6 Tax Breaks for Pet Owners You Can Actually Get

(TNS)—You love your pet—he’s like your child, after all—but the IRS doesn’t quite see it that way. The IRS takes the position that the money you spend on Fido or Fluffy is generally a personal expense. Your pet gives you pleasure like that latte you bought on your way to work this morning, but just like your cup of coffee isn’t tax deductible, neither is your pet.

There are a few loopholes, however. You might be able to deduct costs related to your pet if he serves another purpose in addition to accepting your undying devotion—and if you can prove it.

  1. Guard Dogs
    Generally, it’s difficult to claim your pet as a business expense, but if your pet guards your business location, you might be able to deduct the costs of keeping him fed and healthy.

“The IRS has taken a fairly hard-nosed stance when it comes to deducting the cost of animals as business expenses—and the courts have agreed with them,” says Micah Fraim, a CPA in Roanoke, Va., and author of “The Little Big Small Business Book.” “But one area that has been consistently upheld is when you own a guard dog. In fact, in Raleigh Cox and Brenda J. Cox v. Commissioner, the IRS didn’t even attempt to disallow deductions for a guard dog. The business was in a bad part of town, and the IRS felt that it was a legitimate expense.”

How to Get the Deduction
You might have a hard time convincing the IRS that your Yorkie or teacup Chihuahua serves in this capacity.

“Size and breed do matter here,” says Fraim. “A mastiff, pit bull or other large breed would be believable. A Maltese or Chihuahua would not.”

Kristina Grasso, master tax advisor with H&R Block, says you might be able to deduct guard dog-related expenses—dog food, training and veterinary bills—on Schedule C if he guards your work premise. So, make sure you “keep records about the dog’s hours and work-related purpose,” she says.

  1. Cats Used for Pest Control
    You might also be able to deduct costs associated with your kitty who keeps your business property free of mice, rats and other vermin.

“Cats or other animals that are kept primarily for pest control are also deductible,” says Fraim.

Fraim noted that in Samuel T. Seawright, et ux. v. Commissioner, the petitioners were entitled to a $300 business expense deduction for cat food.

“The couple owned a junkyard and put the food out to attract feral cats,” he says. “The court upheld the deduction as cats were there ‘to deter snakes and rats.’”

Choose wisely when picking which type of cat prowls your business.

How to Get the Deduction
Remember that if you’re trying to claim your working pets to deduct business expenses, you’ll likely have to convince the IRS that keeping the animal is “ordinary and necessary.” In other words, “hiring” a cat or dog must be “common and accepted in your trade or business.” And, it must be “helpful and appropriate.”

  1. Offsetting Hobby Income
    If you make money showing your pet—which the IRS might consider hobby income—you might be able to claim a tax break for related expenses.

“Pets used in hobbies, such as show dogs, might be deductible,” says Grasso. “If the dog wins prize money in the endeavor, then the expenses incurred to train, show, etc., are deductible up to the winnings.”

You can expet to receive a 1099 at the end of the year if you earn hobby income.

“You can also deduct related expenses up to the amount of income earned on Schedule A of the 1040,” says Fraim.

How to Get the Deduction
The process to deduct these expenses can get tricky.

“You must itemize to take the deduction at all, which many taxpayers do not,” says Fraim. And, some restrictions apply that might not result in substantial tax savings.

“These deductions are subject to a threshold of 2 percent of your adjusted gross income or AGI,” says Fraim. “For easy math, let’s say you made $1,000 from pet shows, had $3,000 in expenses and your AGI is $100,000…You can deduct $1,000 of expenses—not the full $3,000—ecause you’re only allowed to take a deduction up to the amount of income earned. Even then, you don’t actually get any tax break.”

That $1,000 is less than 2 percent of your AGI, so you actually lose $2,000 from the pet shows—and you still have to pay taxes on the $1,000 in income you earned.

“Two percent of a lower AGI is an easier threshold to execute,” says Grasso. So, the lower your AGI, the more likely it becomes that this tax deduction for hobby-related expenses will result in more tax savings.

  1. Foster Pet Parent Deductions
    If you foster animals, you might be able to take advantage of tax benefits for charitable contributions.

“Any expenses you incur caring for foster animals from a qualified nonprofit are deductible on Schedule A as charitable donations,” says Fraim.

These must be unreimbursed expenses if you want to get the deduction, though, Grasso adds. And, the expenses should go toward caring for these animals, such as pet food, supplies and veterinary bills.

“Thankfully, most of these organizations provide the medical care and food for these animals,” says Fraim, “but any expenses paid out of pocket that are necessary for their care that are not provided for or reimbursed are deductible.”

