There are some great benefits that come with homeownership. Things like the ability to make improvements to your home increased wealth due to an increase in your home’s value through the years, and certain tax advantages. But what if you recently bought a home, are closing costs tax-deductible? Before answering that question, it’s a good idea to understand what closing costs are and what is typically included in them.
What Are Closing Costs?
Closing costs are the fees you pay when you obtain a mortgage loan. Typical closing costs run anywhere from 2% to 5% of your loan amount. For example,on a $250,000 loan, you’ll pay between $5,000 and $12,500 in closing costs.
Here is What’s Typically Included in Closing Costs:
These are fees homeowners pay to the state, county, and even various local entities to help fund the school district where you will be living, pay to repair and keep roads in good condition, and fund the local library, to name a few. The tax amount varies depending on where you live and the amenities available in your community.
Usually, you will be responsible for paying property taxes from the date of closing forward, and the seller will pay from January to the date of closing. Your lender will typically collect between three and six months of property taxes from you at the time of closing. This is to ensure there is enough in escrow to pay the tax bill when it comes due.
Recording fees are charged by the county to record the documents related to the transfer of ownership of the property. This takes place every time a house is bought or sold.
Loan Origination Fee
This is a fee charged by the lender as compensation for handling your mortgage loan from inception to closing. The amount of this fee varies from lender to lender.
This insurance typically protects loss related to the property. It is required by the lender so that they know the property is protected. The cost of this insurance varies depending on the value of your home and the amount of coverage you carry on the property.
Primary Mortgage Insurance
Lenders require PMI (Primary Mortgage Insurance) on Conventional loans if the borrower does not put at least 20% of the sales price toward the down payment. This insurance is protection for the lender should the loan ever go into default. On a home valued at $250,000, you would need to have a down payment of $50,000, to equal 20% down, or you will be charged PMI.
The appraisal provides the lender with an independent opinion on the value of the home. It is provided by a professional who is trained to estimate the value of real estate. The home appraisal process provides assurance to the lender that the amount they are lending is not greater than the value of the property.
Credit Report Fee
The credit report provides the lender with information about your credit history and credit worthiness. If your score is too low, it will impact your ability to secure financing and could cost you the ability to obtain the best interest rate available.
The flood inspection determines whether the property you are purchasing lies in a flood zone. If it does, flood insurance will be necessary.
Your lender will require a pest inspection if the appraiser notices any infestation of termites or other pests when completing the appraisal. In some places, a pest inspection is required on all deals.
The title search is performed by a title company. They are responsible for making sure the title to the home is clear, meaning there are no defects in the title or problems that would prevent the title from transferring to you at the time of purchase.
You will need two types of title insurance when buying a home. The first kind protects your lender (lender’s title policy) in case something was missed during the title search. The second type of title insurance is an owner’s title policy. This protects you against any defects or problems in the title just as the lender’s title policy protects the lender.
If there is a question regarding property lines, the title company can order a survey.
Discount Fee or Points
When you pay points toward your mortgage loan, it is also known as buying down the loan. These fees, paid to your lender, lower the interest rate of your loan. One point equals 1% of the loan amount. In our example of a $250,000 loan, you would pay $2,500 to buy the loan down one point. The amount the one percent buy down would impact your interest rate varies by lender, type of loan, and current mortgage rates.
The escrow company is responsible for handling all the funds involved in buying your new home. They make sure all parties involved in the transaction get paid accurately. The fee charged by the escrow company, also known as a closing fee or settlement fee, pays for their involvement in the transaction.
Prepaid Daily Interest Charges
At the time of closing, borrowers pay interest on their loan from that date to the end of the month. If your closing date is near the end of the month, you will pay fewer taxes than if you closed on your loan the first week of the month. The seller is responsible for paying interest from the first of the month to the date of closing.
Are Closing Costs Tax Deductible?
