Monday, February 12, 2018

Should You Install Solar Panels?


Deciding to install solar panels is a significant decision with many variables.  Should you lease or buy? How should you finance the installation? How much savings will you receive from leasing or buying? How do you find a reputable company?

Determine if Solar is Right for You

The first step is to determine if your home is appropriate for solar.  You don’t need to have sun all the time for solar power but you do need to determine if your property has the right amount of sunlight.

If you want roof mounted panels, look closely at your roof and determine if sunlight is hitting the right spot.  South facing roofs are best but East and West facing roofs work almost as well.  If your roof faces North, don’t mount panels on the roof. Consider a ground mounted system if feasible.  Even in sunny California, you may not get enough sun in the right spot for solar power.

Also determine if there are any obstacles to the sunlight: trees, other homes, hills, etc. You want the spot to receive as much sun as possible.

Calculate Your Savings

The first step is to determine how much your utility company is charging you for each kilowatt-hour (kWh) of electricity you use.  This cost can vary widely depending on where you live.

A solar system is basically a small power plant installed on your roof similar to the large power plant a utility company employs to provide electricity.  Keep in mind that homeowners with higher electricity rates will have greater savings when they switch to solar.

There are several online options for determining how much you will save with a solar system. You can use a search engine by inputting solar system calculator or visit sites likes www.energysage.com. You can also search your local utility company to see if they offer calculators programmed for your area. In San Diego, San Diego Gas & Electric offers such a calculator to it’s customers.

Determine if You Will Lease or Buy

For many years, most homeowners opted to lease their solar systems. However, more homeowners are now buying their systems.

When you lease or enter into a Power Purchasing Agreement (PPA), you do not own the system; you are renting the system from the company. Leasing is very convenient but doesn’t offer the same savings as buying the system would give you.

With leasing, there is little or no upfront money required; you are not responsible for any maintenance; and you may still acquire federal, state and local tax credits if offered. However, your savings will be less; you lose control of your roof since the company can determine where and how many panels to install; buyers may not want a leased system if you try to sell your home; and leasing maintenance plans are not always favorable to the homeowner.

Buying a solar system requires more research and decision making for the homeowner.  It’s recommended that you get several estimates from various companies.  Sometimes the best deal is not with the largest company in your area.  Numerous small companies offer better deals than larger ones. Look closely at what you want and how you’re going to finance the project.

As with other services, check the Better Business Bureau to find a reputable and reliable company.  Don’t forget to ask for recommendations from your friends and family. Also check online reviews but don’t rely solely on one source.  Look at all sources before making a decision on which company to choose. Once you have chosen a company, ask for references and call them.  Buying a solar system is a sizable expense; use all your resources to get the best deal for you.

Buying a system has both pros and cons.  First, buying provides you with flexible financing options. You can pay cash, use a home equity loan or obtain a solar loan. Second, a solar system that is bought and paid for improves the selling value of your home. Finally, as with leasing, you may still acquire federal, state and local tax credits if offered.

On the negative side, buying a system requires a lot of upfront money if you use cash for the purchase.  The return on investment may take anywhere from five to ten years. In addition, the owner is responsible for any maintenance costs.


Don’t forget to contact your insurance company before installing the system. You may need to increase your policy to cover the panels. Also, check with your homeowner’s association before installing and find out if there are any rules or restrictions that need to be considered first.

After you’ve installed the system, stay connected to your utility company.  There may be times when you will need to supplement your electricity in case there’s an emergency; your system may go down; or not produce enough electricity during less sunny seasons.

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Thursday, December 28, 2017

Summary from the National Association of REALTORS on How the New Tax Bill will Affect Homeowners

With the passing of the new tax bill, everyone wants to know how it will affect them. Below is a summary created by the National Association of REALTORS for current and prospective homeowners and provisions that affect commercial real estate. 


Major Provisions Affecting Current and Prospective Homeowners

  • Tax Rate Reductions


    • The new law provides generally lower tax rates for all individual tax filers. While this does not mean that every American will pay lower taxes under these changes, many will. The total size of the tax cut from the rate reductions equals more than $1.2 trillion over ten years.
    • The tax rate schedule retains seven brackets with slightly lower marginal rates of 10%, 12%, 22%, 24%, 32%, 35%, and 37%.
    • The final bill retains the current-law maximum rates on net capital gains (generally, 15% maximum rate but 20% for those in the highest tax bracket; 25% rate on “recapture” of depreciation from real property).
       