What about if you volunteer at a shelter or rescue organization?

“Keep track of mileage for trips made to further the organization’s work because this is deductible at 14 cents per mile,” says Grasso.

How to Get the Deduction
When it comes to fostering animals from municipal shelters, both Fraim and Grasso say to be careful. According to Fraim, most are not 501(c)(3)s and do not qualify for these types of tax deductions, unless they’re somehow tied to a charity.

“Some private agencies take on responsibility for animal control (law enforcement) functions or handle sheltering for a municipal animal control department by contracting with one or more municipalities,” says Grasso. “Thus, if the private agency is set up as a nonprofit 501(c)(3) organization, the volunteers should qualify for any applicable deductions.”

Still, “people should foster animals because it increases the animal’s chances of being placed in permanent, forever homes and the animals get needed socialization—not because it potentially gets them a tax deduction,” she adds.

  1. Guide Dogs and Service Animals
    Medical expenses are tax deductible if you itemize. Let’s say your pet helps you in a health-related capacity. If so, you’ll likely get a tax break.

You can also include the costs of purchasing and training guide dogs for the blind or hearing impaired. This also includes veterinary, food and grooming expenses. Pets are also used in therapy, such as in the treatment of post-traumatic stress disorder. These animals are covered as well, say Fraim and Grasso.

How to Get the Deduction
“Make sure to get a prescription from your doctor—or some other documentation that shows your medical necessity—prior to obtaining any pet that you claim,” says Grasso. Otherwise, “the IRS may conclude that your pet does not meet the requirements to deduct these pet expenses. Keep any documentation that shows how the animal was specially trained to help you with your medical condition, too.”

Also, the IRS doesn’t consider Fido to be a therapy dog unless he’s been trained and certified.

“The animal must be trained or certified as treatment for a diagnosed illness or condition for the IRS to approve the deduction,” says Grasso.

You don’t actually have to use the dog yourself to get a deduction, though. If you raise dogs for a charitable organization such as Guide Dogs for the Blind, costs associated with providing for them qualify as a charitable deduction, as well.

Taking advantage of these types of medical and charitable deductions related to animals can help you save a lot of money on your taxes this year.

  1. Moving Expenses
    The IRS won’t let you claim your pet as a dependent—but it’s not so heartless as to make you leave him behind if you’re forced to move due to work.

You can deduct costs associated with transferring your pet to your new home, but there are some requirements you have to follow, according to the IRS.

How to Get the Deduction

  • Your move must be closely related to the start of your work
  • You have to pass the distance test
  • You have to pass the time test

For example, your new workplace must be at least 50 miles farther from your old home than your old workplace was. So, if your old workplace was only 10 miles away from your old home, your new workplace must be at least 60 miles from your old home. And if you’re an employee, you must work full-time for 39 weeks or more during the first year after you relocate.

Once you satisfy the IRS requirements, you can deduct the cost of shipping your household pets to your new home, along with other move-related expenses.

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Volatile Market Threatens Retirement Real Estate

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The stock market has been on a volatile patch after plunging nearly 1,600 points at the beginning of February—and, while stable now, consumers and investors are watching closely. With many public pension plans tied to stocks, the incoming retirement community is hoping for a full recovery to recoup losses.

Many public pensions have already reported a loss. The California Public Employees’ Retirement System—the largest public pension fund in the nation—lost $18.5 billion in value over 10 trading days at the beginning of the month, according to the Wall Street Journal. While diversifying from traditional stocks and bonds decreases the risk of massive losses during a market drop, investing in alternative assets can introduce complex selling regulations and added fees.

Millions of government workers are relying on these plans, and with various states in a pension shortfall, employees are at risk of losing much-needed funds. The Wall Street Journal reports that most pension funds need to earn between 7-8 percent each year in order to pay for future benefits. According to Kiplinger, a few states are struggling to meet this goal: Illinois, Connecticut and Kentucky need to recover half of their estimated liabilities. In order to meet these objectives, hired firms are setting aggressive investment targets, which can potentially fund these accounts at a quicker pace, or may cause a steep fall-off, depending on stock market activity.

While most pension plans do not provide enough funds to financially carry an individual through their retirement, for many, they are the primary benefit they will rely on. For 30 percent of public-sector workers in 12 states, Social Security is not an option, according to CNN Money. The inability to control which assets their employer’s hired firm decides to invest in can be frightening for soon-to-be retirees who are watching funds diminish in the wake of this month’s market downturn.

