Jerry LaRose, Realtor, Short Sale Expert Orlando, Florida Real Estate Expert

1. 1. Do not pay doctor bills or credit card debt ahead of the mortgage. Keep mortgage payments current as possible.
2. 2. Negotiate with your lender to restructure your mortgage. If the loan is guaranteed by a federal or state agency, the lender may be required to grant assistance, or provide other options, to avoid foreclosure.
3. 3. Sell the house before it goes into foreclosure. If your mortgage is higher than the home’s market value, you may be able to persuade the lender to allow you to sell it for less and forgive the rest of the debt. (this is called a short sale)

If you’re about to lose your home, filing for bankruptcy can stop the foreclosure process and allow you more time to try to work out a plan to keep the home. Get legal advise from an attorney specializing in bankruptcy. For more information on foreclosures feel free to give me a call.

About the author: Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of real estate in Orlando, Windermere, Winter Garden Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit http://www.jerrysellsorlando.com/ for your real estate needs. Please give me a call if you have questions about the Orlando and Central Florida real estate market.Jerry LaRose, P.A., ABR, GRI, e-PRO, CLHMS, REALTOR® 407-580-7011(Copyright © 2008 By Jerry LaRose, P.A. All Rights Reserved.)

Are you self-employed or a partner in a small professional practice? If so, you're probably very familiar with all the different challenges of running a business. Ultimately, you're responsible for attracting and retaining customers, providing them with quality services or products, getting paid for your work, and then paying your employees and vendors-all before ever paying yourself a penny.

Then, from the remaining profits, the government wants their "fair share" of your success. Fortunately, with some knowledge and planning, you can take steps to minimize the taxes you end up paying. Here are five ways that self-employed individuals and Realtors® can cut their tax bill.

1. Employ your child

While you get to deduct the wages you pay to your son or daughter as a business expense, your child doesn't pay any federal income taxes on the first $5,350 of wages earned (in 2008). Plus, if your business is a sole proprietorship or a two-person partnership consisting of the child's parents, wages paid to your child under the age of 18 are exempt from social security and Medicare taxes as well.
Using the wages paid to your child to fund a Roth IRA is another perk of employing your child . The maximum IRA contribution is $4,000 in 2007, increasing to $5,000 in 2008. Imagine 60 years or more of tax-free growth within your child's Roth IRA.

For example: Let's say you're in the top tax bracket, and you pay your child who is under the age of 18 wages of $5,000 in 2008.

2. Employ Your Spouse of Other Family Member

If your practice has a 401(k) plan or SIMPLE IRA in place, consider paying your spouse or other family member over the age of 21 enough in wages to max out their allowable salary deferrals, provided he or she isn't already doing so through another employer. For 2007 and 2008, a person can contribute up to $15,500 ($20,500 if 50 or older) into a 401(k) plan, and up to $10,500 ($13,000 if 50 or older) into a SIMPLE IRA. Remember, money contributed into these plans grows tax deferred and is usually protected from your creditors too.

Note: Be aware that there are some costs to you. Expect to pay social security and Medicare taxes at a rate of 15.3 cents for every $1.00 of wages paid to your spouse or family member. You'll generally owe unemployment taxes and workers' compensation insurance on their wages as well.

For example: Let's say you're in the top tax bracket, pay your spouse $17,000 in wages, from which your spouse contributes $15,500 into a 401(k) plan through salary deferrals.

3. Consider an HSA

With the rising cost of health insurance, high-deductible plans are becoming more attractive to healthy professionals. The rules now allow you to combine a high-deductible plan with a tax-advantaged Health Savings Account (HSA).

Here are the basics about HSA's:

• Your practice can make pre-tax contributions into an HSA on behalf of you and your family members.

• Money can be withdrawn tax-free from your HSA at any time to pay qualifying medical expenses.

• Any money remaining in your HSA upon your reaching the age of 65 can be withdrawn penalty-free to help fund your retirement.

For 2008, people with family coverage can contribute up to $5,800 into their HSA, while people with individual coverage are capped at $2,900. The government really wants HSAs to succeed, so you should be able to find an adequate high-deductible health insurance option within your state.

For example: Let's say you switch to a high-deductible health insurance plan and contribute $5,800 into a Health Savings Account.

4. Incorporate Your Business

Once the profits in your business exceed $230,000 (in 2008) per owner, you could save some taxes by incorporating. That's because you avoid paying the 2.9% Medicare tax on money withdrawn from your practice as S-Corp dividends instead of as salary.

Why is $230,000 the magic number? That's the maximum amount of salary that you can use to calculate your retirement plan contributions in 2008.

Beware of the costs of incorporating, however, including having an accountant prepare your corporate tax return, additional payroll taxes and worker's compensation insurance now that you'll be on the company's payroll, and a variety of minimum taxes and filing fees assessed by many states.

