P: (901) 482-0354 | E: Jo@JoGarner.com

P: (901) 482-0354 | E: Jo@JoGarner.com

Things You Need To Know To Legally Avoid Taxes With Real Estate, Mortgages & Estates

by | Jun 6, 2015 | Financing & Refinancing, Mortgage Loans & Rates, Tips, Tricks & How To's

Things You Need To Know To Legally Avoid Taxes With Real Estate, Mortgages & Estates

6-6-15 “Things You Need To Know To Legally Avoid Taxes With Real Estate, Mortgages & Estates”


 

HIGHLIGHTS FROM THE PODCAST:

Market News

Look Back Memphis Trivia Contest

QUESTIONS ANSWERED BY WIS LAUGHLIN:

  1. How does the mortgage interest deduction work?
  2. Do I have to pay taxes when I sell my house?
  3. What if I want to invest in real estate rental property?
  4. What happens when I have made improvements to my rental house and now I want to sell it?
  5. What other tax deductions are available for some people once they start taking the mortgage deduction?
  6. What types of houses are considered eligible for mortgage interest tax deductions? House boats? 2nd homes? Investment properties?
  7. How many houses can I use for mortgage interest deductions?

_____________________________________________________________________________________________________________________

QUESTIONS ANSWERED BY Jo Garner:

What are some things you can do to help self-employed people who take tax write-offs but need to show enough income to qualify for a mortgage?

What kind of income will mortgage underwriters use for qualifying someone and which kind of income cannot be used?

REAL ESTATE TIP OF THE WEEK

Announcements

Good morning Memphis! Good morning across the country on iHeart Radio and BOCI radio. You’re on the Real Estate Mortgage Shoppe program and I’m your host, Jo Garner, Mortgage Officer with Evolve Bank and Trust. What did you pay in taxes this year? What about last year? What percentage of your income did paying taxes consume? Today we’re talking about Things You Need To Know To Legally Avoid Taxes With Real Estate, Mortgages & Estates.”

Joining us around the coffee table this morning we have Attorney Wis Laughlin, a Wis Laughlin, also known by his clients as The Wizard is a tax, estate and business planning lawyer. Wis was a former IRS attorney. You can see pictures later today of Wis Laughlin, The Wizard, with his Wizard Walking Staff. He is an Accredited Estate Planner and Corporate Counsel so he KNOWS how to legally help you keep more of your money in your pocket.   Wis, tell us a little bit about yourself and what you do as an attorney. <Wis talks about himself and what he does for his clients.>

 

(Jo) If you have a question or just want to talk about OUR favorite topic on this show—your real estate—call us right now at 901 535-WREC 901 535-9732. Speaking of real estate, Memphis had some higher numbers compared to last year. With all arrows pointing up, Home Sales for the last year in Memphis and Shelby County were up 3%. Average sales prices were up more than 6% to $156,460 compared to $148,237 last May. The MEDIAN sales price was up 15%. May bank sales were up 3% from last year. May bank sales were up 3% from last year.  Condo sales were up 48% from last May. And now for a little current market news. Yesterday, June 5th 2015, a very solid payrolls report pushed rates higher with 30 year fixed rates coming in around 4.125% to 4.25%–no points in some cases. The 15 year rates coming in around 3.25% to 3.375%. This is higher than they have been this year so far.

 

If you have been wanting to restructure your mortgage, shorten the term, lower the payments or pull some cash out, let’s do your numbers and see if the deal will work for you today. Make Your Plan, Work Your Plan, If The Deal Works For You Today, DO IT TODAY!

 

<Wis makes comments here >

 

(Jo) My friend Richard Scarbrough, a very successful real estate investor in the Memphis area, has said many times on this show that the reason he started investing in real estate was so he could shelter his hard-earned income as a realtor.   For every dollar you can save from taxes, it’s another dollar that stays in your pocket. So why not work smart and take the legal write-offs available to you?     But—as you’re erasing your tax bill with the legal write-offs, remember that, if you want to be qualified to purchase a home or refinance one in 2015, you are going to need to show enough income to get the loan you want—and you’re going to need an experienced loan officer that knows which expenses you wrote off your taxes can legally be added back to income for loan qualifying purposes.   If you’re needing to write off some expenses but still want to qualify to get a mortgage, call me on the air 901 535-WREC or call me on my direct line (901) 482-0354 (901) 482-0354. My very experienced assistant and I start at the back of your tax return and work forward so that we can add back legal tax write-offs to your income that are allowed to be added back for loan qualifying purposes.

