit to how much someone can gift another person without paying a gift tax, both yearly and in a lifetime. When a house is given as a gift through co-ownership, the portion transferred is considered a taxable gift and counts toward the lifetime exemption, so it has to be reported for gift tax purposes. Say a single parent adds a child to the deed, the parent would need to report 50% of the value of the home as a taxable gift (based on the fair market value of the home at the time of the transfer).
Secondly, gifts made during a lifetime are subject to carryover cost basis (the value of the house for tax purposes). Thus, the cost basis used for capital gains tax purposes doesn’t get a step-up at the time of death—instead, the child may get a larger tax bill on the portion of the house that was given to them if they eventually sell the house after the co-owner’s death.
Finally, as co-owners, the home becomes an asset of the child, creating several potential issues. First, if the child runs into financial trouble, gets divorced, or has other issues, your home may be put under a lien or become subject to other action. Second, the co-owner would need the child’s permission to sell the home, take out a new mortgage, or refinance an existing one. And finally, the child may decide they would like to sell the home, which can create challenges.
2. A will
A will can be used to pass on a home. This process helps ensure that the owner decides who inherits the property. However, assets that transfer through a will still pass through the probate process, which can be time-consuming and expensive. In addition, a will is a public document, so anyone can review the decedent’s assets and see who inherited them, so this can create a privacy concern.
3. A revocable trust
A revocable trust is a legal structure that allows the “grantor” or “trustee” to retain control over their assets during their lifetime, as well as specify exactly how and when their assets pass to their beneficiaries. After the trustee’s death, the trust acts as a will substitute and enables the assets to be privately and quickly distributed without going through the time and expense of the probate process. This will allow the trustee full control and use of their home during their lifetime while providing for efficient distribution at their death.
Due to the complexity of trusts and the variation in state-level rules, it is important to work with a professional to set up a trust, which costs money, but may be the only way to help ensure that the trust works effectively. It is also important to remember that it may be necessary to change the titling of your assets for the trust to function as intended.
Finally, a trust may be particularly beneficial for families that own properties in more than one state. Without a trust, an estate may pass through probate in multiple states. “For many of my clients, one of their main goals is to pass down assets to beneficiaries without probate, and so a revocable trust is a core component of their estate plans,” says Terri Lyders, Vice President, Advanced Planning at Fidelity.
4. A qualified personal residence trust (QPRT)
A QPRT is a way to move a primary or vacation residence out of your estate at a reduced gift tax cost. With a QPRT, the home is transferred to the trust right away, but it allows the original owner to retain the right to live in the home for the duration of the QPRT term. During that time, they are responsible for rent, maintenance, taxes, and other aspects of ownership. The trust has an end date after which ownership of the house is transferred to the beneficiary (generally children or a trust for their benefit) and the original owner no longer has the right to occupy the house (although a lease may be negotiated with the beneficiary).
In order for this strategy to be effective for tax purposes, the original owner must outlive the term of the trust. Otherwise, if they die before the trust terminates, the value of the home is included as part of their taxable estate and could be pulled back into the estate. While a QPRT may be used for a primary residence, it can be challenging for a person to lose the right to occupy their home, or pay rent to do so, and thus QPRTs may often be used for vacation homes.
Two big benefits of a QPRT include the reduced gift tax cost of the transfer (because the owner retains the right to live in the home for a period of time and keeps some of the value of the house), and that the value of the home is frozen for estate tax purposes at the time the trust is created. This means that for estate tax purposes, the value of the home is established at the time it enters the trust—and future price appreciation won’t affect the estate’s tax bill. For a family facing estate tax issues, this strategy may help to limit taxes in the event that the property value increases over time.
Tip: A property that is subject to a mortgage can be difficult to handle from a gift tax perspective, and therefore it is often suggested that any debt be paid off prior to the transfer to a QPRT.