What does this mean for real estate?

Future retirees, for one, may not have as many options when it comes to housing and paying off existing mortgages. Retirement-aged consumers who owe on their mortgage and do not receive the necessary funds to pay their debt, in addition to living expenses, may find themselves in a difficult situation. Individuals that were initially planning on downsizing and/or investing in a vacation property may find they need to refinance or risk losing their home to foreclosure or bankruptcy. These public pension plans in relation to stock market activity may also prompt homeowners to stay in their homes and at their jobs longer to secure more funds and ensure a financially safe future. With less downsizing, market inventory may be affected, creating shortages for move-up buyers.

With pension funds dwindling, the Public Pension Project—created by the Urban Institute’s Program on Retirement Policy and State and Local Finance Initiative—is working toward reform by examining current public pension trends and activity throughout the U.S. A State of Retirement map compiles this data to present detailed state-by-state information on plan rules.

Firms are adapting to the volatile market, selling off stocks and diversifying where needed, but only time will tell if these are sound investment decisions that will provide enough funds for the millions of Americans that need this income for their retirement and future real estate needs.

Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at ldominguez@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

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$25,500 :: 23051 STEWART Avenue, Warren MI, 48089

Property Photo

2 beds, 1 bath
Home size: 725 sq ft
Lot Size: 4,356 sq ft
Added: 09/27/17, Last Updated: 02/25/18
Property Type: Single Family
MLS Number: 217087664
Community: Warren
Tract: SUPERVISOR’S CHESTERFIELD
Status: Sold

PROPERTY IS OCCUPIED AND OCCUPANTS ARE NOT TO BE DISTURBED OR CONTACTED UNDER ANY CIRCUMSTANCES. INTERIOR INSPECTIONS ARE NOT AVAILABLE AND PROPERTY IS BEING SOLD AS IS. PROPERTY IS BEING SOLD THROUGH AUCTION. PLEASE CONTACT THE LISTING AGENT FOR AUCTION DETAILS.

Listed with Carrington R E Serv US LLC


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$15,000 :: 7244 MEADOW, Warren MI, 48091

Property Photo

3 beds, 1 bath
Home size: 880 sq ft
Lot Size: 3,920 sq ft
Added: 09/14/17, Last Updated: 02/24/18
Property Type: Single Family
MLS Number: 21368535
Community: Warren (50023)
Tract: PIPER’S VAN DYKE # 09
Status: Sold

Home needs repairs and is priced accordingly, bring your tools for this great investment opportunity. Buyer is responsible for any city inspections and requirements.

Listed with A Smart Move Realty


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$52,500 :: 21891 NUMMER AVE, Warren MI, 48089

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3 beds, 2 baths
Home size: 1,500 sq ft
Lot Size: 7,405 sq ft
Added: 09/20/17, Last Updated: 02/23/18
Property Type: Single Family
MLS Number: 21370803
Community: Warren (50023)
Tract: PETER PARK
The price of this listing was last reduced on 1/10/2018 by 8%
Status: Sold

Buyer’s financing fell through. Move-in condition! Nice 3 bedroom single family ranch home with 2 1/2 car garage and large fenced around yard. Gated driveway. Spacious rooms throughout, including 250 sq ft addition – dining room that could be used also as a family room. Large living room. Spacious laundry room in the end of the hallway with pantry closet. Huge kitchen with eating area. Hardwood, laminate, and vinyl flooring. Central air. Forced air heat. All appliances included. Great for first time home buyers, or for investors. Check this home out!

Listed with Real Estate One-WB/FH


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$209,900 :: 3618 MADDOX DR, Warren MI, 48092

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4 beds, 3 baths
Home size: 2,080 sq ft
Lot Size: 8,276 sq ft
Added: 02/22/18, Last Updated: 02/22/18
Property Type: Single Family
MLS Number: 21416265
Community: Warren (50023)
Tract: WILLIAMSBURG
Status: Active

Huge 4 bedroom home with 2.5 baths, a large front porch with swing, attached two car garage, in ground sprinklers, fenced backyard, brick patio, and shed. This home features four bedrooms (with large closets), a huge master bedroom with 4 closets, sitting room with new carpet, balcony, and a luxurious 10×14 master bathroom with tub & shower. There are 3 bedrooms up, and one down that could be used as an office or playroom. The family room has charming beams, new carpet, and a cozy fireplace. Other features include a finished basement with bar, poured concrete walls, and work space. The hardwood floors upstairs were recently refinished.

Listed with KW Domain


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Why Your Mortgage Is Getting More Expensive

(TNS)—World events are conspiring to make it more expensive for you to borrow money to buy a house.

