...Owning a home offers many benefits not available as a renter such as pride with ownership, qualifying for special tax breaks, and saving money. Renovating property is one example of expressing the freedom available to a homeowner that renters do not have. Many tax breaks are only available to homeowners for many reasons including deductions for mortgage interest, First-Time Home Buyers’ Tax Credit and deducting expenses by having a home-based business. The amount of money saved considerably outweighs the money spent on renting a house or apartment. Not only does one save money , but the money is equally invested. Money saved by owning a home grows in many ways. Additional benefits not relating to money, such as a feeling of worth or inclusion in community decisions are positive reasons for owning a home. Spending money on rent when one can afford to buy is not the best financial decision. Though renting property relinquishes the renter of most responsibilities the benefits are few. When a person saves money to buy a house, that person takes pride in the amount of hard work accomplished to attain the goal of purchasing the house. Owning property “instantly” makes the owner a part of the neighborhood and community, along with its social advantages” (Hudson Valley Business Journal, 2/25/2008 Supplement, Vol. 19, p4-4, p. 1). One may choose to make valuable decisions when becoming part of a new neighborhood that help mold the area into a safer community. Such decisions effect...
Words: 1017 - Pages: 5
...Income Tax: Small Family and Minimal Deductions ACC 401 July 23, 2012 Instructor Income Tax: Small Family and Minimal Deductions One of the jobs of tax consultants is to determine the types of forms to complete when assisting a person in completing his or her income tax forms. The number and types of forms used is determined based-on the person’s income, if the person is having his personal or business tax forms completed, the deductions the person is taking, and the proof of deductions that a person has saved. The family chosen for this paper is a small one-child family completing their personal income tax, filing jointly, and using minimal deductions. Based on the couple’s income, a recent home purchase, attendance in college, dependent child, and deductions, the most appropriate forms to complete are the 1040 U.S. Individual Income Tax Return, earned income credit form, form 8812-Additional child tax credit, form 8863 education credits and form 5405 (First Time Homebuyer Credit and Repayment of the Credit) (Internal Revenue Service, 2012). Scenario: The couple is Jackson R. Parker and his wife Elizabeth Parker. They have a healthy non-disabled three-year-old son named Colton. Mr. Parker is in the United States Army. Mrs. Parker is unemployed and does not work, but attends college full-time. The couple purchased their first home on February 23, 2011. They paid $300,000 for their home. They had few receipts with the exception of the husband’s W-2 from...
Words: 1560 - Pages: 7
...financial responsibility is overwhelming and they are just not ready. Although some people believe they are not financially ready to purchase a home, buying a house is a better option than renting an apartment for three main reasons. First, becoming a first time home buyer can be a very exciting experience that can have a positive long-term effect on some one’s life. Second, a home buyer can make any modifications or changes to a home. Third, and most important, you will eventually own your home. With those three examples, I will show the advantages of buying a house over renting an apartment. The first advantage to buying a home verses renting an apartment is that first time home buyers usually receive incentives or rewards for being first time home buyers. If the home buyer is purchasing a newly built home, usually the builder will give little incentives such as appliances in the home, a gift card to purchase new items for the home or even interior upgrades to the home. In recent years, there was a huge increase in the home buying market. This was the first time home buyers tax credit approved by the federal government. According to "About Incentives For First Time Home Buyers “(n.d.), “In 2008, the American Housing Rescue and Foreclosure Prevention Act gave a tax credit of $7500 to new home buyers. The government passed this credit to give a new impetus to the housing economy” (para.2). Although apartment The Advantages of Buying a House over Renting an Apartment renters...
Words: 1139 - Pages: 5
...Take Home Project 1. BUSINESS FORMATION a. What form would be required to form a Limited Liability Company? Articles of Organization b. What form would be required to form a Corporation? Articles of Incorporation c. Does an attorney need to sign the organization documents for an LLC? No but it may be in the best interest for the organization d. Does an attorney need to sign the organization documents for a Corporation? No, but it may be in the best interest for the organization e. What are the filing fees associated with filing an LLC and a Corporation? $110 for both and the CL-1 is $25 f. Are there annual fees to be paid to the state for an LLC or Corporation? Both LLC and Corporation have to pay $10 fees g. Does a Corporation doing business in SC but formed in another state have to register with the State of South Carolina? Yes, they are required to register every location that their business resides in h. Does a General Partnership have to file anything with the Secretary of State? No. 2. BUSINESS LICENSES AND TAX REGISTRATION For this portion- I chose to run an S CORP for my liquor store which sells tobacco, wine, and liquor. My three employees are my cashier, stocker, and manager. a. In Charleston, all businesses are required to have an annual business license for each location. There is a five step process for obtaining this business license. First- Zoning Compliance. The city encourages every business to...
Words: 2055 - Pages: 9
...transmitted in any form and by any means—electronic, mechanical, photocopying, recording, or otherwise—without the prior written permission of the publisher. Revised edition September 2009 This material is based on work supported by the US Small Business Administration (SBA). Any opinions, findings, conclusions, or recommendations expressed are those of the author(s) and do not necessarily reflect the views of the SBA. Contents Table of Contents .......................................................................1 Business Start-Up Planning Chart ....................................................................... 1 Yourself Potential ...................................................3 Assess Yourself as a Potential Business Owner ................................................... 3 Personal characteristics .......................................................................................................... Demands of owning your own business ................................................................................. Business experience and management skills ........................................................................ Self-Analysis...
