Home bridal registries grow in popularity
More newlyweds are opening up special bank accounts for wedding-goers to contribute cash to help them raise a down payment on a house, rather than traditional registries that ask for new china or linens.
Q. Do you know anything about these "home bridal registries" that some banks are offering?
A. Sure. A small but growing number of lenders are offering the registries, which newlyweds can tap to help with a down payment on a house.
The offbeat registries are based on traditional accounts that engaged couples often create at their favorite retailers. The twist is that well-wishers are asked to make cash donations to the bank account rather than buying the bride and groom a toaster or TV.
There are two main reasons why the home bridal registries are gaining in popularity. First, many younger people don't have a lot of cash and may be strapped with huge student-loan debt, so the hope of scraping up a down payment in today's pricey housing market is dim. In addition, many older renters who are betrothed already have all the pots and pans they need but would welcome cold cash to help purchase a home.
The Federal Housing Administration has also given its blessing to such accounts, which means the bride and groom can qualify for an FHA-backed loan through independent banks with a down payment as small as 3 percent if certain conditions are met. Information about the government program can be obtained by calling the agency at (800) 225-5342 or by visiting www.hud.gov.
Still, balances in the registries can add up quickly. The average family member spends $146 on a gift for the couple, bridal website TheKnot.com says, while friends shell out an average of $79. And since the typical wedding includes 150 guests, you can see how newlyweds who create these unusual accounts can get a huge head start on buying a home of their own.
Q. I am 62 years old and recently closed my longtime plumbing shop, but I will continue handling small jobs out of an office in my converted basement. Can I take the home-office tax deduction, even though I will be working only part time?
A. You can, but only if certain Internal Revenue Service requirements are met.
The key IRS condition is that your basement/office be used "exclusively and regularly as your principal place of business." That means you can use the space only as the headquarters for your plumbing operation: It cannot double as, say, a billiards room, a spare bedroom for visitors or a place to hang with the guys on Sundays to watch football and eat pizza.
There are two options to take the deduction if you qualify. The first is to deduct a percentage of your overall mortgage-interest payments, real estate taxes, insurance charges, utilities and the like that's properly allocated to the home office.
To illustrate, if your converted basement accounts for 20 percent of your home's total square footage, you'd be able to deduct one-fifth of those expenses. The remainder of your interest payments and realty taxes could still be deducted on your 1040 form.
Choosing this option also may allow you to claim depreciation, a bookkeeping tool that can bolster your write-offs. This method usually provides the fattest home-office deduction, but it's tricky enough that you may need to consult an accountant to avoid an audit by the IRS.
The simpler method is to measure the space used for the business and base the write-off on a standard rate of $5 per square foot. Choosing this option, though, limits the total deduction to $1,500 annually.
For more details, get your free copy of IRS Publication No. 587, Home Office Deduction, by calling the IRS at (800) 829-3676 or by downloading it from www.irs.gov.
Q. We recently bought a new home, but had a hard time finding property and liability insurance coverage because we have two purebred Akita puppies. I know that a lot of insurers won't issue polices to homeowners who own pit bulls, but c'mon - two tiny Akitas?
A. The problem is they won't be small forever. And though I adore Akitas myself, even the American Kennel Club notes that their temperament "can range from calm to bouncy and aggressive, so the breed should always be supervised around small children and other animals."
San Diego-based Einhorn Insurance, an agency that specializes in placing coverage for hard-to-insure dogs, reports that Akitas are among the "dangerous breeds" or even "blacklisted breeds" identified by many insurers. Even those that offer such canine policies almost always charge the homeowner a higher premium, bigger deductibles, limited payouts or a combination of all three.
The other dogs on the list are two types of terriers - pit bulls and Staffordshires - as well as Doberman pinschers, Rottweilers, Chows and Great Danes. They're joined by Presa Canarios, Alaskan Malamutes, German shepherds, Siberian Huskies, wolf-hybrids or a mix of any of the above.
Real estate trivia: More than 4 million taxpayers claim the home-office deduction each year, tax-services giant H&R Block reports, with the average write-off topping $2,600.
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© 2014, Cowles Syndicate Inc.