 

<Wis makes comments here>

 

(Jo) We’re talking about avoiding taxes and, in other words, keeping more money in our pockets. Here’s some ways you can try and keep more of your money in your pocket. If you have been renting but now you’re buying a home that is more spacious with more amenities than what you had on the rental unit AND your house payment is LESS than rent AND you choose to write off the mortgage interest to reduce your taxes.

You can take steps to set up an extra source of income if you can buy another house to add to your rental property portfolio and put very little down and lock in an ultra low mortgage rate with a low payment.   Ching! Ching! The lower your payment, the higher profit margin you can enjoy. But, don’t buy a losing business. Buy a real estate rental property that brings you a positive cash flow right up front.

You can take steps to make life better for yourself if you can finally refinance your house to a lower interest rate on a special HARP or streamline refinance program that doesn’t require a full appraisal—getting a loan that doesn’t require ANY appraisal at all. Even if you DID have to have an appraisal, several areas around the Memphis have gone UP in value. You may be able to refinance today when you couldn’t I would love to help you get some bragging rights on your mortgage refinance or on a mortgage to buy a house.   Call us right now on the air at (901) 535-WREC or (901) 535-9732   or you can reach Susan or me directly OFF the air at 901 482 0354. That number again is (901) 482-0354 or catch us on our blog www.JoGarner.com

Legally avoiding taxes and saving on interest costs is GREAT for your bank account, but its great for the SOUL too. It’s a nice feeling knowing that you grabbed an opportunity and now can sit back and enjoy the benefits.

 

Attorney Wis Laughlin, we’re talking about Things You Need To Know To Legally Avoid Taxes With Real Estate, Mortgages & Estates. What are some things we need to know — <Wis launches his topic until the 1st break at 9:15AM)

 

 

 

 

2nd segment after 9:15 break—It’s time for the Look Back Memphis Trivia Contest. I am giving away to the first person with the correct trivia answer a $25 gift certificate. If you know the answer to one of our trivia questions, call us at 901 535 WREC 901 535-9732.

 

QUESTION: What happened in Memphis on this day June 6th 1862?

ANSWER: 1862 Union claims Memphis in naval battle/ First Battle of Memphis/ Battle of the Rams

Hint #1: Thousands of residents from Memphis and surrounding areas gathered at the riverbank to watch this event.

Hint #2: The action involved ships

Hint #3: The actual event lasted less than 2 hours

Hint # 4: Rams and Cottonclads, Ironclads

First Battle of Memphis or Battle of the Rams

The First Battle of Memphis was a naval battle fought on the Mississippi River immediately above the city of Memphis on June 6, 1862, during the American Civil War. The engagement was witnessed by many of the citizens of Memphis. It resulted in a crushing defeat for the Rebels, and marked the virtual eradication of a Confederate naval presence on the river. Despite the lopsided outcome, the Union Army failed to grasp its strategic significance. Its primary historical importance is that it was the last time civilians with no prior military experience were permitted to command ships in combat. As such, it is a milestone in the development of professionalism in the United States Navy.[1]

The defending Confederates closely matched the advancing Federal force in raw numbers, with eight Rebel vessels opposing nine Union gunboats and rams, but the fighting qualities of the former were far inferior. Each was armed with only one or two guns, of a light caliber that would be ineffective against the armor of the gunboats. The primary weapon of each was its reinforced prow, which was intended to be used in ramming opponents.[2]

The Confederate rams were distinguished by a unique feature of their defense against enemy shot. Their engines and other interior spaces were protected by a double bulkhead of heavy timbers, covered on the outer surface by a layer of railroad iron. The gap between the bulkheads, a space of 22 in (56 cm), was packed with cotton.[3] Although the cotton was the least important part of the armor, it caught the public’s attention, and the boats came to be called “cottonclads”. (Later in the war, ships’ crews were often protected from small-arms fire by bales of cotton placed in exposed positions, and these vessels were also referred to as cottonclads. They differed, however, from the originals of the category.)[2]