Mortgage rates have increased for five consecutive weeks, according to Bankrate data, bringing interest on a 30-year fixed rate loan to 4.44 percent—the highest level in 11 months—while home prices continue to rise due to a lack of available homes.

After years of tepid economic growth, animal spirits are aflame. Inflation and wage growth recently found a groove, while the Federal Reserve’s plan to raise short-term interest rates multiple times for a consecutive year has reduced the value of government debt. The yield on 10-year Treasuries is close to a four-year high. (Bond prices and yields are inversely related.)

Oh, and China may reduce its appetite for U.S. bonds.

Homebuyers Should Get off the Fence
Mortgage rates are moved by the yield on 10-year Treasuries, rather than short-term rate hikes by the Fed. That’s why mortgage rates fell throughout 2017, for instance, even as the central bank raised the federal funds rate three times.

Rates remain cheap, however, compared to historical prices. A 30-year fixed-rate mortgage came with an interest rate above 6 percent just before the Great Recession in 2007.

Potential homeowners should get off the fence and make a bid, assuming you have an affordable home target and adequate savings, because rates are likely only heading north.

Why Mortgage Rates Are Increasing
You’ve seen this movie before.

Immediately after the 2016 election, investors sold government debt en masse, causing the 10-year yield to rise from 1.88 percent on November 8 to 2.60 percent five weeks later. That dramatic rise was predicated on investors thinking a newly Republican-controlled Washington would bring about faster economic growth through infrastructure spending and tax cuts.

Optimism waned throughout 2017, though, as the GOP failed to overhaul the Affordable Care Act, casting doubt on their cohesion as a governing party. The long-promised massive infrastructure bill never materialized, while the prospects of a tax overhaul dampened. By the first week of September, the 10-year yield was 2.05 percent.

But then Republicans made progress on a $1.5 trillion tax bill, while the employment picture continued to brighten, and the U.S. economy grew at a solid clip over the last six months of the year.

With Congress agreeing to a $300 billion spending bill—which will only throw more coal on the burning economy—investors see fewer reasons to own bonds. Economic growth and higher pay could result in long-awaited inflation gains. Prices have been rising below the Fed’s 2 percent target, according to the central bank’s preferred prices gauge, for years now.

Higher inflation is a boon for fixed-rate borrowers but hurts debtors. The January jobs report, which showed a 2.9 percent-year-over year earnings increase, was a signal to market observers that inflation may be coming.

Meanwhile, Bloomberg reported in January that China, the largest foreign holder of U.S. debt, may reduce or cease U.S. debt purchases, causing market jitters.

Should You Be Worried?
Given the recent run-up in yields, you may be worried—but don’t panic just yet.

“This is not alarming,” notes Chris Vincent, fixed income portfolio manager at William Blair. “There is no significant drama in the credit markets.”

Markets, after nearly a decade of low rates and low growth, are adjusting to the new normal and corresponding volatility—and while China may own over a trillion dollars of U.S. debt, that’s less than 20 percent of all debt owned by foreign nations, and a fifth of what America owes itself.

You are entering a world where it’s going to become more expensive to borrow money. It’s time to get used to it.

©2018 Bankrate.com
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$116,000 :: 11840 HERBERT AVE, Warren MI, 48089

Property Photo

3 beds, 2 baths
Home size: 1,589 sq ft
Lot Size: 7,840 sq ft
Added: 01/26/18, Last Updated: 02/20/18
Property Type: Single Family
MLS Number: 21408874
Community: Warren (50023)
Tract: TWINBROOK
Status: Sold

HANDYMAN SPECIAL!!! A lot of potential here for this Ranch in North Warren. Features hardwood floors throughout and all brick exterior and premium lot that backs up to a city park. House has great bones and would look amazing with some refinishing and TLC. Great pickup for investors or homeowners who can do the work themselves. Come and see today!

Listed with GSA Elite Realty


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Survey Finds Hidden Costs of Homeownership

(TNS)—Your day burns brightly on both ends.

You prod your kids out of bed at daybreak, get them dressed, fed and off to school. You drive to work, endure meetings, colleagues, power lunches, memos and strategy sessions, only to return home through gridlocked traffic just as the sun sets, beg your kids to eat dinner, wash them, coax them to sleep, do the dishes and then mercifully collapse in front of the television set.

You fret over your emergency savings account, retirement savings account, credit card debt, mortgage rate, health insurance, college savings, and on and on.