For example: Let's say you change your business structure from a sole-proprietor to an S-Corporation, earn $330,000 in profit, from which you take a salary of $230,000 and S-Corp distributions of $100,000.

5. Set up a More Sophisticated Retirement Plan

From what I've seen, most practices have relatively basic retirement plans in place, such as a SIMPLE IRA or a Safe-harbor 401(k) plan. While these plans are generally more than adequate, you should be aware that there are more sophisticated plans that you can establish that allow for increased annual contributions for you and your partners, without requiring you to contribute more money into the plan on behalf of your staff. You'll want to find a retirement plan specialist to help you design the best type of plan to fit the specific needs of you and your practice.

Five Ways To Save

Check with your Tax Professional to see if it makes sense to institute any of these five tax-saving strategies early in 2008. By investing some time now, you could earn substantial dividends in the form of reduced taxes down the road.

Top Ten Short Sale Questions Answered

Number 10

I can't make my house payments, but I do have an ability to pay back all or part of the negative equity. Also, I want to preserve my credit score...is a short sale right for me?

Probably, not. In cases where the seller can pay back all or part of the negative equity (usually to the 2nd lien holder), it makes sense for them to work out a repayment plan. The lender will then release the lien and allow the home to close.

Number 9

If I pay mortgage insurance and default on my loan, why wouldn't that cover the deficiency amount?

The mortgage insurance is not there for your protection, just the mortgage lender's.

Number 8

Do I have to have my home "Approved" by the lender prior to offering it for sale as a short sale?

No. Technically speaking there is no such thing as being "Short Sale Approved." The actual approval only happens with an accepted offer.

Number 7

I just missed a payment and I know I will miss more...how long does the foreclosure process take and is there time to do a short sale?

The foreclosure process takes differing times depending on your state. In the Midwest a foreclosure can take over a year. In California its taking 6+ months. Generally speaking a well priced short sale being processed by an educated short sale listing agent will sell and close in less than 120 days.

Number 6

Will I still have to pay property taxes if I do a short sale?

Property taxes will always have to be paid as part of any accepted short sale. Whether it's you or the lender, it depends on their policies and the specific agreement you reach while negotiating the short sale.

Number 5

I owe more than my home is worth and I can't make the payment. Do I have to somehow qualify for a short sale?

The simple answer is NO. If someone can't make their payment and they are otherwise insolvent, they qualify for a short sale. Note: insolvent simply means their total debts are great than their assets.

Number 4

Do I have to pay income taxes...I have heard that I will get a 1099. Will the loss the bank takes be treated as a taxable gain to me...the seller...is this true?

It WAS true, now it's not. Consult your Tax Attorney or Qualified CPA. Very recently the tax law was modified and now most people who do a short sale will have no taxes due.

Number 3

How do you, my listing agent get paid...who pays your commission?

The bank will pay the commission along with all the other usual closing costs.

Number 2

Do I have to miss a payment to do a Short Sale?

No. Late last year most major lenders started accepting short sale offers from sellers who have never missed a payment.

Number 1

I want to do a short sale and have a 2nd mortgage, does this make me ineligible?

No. Both of your lenders will need to be satisfied in some way to complete the short sale. If your first lender will be paid off by the sale, then you just negotiate the terms with the second lender. Most short sales do involve 1st and 2nd lien holders.

About the author:

Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of real estate in Orlando, Windermere, Winter Garden Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit http://www.jerrysellsorlando.com/ for your real estate needs. Please give me a call if you have questions about the Orlando and Central Florida real estate market.

Jerry LaRose, P.A., ABR, GRI, e-PRO, CLHMS, REALTOR® 407-580-7011

(Copyright © 2008 By Jerry LaRose, P.A. All Rights Reserved.)

Economist suggests $5,000 home-buyer tax credit to spur homeownership. In the March Real Estate Insights, NAR (National Association of Realtors) chief economist Lawrence Yun, analyzes several federal plans proposed to curb foreclosures and stimulate the housing market. Yun proposes a homebuyer tax-credit of $5,000 tax credit (which currently exists in Washington, D.C.), which would cost the federal government $40 billion. Yun says: "A reversal in the weakness in the housing market, which has been subtracting about one percentage point off GDP growth, can add $40 billion to the U.S. Treasury, essentially offsetting the cost of the tax credit. If the initial $40 billion cost is hard to swallow, how about a more targeted tax credit for only first-time home buyers? That would cost the government about $15 billion."

We'll see if that happens!

About the author:

Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of real estate in Orlando, Windermere, Winter Garden Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit http://www.jerrysellsorlando.com/ for your real estate needs. Please give me a call if you have questions about the Orlando and Central Florida real estate market.

Jerry LaRose, P.A., ABR, GRI, e-PRO, CLHMS, REALTOR® 407-580-7011

(Copyright © 2008 By Jerry LaRose, P.A. All Rights Reserved.)

Should you buy foreclosed homes?  Good Question.  View this video to give you a bit of a heads up on what to expect.