The Federal force consisted of five gunboats, four of which were known semi-officially as ‘Eads gunboats,’ after their builder, James Buchanan Eads, but more commonly as ‘Pook Turtles’, after their designer, Samuel M. Pook, and their strange appearance.[4] The fifth gunboat, flagship Benton, was also a product of the Eads shipyards, but was converted from a civilian craft. Each of these vessels carried 13–16 guns. The other four vessels were rams, with no armament whatever, aside from small arms carried by the officers. All of the rams had been converted from civilian riverboats, and had no common design.[2][5]

Organization[edit]

Both sides entered the battle with faulty command structures. The Federal gunboats were members of the Western Gunboat Flotilla, commanded directly by Flag Officer Charles H. Davis, who reported to Major General Henry W. Halleck. The gunboats were thus a part of the United States Army, although their officers were supplied by the Navy.[6] The rams were led by Colonel Charles Ellet, Jr., who reported directly to Secretary of War Edwin M. Stanton.[7] Thus the Federal ‘fleet’ consisted of two independent organizations, with no common command outside of Washington.

The Confederate arrangement was even worse. The cottonclads were about half of a group of 14 river steamers that had been seized at New Orleans and converted into rams to defend that city. Known as the “River Defense Fleet“, it was split in two when the Confederate holdings on the river became threatened from both the north and the Gulf of Mexico. Six were retained below New Orleans to face the fleet of David G. Farragut, while eight were sent up to Memphis to block the Federal descent down the river. (Sending them this far north did not violate their original purpose, as Memphis was regarded as a shield for New Orleans.) The northern (Memphis) section was commanded overall by James E. Montgomery, a riverboat captain in civilian life. The other boats were also commanded by former civilian riverboat captains, selected by Montgomery, and with no military training. Once under way, Montgomery’s command ceased, and the rams operated independently. The futility of this arrangement was recognized immediately by military men, but their protests were disregarded.[8] Furthermore, the captains would not either learn how to handle the guns themselves, nor assign crew members to the task, so gun crews had to be drawn from the Confederate Army. The gunners were not integrated into the crews, but remained subject to the orders of their army officers.[9]

QUESTIONS ANSWERED BY WIS LAUGHLIN:

  1. . How does the mortgage interest deduction work?
  2. Do I have to pay taxes when I sell my house?
  3. What if I want to invest in real estate rental property?
  4. What happens when I have made improvements to my rental house and now I want to sell it?

 

  1. What other tax deductions are available for some people once they start taking the mortgage deduction?

 

  1. What types of houses are considered eligible for mortgage interest tax deductions? House boats? 2nd homes? Investment properties?
  2. How many houses can I use for mortgage interest deductions?

_____________________________________________________________________________________________________________________

QUESTIONS ANSWERED BY Jo Garner:

  1. What are some things you can do to help self-employed people who take tax write-offs but need to show enough income to qualify for a mortgage?
  2. There are certain tax write-offs that can legally be added back to income for mortgage qualifying purposes, like depreciation on cars or trucks or equipment and a number of other items. Just because the front page on the tax return doesn’t show enough income from the business doesn’t mean there isn’t income hiding in the BACK pages of the tax return that a good mortgage loan officer can add back. Susan and I start at the back of the return when we calculate income for a self-employed person.
  3. Add back .23 cents per business miles if standard mileage deduction was used.
  4. once in a lifetime write offs
  5. Average 3 or 4 years tax returns if the 3 or 4 year income trend shows a more accurate estimate based on significant swings up and down year by year.
  6. If the seller is not paying the ENTIRE amount of the buyer’s closing costs and prepaids, then the buyer may want to consider the portion he himself pays to be the property taxes or something that he can write off.

 

  1. What kind of income will mortgage underwriters use for qualifying someone and which kind of income cannot be used?
  2. Mortgage underwriters like salaried employees and hourly employees who get a steady, guaranteed income even if they have not been on that particular job for very long. But they like to see good job stability overall. Be careful about writing off unreimbursed employee expenses though. The amount of that write off is deducted from your regular income when you qualify for a mortgage loan.   If over 25% of a person’s income is bonus, over-time or commission , then underwriters like to see at least a year and a half or two years track record to average. For self employed or people who work as subcontractors, the tax return is the best way to calculate NET income. If you are working as a temporary employee, your income will need to be permanent before we can use it.   Also be careful about changing the method of how you are paid during the loan process. I had a client recently who had GREAT credit and ample money in savings—a model client. He had recently gotten out of the military and was starting his career as a truck driver.   At the time of loan application his income was W2 type, regular, salary type income.   He easily qualified for the loan. HOWEVER, in the middle of the loan process, our client allowed his employer to change his income instead of a regular salary over to being paid by the mile.   Now, true, he was making more money but since he had only been driving for that company for a few weeks and did not have a two-year track record, he no longer had a guaranteed salary and the government loan programs he wanted would not allow us to count ANY of the income. The solution was to have the employer guarantee the minimum number of miles he could drive each week or switch his income back to salary. Those small changes in income or assets is what can make or break your deal. It is THAT important.

