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http://www.TwinCitiesUSA.com/video/Phil-Kronlage-CPA-discusses-the-tax-advantages-of-owning-Real-Estate

STEVE:  Hi, this is Steve Westmark.  Thanks for watching my video blog this week.  Today, I’ve brought in a professional financial adviser, Phil Kronlage, who’s a CPA, to talk a little bit about the benefits of owning real estate.

PHIL:  Thanks for inviting me in today.  I really appreciate the opportunity to talk with you about this.  I’ve been advising clients for over 35 years on whether to buy or rent property and certainly their personal residences.  The reason that people like to purchase their person residence is because they get an itemized deduction for their mortgage interest and they also get an itemized deduction for their real estate taxes that they pay on that property.

And when you rent an apartment or rent a house, the full rent payment goes directly to your landlord and you get absolutely no tax benefits from that whatsoever.  So when you’re looking at buying a property versus renting a property, you really have to take into consideration what the tax effects of that is going to be because that will actually put more money back into your pocket.  So if the mortgage payment seems a little bit higher than your rent, you need to take into consideration the taxes that you’re going to save.

And generally, those types of expenses are deductible on your federal return and on your state return.  So looking at both of those, your mortgage payment may even be less than your rental payment.

STEVE:  And Phil, I know another big area that I find is a positive is when you do finally go to sell your property after 20, 30 years, there are some tax benefits for owning real estate.

PHIL:  Absolutely, Steve.  Right now, the government allows us on a joint return to avoid tax on the first $500,000 of gain of your personal residence if you meet all of the criteria, which is basically very easy to meet.  If you’ve lived in the home for at least two years, the first $500,000 of that gain is not taxable.  And if you’re single, the first $250,000 of that gain is not taxable.  So it’s a great, great tax advantage for individuals who own personal residences.

STEVE:  It’s important to have a really good tax professional involved in when you buy a piece of real estate.  And if you kind of wondered rent versus buy analysis, I’m sure that’s something you could help anybody with if they wanted to make a call to you on that.  Is that true?

PHIL:  Absolutely.  We basically just need to know what their tax information is to calculate their taxable income and then show what the tax would be if they purchased a home and then what the tax would be if they rented a property.

STEVE:  Great.  Well, thank you very much, Phil.  Have a great day.

 

Smart Phone Apps!

by Steve Westmark

http://www.TwinCitiesUSA.com/video/Phone-Appsmov

Hi, this is Steve Westmark. Thanks so much for watching my video blog for this week.  I’m really excited to announce our company and my web provider providing apps for smartphones.  Now if you have a smartphone, you know the fun things  they can accomplish.  The new smartphone apps allow you to go in and geocode from wherever you are to look at properties anywhere in the Twin Cities.  In fact, I’ve even used it up north in Brainerd and Cross Lake.

It’s an exciting new application that you can have as a consumer.  So here’s what you do.  So go to your phone.  Go to the area where you text.  Push the button for text and then put in to the area where you’re going to text someone a phone number.  That phone number is 952-373-0400.  And then in the message area put in OK and send it.  That will send back to you a link that will automatically give you the geocoded app that allows you to look at all Twin Cities properties for sale.

The second way to go and look at properties is to go to your app store.  So as you go to your phone you put in the app store and press app store.  You press on search, and at the top you type in myAgent by IDX and up it will come.  And then you go to press for the free install and you’ll have the new app.  It’ll ask for a password, and the password is 8018.  I hope you enjoy using these new apps.  You can use them both on AT&T phones that are the iPhone or the Droid.  I hope you enjoy it.  Have a great day.  Bye.

 

 

Have A Child, Buy a House, Pay for College

by Steve Westmark

http://www.TwinCitiesUSA.com/video/Have-a-child-buy-a-house-pay-for-college

STEVE:  Hi, this is Steve Westmark.  Thanks for watching my video blog this week.  This is a continuance on investment in real estate.  One of the things that you can do is to have a child or a grandchild, buy a house, then sell the house after 18 years and pay for their college education.  I’ll show you a quick method of how to do it.  Now the hardest thing is to have a grandchild or a baby, but then second is you go buy a house.  And as I’ve said in the past, you buy a house or a 1% rental and if you bought one for approximately $100,000 and then put an 18-year mortgage on it at a 5% interest rate, then the next thing to do is go and rent the house.

You should be able to rent that house and I can show you for a cash flow.  And following that cash flow and having the tenant there paying your rent, you will then after an 18-year mortgage and your child graduating from high school, you then sell the house.  Now in the Twin Cities over the past 40 years, we’ve seen compounded increase in property values.  Even with the decline in prices over the last few years, it has gone up 5.3% interest appreciation per year over the last 40 years.

So if you bought a house for $100,000, 18 years later it would sell for $253,000.  You’d have approximately a $1,200 cash flow per year by putting it in a savings account at 2% and being very conservative here, you’d have about $25,700 after those 18 years.  You’d have a total of $279,000.  That would be about a 13.65% return on your investment.  So in conclusion, buy a house for your grandchild or your child.  Rent it out for the 18 years.  Sell it, have a great return, and your college education is pretty well paid for for your student.

Hope you enjoyed this quick video.  If you have any questions on this, please give me a call.  Have a great day!

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Photo of The Steve Westmark Team Real Estate
The Steve Westmark Team
RE/MAX Advantage Plus
14451 Highway 7 Suite 100
Minnetonka MN 55345
612-978-7777
877-SOLDING
Fax: 952-241-1600