5. A beneficiary designation—a transfer on death (TOD) deed
Some states offer a TOD designation on a deed which essentially names a beneficiary for that property. With a TOD designation, assets pass outside probate, so it’s quick and private, and the heirs still get a step-up in basis for tax purposes, which means the value of the house is adjusted to current market value. It may also be less expensive than setting up a trust.
There are some drawbacks to a TOD designation. It only allows individuals or charities as beneficiaries, not a trustee under a trust. That means that if a child is still young at the time of the transfer, they would directly own the home, which may not be practical. There is also no contingency, so if the child named as beneficiary dies before the original owner, there is no provision to skip a generation and pass the asset to their children—the TOD deed would have to be updated by the owner. Additionally, if the home is passed to an adult receiving government benefits, it could affect their eligibility.
Tip: TOD deed options are limited by state law, and many states do not offer this option at all. Check with your attorney or tax advisor to determine whether this option is available and would be appropriate for your circumstances.
6. Through selling
If it’s unlikely that children will want the home, consider selling it and renting a home later in life. Issues like maintenance, health, and lifestyle may be more important than the financial considerations here, but be sure to consider the tax impact of this decision.
Current federal tax law allows a capital gains exclusion of either $250,000 (for an individual) or $500,000 (for a married couple filing jointly) on the sale of a house, provided that they have lived in that house for 2 of the previous 5 years, and that the home meets the residency requirements. Gains above that amount are taxed. Inheriting a property comes with a step-up in basis (which means it’s reassessed at current market value) potentially eliminating capital gains tax.
The bottom line
A home can be the most valuable asset in an estate. If you don’t take any action and die without a will or having made any other arrangements, your assets will pass according to your state intestacy laws, which may or may not reflect your wishes. This may include going through probate—a process that is potentially expensive, public, slow, and complicated.
The transfer of real estate assets can pose unique legal, tax, and emotional issues for a family, so it may be beneficial to work with a professional to help protect yourself and your loved ones. It’s important to come up with a plan that makes sense for you, and your heirs, and to create an efficient strategy to execute it.
Fidelity does not provide legal or tax advice, and the information provided is general in nature and should not be considered legal or tax advice. Consult an attorney, tax professional, or other advisor regarding your specific legal or tax situation.Votes are submitted voluntarily by individuals and reflect their own opinion of the article’s helpfulness. A percentage value for helpfulness will display once a sufficient number of votes have been submitted.
Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917
Today I am posting another writer’s article who reached out to me to share useful tips to helping Buyers navigate the real estate market and some of these tips are handy for anyone in the market for a property.
Watching people hunt for the perfect home on TV can be entertaining. When it comes to hunting for your perfect home, however, things can feel more stressful than exciting. This can be especially true if you’re a homebuyer who is also living with disabilities, as you will likely need to find a home that has accessibility features. That can be overwhelming for many shoppers. So, if you’re worried about the process of finding and buying that accessible home, keeping these tips handy can give you some serious peace of mind.
Finances Should Come First
When it comes to being smart about buying an accessible new home, you really need to start with some financial steps. Gather any pertinent documents related to your finances — including tax returns, bank statements, and credit reports — and go over them very carefully. That way, you can put together a realistic price point for your new home.
Wondering what that price will get you in your desired location? You can use online tools to research local home prices and features included in local listings. Couple that information with the right financial steps and you should be in good shape to start searching for a new home with the accessibility elements you need and the features you want.
Something to consider here as well is that it’s always best to have a knowledgeable lender by your side before you start your official house hunt. Look for a lender associated with the Idaho Housing and Financial Association. Tim Kinkeade with First Home Bank is an excellent example of a loan originator with decades of experience. Your loan officer can even help you find state-funded programs that can help with down payment money if you’re struggling to come up with the cash you need to make the leap into homeownership.