Words: 16371 - Pages: 66
...economy. The first step for a small business owner is to determine which of the four forms of business the organization will best fit with the new owner’s ideas. In addition, the business owner will need to review all tax legalities and implications associated with the different forms of business for her organization. This paper will discuss the four forms of business and the different types of financial statements associated with the forms of business in relation to consequences of taxes, liabilities, and accounting implications. Sole Proprietorship Sole proprietorship is the most common and easiest form of business to create. Some of the benefits of a sole proprietorship are that the owner can make decisions of hiring and firing employees, decisions of which vendors to use, what materials and equipment to purchase and what direction they want the business to take. A disadvantage is that the owner is limited to funds as a sole proprietor can only access the funds that are available. In addition, the sole proprietor is responsible for all liabilities associated with the business. The financial statement associated with at sole proprietorship is the statement of cash flow. The statements of cash flows provide financial information regarding cash receipts and payments of the organization in a specific period of time. This is important because lenders would like to see the amount of cash the organization has. This will determine if vendors will grant credit to the business...
Words: 1267 - Pages: 6
...MacLean A New House- Decision “Home ownership matters.” Does it? I mean, there is nothing written in stone that says we ALL have to own a home. Growing up I always felt a sense of security knowing that I would always have the same bedroom, the same backyard, and the same house. Many of us probably think of that when we consider buying a home. Some of us want that sense of security. We want to lay down roots, so to speak. Others are perfectly content with renting. I had a friend say to me that he would much rather rent and not have to worry about repairs and everything else that goes with owning a home. He did not want the added responsibility of owning a home. Whatever your reasoning might be, I am sure most of us have at least thought about home ownership once or twice. I am at a point in my life where I have been seriously considering buying a home. I have been saving over the past few years and I have also been clearing any past debts that I had so that I do not have extra bills to pay. I want to be financially secure before considering taking that next big step. Most people think like I do. They consider the financial aspect of buying that new home and like to prepare themselves financially before entering into that commitment. While preparing myself financially, I have taken into consideration some of the principles of economics that will help me prepare financially for this next step. The first principle that I have applied to my...
Words: 1580 - Pages: 7
...acquirement people will always make in their life is buying of a home. It is to this date considered as the ‘American dream’ up to this date. The income tax code too provides advantages to home ownership. The considerations for renting an apartment are the same to those of buying a house. Majority of people consider owning a house to be worthwhile the model, age and design of the house notwithstanding. The option to either buy a house or to rent an apartment depends on personal preferences. Unlike when buying a vehicle, buying a car takes a long process (p.129). (Bevan 2008. p.53) explains that home owner take added care to their homes than renters, they remain in their homes longer than those who have rented homes. He reports that research shows home owners to report a high self-esteem than renters. Other than psychological comfort owning a home can be an option of tapping into house equity when emergencies arise. All the advantages of ownership can be lost once the owner gets difficulty meeting mortgage payments. Bevan (2008) further indicates that sometimes it may last for an over a decade to own a home. He indicates that it is good to understand that once current position when planning to transact a home or rent an apartment. It is worthwhile to seek the advice of a mortgage broker or to a financial institution and get an approval for a mortgage. The question on renting an apartment or buying a home is probably one of the biggest decisions a person has to make. Some...
Words: 1103 - Pages: 5
...difficult to generate growth capital, the proprietor has unlimited personal liability for company debts and the company only lives as long as the propietor. Partnership: This can take the form of a limited partnership and a general partnership where liability and control is divided along these lines. A limited liability partnership or limited liability company is structured to where all partners have limited liability with respect to the business’s liabilities. This works well for the partners but is an area of concern for the partnerships lenders, customers and suppliers. Corporation: This is created as a separate legal entity under law and as such is “separate and distinct” from its owners and managers. The advantages are is has unlimited life and can continue after the death of the owners. It also has easy transferability of ownership interest through transfer and sale of shares of the company and limited liability. That is, the liability is limited by the funds invested. c. Companies can go public through use of an Initial Public Offering (IPO) where stock is sold to the public at large. The corporation can continue to grow after the offering by bank borrowing, issuing bonds/debt and or selling more shares of stock in the company. An Agency Problem is...
Words: 1974 - Pages: 8
...Lit1 Task 1 Organization of Business Sole Proprietorship: Most common form of business today. Legally speaking the sole proprietor and the business are one in the same. Any legal issues such as law suits and tax liabilities are the same and the sole responsibility of the owner. There is no autonomy, no differentiation between the business and the owner. If the business gets sued, it is the personal assets of the business and the owner that are in jeopardy. It is also the easiest form of business to start and to end. A sole proprietor needs to obtain the appropriate licenses for the state and/or municipality in which they wish to do business then, they are up and running. All revenue is personal revenue for the owner. Any bills are paid by the owner. The business can be closed as easily as it was opened. Just stop doing business. The business cannot be passed on to anyone, when the owner dies the business dies. Any loans needed to do business will be in the form of personal loans from a bank since the business and the owner are one in the same. The owner’s credit worthiness is the businesses credit worthiness. Since the owner of the sole proprietorship and the business are one in the same, there is no need for agreements or contracts. General Partnership: Unlike a sole proprietorship, a general partnership is formed with an agreement between the parties involved. General partnerships are formed when two or more people agree to open a business and contribute...
