Year-End Tax Tips for Senior Citizens

Here are some great tips I found on the RISMEDIA website with some money saving tax tips for seniors. 

1. Take a Senior Citizen Deduction

The IRS allows those age 65 and over to take an additional deduction worth $1,350 for single filers or $2,100 for a married couple. This also applies to individuals who do not itemize their deductions because it is added to their standard deduction.

2. Claim Stock Losses Now

Those seniors with stock losses should consider taking them before year-end. Losses are used to offset any stock gains, including gain distributions from mutual funds. In addition to offsetting gains, seniors can claim up to $3,000 in losses per year to effectively reduce taxable income for 2008. Any losses in excess of that amount are carried forward to future returns.

3. Seniors Seeking Cash Should Consider a Reverse Mortgage

Income earned from a reverse mortgage is tax free, meaning that seniors in need of cash can unlock the equity in their homes as a lump sum payment in 2008 with no tax implications. A reverse mortgage remains a viable financial tool for those 62 and older because it does not take into account credit history or a borrower’s current financial situation.

4. Pay Outstanding Medical Bills Now

An individual with either a low taxable income or large medical expenses should consider paying all outstanding medical bills before the end of the year as an additional deduction. This would include supplemental health insurance, doctor bills, hospital bills and prescription drugs. Eligible deductions also include medical mileage, the number of miles traveled to and from the doctor, pharmacy, or hospital.

5. Be Aware of Social Security Income Threshold

Those senior citizens who continue to work while drawing social security should be aware of mandated income thresholds. If income exceeds $25,000 for one person or $32,000 for a married couple, then social security begins to be counted as taxable income. This can be a large burden on senior citizens. If a senior is close to these income limits, they should consider pushing some income into next year to protect all of their social security from income taxes.

6. Understand IRS Rules for IRAs

The IRS requires taxpayers to begin withdrawing funds from their IRA’s in the year after the year they turn 70 and one half. In most cases, seniors should begin withdrawals in the year they turn 70 and one half. By waiting until the following year, seniors would be required to make two withdrawals, potentially entering them into a higher tax bracket.

“Senior citizens are being squeezed like never before and need to take advantage of any savings available to them,” said Eric Bachman, founder and CEO of Golden Gateway Financial, a comprehensive online financial resource for seniors and retirees. “With a few savvy moves, senior citizens can save themselves hundreds and even thousands of dollars in income taxes.”

“Older Americans need to be aware of the benefits made available to them by the IRS,” said Duhe, a certified public account and principal of Jeanne S. Duhe, LLC. “These are effective ways to save money in order to extend existing budgets even further.”

As one of only 10 Senior Real Estate Specialists (SRES) in Fort Collins, I try to provide valuable tips for our growing, mature population in Northern Colorado.

My blog has reached over 20,700 views thus far…thanks for the interest! 

Your friend in real estate,

Mike Malvey

Reverse Mortgage Q&A

There is a unique mortgage available to optimize retirement cash flow without having to sell your home and it is called a Reverse Mortgage.  To better understand what it is and who can use it, I’ve put together a little question and answer which should clarify most of your questions.

What is a Reverse Mortgage?

It’s a special type of loan that enables individuals aged 62 or older to convert some of their home’s equity into tax-free cash.  Unlike traditional equity loans, no repayment is required until the home is no longer the principal residence.

Who is eligible?

Homeowner(s) at least 62 years of age and occupy the property as their principal residence.  Eligible properties include single-family homes, condos and townhomes or a 2 to 4 unit dwelling.  The home must be owned free and clear or have a small balance that can be paid off with a reverse mortgage.  No income, employment or credit requirement.

How much cash can a homeowner receive?

The amount that can be borrowed is based on a HUD formula that factors in the age of the youngest homeowner, the interest rate, appraised value and county where the home is located.

What are some of the benefits?

The reverse mortgage customer always retains ownership and lives in their home.  Cash advances can be used for any purpose.  Loan proceeds are not considered “income” and do not affect social security, Medicare, SSI or Medicaid benefits.  The heirs can keep the home after repayment of the loan.

What type of interest rate options are there?

The reverse mortgage is an adjustable rate loan linked to the one-year U.S. Treasury rate.  Any adjustment in the rate has no effect on the amount or the number of loan advances the customer can receive, but causes the loan balance to grow at a faster or slower rate.

What are the tax-free cash options?

• Lump sum advance makes cash available. 
• Tenure plans provide fixed monthly advances.
• Line of Credit makes cash available on request.