Using All the Tools at Your Disposal
If you are serious about buying an accessible home, you should work with a realtor right after you have your financial plan sorted out. Local real estate agents will likely have access to more listings that are available online; plus, you won’t have to comb through multiple sites. You may even be able to find an agent with special certifications that can make the process even smoother, especially if you are a senior with disabilities looking for a new home with more accessibility. Either way, be sure to let your realtor know which features are crucial for you.
Of course, these are difficult times for house hunting since most of the country is on COVID-19 lockdown. The good news is that you can use online tools to get a clearer picture of the local market and specific homes you’re interested in. For example, some agents offer live virtual tours of homes which will give you an in-person perspective. While it’s not the same as being there in person, you’ll still be able to explore the house without having to leave home.
Accessibility Can Be Stylish
If this is your first time looking for a home with accessibility features, you should know that accessibility does not have to be boring when it comes to home design. Just check out this home that was created for a buyer who became disabled after a motorcycle accident. After a complete renovation, an older ranch-style home was transformed into a completely wheelchair-accessible living space, with small touches that make getting around and getting comfortable easier. Safe bathrooms can be beautiful as well, especially with the growing popularity of walk-in showers. The newest showers are just as stylish as they are safe, and they can be added to your home for around $1,000 to $2,300, depending on the size you need.
Modifications May Be Needed
As you can see from the accessible home example above, renovations may be necessary in order to turn your dream home into an accessible safe haven. That shouldn’t put you off from your home search, but you will need to budget for modifications as you determine how much home you can afford to buy. You can also look into additional financing options that can help cover any needed home modifications, including special FHA home loans. These loans do come with additional stipulations but you can use them to make just about any type of improvement to your new home. For accessibility modifications, you may also be able to use other funding sources to help out with costs, including grants from non-profits or VA benefits. Your lender might be able to offer suggestions here as well.
Buying a home that includes accessibility features shouldn’t be any more stressful than finding a home that doesn’t. Still, homebuyers who are living with a disability can face additional challenges when searching for their dream home, including having to budget for future home modifications and finding a home where they can age in place safely during their golden years. If you are a home shopper who is living with disabilities or looking to age in place in your next home, be sure to keep this guide handy so you can save yourself some hassle.
Patrick Young is an educator and activist. He believes people with disabilities must live within a unique set of circumstances–the outside world often either underestimates them or ignores their needs altogether.
The rules of the road have been changed, or by some understandings, uncovered, as to how recycling must be done. If the guidelines are not followed, tons of recyclables mixed iwth non-reclycable items get dumped in landfills which has led to our city revamping our own rules to help us avoid this problem.
Good as these intentions may be, we humans tend to not like change and need a little aid ourselves in keeping straight what can and cannot go into those recycle bins. Below is a picture I took of the single stream (read curbside green bin pick up) of what is acceptable and what is not.
Below is what I took regarding those pesty plastic bags and any other plastic packaging film. Our recycle center has a contract with the Trex Deck company to recycle all those plastics and you can learn when and where to depot those bags below….
Congress passed the CARES Act recently and many wonder if there is anything in the program that may help them in this time of need. Some may think no but may be wrong as the Act was designed to provide aid to as many as possible, covering more people in a variety of ways. Below is a brief overview of what the program offers Americans so you can see how it may help you or your family and friends….
I thought this blog was worth a repost as the visitors seem to know their trails and shared a fun adventure on ours along with some wonderful pics. The link below is on blog SingleTracks, article titled: “Singletracks and Moose Tracks in Moscow Idaho” is written by Julie Singh …. Enjoy! 🙂
Given Vitalant says they face roughly a 30% drop in donations every summer, I thought it appropriate to help spread the word. So…..
Looking for a way to give back to our community? Join us in supporting Vitalant, our community’s only blood provider, at their Moscow Bloodmobile on MONDAY ,JULY 8TH!
Patients at more than 35 hospitals across the Inland Northwest rely on volunteer blood donors from Vitalant for the life-transforming donations they need! Plus! Presenting donors will receive a free SOS 2019 T-Shirt! Schedule now: bit.ly/VitalantWAID
WHERE: Eastside Marketplace 1420 S. Blaine St. Moscow, ID 83843
Please SHARE. SHARE, SHARE this event regardless of whether you can attend in person as well!