  • Exclusion of Gain on Sale of a Principal Residence

    • The final bill retains current law. A significant victory in the final bill that NAR achieved.
    • The Senate-passed bill would have changed the amount of time a homeowner must live in their home to qualify for the capital gains exclusion from 2 out of the past 5 years to 5 out of the past 8 years. The House bill would have made this same change as well as phased out the exclusion for taxpayers with incomes above $250,000 single/$500,000 married. 
       
  • Mortgage Interest Deduction

    • The final bill reduces the limit on deductible mortgage debt to $750,000 for new loans taken out after 12/14/17. Current loans of up to $1 million are grandfathered and are not subject to the new $750,000 cap. Neither limit is indexed for inflation.
    • Homeowners may refinance mortgage debts existing on 12/14/17 up to $1 million and still deduct the interest, so long as the new loan does not exceed the amount of the mortgage being refinanced.
    • The final bill repeals the deduction for interest paid on home equity debt through 12/31/25. Interest is still deductible on home equity loans (or second mortgages) if the proceeds are used to substantially improve the residence.
    • Interest remains deductible on second homes, but subject to the $1 million / $750,000 limits.
    • The House-passed bill would have capped the mortgage interest limit at $500,000 and eliminated the deduction for second homes.
       
  • Deduction for State and Local Taxes

    • The final bill allows an itemized deduction of up to $10,000 for the total of state and local property taxes and income or sales taxes. This $10,000 limit applies for both single and married filers and is not indexed for inflation.
    • The final bill also specifically precludes the deduction of 2018 state and local income taxes prepaid in 2017.
    • When House and Senate bills were first introduced, the deduction for state and local taxes would have been completely eliminated. The House and Senate passed bills would have allowed property taxes to be deducted up to $10,000. The final bill, while less beneficial than current law, represents a significant improvement over the original proposals.
       
  • Standard Deduction

    • The final bill provides a standard deduction of $12,000 for single individuals and $24,000 for joint returns. The new standard deduction is indexed for inflation.
    • By doubling the standard deduction, Congress has greatly reduced the value of the mortgage interest and property tax deductions as tax incentives for homeownership.Congressional estimates indicate that only 5-8% of filers will now be eligible to claim these deductions by itemizing, meaning there will be no tax differential between renting and owning for more than 90% of taxpayers.
       
  • Repeal of Personal Exemptions

    • Under the prior law, tax filers could deduct $4,150 in 2018 for the filer and his or her spouse, if any, and for each dependent. These exemptions have been repealed in the new law.
    • This change alone greatly mitigates (and in some cases entirely eliminates) the positive aspects of the higher standard deduction.
       
  • Mortgage Credit Certificates (MCCs)

    • The final bill retains current law.
    • The House-passed legislation would have repealed MCCs.
       
  • Deduction for Medical Expenses

    • The final bill retains the deduction for medical expenses (including decreasing the 10% floor to 7.5% floor for 2018).
    • The House bill would have eliminated the deduction for medical expenses.
       
  • Child Credit

    • The final bill increases the child tax credit to $2,000 from $1,000 and keeps the age limit at 16 and younger. The income phase-out to claim the child credit was increased significantly from ($55,000 single/$110,000 married) under current law to $500,000 for all filers in the final bill.
       
  • Student Loan Interest Deduction

    • The final bill retains current law, allowing deductibility of student loan debt up to $2,500, subject to income phase-outs.
    • The House bill would have eliminated the deduction for interest on student loans.
       
  • Deduction for Casualty Losses

      • The final bill provides a deduction only if a loss is attributable to a presidentially-declared disaster.
      • The House bill would have eliminated the deduction for casualty losses with limited exceptions.
         
    • Moving Expenses

      • The final bill repeals moving expense deduction and exclusion, except for members of the Armed Forces.
      • The House-introduced bill would have eliminated the moving expense deduction for all filers, including military.
         

    Major Provisions Affecting Commercial Real Estate


    • Like-Kind Exchanges

      • The final bill retains the current Section 1031 Like Kind Exchange rules for real property. It repeals the use of Section 1031 for personal property, such as art work, auto fleets, heavy equipment, etc.
      • The exclusion of real estate from the repeal of 1031 like-kind exchanges is a major victory for real estate stakeholders, who had fought hard to preserve the provision for several years, and against long odds.
         
    • Carried Interest

      • The final bill includes the House and Senate language requiring a 3-year holding period to qualify for current-law (capital gains) treatment.
      • Again, real estate stakeholders prevailed against long odds to preserve the incentive of capital gains treatment for carried interests in the final legislation.
         
