Remodeling, Financing and Taxes

Is your home in serious need of renovation? Whether it needs a remodel because it’s looking old and out of date, or for more serious reasons, such as a failing roof, where do you get the money to pay for things like that? Unless you just have thousands of dollars at your disposal, the answer is likely through financing. However, there’s a smart way and a not-so-smart way to secure financing.  

Obviously, as a responsible homeowner, you want to choose the smart way.

Good Credit Options

The best case scenario is that you have excellent credit and can work with an upscale, reputable lender, such as a bank, a broker, or a credit union. If you are able to secure a loan from one of these choosy institutions, you can use your home as collateral and borrow the amount you need.

Just don’t go too crazy with borrowing, or you could blemish the spotless credit you’ve worked so hard for. Only borrow what you actually need and don’t get sucked into doing extra repairs or remodeling just because you have the credit available.

Tap Into Your Savings

If you have a lot of equity built up in your home, then you can borrow against that to handle remodels and repairs. If you don’t, however, then you may have to look to other options.

One of the best options is to tap into your savings account. That might be tough, but paying with cash is always better and cheaper than paying with credit in the long run. You should only do this, however, if you have enough to still maintain some degree of savings. Most financial advisors suggest always keeping at least three months worth of living expenses in your savings account. If you can do that and still manage your remodel or renovation, then go for it.

Tapping into your savings is serious business, though, so save this option for repairs and renovations that are absolutely necessary, not just ones that are going to make your home look prettier.

Break Out the Plastic

When you’ve exhausted all other options, it may just be time to use your credit card to finance those remodels or repairs. As a caveat though, don’t use your plastic if you’re not able to avoid paying interest on this hefty purchase. If you can pay off more than your minimum amount each month, even after the repairs are done, then go for it. If you can’t, though, you may want to keep searching for the right fit for you.

And, speaking of the “right fit,” every person and every person’s situation is different. If your home really is in need of some TLC and you’re not sure how to foot the bill, go over your options with a financial advisor, determine of your financing of the project can result in tax breaks. These professionals can always help you to find the right solution for your situation.

How Giving Leads to Saving

You’ve probably heard the saying that giving is better than receiving. That may be true, but why can’t you have both? If you are someone who gives money to charity or donates goods to charitable organizations, you are entitled to deductions that can help you save money.

Every Contribution Counts!

Most people can’t afford to give huge amounts of money to charity each year. However, even people who can’t give large amounts will usually donate something throughout the year. Maybe they add a dollar to their supermarket purchase to help support charity, or maybe they purchase girl scout

cookies or something else small for a good cause.

However, even these little contributions count; it’s just up to the giver to remember to count them! Donors can request a receipt, even for small donations, and store them until tax time. They’re often surprised to find how much they’ve actually given throughout the year...and how much of a break it can cut them on their taxes.

Add Up Expenses

Sometimes, “giving back” just means handing over some cash, buying something, or driving items to the local thrift store. Other times, however, there are expenses involved in being a good person.

For those whose good deeds require them to travel, such as to support or take part in a charitable event, the costs of things like gasoline, airline tickets, hotels, and even food eaten along the way can all be deducted.

Be Honest

As with all things tax-related, be honest in your dealings. Don’t over-declare donations or over-exaggerate their worth. After all, the whole point is to do something good and get a little back, not to be greedy and dishonest.

Those who give (and receive) the right way will enjoy two rewards: the reward of having done the right thing and the financial reward of a nice tax break.

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• How to Estimate the Value of Clothing for IRS Deductions

How Homeowners Save Money on Taxes

Do you own a home? If so, know that you can “catch a break” in a variety of ways when it comes to your taxes. The best way to learn about all of the different tax breaks available to you and to take full advantage of them is to seek the help of a knowledgeable accounting firm in your area.

When you visit that accounting firm, you will likely learn about several different types of tax breaks, including the much-loved mortgage interest deduction. You can claim this deduction on up to two homes as long as

your mortgage loan is not for more than a million dollars. All you have to do is itemize your return, and you’re good to go!

While the mortgage interest deduction is a popular way for homeowners to save money, it’s certainly not the only way for them to do so! To learn about other ways in which you can save big, contact Susan S. Lewis, Ltd., an accounting firm in Naperville, today.

Related articles

• Tax breaks for homeowners (foxbusiness.com)
• Tax reform proposal would cut many real estate deductions (latimes.com)