 

REAL ESTATE TIP OF THE WEEK: (1.5 MINUTES) Wis Laughlin shares practical, money-saving or time-saving real estate tip.)

Announcements: Talk Shoppe offers free education and networking to anyone interested in real estate or business. This Wednesday June 10th 2015 9A-10A John Lawhon of Lawhon Landscaping will be sharing “How Landscaping Curb Appeal Helps Sell Homes.” Breakfast served by Chef Eric Meyers of the Confectionery Memphis . Talk Shoppe meets at the University of Phoenix 65 Germantown Court 1st floor Cordova, TN 38018. For more information about Talk Shoppe, go to www.TalkShoppe.com

 

Special thanks to Annette Gavin, Masters in Marketing at the University of Phoenix for conducting our online marketing. Annette is looking for a career using her Masters degree in Marketing Analysis. <Annette briefly speaks>

  • To hear today’s podcast of the Real Estate Mortgage Shoppe and others, go to JoGarner.com .

“MAKE YOUR PLAN, WORK YOUR PLAN. IF THE DEAL WORKS FOR YOU TODAY, DO IT TODAY.”

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Transitional Music: Tax Man by the Beatles; Taxes Everywhere by Matt Cline; You Make It, They Take It” by Jerry Lee Lewis “Memphis” by Johnny Rivers for Trivia Contest

 

 

ABOUT ATTORNEY WIS LAUGHLIN:

 

 

 

Wis Laughlin is a tax, estate and business planning lawyer. His passion is to help individuals and small businesses to avoid income taxes as well as legal costs associated with estates and contracts. By cutting these costs you multiply the growth of your assets over your lifetime. Wis’s experience as a former IRS attorney, Accredited Estate Planner and Corporate Counsel make him uniquely suited to coach you in these areas.

 

We are going to talk about ways to cut taxes, with a focus on tax rules that affect your home. FREE:  bring me a tax return, will, trust, or other legal document, and I will show you a better way! 
Harry W. (Wis) Laughlin, Attorney at Law
1028 Oakhaven Rd. 38119
Website: https://www.linkedin.com/in/laughlin
901 507-4274

______________________________________________________________________________ABOUT JO GARNER, MORTGAGE PROFESSIONAL WITH EVOLVE BANK & TRUST

 

www.JoGarner.com   (901) 482 0354 jo@192.232.195.219 twitter @jogarner

Jo Garner is a mortgage officer with extensive knowledge in tailoring mortgages to her customers who are refinancing or purchasing homes all over the country. She offers conventional, FHA, VA or other loan programs for refinancing and purchases.

 

Jo can help you look at rent vs buy, when it makes sense to refinance, how to get the best deal on your home purchase financing.

 

Jo Garner has been in the real estate/financing business for over 20 years.  She got her start in Portland, Maine where she first began her real estate career. She received her real estate education from the University of Southern Maine  and was personally mentored in San Diego, California  by Robert G. Allen, author of Nothing Down, Creating Wealth and The Challenge.

 

On moving back to West Tennessee in 1987, she went into business buying and selling discounted owner-financed notes secured on real estate.  In 1990 Jo went to work for a residential mortgage company and has been a mortgage loan officer for over 20 years.  Her goal is to offer excellent, affordable service to her customers, tailoring the loan programs to the specific needs of her clients.

In addition to her work in the mortgage field, Jo Garner  is the primary sponsor and founder of Talk Shoppe in Memphis. www.TalkShoppe.BIZ She was also the editor of Power Shoppe, a free weekly e-zine designed for real estate professionals and others indirectly connected to the real estate industry and currently publishes on her blog www.JoGarner.com   .

 

For real estate financing solutions, plug into the Real Estate Mortgage Shoppe program. You can find mortgage rates, FHA Streamline refinance with no out-of-pocket costs, refinancing options, home purchase loan programs, answers and real estate, money-saving tips and more.