Housing is in Bloom

The nation's housing sector is buzzing like bees in springtime. And indeed, housing has historically boosted the U.S. Gross Domestic Product (GDP) and job creation, which are key stimulators and indicators of economic health. 

When GDP is referenced in news media, it means the total goods and services produced by labor and property in the U.S. This figure is measured quarterly, and recent figures show that GDP increased impressively at 3.1 percent in the 1st quarter of 2013, up from 0.4 percent in the last quarter of 2012. 

Sales of previously-owned houses increased three straight months in March, rising 0.4 percent to a 5 million annualized rate, its highest level since late 2009, then took a small dip in late April by 0.6 percent to 4.92 million units. During this time, new home sales maintained an upward climb by 1.5 percent within expectations to 416,000. Analysts say housing could provide tailwinds strong enough to realize the improvement to the labor market for which the folks at the Fed are hoping. The Fed (which sets the U.S. monetary policy by monitoring national employment, prices and interest rates) recently noted that inflation also remains in check. 

Homebuilders across the nation have contributed to the increase in Housing Starts, up a whopping 47 percent over the same period last year. At their highest since June 2008, Housing Starts spiked by 7 percent this March to 1.036 million units on an annualized basis, well above the 930,000 expected, though they did decline in April. Gains in home prices and construction will put more Americans to work this year, and that's good news overall for the health of the U.S. economy.

Understanding The Tax Deductions for Rental Property

We thought this post was perfect timing for Tax Season! If you are thinking about buying rental properties, then you are probably wondering what benefits you will have other than the rental income. Rental homes can be a houseboat or a trailer or anything as long as there are sleeping, cooking and bathroom accommodations. And the location of the home does not matter - even if it is outside of the United States.

There are many pros and cons to owning a rental property but some of the best benefits are the tax deductions that become available to you. Just remember to save all of your receipts and any other documentation you may have for the expenses you have incurred.

Here are some of the most common items you can use as a tax deduction if you own rental property.

• Advertising
• Cleaning
• *Maintenance
• Any commissions you pay to a rental agent
• All homeowners association dues or the like
• Your insurance premiums for the home
• Any legal fees you have incurred
• Your mortgage interest
• Taxes
• Utilities
• Accountant fees
• Some travel expenses - there are some restrictions
• Mileage

*The IRS has different rules for repairs versus improvements. You can write off repairs; which is anything that fixes your property to keep it in good working conditions. However, you cannot write off improvements per se; which is any cost that adds value to your rental property.

An example of a repair would be patching a leaking roof. An example of an improvement would be actually replacing the roof. If you have the cost of an improvement, then you can use that expense as a deduction but it must be depreciated over several years. You can also use the actual depreciation of the home over time due to wear and tear. But these rules are very tricky and it is recommended that you seek professional tax advice before proceeding with these types of deductions.

This article has been written as a general overview of this topic and should not be construed as tax advice or legal advice. Always consult a tax professional for this type of advice.

Thank you for Reading,
The Inman Team