Real Estate Information Archive

Happy New Year! January is the time for starting out with a clean slate and vowing to make changes that are good for us. In spite of our good intentions, however, by now many of us have made--and broken--many familiar resolutions and have fallen back into bad habits. Despair not. There is one action you can begin right away, stick to without hardship or self-denial, and benefit greatly from in just a few months. The holiday season may be behind us, but tax season is not far away, and you can resolve to get an early start by identifying house-related tax deductions now and gathering the necessary documentation for them.

Doing so provides you with a win-win situation. Not only will you get a head start on a sometimes onerous task, you will also derive pleasure from seeing how much money you will save simply by owning Chester County real estate. The following information is current as of now, but I urge you to check with your accountant, visit the IRS website, or call the IRS assistance line at 800-829-1040 for verification and/or specifics.

PRIMARY RESIDENCES

• MORTGAGE INTEREST: As you know, much of your mortgage payment goes toward paying off interest, especially in the early years. All this paid interest, on debts of up to $1 million on a joint return, is tax deductible. The amount you have paid is reported to you on a 1098 form sent by your lender and should be reported by you on line 10 of a Schedule A form (itemized deductions).

• HOME EQUITY LOAN INTEREST: Interest paid on home equity loans (second mortgages, equity credit lines, and some refinancing) is fully deductible up to $100,000--regardless of how you use the proceeds. If you use some or all of the proceeds for home improvements, that amount can be added to the $100,000. Be sure to carefully document all improvement costs. Note: The limits mentioned apply only as long as all debt secured by the residence does not exceed the fair market value of your Chester County real estate.

• POINTS: The points you paid to the lender at closing are deductible for the year in which you paid them. This amount is also reported to you on the lender’s 1098 form. See publication # 936 from the IRS for more specific information, especially about points paid for refinancing.

• PROPERTY TAXES: Chester County real estate property taxes are fully deductible.

• PRIVATE MORTGAGE INSURANCE: If your mortgage was taken out between 2007 and 2010 and your joint income is below $100,000, you can deduct any premiums you paid. Note: This is the last year that you can take this deduction.

• HOME OFFICE: If you use a portion of your home exclusively for business purposes, there are certain costs you can deduct. Such expenses may include a percentage of your utilities, repairs, qualified insurance premiums, and even property taxes. The IRS has specific requirements for these deductions. Consult IRS publication #509.

• SELLING YOUR HOME: In addition to being able to pocket as much as $500,000 tax free in profit if you file jointly and have lived in the piece of Chester County real estate for two of the past five years, you can also deduct from your taxable capital gain many costs which you incurred while selling the property. Such costs usually include realtor commissions, legal and inspection fees, and title insurance. In addition, cosmetic repairs and improvements you made to the home within 90 days of the sale are also deductible.

TAX CREDITS: These are even more beneficial than deductions and fall into two categories for the 2010 tax year.

• HOMEBUYER TAX CREDIT: Buyers who purchased a house before May 2010 and qualified for a Homebuyer Tax Credit may claim that credit by mailing in (you cannot file electronically) your return with IRS Form 5405. Members of the military, foreign service, and intelligence communities have until April 30, 2011, to purchase a home and be eligible for this credit.

• HOME ENERGY TAX CREDIT: If you installed qualified energy-efficient systems, windows, and/or appliances in your home before December 31, 2010, you may be eligible for a tax credit of up to $1500. Again, you may not file electronically, and you must complete and attach IRS Form 5695 to your return.

FORGIVEN DEBT: Mortgage debt to buy a principal residence that is forgiven (as in a short sale, foreclosure, or debt restructuring) is no longer taxable in many cases. Restrictions apply for investors, equity lines, refinancing, etc. See IRS Publication 4681 for detailed information and use IRS Form 982 for filing.

Settlements provide necessary funds for reliable electric & natural gas service, customer support and low-income assistance.

PHILADELPHIA (Press Release-August 31, 2010) – PECO today filed joint settlement petitions with the Pennsylvania Public Utility Commission (PAPUC) reflecting agreements reached with all interested groups on the increases in natural gas and electric delivery charges beginning Jan. 1, 2011.

“We are pleased to have worked cooperatively with all involved to reach these agreements,” said Denis O’Brien, PECO president and CEO.  “These settlements will help us continue to provide reliable gas and electric service and quality customer care while also managing the impact of these changes to our customers.”