Words: 1951 - Pages: 8
...Use Form 1040 to deduct mortgage interest. Alternate Text Group When several people own a home or business property together, things can get confusing at tax time. The IRS lets you deduct the amount of mortgage interest you pay on your taxes, and co-owners all want to make sure they get their piece of this potentially lucrative pie. The law is clear, however, in that you can only deduct the amount of mortgage interest you actually paid. Co-owners must look at their financial records to determine who paid what over the course of the year and act accordingly. Deduction Eligibility Before you worry about how you're going to split your mortgage interest deduction, you must first determine if you're eligible for it. In order to qualify, you must have an ownership stake in the home. Let's say, for example, you cosigned on a mortgage for your brother. He lost his job in June, so you made his mortgage payments for the last six months. You did so because, as a savvy cosigner, you know that your credit score would have dropped along with your...
Words: 664 - Pages: 3
...Home Ownership or Renting It’s all About Getting the Most for the Dollar Courtney Booher Com 156 July 3, 2011 Home ownership has distinct advantages over renting property. Landlords and property management firms make hard sale pitches on the advantages of renting versus ownership. Many refer to the advantages listed on http://www.ourfamilyplace.com/homebuyerorrent.htmls Such as, fixed cost for the term of the lease, flexibility in moving, and the ill perceived thought that there is a smaller initial outlay of money. However, they fail to discuss the advantages of home ownership as identified by Elizabeth Wentraub in her article "Buy a Home" that is posted online at http://www.homebuying.about.com/od/buyahome.html. Wentraub discussed that even though real estate values are cyclical; in the long term real estate consistently increases in value. Why? There is only so much land available. Supply and demand dictate rising values. In addition she discussed the property tax advantages, capital gains exemption, mortgage interest deductions, and the use of home equity loans. When all things are considered, it is about getting the most for the dollars spent. That advantage goes to home ownership. As of 2009 67.9 percent of all owned property was occupied by the owner. Renting advocates tout the myth that there is a smaller outlay of initial dollars for renters. However, that is just not the case. Many federal programs allow individuals with...
Words: 1441 - Pages: 6
...The higher marginal tax rate of 12% to 20% adds on personal taxes and this discourages high-end investment. The investors are likely to take their capital overseas, which shifts the business frame outside Singapore. Consequently, there is less employment of low and middle-income group workers, which reduces their wage. The richer individuals can still thrive on the investments in other countries but the same does not occur for less privileged workers. Thus, the income gap rises and progressive tax model may be...
Words: 1381 - Pages: 6
... Rent or Buy? The birth of a child means new responsibilities for the parents. One of the biggest responsibilities is providing a safe place for the child to live. This means the parents need to make a decision on whether to rent or buy a larger home for the growing family. If I were personally presented with this decision right now, I would make the choice to rent rather than buy. As I considered this decision I took into consideration many the economic principles that I have learned in this course and how they affect my ability to buy a house. The first principle I thought about was how much I could afford to pay for a house. This was the major factor affecting my decision. My income right now is very limited so at this time I do not have the means to save toward a down payment. Without a guarantee that my financial situation will increase, it is not wise for me to make a commitment like this at this time. I need to finish my education and find a more secure, better paying job first. I also considered other economic related factors when I made this decision. I thought about the type of neighborhood that I would want to live in, the additional financial responsibilities of owning a home, the total monthly and yearly cost of homeownership, the risks that come with owning rather than renting, my lifestyle and spending habits and my current savings account (O'Brien, 2005). A growing family should decide on what type of neighborhood...
Words: 1866 - Pages: 8
...House – Decision XECO 212 Week 9 7/21/11 Seffan Bune Home ownership is considered by many as the pinnacle of the American dream, a two car garage, white picket fence, and nice backyard for those projects that are somehow always nearly completed. This is what we have been told is the major leap into adulthood and makes you one of the high caliber Americans who can claim that their home is their castle, but is this still true in this country? With the financial downturn and the home foreclosures at a all time high, nearly every block I see has a home for sale at reduced price so how does this milestone still hold up to scrutiny and how can this generation still reach for that goalpost of what is considered the standard of the happy nuclear family? The decision to purchase a home is the major point in an American life and it is a decision that should not be taken lightly because if not done correctly and with a plan on how to sustain the purchase that is not solid the consequences could be dire. After taking this course I have found out that there are methods and concepts that if implemented correctly the idea of owning a home is still within grasp of many of us but there are many things that need to be weighed before pulling the trigger on such a large and momentous decision. First are the ten principles of economics which I will go into more detail later on that are crucial to making a large purchase be it a home, car, or any other large ticket item that can have ramifications...
Words: 3015 - Pages: 13
