Tax rules are complicated

It is Friday and Fridays are for fun. There isn’t anything fun about taxes but I can write about it anyway because it is my blog.

Very few people really understand the Federal tax code. I think it is created to be as confusing as possible. If people are confused then politicians can say they lowered taxes or that taxes were increased and no one can prove it.

There are people who honestly believe that if their tax refund is lower than expected they paid more taxes.

Getting a bigger refund usually means that too much money was withheld from each paycheck. In my case, because I am self-employed if I have a refund it means I overpaid my tax payments.

If I underpay my estimated taxes I end up having to make a payment to the IRS on April the 15th and I pay a fine for my underpayment. If I overpay I apply what would be a refund to my next tax payment.

It works the same way for people with W2 type jobs. If the amount of money that is withheld from each paycheck is barely enough to cover the year’s taxes there won’t be much of a refund. If too much is withheld the refund check is higher.

If too little is withheld then the taxpayer has to write a check.

To determine if you are paying more in taxes or less calculate income taxes as a percentage of your income.

If you are not sure how to calculate a percentage use this calculator. .

If your refund is too small have more money withheld from your paychecks so that next year your refund will be higher.

Remember your 2018 income taxes are due on April the 15th and that is just 59 days from today.

Your home doesn’t have to be new to be smart

queen anne house
Queen anne

My house is old. Part of it was built in 1858 and the newer part may have been built as recently as 1860. In fact, it was built without central heating, electricity, central air conditioning or plumbing. The house has all of that today and more.

It was built before many of the modern appliances we have today existed. They were added later. The electrical system and the plumbing and heating have all been updated even more recently.

I have one of those smart thermostats that I can control with an app or by voice the Amazon Echo. I don’t have to be at home to know what the temperature is in my house or to change the temperature.

There is a camera in my house that can be activated by motion and it can send me an email alerting me that someone has entered my house. I can watch someone take my stuff using an app on my phone as I dial 911 and yell at them through a speaker.

I have some lights and electrical outlets that can be controlled with an app on my phone or by voice. I am interested in upgrading some of the locks to smart locks.

As we add smart devices to our homes those devices will become obsolete and will need to be replaced with newer devices or some other kind of technology altogether.

When we bought our last refrigerator there was no such thing as a smart refrigerator that could help us keep track of what is inside the fridge and what we are out of.

This holiday season I gave my brother’s family an Instant Pot that is accessible by wifi. Doesn’t everyone need a smart Instant Pot?

You don’t have to buy a new house to have smart home technology, which is a good thing because not many new houses are being built.


Internet of things

Those darn ice dams!


I couldn’t help but notice all the ice dams on houses as I drove to a meeting yesterday. With all of the snow we have had and more on the way there will be a lot of ice dams and water damage from them this year.

The dams are caused by melting snow on the roof and heat leaking out from the house.  The snow at the edge of the roof turns to ice as it thaws and refreezes.

The water pools on the roof because the ice dam prevents it from rolling off the roof . . hence the term ‘dam’.  It does not matter how new your roof is you can still take on water.

The best way to handle ice dams is to prevent them. There are companies that will remove ice dams and damage the roof at the same time . . . or not. Removing the snow from the roof will stop new dams from forming.

It isn’t just snow on the roof that causes ice dams.  The University of Minnesota Extension web site has some great information about what causes ice dams and how to prevent them.

Get it in writing


When buying or selling a home in St. Paul it is important to get everything in writing. The contract to purchase should include:

  1. Purchase price.
  2. Earnest money amount.
  3. Downpayment % if financing.
  4. Type of financing.
  5. Closing date.
  6. Specific contingencies.

An offer might be inspection contingent, contingent on financing or contingent on the sale of a home that a buyer currently owns or the seller may want to add a contingency.  Contingencies always have start and end dates and usually require that some specific thing happen before they can be removed. For example, an inspection contingent offer will have an inspection period with a beginning and an end.

With some types of real estate, there are automatic contingencies and laws dictate when the period starts and how long it has to be.

Sometimes everything is in writing and both parties agree but the agreement is written in such a way that there are misunderstandings. For example, a buyer may ask for a specific repair without specifying that the repair needs to be made by someone who is qualified to make the repair. If the buyer is asking to have a window repaired on a house with more than one window the contract needs to reference the specific window.

Using too many or too few words on a contract can lead to misunderstandings later on. Using the wrong words or not being specific enough can lead to misunderstandings or even lawsuits.

When I receive or review a contract from another agent sometimes I can tell if the agent is new or if he or she is experienced. Experience does matter when writing real estate contracts.

Before making an offer or accepting an offer on real estate read the contract and make sure you understand it. Often I spend more time explaining a contract than I spent writing it and I am fine with that.

If everything isn’t in writing . . . good luck!

Renting is alway an option

People who rent rather than own their homes are buying flexibility. For some flexibility means having a better job. Home ownership isn’t for everyone.

The National Association of Realtors conducted a survey to study non-home owners. Most would like to own a home at some point in the future. I aspired to be a homeowner from the time I graduated from college. I was 29 when we bought our first home. At the time the challenge was saving up for a downpayment.


To some buying real estate is an investment. To me, it was always about owning a home that I could call my own. A place to live with neighbors and a garden and a front porch.


How many houses do I need to see?

Home buyers always want to know how many houses they should see before they make an offer.  A decade or so ago there were many houses on the market to choose from. Today there are not so many but the answer to the question: “How many houses do I need to see?” hasn’t changed, it is still “it depends”.

It helps to start with a list of “must have” and “nice to have”.  Choosing a neighborhood or a couple of neighborhoods makes the home shopping process much easier. During the 17 years, I have helped people find that perfect home I have observed that people who are open to any neighborhood and who search in many neighborhoods usually do not find a house they want to buy.

Some home buyers spend hours online doing research and end up making an offer on the first or second house they tour. The internet is the best screening tool ever for house hunters. Use Google Maps to view the home from the street and check out the properties next door. Access sites like Zillow to get a rough estimate of the value of the home. Check property tax records for tax assessors valuation.

Part of my job when I am in the role of a buyer’s agent is to provide information about real estate. I can answer most questions because I have access to a lot of data and because I know people. 🙂

Some buyers drive by houses for sale, others walk the neighborhood and talk to nearby neighbors.

Most buyers need to see as many houses as they need to see before they are ready to make an offer. I have worked with clients who have looked at dozens of houses over a period of a couple of years before they have found the right one. Every year I work with at least one buyer who tours one home and makes an offer on it.