Hello friends. Recently, I received in the mail a noticed, which is included at the bottom of this blog, that notifies those of us who have a well that we must follow some procedures to ensure we continue to have our water rights included with our property. There is a deadline of April 30 and since I have learned that friends of mine in the Palouse have yet to receive this notice while those of us who live in Moscow and are far less likely to have a well and be affected, I thought it wise to pass this along ASAP so those that it does impact can act quickly.
If a property owner has a well, there is a good chance that the water source the well taps into pulls from the Palouse River Basin and if so, then the property must file a “notice of claim”. If said owner believes the well driller registered your well and it can be identified on the Idaho Dept of Water Resources website, please verify that it IS in fact registered because mistakes can be made/have happened.
Without this claim, your water rights may not exist. According to Idaho law, if we face a water shortage, then who is permitted water is decided based on the appropriation doctrine, meaning “first in time is first in right”. In other words, who had a claim first gets the rights to the water.
Given I am not an expert on this matter, I am including the notice along with links to further information on this matter and in them, who to contact for further clarity.
White and grey aren’t going anywhere, but expect to see warmer tones and more earthy neutrals popping up in 2019. Cold whites are being replaced by warmer, softer whites. And warmer tones of grey have become a popular alternative to the cooler grays we were seeing earlier in the decade. Dove grey—with a lilac undertone—is a particular favorite with designers this year.
Sherwin Williams chose Cavern Clay, a warm terracotta, as its 2019 color of the year, while Behr selected Blueprint, a mid-tone blue. Benjamin Moore’s selection is Metropolitan, a sophisticated grey.
If you’re preparing to sell your home, consider a light, neutral paint color. Neutral colors provide a blank canvas upon which a buyer can envision placing their belongings, and lighter colors make a room appear larger and brighter.
Don’t feel limited to using one metallic finish throughout your home—or even throughout a single room. Designers are mixing metals in 2019, and their favorites include copper, brass, pewter, gunmetal, and matte black.
Experts suggest picking one metal hue to
dominate your color palette and a contrasting tone to complement it. If your
room has a warm color palette, choose a warm-hued primary metal, such as brass
or copper. For cool palettes, choose a cool-toned metal, like pewter or
stainless steel. You can also experiment with mixing finishes, such as polished
and hammered copper.
From faucets to cabinet pulls to accent pieces, swapping out your old or dated fixtures is an easy—and relatively inexpensive—way to modernize your decor. Mixing metals adds depth and gives your room a more curated look.
3. OUTDOOR ELEMENTS
Bringing outdoor elements into the home can help warm up a sterile space. And natural materials can soften a modern design esthetic.
Homeowners are increasingly looking for ways
to incorporate these materials throughout their home. Especially popular right
now: stone, copper, concrete, and wood. From concrete showers to agate stone
tiles, designers are finding unexpected ways to bring the outside in.
One notable exception: granite countertops.
Engineered quartz—a combination of ground quartz and resin—overtook natural
granite stone as the most popular countertop material in 2018. This durable,
low-maintenance, highly-customizable product has won over homeowners and
Stainless steel has been the industry standard
for years, but the market is trending toward variety and fresh alternatives.
Homeowners have more options available than ever to personalize their kitchens
with vibrant colors, black stainless, or modern white appliances. Another
favorite? Integrated appliances that blend seamlessly into cabinetry. Built-in
column refrigerators, which allow you to customize the design and size of your
freezer and refrigerator, are becoming a “must-have” in high-end homes.
Advancements in technology have also brought a
new wave of appliances to the market. Induction cooktops are replacing
commercial gas ranges as a gourmet favorite. And french door ovens and steam
ovens are also gaining in popularity—especially ones with smart features you
can control from an app on your smartphone.