It makes sense, then, you’d opt to pay a cleaning or lawn service every week to lighten your load. Hiring someone to keep your property in working order, either on your own or through homeowners association fees, doesn’t come cheap, though.

More than three in five homeowners—63 percent—use at least one recurring home maintenance provider, while 35 percent use two, according to a recent Bankrate survey. The average homeowner pays $2,000 annually on maintenance services, the survey finds.

Costs of Owning a Home
The price of biweekly landscaping probably never factored into your calculus when deciding how much house you can afford.

The average home mortgage neared $250,000 last year, according to the National Association of REALTORS®, which came with a monthly principal and interest payment of $973, or about one-sixth of median family income.

Homeowners saw an average property tax bill of $3,300 in 2016, according to ATTOM’s most recent data, adding another $275 to your monthly budget. You’ll also owe hundreds more in insurance premiums depending on where you live and what type of house you own.

That doesn’t even include the money you need saved in case something unexpected happens. If your air conditioning unit or washer and dryer gives out, you could immediately owe hundreds, if not thousands.

Kevin Mahoney, CEO of fee-only financial advice firm Illumint, recommends to designate a savings account as a “home maintenance fund.” Mahoney, who recently bought a renovated row house in Washington, D.C., contributes $100 to $200 a month as a hedge against unexpected repairs and wear-and-tear. Maintaining a house fund will inoculate you against high-interest debt, leaving your budget open for routine maintenance services.

Cost You Probably Didn’t Think About
After the years required to amass a sufficient down payment—the average among new homebuyers is 11 percent—and all the big costs staring homeowners in the face, it’s little wonder if you don’t account for smaller fare.

But the price tag for convenience can rise quickly.

People who opt for housekeeping shell out an average of $285 a month, while HOA dues ($210) and landscaping ($144) followed behind. A home security system costs $130, slightly more than pool care ($123). Snow removal ($84), septic service ($67) and trash and recycling collection ($55) proved more affordable.

Unsurprisingly, renters are less likely than homeowners to pay for recurring maintenance services, and when they do, they pay less for most services.

On average, renters pay less for housekeeping ($128), HOA dues ($71), pool care ($70), landscaping ($61) and snow removal ($24); however, they fork over a little more for security systems ($142), septic service ($113), and trash and recycling collection ($63).

Nate Masterson, a director of Finance for Maple Holistics, pays $1,000 annually for gardening services, and another $70 to clear his Riverside, N.Y., home of snow.

“It would require a lot of strenuous work to perform either task, and it’s simply more worthwhile for me to pay a professional,” says Masterson, 34.

Make Sure You Account for All Costs
Americans broadly struggle mightily to save.

The average person wouldn’t pay for an unexpected $1,000 expense from their savings, per a recent Bankrate survey, while the median amount in a savings and checking account for a middle-income household has essentially remained flat over the past 27 years, according to Federal Reserve data.

Credit card debt recently hit an all-time high, while the personal savings rate has dropped precipitously over the past two years.

If you don’t have a fully-funded emergency fund comprising three to six months’ worth of expenses in a high-yield savings account, strongly consider suspending as many as these services as possible until you do. Dropping almost $300 a month on housekeeping while lacking $1,000 in the bank is simply too risky. What if the roof caves in? At the very least, start contributing to a home maintenance fund.

You may not have a say in other costs—trash collection and HOA fees were two of the three most common—but make sure to account for those expenses into your budget prior to moving in, and in your emergency fund.

Life’s hard, and there’s nothing wrong with paying someone else to mow your lawn. Unless you can’t afford it.

©2018 Bankrate.com
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$164,600 :: 29423 WOODPARK CIR, Warren MI, 48092

Property Photo

2 beds, 2 baths
Home size: 1,407 sq ft
Lot Size: 0 sq ft
Added: 01/04/16, Last Updated: 02/18/18
Property Type: Condo/Townhouse/Co-Op
MLS Number: 20729168
Community: Warren (50023)
Tract: CREEKS EDGE AT HERITAGE VILLAG
Status: Sold

*New Construction*Unit Not Completed*Model Open: Tues, Wed & Fri 1 pm ? 7 pm, Sat & Sun 12 pm ? 6 pm. 29307 Woodpark Circle, Warren MI 48092. Creeks Edge at Heritage Village: 1st floor ranch: 2 bedroom 2 full bath with large closets, huge Great room and optional fireplace. Inviting Kitchen with Standard Granite Counter tops, Range, Microwave, and Dishwasher, Deck of Kitchen Nook, Full Basement, 1 Car Attached Garage.

Listed with RE/MAX Classic


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