(Tax accountants) An Overview of Home Information Packs
No commentsBy Haywood Dickerson
Home owners will soon have just three months to sell their homes or be forced to re-issue the seller’s information pack at an estimated cost of 1000 for the average semi-detached home. This would be in addition to the original 1000 paid out for the original sales pack.
Much has been written about the Home Information Packs (HIP’s). Here we aim to examine the final details, just released.
From June 2007 it will be compulsory for all sellers to produce a dossier containing certain basic facts regarding the sale of the property. Ministers estimation of the costs of this survey are 776, a figure that the experts dispute. They say the figure is much more likely to be 1000. These figures are based on an average semi.
The information given in the dossier includes searches, deeds, description of the property and an energy efficiency rating. However, it appears that there are some rather worrying exclusions in the list. For example, there is no reference to rights of access, ground stability, natural subsidence or effects of mining. Risks of flooding are not included; neither is contamination from radon gas or other substances. Telecommunication links seem to have been overlooked too.
Despite this cost to the seller, it appears that if a buyer is borrowing in excess of 80% of the property value, they’ll still be expected to commission and pay for valuations.
With regard to the three month time limit on sales, it appears that mortgage lenders will refuse to advance cash to buyers where the HIP is over three months old. Also, if house is taken off the market for over 28 days within those three months, a new HIP will have to be obtained. Where the reason for the property being off the market for 28 days was connected with a sale, the rule would not apply.
Where a property is marketed for sale on a private website or even by a for sale sign in the garden, the failure to supply a HIP will result in a fine of 200 per day.
In reaction to the announcement of these regulations, a Tory spokesman was quoted as saying the packs were “expensive, deficient and dangerous. The refusal to tell families whether the back garden will be safe for their children or of potential flood risks, delivers a serious blow to the credibility of these packs.”
.The Law Society are concerned that there may be significant defects in the scheme in the there is no provision in the regulations for information within the HIP to be authenticated or confirmed by the seller. They are of the opinion that there should be a warning that reinforces to the buyer the risk of taking on substantial liabilities and commitments.
When you take into consideration the fact that the VAT alone from these packs will bring in 111m per year into the treasury you realize why the Government has been accused of yet another stealth tax implementation.
So there you have it. It appears to be that, for better or worse, HIP’s are here to stay.
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Are Your Finances Prepared for Disasters?
By Mervin Hester
Home is where most people feel safe and comfortable. But sometimes - say, when a hurricane, flood, tornado, wildfire, or other disaster strikes - it’s safest to pack up and go to another location.
When it comes to preparing for situations like weather emergencies, financial readiness is as important as a flashlight with fully charged batteries. Leaving your home can be stressful, but knowing that your financial documents are up-to-date, in one place, and portable can make a big difference at a tense time.
Here are some tips for financial readiness in case of an emergency:
Conduct a household inventory. Make a list of your possessions and document it with photos or a video. This could help if you are filing insurance claims. Keep one copy of your inventory in your home on a shelf in a lockable, fireproof file box; keep another in a safe deposit box or another secure location.
Buy a lockable, fireproof file box. Place important documents in the box; keep the box in a secure, accessible location on a shelf in your home so that you can “grab it and go” if the need arises. Among the contents:
- your household inventory
- a list of emergency contacts, including family members who live outside your area
- copies of current prescriptions
- health insurance cards or information
- policy numbers for auto, flood, renter’s, or homeowner’s insurance, and a list of telephone numbers of your insurance companies
- copies of other important financial and family records - or notes about where they are - including deeds, titles, wills, birth and marriage certificates, passports, and relevant employee benefit and retirement documents. Except for wills, keep originals in a safe deposit box or some other location. If you have a will, ask your attorney to keep the original document.
- a list of phone numbers or email addresses of your creditors, financial institutions, landlords, and utility companies (sewer, water, gas, electric, telephone, cable)
- a list of bank, loan, credit card, mortgage, lease, debit and ATM, and investment account numbers
Social Security cards
- backups of financial data you keep on your computer
- an extra set of keys for your house and car
- the key to your safe deposit box
- a small amount of cash or traveler’s checks. ATMs or financial institutions may be closed.
- Consider renting a safe deposit box for storage of important documents. Original documents to store in a safe deposit box might include:
- deeds, titles, and other ownership records for your home, autos, RVs, or boats
- credit, lease, and other financial and payment agreements
- birth certificates, naturalization papers, and Social Security cards
- marriage license/divorce papers and child custody papers
- passports and military papers (if you need these regularly, you could place the originals in your fireproof box and a copy in your safe deposit box)
- appraisals of expensive jewelry and heirlooms
- certificates for stocks, bonds, and other investments and retirement accounts trust agreements
- living wills, powers of attorney, and health care powers of attorney insurance policies
- home improvement records
- household inventory documentation
- a copy of your will
Choose an out-of-town contact. Ask an out-of-town friend or relative to be the point of contact for your family, and make sure everyone in your family has the information.
After some emergencies, it can be easier to make a long distance call than a local one.
Update all your information. Review the contents of your household inventory, your fireproof box, safe deposit box, and the information for your out-of-town contact at least once a year.
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Strategies for Planning Wealth
By Haywood Dickerson
The last ten years has seen massive wealth growth in the United States. This brings up the issue of wealth planning, particularly from a tax perspective.
Got Wealth?
There is little doubt that the overall wealth of a significant percentage of Americans has grown like a weed in your garden over the last 10 years. There are a variety of reasons for this growth. Real estate appreciation has set historical records. Stock options are creating massive paper wealth, while also creating tax nightmares. Demographically, a bulge in our population, the baby boomers, are reaching retirement age. Regardless of the reason, wealth planning is becoming a big issue for many people.
Wealth planning strategies tend to be very detail oriented. They also tend to be an option only for certain situations. As a result, you need to speak with a professional regarding each particular strategy to determine if they are of assistance to your situation. These techniques are not universal solutions like stuffing money into a 401k, so don’t take them as such. Let’s take a look at one popular strategy.
Once wealth planning strategy that is very popular deals with real estate. The strategy focuses on making a fixed asset, the equity in your home, grow. Many homeowners do not realize that the equity in their home is not growing. Instead, it is the value of your home that grows, which creates ADDITIONAL equity. Let’s look at an example.
Assume I own a home worth $1,000,000 and have $500,000 in equity. The equity is just sitting there. It does not grow. If the value of the home drops to $900,000, I still have the same amount of equity. If the home appreciates by $100,000, I get an additional $100,000 in equity because the house increased in value, not because my original $500,000 grew in any way. If you can get your mind around this concept, you will realize the problem.
The strategy for this situation involves turning the equity in your home into a growing asset without taking on any additional risk. The process is very simple, but a masterful one. You refinance the home to remove as much of the equity as possible. The equity is then put into no risk custom life insurance product. It grows tax free in the product, which is based on the performance of the stock market. If the stock market has a negative annual return, the insurance policy is tailored to eliminate the risk by setting your annual gain or loss at zero. Put another way, if the market loses 10 percent this year, you lose nothing.
This simple strategy is a tremendous way to double the wealth you gain on your home. Instead of just being happy with the appreciation, you get both appreciation and the tax free gains in the insurance policy. In laymen’s terms, this lets you leverage your property for double gains.
Wealth planning strategies are very subject specific. The above one works with real estate, but no other subject. To identify the best solutions for your situation, you should consult with a top tax attorney, financial planner or accountant.
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