Not all closing costs are tax-deductible, and the tax code changes frequently, so check with a tax professional to determine what deductions apply to your situation. Here are some typical closing costs that may be able to deduct from your taxes this year:
This deduction allows you to deduct the amount of interest you pay when you buy your new home. It is one of the best tax deductions for buyers. Your tax professional can assist you with questions regarding this deduction.
Primary Mortgage Insurance (PMI)
Through 2020, the PMI deduction is allowed. After 2020, this closing cost will no longer be tax-deductible unless extended by Congress.
Any of the discount points you paid when you closed on your loan are tax-deductible. You should consult your tax professional or visit the IRS website to determine whether you can take this deduction in the year you purchased the house, or whether you are required to deduct the points over the life of the loan.
State and Local Real Estate Taxes
This deduction includes state and local taxes and property taxes. Again, you will need to consult your tax professional or visit the IRS website.
Your tax preparer will determine if it is in your best interest to take the standard deduction versus itemizing your deductions in the year you purchase your home. The IRS has determined standard deduction amounts for each taxpayer category. If the standard deduction for your situation is higher than if you were to itemize, then it would benefit you to take the standard deduction, and vice versa.
Homeowner tax benefits do not end when you buy your home. If you work from home, the IRS also allows for a home-office deduction. And should you decide to install solar panels or other energy-efficient improvements to your home down the road, there is another deduction that might apply to your situation, known as the residential energy-efficient property credit. Always talk with a tax professional to ensure you are taking full advantage of the latest tax code.
Luxurious Mountain Living In 3 Markets For About $2.3 Million
For some, there’s nothing better than to get away from it all; for others, even the idea of exploring the great outdoors may seem like more of a chore than a vacation. In this week’s look at luxury real estate around the world, I took a look at three properties in cities popular among outdoor enthusiasts that buck the notion that roughing it can’t be done in comfort and style.
From a high-end condominium overlooking Whitefish Lake in Montana to an updated Victorian home in downtown Breckenridge, here’s a look at what about $2.3 million buys right now in three mountain markets.
Breckenridge, Colorado | $2.38 million
Located about two blocks from Main Street on North French Street in Breckenridge, this updated Victorian-style home is steps away from the charming downtown area full of boutique shops, dining and spas. The area is also popular for its proximity to the BreckConnect Gondola, which lies about two blocks from the property.
Features: Fanciful trim and detailing on the exterior lend a whimsical touch to the home, which takes in sweeping mountain and tree-top views. Recently remodeled, the two-story home features a cozy living room with picture windows and a fireplace filling two walls. A dining room and a kitchen adjoin the living room space. The streamlined kitchen has been updated with new cabinetry, dark subway tile and a stone-topped breakfast bar for a more modern feel.
Other perks: The 2,236-square-foot floor plan has five bedrooms and 3.5 bathrooms that can accommodate up to 12 adults (15 total with children). One of the front-facing bedrooms opens to a balcony with mountain views.
Represented by: Michele Hart, Slifer Smith & Frampton Real Estate
Truckee, California | $2.36 million
For those in the market for a more amenitized living situation, there’s Village Walk Skyline near the Northstar Village ski resort in Northern California’s Tahoe-Truckee area. Located at the peak of Northstar Village, the sustainably constructed residences offer curated living spaces with some of the most spectacular views in the area. A short walk to the village area is another reason why these luxury townhomes sold like hotcakes in 2020.
Features: Designed with simplicity in mind, homes feature large open spaces and soaring ceilings that give the roughly 3,000-square-foot interiors a voluminous feel. Large communal areas such as the chef’s kitchen and great room lie on the main level and open directly to a deck and outdoor dining patio. An expansive primary suite—one of four bedrooms—sits off the great room and has access to the deck.
Other perks: In addition to a junior suite and guest bedroom, a dedicated bunk room provides additional space for guests and children. The lower level has been configured with a central recreation room that leads out to decking with a spa.
