Buying a home with cash seems like it is straightforward. You can save money and time with lower closing costs, no financing contingencies or required appraisals. However, there are some elements that may be less obvious like property taxes, tax deductions and reporting. Here is a closer look at some of the details. 

What Tax Breaks Do Homeowners Get?

Generally speaking homeowners can take advantage of deductions on their taxes. These include property taxes, mortgage interest, mortgage insurance premiums (PMI) and mortgage points. These items are tax deductions – meaning you can deduct them from your total taxable income. Of course some of these need not apply should you be paying cash.

Does It Make Sense To Buy With Cash?

Here is where it all depends on everyone’s situation. For one, recent tax changes that now offer one to take a standard deduction may not necessarily make much of a difference as it may be best just to take the standard deduction. The other thing to consider is the cost to finance. Calculate how much it will cost to borrow the money to finance the home over the 15 or 30 years that you carry the mortgage for. While you may lose these tax benefits it may be better or cheaper to pay cash.

Do You Need To Report a Purchase to the IRS?

You just might. The IRS does have a form “8300”  that depending on where you are buying a home the IRS may be looking for this form to be completed. While wire and bank transfers are the norm for cash transactions and have their mechanisms in place for reporting, check with your accountant and title agent should you need to do this.

How Do You Pay Property Taxes?

Prior to your closing the title agent will look up the taxes that have been paid and the effective dates which will then determine what is owed by the buyer and seller. These figures will be on the closing document, but really have no difference whether paying cash or financing. What does in fact differ is the fashion in which you pay your taxes going forward. For those with a mortgage your taxes will be collected in a prorated amount each month by the lender. Your lender pays them in full when they are due. If you pay cash for your home then you pay your property taxes just like you pay any other bill when it is due.

Homeowners have been focusing on making the most out of their yards even more so these days by adding more furniture, play stations or lounging areas. At first one may be thinking of what they want and what they can fit, but once you have established these things it is time to consider adding an element of style and improved aesthetics. Here are some helpful pointers. 

It’s All About The Details

When you select an area for seating you will want some consistency. Set it up with matching seats, tables, toss pillows and even side tables. This will automatically create a focal point in your yard that will say welcome! You can also add some finishing touches like stylish vases, plant containers or trays. These items can be purchased for lower costs and help add warmth to your look.

The Right Lighting

Lighting is always key whether inside or out. A good mix of some practical and fun or mood lighting is a great combo. Make sure you have the important and essential lighting for safety but consider some spotlights on yard plants or features, string lights for cooking areas and even lanterns by your seating areas. 

Create Rooms

Build in some easily defined areas within the backyard for activities like cooking, dining, and relaxing. The separation of all of these areas will create organization and a natural flow. These different “rooms” within the backyard will make it feel like as much of a sanctuary as your actual house.

Include Plant Furniture

Pots and containers for plants can have multiple uses. For one, they will add some life and interest in your outdoor decor with the different plants you choose as well as the colors and types of containers that you get. Pots are great as you can use them as accent pieces for your different rooms or zones. Containers can also be used to section off your different zones making for almost a natural divider. 

Outdoor living is one of the best parts of living in Fort Lauderdale and if your outdoor space needs some love then it may also be time to invest in some new patio furniture. When adding new pieces, make sure to leave enough room for the furniture and for people to move between various entertaining or lounging zones. Here are some helpful tips for when you plan to enhance your own spaces.

Measure spaces

Before you invest in expensive furniture, be sure to measure the areas that you have available. You can use some string, tape, chalk or even newspapers to map out each area or “zone” that you plan on outfitting with furniture. It is important to leave enough space for flow.

Assess for flow

Decide on how you want to use the yard but also how people are realistically going to use it. For example if most guests enter through a gate on the side of the yard, then plan accordingly so they can pass through easily. A good rule of thumb is to have at least 3 feet of clearance in areas that get a lot of foot traffic around furniture. Yield at least 4 feet around grilling areas and 5 feet around pools or hot tubs.

Add comfort

Just because it is outside doesn’t mean that you can’t add comfort. Approach decor just as you would inside by adding side tables, coffee tables, ottomans, toss pillows and even an area rug. These little details add warmth and are inviting.

Dining area tips

For smaller areas you can usually get away with doing a little bistro table as they are only 2 to 3 feet wide. Add chairs and you can fit this easily in an area that is 6 or 7 feet wide. For larger areas you can go with a more standard size table. Take the dimensions of the table you have in mind then add an extra 3 feet of space on all sides to accommodate for chairs and passerby space.

Seating area tips

Seating is huge as it usually is what is most often used in one’s outdoor space. Choose from simple chairs or chaise lounges to larger sofas or comfortable benches. Sizing for chairs and sofas are often similar to those that are found inside making it easy to plan. Yield 3 square feet for chairs, 30 inches deep for couches and usually 80 inches long for most chaises. Small side tables are usually about 18 inches on one side.