    • Cost Recovery (Depreciation)

      • The final bill retains the current recovery periods for nonresidential real property (39 years), residential rental property (27.5 years) and qualified improvements (15 years). The bill also replaces separate definitions for qualified Restaurant, Leasehold, and Retail improvements with one definition of “Qualified Improvement Property.”
         
    • Qualified Private Activity Bonds

      • The final bill retains the deductibility of qualified private activity bonds used in constructing affordable housing, local transportation and infrastructure projects and for state and local mortgage bond programs.
      • The House bill would have eliminated the use of private activity bonds.
         
    • Low Income Housing Tax Credit

      • The final bill retains current law. However, a lower corporate rate will negatively impact the value of the credits in the future, and will result in less low-income housing being developed.
         
    • Rehabilitation Credit (Historic Tax Credit)

      • The final bill repeals the current-law 10% credit for pre-1936 buildings, but retains the current 20% credit for certified historic structures (but modified so the credit is allowable over a 5-year period based on a ratable share (20%) each year).
      • The House bill would have entirely eliminated the Historic Rehabilitation Credit.

    Tuesday, November 21, 2017

    Gratitude: Being Grateful All Year




    Every year at Thanksgiving as we gather with family and friends, we express our gratitude for various factors in our life. This is the season of gratefulness but practicing gratitude all year has tremendous benefits for our well-being. While you may feel that cultivating gratitude all year is a lot of work, it’s actually very easy.
    Benefits of Practicing Gratitude
    To start, choose a method that works for you.  Below are several easy ways to start.
    Start a Gratitude Journal
    The traditional method is to write down three things which you are thankful for at the end of the day.  Another method is to write them down as they happen throughout the day.  You would be surprise how many times you feel grateful throughout the day and how good you feel throughout the day.
    Another variation can involve the whole family.  At the dinner table, have each family member explain what made them grateful that day.  You would be surprise at how connected the family will feel by sharing stories of gratitude instead of complaining about their day.
    Use Thank You Freely
    Saying Thank You may seem self-explanatory but often in our busy lives we forget to say it.  Everyone has untold stories in their lives that we know nothing about.  Acknowledging a person by saying Thank You can provide that spark of light needed.  Telling someone Thank You for a small act or for doing a good job, gives a feeling of well-being to the person and to you. It’s very simple but can have a tremendous impact on another person.
    Write Out Thank You Notes
    In this age of email, writing out a thank you note is a big deal.  It means you’ve taken time to think about the person you’re thanking and adding a personal link to that person.  The recipient will know you took time and effort to send a heartfelt thank you.
    Reach Out to Someone Who Inspired You
    Everyone has someone who has inspired or positively influenced them.  If possible, write a letter or call them to tell them how much you appreciate them.  If the person is no longer living, write a letter anyway.  Just the act of writing that letter will influence your feeling of gratitude.  Remember any small act can have ripples that reach into the future.  Someone will some day tell you how much they appreciate your influence in their life.
    Change Your Words
    Everyone is stressed nowadays.  Instead of focusing on the day-to-day stresses in your life, start looking at the positives. Instead of complaining about the pile of work you need to finish, tell yourself how grateful you are for your interesting job or your coworkers. Or if you’re running ragged taking your kids to practice, running errands and then going to a holiday party, tell yourself how thankful you are for your family and friends.  Instead of looking at the negative, spin a positive thankful mindset. You’ll find that over time, it will feel natural and your life will be more enjoyable.
    Benefits of Living a Grateful Life
    Many studies have proven that gratitude provides various health benefits.
    ·      Gratitude helps to relieve stress and to overcome trauma. Studies have shown that gratitude has helped with PTSD and for people who experience trauma, such as mass shooting, gratitude improved their resilience to recover.
    ·      Gratitude improves psychological health. Be grateful replaces negative feeling like anger and resentment. Gratitude also increases happiness and reduces depression.
    ·      Gratitude improves overall health. People who exhibit more gratitude have less aches and pain and improved physical health.
    ·      Gratitude improves your sleep. Focusing on gratitude doesn’t leave much room for worrying. Many people don’t sleep well because they’re focusing on problems or what may happen. Instead focus on gratitude and you’ll sleep soundly.
    ·      Gratitude improves self-esteem.  By focusing on being thankful for others and the accomplishments of others, you improve your own self-esteem by not comparing yourself to them.
    ·      Gratitude improves your connection to others. Gratitude opens your heart to others and helps you build stronger relationships, especially with new acquaintances.  People are more likely to be attracted to you and your positive feelings.

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