Represented by: Taylor Carlton and JB Benna, Tahoe Mountain Realty
Whitefish, Montana | $2.3 million
The pristine waters of Whitefish Lake bring thousands of adventure-seekers to the area each year for boating, swimming, fishing and other popular lake activities. This modern condominium on the shore has a front-row seat of the action with three levels of decking that face the lakefront.
Features: Tailored for modern living, the four-bedroom, three-bathroom condo features a contemporary aesthetic with wide-plank wood floors, walls of glass and modern fixtures throughout. In the primary suite, the space expands to include a four-piece bathroom, a walk-in closet and a clean-burning bio-ethanol fireplace.
Other perks: An automated whole-house audio/video system makes controlling the lights, shades and entertainment a breeze. Pocketing doors in the main living area erases boundaries between indoor and outdoor spaces.
Represented by: Jeff Raper, National Parks Realty
National Parks Realty, Slifer Smith & Frampton Real Estate and Tahoe Mountain Realty are exclusive members of Forbes Global Properties, a consumer marketplace and membership network of elite brokerages selling the world’s most luxurious homes.
Here Are The Properties At Stake In The Gates Divorce
Bill and Melinda Gates’ divorce announcement is likely to spark one of the largest divisions of personal assets in history. Bill Gates is presently the world’s fourth-richest person, with a $130.5 billion fortune, stemming from his $25 billion stake in Microsoft, a host of publicly traded investments and a collection of ultra-luxury properties scattered across the U.S.
The couple’s main home, a $131 million estate nicknamed Xanadu 2.0, spans 66,000 square feet and took seven years to build. It features a trampoline room, six kitchens and an artificial stream. Their other homes include a $43 million beachfront mansion in Del Mar, California and an equestrian estate in Wellington, Florida, which also counts billionaires Jeremy Jacobs, Michael Bloomberg and John Malone as owners.
Easy to overlook is the huge portfolio of farmland. The couple are the largest private farmland owners in America, with 242,000 acres, according to The Land Report, with the biggest swaths in Louisiana (69,071 acres), Arkansas (47,927 acres) and Nebraska (20,588 acres). It is not presently clear how that land is being used.
They also own four private planes, a vast art collection and the Codex Leicester, a notebook filled with scientific writing by Leonardo da Vinci, which Bill bought for $30.8 million in 1994.
On some level, it doesn’t matter how the couple plans to divide their assets. Together with Warren Buffett, in 2010 they cofounded the Giving Pledge—a promise by high-net-worth individuals to give away more than half of their wealth—and reportedly plan to leave $10 million to each of their children, devoting the rest to charitable causes.
Already, they have given more than $35 billion worth of Microsoft stock to the Bill and Melinda Gates Foundation, the world’s largest private charity, which focuses much of its work on public health. Last May, for instance, the foundation said it would earmark $300 million to combat the Covid-19 pandemic.
Below is a closer look at some of the couple’s real estate holdings.
Located on Lake Washington, the home’s nickname, Xanadu 2.0, drew inspiration from the protagonist’s abode in Citizen Kane. With a reported seven bedrooms and more than 18 bathrooms, the house is designed to be energy efficient while also supporting an underwater sound system, screens powered by miles of fiber-optic cables, and a 2,100 square-foot private library.
Del Mar, California
This six-bedroom home was designed by Ken Rochetti, and includes tons of deck space, a four-car garage, jacuzzi and glass tile pool. Spanning 5,800 square feet, the $43 million property is a landmark in Del Mar. It was last owned by Madeleine Pickens, who was previously married to billionaire T. Boone Pickens.
Indian Wells, California
The six-bedroom house was purchased in 1999 for $12.5 million and, at 13,000 square feet, is one of the couple’s more modest properties. One main appeal is its proximity to a golf course designed by Tom Fazio. Lee Iacocca reportedly lived nearby.