The settlement reflects a $20 million overall increase in natural gas delivery rates and a $225 million increase in electric delivery rates.  Specifically, with these increases PECO will:

• Continue to invest in our electric and natural gas delivery systems – replacing equipment, upgrading infrastructure and investing in new technology.  We plan to invest about $1.7 billion in our electric delivery system and $380 million in our natural gas delivery system during the next 5 years – ensuring reliable service to customers and employing thousands of people in our regional workforce.
• Continue to improve customer service, and expand our natural gas energy efficiency programs.
• Increase assistance to low-income customers by providing more tailored assistance programs and limiting total program costs.

Based on these settlements and electricity purchases to date, PECO now estimates that total prices for residential electric customers will increase less than 10 percent.  For the typical residential electric customer, the increase will be less than $8 per month.  The actual prices that electric customers will pay beginning Jan. 1, 2011 will be determined following PECO’s final electricity purchases this fall.

Costs for our residential natural gas customers are now expected to increase about 8 percent.  For the typical residential natural gas customer, the increase will be less than $8 per month.  The final prices that natural gas customers will pay beginning Jan. 1, 2011 also will be determined later this fall.

This is PECO’s first electric delivery rate request since 1989 and only the second natural gas delivery rate request in 23 years.  The delivery charges are the portion of the bill that covers PECO’s costs to deliver electricity and natural gas to customers.  They represent about one-third of a customer’s overall bill.

The commodity charges, or the electricity and natural gas used by customers, make up the remaining two-thirds of a customer’s total bill.  These charges are passed along directly to customers at exactly the price that PECO pays. 

Customers can offset this increase by taking simple steps to use less energy.  For example, just by replacing five incandescent bulbs with CFLs and raising the thermostat two degrees during the summer customers can save more than $8 a month – totally offsetting the expected increase.

PECO Smart Ideas, our full suite of energy-efficiency programs, has products and programs to help save energy and money:

• PECO has discounted CFL bulbs at more than 700 area stores.  These light bulbs use up to 75 percent less energy and last about 10 times longer than traditional light bulbs.
• PECO is paying rebates to customers who purchase qualified energy-efficient electric appliances, and upgrade to high efficiency natural gas heaters and water heaters.
• PECO is paying incentives to customers who allow us to pick up older, energy-wasting refrigerators and freezers.
• PECO has developed an online home energy audit to help customers understand how they currently use energy and how they can use less. 

PECO also offers payment options, like Budget Billing, to help customers manage their bills.  Budget Billing divides energy costs evenly throughout the year.  Customers also can potentially save money by choosing a competitive electric generation supplier.  To learn more about shopping for a competitive electric generation supplier visit the PAPUC’s website at www.papowerswitch.com.

Programs also are available to help customers who may be struggling to pay their energy bills.  Through PECO’s Universal Services programs, we assist more than 130,000 low-income customers each year with reduced rates, free energy-efficiency improvements and Federal Low-Income Home Energy Assistance Program funding.

As part of the PAPUC review process, the proposed settlements will be reviewed by two administrative law judges prior to final PAPUC ruling later this year.  For more information about upcoming changes in our energy market and how PECO can help, visit www.pecoanswers.com.

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Based in Philadelphia, PECO is an electric and natural gas utility subsidiary of Exelon Corporation (NYSE: EXC). PECO serves 1.6 million electric and 485,000 natural gas customers in southeastern Pennsylvania and employs about 2,400 people in the region. PECO delivered 83.7 billion cubic feet of natural gas and 39.4 billion kilowatt-hours of electricity in 2008.  Founded in 1881, PECO is one of the Greater Philadelphia Region's most active corporate citizens, providing leadership, volunteer and financial support to numerous arts and culture, education, environmental, economic development and community programs and organizations.

So you’ve finally found the piece of Chester County real estate you’ve searched for months! What next? Before you sign a contract, make sure it contains a home inspection contingency, a clause stating that your offer is contingent dependent on the results of a home inspection.

A home inspection is of primary importance because it allows you to obtain an unbiased professional assessment of all the components of the property. It is a step necessary for you to decide if you will stay with your original offer, renegotiate based on documented issues and needed repairs, or back away from the purchase of that piece of Chester County real estate altogether.

