All Dollars Not Equal: Division of Assets

The division of assets between the spouses is an important decision to finalize a divorce.  The exercise looks relatively simple: assign a value for each of the assets and divide them based on a mutual agreement between the parties.

The challenge is to make a fair division which requires an analysis to determine their value after they’rezaby- converted to cash.

Assume the two major assets in the example, a retirement account and the equity in the home, are equal at $100,000.  It might seem logical to give the home to one spouse and the retirement account to the other.  However, if the person receiving the home decides to sell the home, the net proceeds could be considerably less than the spouse receiving the retirement account.

Let’s pretend that the spouse with the home negotiates a lower price of $475,000 due to current market conditions.  The former couple had owned the home for many years and refinanced several times, pulling money out of the home each time.  When the remaining spouse sells the home, there could be a considerable gain that was never recognized.

As a single person, he or she is now only entitled to $250,000 exclusion and would have to pay tax on the excess gain.  After paying the sales costs, outstanding mortgage balance and the taxes due on the gain, the remaining spouse would have net proceeds of $24,375 compared to the $100,000 that the former spouse received in the settlement.

The message in an example like this is to examine and consider the potential expenses that may be involved with converting the assets to cash after the divorce. Obviously, expert tax advice is valuable in making such decisions.  divorce.png

The Joys of Home Ownership: What do you do about the Raccoons In a Crawl Space?…the Rest of the Story

Well the Raccoons are now long gone. The exposure to the fiberglass in the insulation under my home caused the kits to perish. Raccoons can cause a lot of damage to a home, even if you are an attentive homeowner.The Pile of Insulation and Venting

So, here is what happened. I got another bid. I hired that company after they prepared a 32 page detailed report with 28 pages of photographs which identified the damage and what was necessary for mitigating that damage.  This type of mitigation I’ve never encountered since I started selling Real Estate on The Mountain in 1985. I sell nice homes on the Rivers and Creeks, on the Golf Course or great Cabins in the Woods.

On August 9th, the Company I hired did there mitigation in my crawlspace . As of today, the horrid odor from the dead kits is gone which took about 3 to 4 days. Better yet, the total final invoice was LESS than the original estimate. The calculations were based on what they had to tear out.  It turned out that it was not quite as extensive, as the original estimate.

Today, I got a bid for the insulation replacement from my Contractor. Then I will get a bid for the ducting for my heating and cooling. Lucky, there have been no heat spells in the Pacific Northwest.

By the way, I would have been charged 275% more by the first company’s bid .

Many thanks to Servepro of Gresham and the entire staff that helped me.

Feel free to call for a referral but hopefully you will not need one for this type of problem.

By |August 15th, 2013|Categories: Homeowners|Tags: , |0 Comments

The Joys of Home Ownership: What do you do about the Raccoons In a Crawl Space?

Summer Pleasure

Looking at the beautiful hanging baskets out my windows is one of the things that I just can’t wait for every spring!   The Town of Sandy, Oregon has gorgeous baskets that look magnificent during the summer months.  The past few years It has been fun experimenting with Begonias’.   I always thought that begonias were “Old Lady” flowers. How quickly perception changes with maturity.

Amidst the beauty in the gardens here in Welches, another interesting twist happened this summer. Getting ready for work one morning I heard a very strange noise.  After opening the window and listening for what was outside, it wasn’t coming from outside at all.  I looked down towards my heating vent, and yes, those sounds were from under my house!  Holly Moley! First thought, feral cats, but after sharing my Smart Phone video with my explicit comments at the local hardware store, we figured out it was indeed Raccoons, or Procyon lotor. Here are their  sounds to listen to in case you encounter them.  Now what do I do?

Luckily, I am a Real Estate Broker with many contacts for Pest controls folks and contractors! No one wanted to get under the crawlspace because raccoons can be quite aggressive when their “kits” are concerned.  No one wants rabies shots for two weeks! I thought I would just hire a local guy to get under the crawlspace and clean up. Little did I know…

Then a client invited me to dinner. I was recounting the raccoon story and he said don’t you go down there or send someone that doesn’t know what they are doing.  I just thought, oh rabies. He and his wife told me that there is a parasitic roundworm, it can be deadly so care must be taken during the clean up.

So today I hired a company to come look. Two of the babies crawled into my vent and are no longer alive due to ingesting insulation most likely. Yes, they took my heating system vents down! The “mama” is no where to be found.  Only one ingress/egress was found which they confirmed.

The bid for what they were going to do was OMG, Over the Top!  The insulation is down in part of the crawlspace but I was not given specifics and photos. He just said the whole crawl space needed new vapor barrier, the soil dug down a few inches, and all new insulation.  He gave me no literature, didn’t know anything about the chemicals used for the odor or the microbiologic agent used as a fogger in the crawl. I had spoken with another company earlier this last week, but they would not send a technician in until I could verify there were no live Raccoons in my crawl. My dialogue with that company was much different. They attend to the localized area since raccoons build nests, and don’t typically infest the whole crawl space like squirrels and packrats. But what bugged me the most was that the technician today didn’t use a respirator when going down into the crawlspace for the bid.  All the reading that I have done on these critters the past week harped on wearing  a respirator when going into a crawlspace.