The Gates’ daughter Jennifer is well-known in equestrian circles, and there is plenty of space to ride on this 30-acre collection of properties in Wellington. The most recent addition came in 2019, a $21 million horse farm set on 7.7 acres.
These Are The 15 Most Popular Home Styles Across the U.S.
No matter where you live, you’ll likely encounter a wide variety of architectural home styles just by driving through your neighborhood. From extravagant to quaint, homes across the U.S. hold their own unique beauty and characteristics just like the people who inhabit them.
So, what are the most popular home styles in the U.S.? From New York, NY to Portland, OR, you don’t have to be an architect to appreciate the range of stunning house styles available on the housing market. So whether you’re in the market for a new home or just love browsing homes on your favorite real estate app, check out the 15 most popular home styles in the United States right now.
What Are the Most Popular Home Styles?
1. Ranch-style homes
Dating back to 1932, the ranch-style home grew in popularity during the 1950s and 1960s, and is still popular today. The iconic ranch architecture is known for its simple, single-story floor plan, low-to-the-ground look, often with an open layout and occasional basement. This style of house typically has a smaller yard, attached garage, and a low-pitched roof. The ranch-style home often features large windows and sliding glass doors, encouraging an indoor-outdoor living style. A ranch can also be called a ‘rambler,’ depending on which region in the country you live in and local terminology.
Looking locally, ranch-style homes currently have the highest sale-to-list ratio in a handful of cities, meaning this style of house is more likely to sell above the list price. These cities include Portland, OR, Phoenix, AZ, Chicago, IL, San Francisco, CA, and San Diego, CA. Each of these cities favor the rambler, with a current sale-to-list ratio of over 100%.
2. Craftsman-style homes
The beloved craftsman style home became increasingly popular in the 1900s by architect and furniture designer Gustav Stickley, and has remained popular throughout the 21st century. This staple for American Architecture adds charm to any neighborhood with its exterior features, including shingles, low-pitched roofs, and covered front porches. Craftsman homes also feature recognizable interior details such as thick trim, prominent ceiling beams, and built-in shelving and seating.
Craftsman homes are a desirable home style all across the U.S., but they are often sold above list price in Oakland, CA, Seattle, WA, Atlanta, GA, and Portland, OR.
4. Contemporary-style homes
Contemporary architecture is often used interchangeably when describing modern style architecture. A wide range of recently built homes are built with Contemporary-style architecture. These homes have inventive designs and simple forms without elaborate ornamentation or detail. They usually have geometric lines, large windows and doors to bring in light, and open floor plans. They often incorporate sustainable and eco-friendly building materials, textures, and components, exposed roof beams, and flat or low-pitched roofs.
Contemporary-style homes see the highest sale-to-list ratio in Oakland, CA, Denver, CO, Phoenix, AZ, San Francisco, CA, San Diego, CA, Chicago, IL, and Atlanta, GA.
5. Modern-style homes
Emerging in the 1920s to embrace minimalism and reject the more ornate home styles, modern house styles typically include progressive elements such as asymmetrical exteriors, flat roofs, and integrated outdoor spaces. Many modern interiors also feature minimal molding and trim, neutral color palettes, and metal accents.
You’ll find the highest sale-to-list ratio in Denver, CO.
6. Cape Cod-style homes
With roots dating back to 1675, the quaint and charming Cape Cod-style homes are reminiscent of the classic American cottage style. This type of home design migrated from England to the United States, maintaining its symmetrical design and central chimney. Cape Cod-style homes feature a steep roof to keep snow from accumulating, dormer windows for added light, wood siding and shutters to keep the heat in, and hardwood floors for comfort and practicality.
This style of house is prevalent in the northeastern part of the United States, commonly found in the New England region.
7. Colonial-style homes
Dating back to 1876, East Coast architecture has maintained its allure in many parts of the United States. These classic homes are known for their old-world charm, decorative doorways, and symmetrical window placement. Many colonial-style homes will have two or three stories, fireplaces, and brick or wood exteriors.
