About real estate: Be wary before enrolling in pricey ‘no-money-down’ class

Seminars and courses that promise to teach folks how to buy property without a down payment are a dime a dozen. Obtaining a sales license first usually is a better idea.

Q. There are a lot of really inexpensive but nice homes in our area for sale, and we would like to buy one but don’t have enough money to make a down payment. A company in our area is offering a weekend “no money down” seminar, but it would cost about $500 to attend. Would it be worth the money to go?

A. I don’t know which company or entrepreneur is offering the class that would supposedly teach you and other attendees how to buy a house without a down payment. But I can tell you this: In my 35 years as a real estate writer and investor, I have never, ever met a novice buyer who simply enrolled in such a program and was able to close a single deal without putting up any cash.

Chances of doing so today are even more remote, considering the tough new borrowing standards that most lenders have adopted.

That said, I’ll also tell you the same thing that I have told others who were considering enrolling in a no-money-down program: You probably would be better off spending your time and money to get your real estate sales license first. Many junior colleges, professional real estate schools and realty brokerages operate free or low-cost licensing programs that teach the fundamentals that you need to successfully buy and sell real estate, either for yourself or on behalf of other people.

Most of these programs offer flexible schedules, including night and weekend classes for those who have full-time day jobs. Once you have completed the course and passed a state exam, you’ll have the basic knowledge needed to invest in real estate successfully and a license that entitles you to a commission every time you buy or sell for yourself or others.

In addition, licensees often are able to see properties before they’re advertised to the general public — an important benefit that could allow you to quickly snap up the best bargains. Those are just some of the reasons why it’s usually best to get a sales license before enrolling in a no-money-down seminar or course.

Q. I appreciated the tips you recently provided about getting an insurance claim processed as quickly as possible after a natural disaster or other calamity. But as a longtime reader who is also an accountant, I wish you would also have covered the tax deductions readers can take for losses that aren’t covered by insurance. Claiming those unreimbursed losses could save many of your readers a lot of money when they file their returns next April!

A. Thank you for raising this important issue.

For starters, to claim a casualty-loss tax deduction, you must file a formal claim with your insurer: If you don’t ask for reimbursement, you cannot take any tax write-offs. You also will have to itemize your tax return, an important consideration for those who traditionally have used the non-itemized, shorter “1040-EZ” Internal Revenue Service form on April 15.

Understandably, you cannot ask Uncle Sam to give you a write-off for any damages that were covered by your insurance company. Unreimbursed losses that are eligible to be written off include most damages to your home, vehicles, furniture and other personal possessions.

Calculating the amount you can deduct is a little tricky. First, the Internal Revenue Service requires that you total all of your losses and then subtract a flat $100 from the final amount. Then, you can deduct only the balance that exceeds 10 percent of your adjusted gross income, commonly called “AGI” — your income after personal exemptions and some other types of write-offs are taken.

To illustrate, let’s say you suffered $20,000 in unreimbursed losses from Hurricane Sandy, and your AGI this year will be $50,000. You would first subtract the IRS-mandated $100, leaving you with a balance of $19,900 in losses. You would then subtract $5,000 (10 percent of your AGI) from the $19,900. The remaining $14,900 is the amount that could be deducted on your next tax return.

If the damage was caused in a federally declared disaster area, including most counties affected by Hurricane Sandy last month or Hurricane Isaac in August, you can file an amended return for the 2011 tax year if your AGI was lower than it will be in 2012 in order to increase your deductible amount and save more money.

For more information, get a free copy of IRS Publication 547, Casualties, Disasters, and Thefts, by calling the IRS at 800-829-3676 or by downloading it from www.irs.gov. Even better, discuss your situation with an accountant or other tax expert.

Q. I know that I can put my house into the type of money-saving living trust that you often recommend, but can I also put my small rental property into it so it can pass quickly to my heirs instead of having to go through the long probate process?

A. Yes. Any type of real estate can be put into a living trust, as can vehicles, stocks and bonds, and antiques or other personal possessions. And they can all be put into the same trust: There’s no requirement that a separate trust be established for each individual item.

REAL ESTATE TRIVIA: The Library of Congress building in Washington has more than 327 miles of bookshelves.

Ÿ For the booklet “Straight Talk About Living Trusts,” send $4 and a self-addressed, stamped envelope to David Myers, P.O. Box 4405, Culver City, CA 90231-4405.

© 2012, Cowles Syndicate Inc.