Selecting a qualified inspector is vital. Your realtor can provide you with the names of reputable firms, or you can go online to research services offered and credentials. Specific information you should know about the inspector and the inspection process included the following:

      1. Credentials and background: Is he/she licensed in your state? Is he affiliated with any respected organizations such as the American Society of Home Inspectors? Membership in these groups requires that inspectors follow strict guidelines about ethics and continuing education. Be sure to inquire about experience and training. A construction-based background is a plus, as is attending a college with an emphasis on construction or attending a home inspection school.

    2. Fees: Although you don’t want to spend money unnecessarily, this is not a place to scrimp. Your house purchase is a very large investment, and you need to know as much as you can about it. Do remember that money spent on a quality inspection now will be returned to you by avoiding unexpected costly repairs in the future.  The price of an average inspection varies depending on the age, size, and condition of the house. Some inspectors base their fees on the list price of the Chester County real estate. Get estimates from all you contact, but don’t assume that the lowest priced is the best choice for you.

    3. Type of report: Some inspectors use computer generated onsite reporting, some a handwritten checklist, and others a computer generated report you won’t receive for few days. By and large, the last option is in your best interests since it gives the inspector time to review his findings, look up any questions he may have, and send you a detailed, descriptive report. He should also be able to provide you with pictures of the problem areas. Feel free to ask him for a sample report.

    4. The actual inspection: Make sure that you will be allowed to accompany the inspector and ask questions as he checks out the house and grounds. This is a good time for you to become familiar with the home‘s inner workings, locate shut-off valve and breaker panels, and pick up tips on operating and maintaining different systems.

    A thorough home inspection of an average home should take between 2 ½ and 4 hours and should cover both internal and external components of the property. Major items examined should include:

            a. Siding, foundation, brickwork, etc.

            b. Insulation

            c. Deck, roof, garage

            d. Attic/basement

            e. Driveway and walkways

            f. Electrical system

            g. Plumbing

            h. Doors and windows

            i. Heater, air conditioner, and hot water heater

            j. Ceilings, walls, and moldings

Having your Chester County real estate inspected will allow you to make an informed decision about the purchase of a house and will provide you with both essential knowledge and peace of mind.

Interested in conserving the environment? Intrigued with the idea of providing a haven for neighborhood wildlife AND reducing the amount of work, water, and chemicals needed to keep your landscaping alive, well, and attractive? Read on…

Winter is the perfect time to plan a backyard wildlife habitat for your Chester County PA home and design a garden that provides essential kinds of wildlife, such as birds, butterflies, amphibians, and small mammals. Because natural environments are quickly disappearing due to rapid development, greener gardening techniques which are mindful of the ecosystems and needs of native creatures have become essential.

There are many online sites which provide detailed instructions for turning your property into a mini-sanctuary for wildlife, but the initial steps are relatively simple and include providing food, water, cover, and space.

Provide Food for Wildlife

Everyone needs to eat! Planting native herbs, grasses, shrubs, and trees is the easiest way to provide the foliage, nectar, pollen, berries, seeds and nuts that many species of wildlife require to survive and thrive. You can also incorporate supplemental feeders and food sources.

Supply Water for Wildlife

Wildlife need clean water sources for many purposes, including drinking, bathing and reproduction. Water sources may include natural features such as ponds, lakes, rivers, and wetlands; or human-made features such as bird baths (change water 2 to 3 times per week), puddling areas for butterflies, installed ponds, or rain gardens.

Create Cover for Wildlife

Wildlife require places to hide in order to feel safe from people, predators, and inclement weather. Use things like native flowers, leaves, shrubs, thickets, brush piles or even dead trees. Remember to utilize both the horizontal and vertical spaces in your yard.

Give Wildlife a Place to Raise Their Young

Wildlife need a sheltered place to raise their offspring. Many places for cover can double as locations where wildlife can raise young, from wildflower meadows and bushes where many butterflies and moths lay their eggs to caves where bats roost and form colonies.

Green gardening for your Chester County PA home targets a reduction in water and chemical use, a decrease in the size of the area covered with turf grass, and generous use of mulch. How you maintain your garden or landscape (either formal or casual) can have important positive or negative effects on the health of the soil, air, water and vegetation that we all use! Here are some sustainable gardening techniques that you will help you conserve and protect our natural resources.