5. COLORFUL KITCHENS
White will always be a classic choice, but
color is finally coming back to kitchens. More homeowners are choosing cabinets
in alternative neutrals like black, cream, and grey, along with colorful
options like green and blue. Also popular? Wood cabinets in stains like warm chestnut
Two-tone kitchen cabinets remain a homeowner
favorite, as well. To incorporate this trend, try pairing darker lower cabinets
with lighter upper cabinets or a colorful kitchen island with neutral-colored
Swapping upper kitchen cabinets for open
shelves continues to be a popular choice in 2019. It’s a cost-effective update
that can make a kitchen feel larger and brighter. However, it’s not a practical
option for everyone. Before you commit, test it out by removing your cabinet
doors for a few weeks. See how it feels to have your glasses and dishware on
Not ready to give up all your upper cabinet
storage space? Replace just one or two upper cabinets with open shelves for a
lower-commitment but still-updated look.
7. STATEMENT TILE
The ubiquitous white subway tile is finally
fading in popularity. In 2019, homeowners are gravitating toward more colorful
choices, creative textures and finishes, and alternative shapes. Especially hot
right now: hexagons, arabesques, diamonds, and Moroccan fish scales.
Natural stone remains a favorite, including marble, quartzite and river rock. But advancements in porcelain tile that mimics stone, and even concrete, has made it an attractive, affordable, and low-maintenance alternative.
Once an afterthought, ceilings are taking
center stage. While 2018 was all about statement walls, statement ceilings are
shaping up to be the darling of 2019. Designers are using bold paint colors,
wallpaper, intricate moldings, fabric, and other materials to transform a
ceiling into something truly special.
Want to incorporate this trend without going
too bold? Choose a classic design, like coffered or wooden beams. Or stick with
wood paneling or tin tiles for a more timeless look. Even something as simple
as painting a ceiling the same color as the walls can make your space feel more
DESIGNED TO SELL
Are you contemplating a remodel? Want to find
out how upgrades could impact the value of your home? Give us a call for a free
Buyer preferences can vary greatly by neighborhood
and price range. We can share the insights we’ve gathered from working with
buyers in this market … and offer tips on how to maximize the return on your
remodeling investment. And if you’re in the market to sell, we can run a
Comparative Market Analysis on your home to find out how it compares to others
in the area.
For those of you who have not read up on what’s going on with Recycling Centers, recycling centers, like our Latah Sanitation Inc (LSI), are struggling to sell or recycle back to recycling programs as the batches hold too high a percentage of contaminates, meaning un-recyclables like lightweight plastics that get flattened and missed in the paper. Then there are the wide array of plastics that clog up the machines or get mixed into the wrong bathes that contaminate an otherwise sellable batch. The end result– the bad batches go the Boardman Oregon Landfill and LSI loses money. What Moscowvites have not known for a long time is that our options have been either throw our plastics in the trash to go to a landfill or throw it in the recycle bin to contaminate a large batch of recyclables to then send all of it to… a landfill. Sound like a lose, lose?
Well, Moscow Charter School has come up with solution. They are taking advantage of the last resort we have in town and are supporting the collection of plastics that LSI can no longer take for collection at Safeway and WinCo. The school is accepting the following plastics: grocery bags, produce bags, bread bags, cereal liners, food storage bags, case overwrap, pellet bags, ice bags, slat bags, and packaging air pillow bags. They take all the plastics to either Safeway or WinCo who then send the plastics to Trex, a wood-alternative decking manufacturer who uses the plastics to make decks, benches, and other products.
So, when you feel irritated at throwing away your plastic bags or packaging, hang on to them. You can either bring them during school hours to Moscow Charter School or bring them directly to Safeway or WinCo. And who knows, you may be enjoying BBQ on your friends’ new deck and maybe, just maybe, you’ll be standing on that transformed old Amazon package you received some time past, enjoying of a view that makes those extra trips beyond Moscow’s blue recycle bin worth it.