Finishing touches

Finally, additional items that can be nice adds include hammocks, swings and fire pits. Hammocks typically measure roughly 75 inches long and 50 inches wide. Swings can be just as nice falling somewhere between chairs and hammocks in terms of a relaxing seating option. Swings usually start around 2 feet wide for a single person style or up to 6 feet for one that can accommodate 3 persons comfortably. Plan for a 4 to 5 foot area for the arc of the swing when in motion. Lastly, fire pits come in different shapes and sizes, but what you can do is to yield roughly 2 feet between the fire pit and the surrounding seating area.

When you drive down your street and see your neighbor’s house for sale with a sign that says “Under Contract” does that mean you are definitely getting new neighbors soon? The answer is, well sort of. In most cases what this means is that a buyer has submitted an offer and the sellers have agreed to it. While this is a big step, it is really just the first step. Here is some more information on how things play out.

What “Under Contract” Means

When a listing is under contract it means there is an accepted offer but there are still contingencies that need to be met before the transaction is cleared to close. These stipulations will most likely include a home inspection, a home appraisal, buyer financing and in some cases the sale of a buyer’s current home. 

Because there are a few things that could potentially not come together it is not uncommon to take backup offers. In other words, if you were personally interested in this home for yourself, there could still be a possibility for you. The majority of the time a deal will go through, but there is a small percentage of deals that do fall apart for any of these reasons. Most deals that are solid will complete within 30 to 45 days from when the offer was accepted to the closing.

Under Contract versus Sale Pending

These two terms are often used interchangeably but there are some differences. In both cases there has been a meeting of the minds with an accepted offer. Under contract most often means there are still contingencies to be met, while sale pending typically means that all of the contingencies have been met and the property is ready to close. While anything can happen, at this point one can usually assume that the home is essentially ready to close so submitting an offer is a moot point. 

The current state of the real estate market has some ongoing trends of low inventory, low interest rates and rising home prices. With these elements out there some people feel that it may be expensive to buy a home these days and think that it is better or more affordable to keep renting. However, it is important to dive deeper into the subject and examine a few angles to really see if it is more affordable to buy or rent. Here are some compelling facts. 

Income To Monthly Payment Ratio

Recent studies from the Urban Institute show that renters pay a larger percentage of their incomes on rent than owners on their mortgages. The report explains: “When we look at the median housing expense ratio of all households, the typical homeowner household spends 16 percent of its income on housing while the typical renter household spends 26 percent. This is true, you might say, because people who own their own home must make more money than people who rent. But if we control for income, it is still more affordable to own a home than to rent housing, on average.”

Renters Don’t Have As Many Options

Everyone has a living expense whether it is a mortgage or rent. With renting you will never get any of that money back, where with a mortgage it can act similar to a forced savings account as you build equity over time which will put you in a better position in the future. You can almost look at buying a home as a similar investment to say a stock or similar. 

Mortgage Payments Don’t Rise Like Rents
When you are renting there is no telling how much your rent may increase year after year or for that matter if your landlord will even offer a renewal option. It is quite customary for landlords to increase rents either every year with a small bump or every few years with a larger one. However with owning a home with a fixed rate mortgage this is not the case. While your property taxes and insurance can increase, your principal and interest will not change.

Waiting To Buy Could Cost You
Owning a home is one of the biggest keys to financial success for most as it is often one’s largest asset. As building equity takes time, waiting to jump in the game can cost you money. Get started today using property to facilitate your financial success. If you have any questions about what is happening in the local market these days, please feel free to reach out. I am happy to discuss!

Depending on what stage you are in life you may be asking yourself if moving to a smaller home may make sense. This could be to save money, cash out of your home for retirement, switching to condo living or perhaps less people are living at home these days. Whatever your reasoning may be you will want to ask yourself some very important questions before you embark on any plans. Here is some help on what to decide.

Is it a good move financially?

Just because you want to move to a smaller home doesn’t mean costs are going to change. Consider the price of the new home in mind versus what you will net from the sale of your current home. Will taxes be lower? Will there be an HOA fee? Find out about these costs to be sure you will save money.

What pleases you most about moving?

Make a list of the reasons why you wish to move and weigh them against where you will move to. For example, you may be excited to no longer clean such a large home, but will you miss spending your free time in the larger yard you may have? Make sure the move will truly enhance your lifestyle and not leave you missing what you have now.

Where will my stuff go?

This is a very important question. If you move to a smaller home, you will have less room for everything you have today. Be sure you are ready to part with anything that won’t make the cut for the new home. After all, it won’t make sense to move if you have to pay for a larger storage unit if you aren’t ready to get rid of a lot. 

Do I choose a condo or smaller home?

There are pros and cons for each but it comes down to your preferred lifestyle. A smaller home will still offer you more privacy but the regular maintenance is on you to manage. While a condo is a more intimate setting yet your regular dues take care of all the regular and necessary upkeep items. 

What type of floor plan do I need?

You cannot always base your needs on square footage. Number of levels of a home along with how it is laid out are nearly as important. A home may be on the small side but if it has an open concept and enough room in all the right spaces it could work just fine. Touring everything in person will help identify this.

Am I ready to move?

In the end, once you start viewing homes that are smaller and begin doing the math of what you will save in each property’s scenario, then the value proposition should become clear. Comparing what you have now to what you will have then will help you decide if you are ready for this next chapter in your life.