What are the costs involved?

There are closing costs which can be financed into the loan.  These closing costs may include an origination fee, title insurance, appraisal fee, mortgage insurance premium and attorney fees.  Typically the out of pocket expenses equal $350.  The customer is expected to continue maintaining the property, paying the real estate taxes and hazard insurance premiums.

How is the loan repaid?

A reverse mortgage is due and payable when the property is no longer considered the customer’s principal residence.  The loan must be repaid in one payment either from the sale of the home or through other resources.

Consumer Education

Reverse mortgage borrowers are required to obtain a certificate from a HUD approved agency.  The purpose of this is to be sure that the borrower understands the reverse mortgage completely.  There is no fee for counseling and the certificate must accompany an application.

This loan can be a very good option for people who are house rich and cash poor meaning that there is a fair amount of equity in the home and your income does not meet your expenses.  I work with a lender who specializes in reverse mortgages and can help you assess whether or not it might be a good match for your situation.  And my specialization through my seniors real estate specialist (SRES) designation is working with adults over the age of 50 and understanding their unique needs.

For more information about reverse mortgages or the Fort Collins real estate (and surrounding areas) market then visit www.SearchFortCollinsMLS.com or email me at Mike@MikeMalvey.com. 

Thanks for reading!  Now over 13,000 views on my blog!!

Seniors Real Estate Specialist in Fort Collins, Colorado

What is a Seniors Real Estate Specialist (SRES)?  Realtors with the SRES designation are specifically trained to serve the needs and interests of real estate buyers and sellers age 50 plus.  I received my SRES designation in 2007 because I saw a great need to provide the same type of specialization that we receive as we age in health care…so why shouldn’t we receive the same in our housing and equity as well?

Today’s seniors have unique needs and as an SRES, my goals are to:

• Learn of anyone who will be involved in the decision making
• Build trust and rapport
• Define your parameters
• Help you form realistic expectations
• Consider alternatives in some cases
• Learn your needs and goals, life stage, health and activity stage, and motives for buying or selling
• Find out how this purchase/sale fits into long-term plans
• Plan a strategy for finding the right property or plan a strategy for selling your home

Each individual has unique needs.  I can help you because I have…

• A solid comprehension of Federal Laws for Housing for Older Persons Act (HOPA)
• Sensitivity to 50+ issues and priorities
• The devotion to provide reputable services that win and sustain trusting client and customer relationships

Purchase, Sale or Investment Housing Options:

• From communities that enable independent living to facilities that provide assistance and care
• Learn how pensions, 401K accounts, and IRA’s can be used in the purchase of real estate
• Examine how additional sources of income – Medicare, Medicaid, and Social Security may impact your real estate decisions
• Look at all available financing methods including reverse mortgages

SRES designees are not qualified to give financial or legal advice.  That is why I have assembled a team of experts to help serve you.  My team will provide you with professional advice, council, and direct attention to your specific needs.

Looking for a home can be frustrating at times.  If you need additional information, I can provide you with relevant resources and answers to any of your real estate related questions.

Are you undecided about your next move?  Part of my SRES course was dedicated to understanding current market trends, recent research, and the pros and cons accumulated by National and Government programs in these areas of interest:

• Active Lifestyles
• Independent Living
• Assisted Living
• Continuing Care
• Care Facilities
• Age-restricted Communities

A customized approach to your real estate needs is one of the many services I will offer to you.  I have the knowledge and expertise to counsel you through major financial and lifestyle transitions involved in relocating, refinancing, or selling the family home.  My team and I will offer you the opportunity to complete a real estate transaction with the patience, professionalism and expertise you deserve.

 Are you looking for a dedicated real estate professional?  One that will take the time and effort to complete a transaction that meets YOUR standards?  Look no further!  My knowledge and experience in the 50+ market will open up the door for a well-paced successful real estate transaction.

I am also a member of the Elder Care Network (ECN) of Larimer County which is a collaboration of family members and community professionals working to help caregivers, their families and support groups join with their elders to plan transitions, explore options, and support life choices.  This website is a great local resource for family and caregivers to locate information and resources that support the process of caregiving.

The local Fort Collins newspaper, The Coloradoan, ran an article on my specialization working with adults over the age of 50…click here to read the article.

You can search for homes online at: www.SearchFortCollinsMLS.com or email me directly for additional information at: SRESMike@MikeMalvey.com.  I’d be happy to assist you with real estate or caregiver questions so don’t hesitate to contact me: 970-420-7235.