Colonial-style homes are similar to the Cape Cod-style home because of their symmetry and side-gabled roofs, but Cape Cod-style homes are typically one story rather than two or three. Colonial-style homes can be found in the northeastern part of the United States.
8. Tudor-style homes
Originating in the 15th century during the reign of the House of Tudor, this style of house is fairly easy to identify with its unique features. Tudor-style homes typically have a combination of brick, stone, or stucco exterior and decorative half-timbering on the second story to create the well-known striped exterior. They also feature a steeply-pitched roof, cross gables, and tall, narrow windows. Today, Tudor-style homes are prominent in the Northeast and Midwest regions of the United States.
9. Cottage-style homes
Inspired by the medieval styles of the English countryside, American architects designed the cozy cottage-style houses during the 1920s and 30s. This style of house typically has a steep, thatched roof, arched doorways, shuttered windows, and a warm storybook character bringing to life old-world charm.
10. Mediterranean-style homes
Mediterranean-style homes are suitable for warmer climates, which is why this style of house became prevalent in Southern California during the 1920s and 1930s. Influenced by the architecture of countries in the Mediterranean region, they often have low-pitched red tile roofs, vaulted ceilings, arched doors and windows, and a stucco or adobe exterior. The floor plan is typically U-shaped, creating a central courtyard for a garden or fountain. Today, this style of house remains popular in California and Florida.
11. Farmhouse-style homes
The farmhouse was designed back in the early 1700s, built as housing for farmers and all about practicality. Modern farmhouses still exhibit many of the same features that the original design included, like large, wraparound front porches, clapboard siding, large fireplaces, wood floors, eat-in kitchens, and oversized kitchen sinks.
12. Mid-Century modern-style homes
Mid-century modern style is part of the modernism movement and dates back to post-World War II, and remained popular throughout the 1970s. A mid-century modern design is characterized by minimalism, clean lines, and floor-to-ceiling windows. You’ll often see open layouts, and a mix of natural and manufactured materials for the interior elements like wood, stone, steel, and plastic.
Mid-century modern style homes are most popular in Oakland, CA, Denver, CO, San Francisco, CA, and Seattle, WA, with a sale-to-list ratio as high as 131.5% in Oakland.
13. Victorian-style homes
Victorian-style homes were first seen during the Victorian Era from around 1860 to 1900. This house style is best described as a colorful dollhouse with romantic and distinctive features. Victorian-style homes have elaborate detailing in just about every part of the home, from the intricate wood trim, ornate staircases, stained glass, and decorative woodwork. They have steep gabled roofs, a front-facing gable, patterned shingles, bay windows, a round tower, and a front porch.
Victorian-style homes remain popular in Boston, MA and San Francisco, CA, with a sale-to-list ratio of 98.5% and 101.1%, respectively.
Originating in Europe and eventually migrating to the United States, townhomes are most commonly found across cities in the United States. With the convenience of spacious layouts, townhomes offer more amenities than the condo styles and are lower maintenance than most residential homes. They’re typically two or three-story homes, usually sharing one or two walls with adjacent properties, and a rooftop deck to enjoy sprawling views.
Home styles with the highest sale-to-list ratio in the largest 12 US metros:
|Metro||Home Style||Sale-to-list ratio||% active listings|
|Oakland, CA||Mid Century Modern||131.5%||1.2%|
|Chicago, IL||Raised Ranch/Ranch||100.2%||1.0%|
|Mid Century Modern||105.1%||1.0%|
|San Francisco, CA||Mid Century Modern||122.8%||1.0%|
|Seattle, WA||Mid Century Modern||110.9%||1.0%|
|San Diego, CA||Ranch||102.5%||2.3%|
*Per home trends listing data on Redfin.com, as of May 2021
Individual results may vary. This is not intended as a substitute for the services of a licensed real estate agent, or licensed and bonded home services professional or appraiser.
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