Today’s company is used to working with insurance companies.  So, I decided to get another bid for the clean up.  That is what I tell my clients to do, especially when something just doesn’t sit well.

So where is the Joy in this? Maintaining property values does come with a price. It is a reality that is important to think about before purchasing. If I was in the selling market, I would have to attend to it you could be assured of that!

PS: Don’t leave pet food outside!

By |July 28th, 2013|Categories: Homeowners|Tags: , |0 Comments

5 Safety Devices and 10 Home Emergency Items – PLUS 5 Steps to Check that your Insurance has you Covered!

As a homeowner, you always want to be prepared. Here are five home safety devices you should have:
1. Fire extinguishers. Put one on every floor of your home, plus an extra in the kitchen where the vast majority of home fires start. Multi-purpose A-B-C extinguishers put out all types of fires. Check and recharge when the pressure gauge drops. You’ll even get a discount from some insurers.
2. Upstairs escape ladders. Put one under a window in each upstairs bedroom. Practice deploying them.
3. Wireless water alarms. Place under sinks, behind the refrigerator, anywhere water will collect if there’s a leak.
4. Automatic shutoff valve for water heater. This cuts off the water supply as soon as it senses a leak.
5. Sump pump alarm. Alerts you to a rapidly rising water level that could mean a flood.

If a disaster hits, here are 10 key items for a home emergency kit. Keep them in a waterproof plastic bin in an easily accessible place.
1. Battery-operated lantern. Throws more illumination than a flashlight and is much safer than candles.
2. Radio/phone charger. Get one with a hand crank for charging.
3. Multi-tool. Make sure it includes a can opener and pliers.
4. Mylar blanket. This shiny silver sheet is remarkably warm, yet lightweight, and folds up compactly.
5. Nylon rope. Handy for tying down outdoor furniture and securing doors.
6. Fishing line. This is a very strong way to secure items when rope is too thick.
7. Duct tape. Nothing is as versatile for quick temporary repairs.
8. Vinyl tablecloth. Spread it out anywhere to create a clean zone.
9. Baby wipes. These are great for removing dirt and grime from your hands or almost any surface.
10. Work gloves. Use these to protect your hands during post-disaster cleanup.

Here are five steps to take to get the right insurance at the right price:

Step 1. Determine how much coverage you need. Don’t go by your home’s appraised value, which includes the land. Ask your local homebuilders association for recent per-square-foot replacement costs. If your area is prone to natural disasters, price out extended or guaranteed replacement policies to protect you from inflated labor and material costs after such events. With your home replacement taken care of, look at coverage for possessions, living expenses, and liability.

Step 2. Find out what’s NOT covered. Standard policies don’t cover damage from flooding, mudslides, and earthquakes. If you’re in a flood zone, you may have to buy supplemental flood insurance. Most standard policies exclude mold, broken water mains, and sewer backups, but you can buy extra coverage for them.

Step 3. Examine the deductible. Some insurers are changing their deductibles from dollar amounts to percentages, which may turn out to be higher deductibles. If that’s the case, check that the premium has been lowered. To reduce your premiums, you want to take the highest deductible you can afford.

Step 4. Focus on the premium. When you get your renewal, compare the new premium to last year’s. If it’s up more than 5%, ask for an explanation. Did your risk profile change, or the market? Try to lower your premium by bundling in auto insurance, installing a security system, storm shutters, or a new roof. But first check with your insurer.

Step 5. Keep records. Do a home inventory of everything you own. Add receipts, photos, or videos and store with all paperwork, including your insurance policy, in a fireproof box. As a backup, scan and store that info on a flash drive and keep it off-site.

If you’re thinking of buying a home, we can answer any questions you may have about financing that purchase. We can also help with refinancing your existing home or funding home improvements. Please call or email us any time – we’re always here to help…. Have a great day!
P.S.: The housing market is in recovery, home prices are extremely affordable – and mortgage rates remain near historical lows. But it’s smart to get the process started early if you’re thinking about buying or refinancing. Please call or email us to talk about the attractive options available now.

Article Courtesy of Jerry Iverson, Senior Loan Officer, Evergreen Home Loans .

Evergreen Home Loans is a home loan lender and is not affiliated with Merit Properties, Inc. To read more about Evergreen Home Loans, click here

Tax Consequences When Renting Out a Primary Residence

Some homeowners, who were not able to sell during the recession, chose to rent their homes instead.  In some cases, they didn’t need to sell their home at the depressed prices and opted to rent it until the market recovered.image

It’s a valid strategy but there are time restrictions that could have serious tax implications for some homeowners.

The section 121 exclusion for gain in a principal residence requires that the home is owned and used as a main home for at least two years during the five year period ending on the date of the sale.  This allows a homeowner to rent their home for up to three years and still have some part of the exclusion available.

The sale of a home with a $200,000 gain that qualifies as a principal residence would result in no tax being paid by the owner.  Comparably, a rental property with the same gain could have a $30,000 or higher tax liability depending on the length of ownership and tax brackets of the investor.

The housing market has dramatically improved in the last year.  If you have a gain in a home that has been your principal residence and it has been rented less than three years, you might want to consider selling it while you qualify for the exclusion.

If you are considering a sale on your principal residence that has been rented, consult with your tax professional for advice on your specific situation.  For additional information, see IRS Publication 523.

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