HOME OWNERS SHOULD KNOW

Home Owners Must Know
Turning the key in a lock that no landlord has access to, reading in a hammock in your own backyard and painting your dining room bright red - what can be more exciting than making the leap from renter to first-time homeowner? Getting swept up in all the enthusiasm is a wonderful feeling, but many first-time homeowners lose their heads and make missteps that can threaten every thing they've worked so hard to earn. Home Inspection Sugar Land

Don't be among those people; take a few moments to ponder these seven practical concerns that will help guarantee that your first home becomes the location of luxury and financial liberty you've expected.

1. Don't Spend too much on Home furnishings and Renovation
You've just turned over a huge portion of your life savings for a down payment, closing costs and moving expenses. Money is limited for most first-time homeowners - not only are their savings depleted, their monthly expenses are often higher also, due to the new expenses that come along with home ownership, such as water and garbage bills, and added insurance.

Everybody would like to customize a new home and upgrade what may have been temporary apartment furniture for some thing nicer, but don't go on a large spending spree to improve every little thing all at once. Equally as important as getting your first home is staying in it, and as nice as solid maple kitchen cabinets might be, they aren't really worth risking your new standing as a home owner. Give yourself time to adapt to the expenses of home ownership and rebuild your savings - the cupboards will still be waiting for you when you can more adequately afford them. (For further reading, see To Rent Or Buy? The Financial Issues.).Home Inspection Sugar Land

2. Don't Ignore Important Maintenance Items.
One of the new costs that accompanies home ownership is making repairs. There is no landlord to call if your roof is leaking or your toilet is blocked (on the plus side, there is also no rent increase notice taped to your door on a random Friday afternoon when you were anticipating a nice weekend). At the same time you should exercise restraint in acquiring the nonessentials, you shouldn't disregard any problem that puts you at risk or could get worse over time, turning a fairly small problem into a significantly larger and more expensive one.

3. Hire Qualified Contractors.
Don't try to save money by making improvements and repair works yourself that you aren't trained to make. This may seem to contradict the first point somewhat, but it truly doesn't. Your home is both the location in which you live and an investment, and it deserves the same level of care and attention you would give to anything else you value highly. There's absolutely nothing wrong with painting the walls yourself, but if there's no wiring for an electric garage door opener hardware in your garage area, don't cut a hole in the wall and start playing with copper. Hiring experts to do work you don't know how to do is the best way to maintain your home in top condition and avoid hurting - or perhaps killing - yourself. Home Inspection Sugar Land

4. Get Help with Your Tax Return.
Even if you hate the thought of paying money on an accountant when you typically do your returns on your own, and even if you're already feeling broke from purchasing that house, hiring an accountant to make sure you complete your return correctly and take full advantage of your refund is a good idea. Home ownership considerably changes most people's tax circumstances and the deductions they are eligible to claim. Just getting your taxes professionally done for one year can give you a template to use in future years if you wish to continue doing your taxes yourself.

5. Keep Receipts for Home Improvements.
When you sell your home, you can use these expenses to raise your home's basis, which can help you to maximize your tax-free earnings on the sale of your home. In 2008, you could have earned up to $250,000 tax free from the sale of your home if it was your primary residence and you had resided there for a minimum of two of five years before you sold it. This assumes that you owned the home alone - if you owned it together with a spouse, you could each have gotten the $250,000 exemption. (To learn more about how having a spouse can affect your tax return, read The Tax Benefits Of Having A Spouse and Happily Married? File Separately!). Home Inspection Sugar Land

Let's say you purchased your home for $150,000 and managed to sell it for $450,000. You've also made $20,000 in home improvements over the years you've lived in the home. If you have not saved your receipts, your basis in the home, or the amount you originally purchased your investment, is $150,000. You take your $250,000 exemption on the proceeds and are left with $50,000 of taxable income on the sale of your home. However, if you saved all $20,000 of your receipts, your basis would be $170,000 and you would only pay taxes on $30,000. That's a huge savings: in this case, it would be $5,000 if your minimal tax rate is 25 %.

6. Don't Confuse a Repair with an Improvement.
Sadly, not all home expenses are treated equally for the purpose of determining your home's basis. The IRS considers repairs to be part and parcel of home ownership -some thing that preserves the home's original market value, but does not improve its value. This may not always seem true. For example, if you bought a foreclosure and needed to fix a lot of broken stuff, the home is obviously worth more after you fix those items, but the IRS doesn't care - you did get a discount on the purchase price because of those unmade repairs, after all. It's only improvements, like replacing the roof or adding central air, which will help reduce your future tax bill when you sell your home.Home Inspection Sugar Land

For gray areas (like remodeling your bathroom because you had to bust open the wall to repair some old, failed plumbing), consult IRS Publication 530 and/or your accountant. And on a non-tax-related note, do not mislead yourself into thinking it's OK to spend money on something because it's a necessary "repair" when in truth it's actually a fun improvement. That isn't good for your finances.

7. Get Properly Insured.
Your mortgage lender requires you not only to acquire homeowners insurance, but also to buy enough to totally replace the property in case of a total loss. But that's not the only insurance coverage you need as a homeowner. If you share your home with anyone who relies on your income to help pay the mortgage, whether it's a girlfriend or a child, you'll need life insurance with that person named as a beneficiary so he or she won't lose the house if you die unexpectedly. Likewise, you'll want to have disability-income insurance to replace your income if you become so disabled that you can't work.

Also, once you own a home, you have more to lose in the event of a lawsuit, so you'll need to ensure you have excellent car insurance coverage. If you are self-employed as a sole proprietor, you may need to consider forming a corporation for greater legal protection of your assets. You may also wish to purchase an umbrella policy that picks up where your other policies leave off. If you are found liable in a car accident with a judgment of $1 million against you and your car insurance only covers the first $250,000, an umbrella policy can pick up the rest of the slack. These policies are usually issued in the millions. Home Inspection Sugar Land

Conclusion.
With the great freedom of owning your very own home comes great responsibilities. You must manage your finances well enough to keep the home and maintain the home's condition well enough to protect your investment and keep your family safe. Don't let the excitement of being a new homeowner lead you to bad decisions or oversights that jeopardize your fiscal or physical safety.

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