Fredericksburg Texas

The President’s Advisory Panel on Federal Tax Reform recently released a 270-page report that recommended two ways to modify the U.S. Federal tax code. (This Federal Tax Reform report can be accessed at www.taxreformpanel.gov.) One plan is known as the “Simplified Income Tax Plan” and the other is the “Growth and Investment Tax Plan.” Both of these proposals seek to make the tax code fair and simple. It is important to note that at this time, these are merely the panel’s recommendations. There is a complicated and long legislative process that is involved anytime changes are made to the tax code.

MORTGAGE INTEREST DEDUCTION CHANGES

The mortgage interest deduction, which is currently capped at $1.1 million, would be turned into a 15% credit and apply only to principal residences. In addition, the maximum debt eligible for the credit would be limited to 125% of the median sales price for the county, based upon Federal Housing Administration data (Current limits range between $227,147 and $411,704.) It is estimated that between 85% - 90% of all mortgages originated in 2004 fall below these levels.  There would be transition tax relief for those with mortgages above the proposed dollar caps and the new caps would be phased in over a five-year period for pre-existing mortgages.

Potential Impact: Converting a deduction into a credit provides the same tax rate to all taxpayers, although taxpayers in higher tax brackets will lose more tax savings from converting a deduction into a 15% credit. In addition, limiting the credit to only principal residences may have a negative impact on the costs of owning vacation home properties, which might ultimately impact the demand for this type of property.

REAL ESTATE TAX CHANGES

The deduction for state and local taxes, including real estate taxes, would be repealed.

Potential Impact: This change, coupled with the change in claiming mortgage interest deductions, would make property ownership more expensive on an after-tax basis. Investors may begin to reallocate new investments away from real estate and into other investment alternatives.

PRIMARY RESIDENCE SALE CHANGES

The tax exclusion for capital gain on the sale of a primary residence would remain. However, the ownership and use period would be lengthened to three (3) out of five (5) years, versus the two (2) out of five (5) years requirement under the current law. 

Potential Impact: Homeowners will generally need to stay in their principal residences for one more year to qualify for the $500,000, married filing jointly, or $250,000, single, tax exclusion available under IRC Section 121. This additional holding period requirement may reduce the volume of property sales and negatively impact those services associated with the sale and transfer of real estate.

Visit www.Fredericksburg-Texas-Property-For-Sale.com

Consumers Understand Credit Scores Better, But...

Consumers understand credit scores better than ever, but that still isn’t good enough, according to a survey commissioned by the nonprofit Consumer Federation of America (CFA) and Providian Financial.

“In the past year, consumer understanding of these scores has improved, in part because many consumers have obtained their scores,” says CFA Executive Director Stephen Brobeck. “Unfortunately, most consumers still do not know basic facts about credit scores and their financial significance.”

A wide range of businesses — not just creditors — use credit scores in product pricing and availability. The costs related to having a low score can be considerable. Savings available to those with high scores also can be substantial.

“If consumers were to raise their credit scores by only 30 points on average, they would save $16 billion on lower credit card finance charges alone,” says J. Christopher Lewis, Providian’s chief public policy officer.

In 2003, 31 percent of those surveyed by Opinion Research Corporation said they had obtained their credit scores. From 2004 to 2005, the percentage obtaining their scores from credit bureaus increased from 28 percent to 36 percent. In contrast, those obtaining their scores from mortgage lenders or brokers fell from 35 percent to 28 percent.

The increasing number of people familiar with credit scores appears to account for rising consumer understanding of these scores.

In 2004, surveys showed that 87 percent of consumers understood that making payments on time influences their credit score. In 2005, that number was up to 93 percent. During the same time, those realizing that maxing out one’s credit card has a negative effect on their credit score rose from 66 percent to 77 percent.

Despite these numbers, however, more than three-fourths mistakenly believe that they have the right to obtain their credit score for free once a year.  While that’s true of your credit report, it’s not true for your credit score.

Consumers also remain confused about the characteristics of credit scores.

• Only 27 percent understand that scores measure credit risk, not credit knowledge, amount or attitude. Less than half of consumers realize they have more than one credit score — one for each major credit bureau and possibly others.
• Only 54 percent understand that maxing out a credit card and making only the minimum required payment will both lower your credit score.

Many consumers do not understand how lower credit scores cost them money. For example, consumers with credit scores of more than 760 will be charged 5.24 percent interest on a $150,000, 30-year, fixed-rate mortgage; their monthly payments will be $844. Consumers with credit scores less than 620, however, will pay 7 percent interest rates with monthly payments of $998. That’s an annual difference of $1,848.

So how do you raise your credit score?

• Pay your bills consistently and on time.
• Don’t “max out” credit cards or other revolving credit.
• Pay off debt rather than just moving it around.
• Don’t open many new accounts.
• Check your credit report, which is now free, for errors.

To test your knowledge of credit scores, go to www.consumerfed.org/score

Visit http://www.Fredericksburg-Texas-Property-For-Sale.com

Visitors, clients and friends are always asking me to recommend a nice place to stay and/or eat in Fredericksburg .  The following are my recommendations for food and lodging (in no particular order):

LODGING

In Town:

Fredericksburg Guest House  www.fredericksburgguesthouse.com

Austin Street Retreat  www.austinstreetretreat.com

The Bierschwale Estate  www.bierschwaleestate.com

Fredericksburg Inn & Suites  www.fredericksburg-inn.com

Country Accommodations:

Settler’s Crossing  www.settlerscrossing.com

The Trois Estate  www.trosiestate.net

Palo Alto Creek Farm  www.paloaltocreekfarm.com

DINING:

August E’s, Navajo Grill, Mamacita’s, Troisi’s Italian Ristroante, Andy’s Diner, The Nest, Hondo’s, Fredericksburg Brewing Co., The Cotton Gin and Bejas Grill.

Anyone out there reading this who didn’t make the cut…sorry!  This is certainly not an all-inclusive list of the 300+ hotels, motels, B&B’s, Guest Houses, etc. or the dozens of fine restaurants in Fredericksburg…just one guys opinion. 

Feel free to add your comments or suggestions.

I spent 4 hours yesterday trimming trees and removing asbestos siding from the large home.  I had to trim up several trees as a bunch of limbs have grown over the roof and several were actually resting on the roof (not a good thing).  I didn’t get to finish all the trimming I needed to do (quite a bit left to do on the smaller house) because I managed to throw the chain on the chain saw and had to take time out to fix that.

I did manage to pull all the siding, tar paper, nails, etc. from the front of the house.  The transformation is rather dramatic (see photos).  I wised up and placed a large tarp under the area I’m working on so that clean-up is much quicker and easier.  I decided to order a construction dumpster vs. taking constant trips to the dump.  I figure it will end up costing me about $100 more on the overall cost (dump fees) but the convenience will more than make up for it.

I also discovered our first unforeseen snafu!  Yipee!  When we first purchased the property, there was a small storage shed that held a bunch of crap and where they had the old washer/dryer.  We had the shed removed.  The water and power were off when we had this done.  Well, lo and behold, we had the water and power turned back on and we have a broken pipe!  The water flowed until it filled the hole where the shed once stood and proceeded to flow on down the street.  We cut the water off and immediately called the city to make sure they knew of the leak and would give us a credit.  We’ll have to add that to the list of things to fix!

Lastly, we closed on our partnership interest transfer and financing.  We had to pay a total of $1,700+ for the privilege of doing what we’ve always wanted to do with this property.  Again…yippee!