Mulching

Mulch helps keep water in the soil and available to the plant, rather than evaporating into the air. This can help reduce water consumption. As mulch breaks down, it provides nutrients to the soil, which can help reduce or eliminate the need for additional fertilizers. Be sure to use mulches that are from sustainable forestry practices (not Cypress tree mulch) and are free from pests and diseases. Your cooperative extension office can help you find sources of mulch in your local community.

Reducing Lawn Areas

Grass lawns often require chemicals and frequent maintenance. Gas-powered lawnmowers produce high amounts of greenhouse gases, which contribute to the air pollution that causes global warming. Since lawns are often made of only a few types of plants that most animals do not consume, they do not provide a lot of value for wildlife. Replacing grass lawns with native wildflowers, bushes, and trees provides the food, shelter, and cover that help to maintain healthy, natural ecosystems and reduces your time and labor working on the lawn!

Xeriscaping

Xeriscaping is an approach to landscaping that minimizes outdoor water use while maintaining soil integrity through the use of native, drought-tolerant plants. This is a common practice in drier areas, where water supplies and water quality are in very short supply.

Removing Invasives and Restoring Native Plant Communities

Native plants are better for the environment than exotic plants, generally requiring less fertilizer and other additives, less water, and less effort in pest control. They are especially important to native wildlife, such as pollinators, that may have coevolved with a particular species. Pollinators often rely on a certain type of flower as a source of food, while the flower depends on the pollinator to transport its pollen to other flowers for reproduction. When non-native or exotic plants are used, they often upset the delicate balance of a local ecosystem and sometimes even out-compete native species (hence the term invasive) to the point of extinction. Wildlife benefit more when native plant communities remain intact or are restored to their natural habitats, thus providing the best source of food for wildlife.

How to get started? Inventory what is presently in the backyard of your Chester County PA home and consider what can stay, what should go, and what is needed. Locate a list of plants and trees that are native to your area. Contact your local nurseries or agriculture extension office or search for assistance on line. Two informative sites are National Wildlife Federation and Wildlife Habitat. Also, give yourself a pat on the back for helping to restore natural habitats--and look forward to spring!

Yes, it’s tax season again, and given the state of the economy, saving every penny is very appealing. As an owner of Chester County real estate there are many deductions and tax credits you will want to take claim on your 2009 return…provided you qualify of course!!

Here are a number of money-saving ways to reduce the amount of tax you owe--or even increase the amount of your refund!

First, let me explain the difference between a tax deduction and a tax credit.  A tax deduction reduces (adjusts) your taxable income. A tax credit reduces your tax dollar for dollar. You do not have to itemize deductions to claim a tax credit.  

Tax Deductions for Primary Residence

Tax deductions on your primary residence include:

• Interest paid on your mortgage
• Refinancing points paid in 2009
• Real estate taxes
• Interest on major home improvement loans
• Mortgage insurance premiums
• Home improvements required for medical care
• Any sales commission, legal fees, or closing costs associated with the sale of Chester County real estate in 2009

Home Energy Efficiency Improvements Tax Credits

Consumers who purchase and install specific products, such as energy-efficient windows, insulation, doors, roofs, and heating and cooling equipment in existing homes can receive a tax credit for 30% of the cost, up to $1,500, for improvements "placed in service" starting January 1, 2009, through December 31, 2010. See Federal Tax Credits for Energy Efficiency for a complete summary of energy efficiency tax credits available to consumers.

Residential Renewable Energy Tax Credits

Consumers who install solar energy systems (including solar water heating and solar electric systems), small wind systems, geothermal heat pumps, and residential fuel cell and microturbine systems can receive a 30% tax credit for systems placed in service before December 31, 2016; the previous tax credit cap no longer applies. Details are explained here.

Home Buyer Tax Credit

• First-time buyers who have not owned a home in the last three years are eligible for a credit of 10% of the purchase price, not to exceed $800,000. Ownership of a vacation home or rental property not used as a prime residence does not disqualify a buyer as a first-timer.
• Current home owners, or those who have owned and lived in a principal residence for at least 5 consecutive years of the last 8, may qualify for a credit of up to $6500.