How Depreciation Saves You Money

Claiming a depreciation expense allows you to take a dollar amount that equates to about 3.6% (residential) or 2.5% (commercial) of the value of an investment property building (excluding the value of the land) as an expense for a number of years (27.5 for residential and 39 for commercial) to lower your annual taxes due to the IRS. This means when you calculate your net income each year for a residential investment property that is worth $300,000 (excluding the land value), you would deduct $10,909 from your net profit number before you calculate your tax liability. This means you are not paying taxes on that $10,909 if you record your depreciation expense.

When you are ready to sell the property, taxes do become due on the amount you deducted each year but it is still best to take the deprecation expense. Even if you don’t claim the expense each year, the IRS will calculate your capital gains taxes as if you had.

To avoid taxes on capital gains when you sell an investment property, consider a 1031 exchange. If you plan to take your profit from one investment property and use it to buy a similar investment property this option might work for you. Speak to your accountant about this option and make sure you understand the requirements. There are various rules regarding the handling of funds and deadlines that must be met in order to avoid the tax implications.

(Please note this blog should not be construed as financial advice. It reflects my opinion and experience only, which might not apply to you. Always consult your accountant before you make financial and tax decisions.)

Buyers Should Request a CO

I recently met a couple that bought a single-family home about five years ago. They were first-time home buyers, and at the time they were represented by an agent I do not know. The home they purchased was recently renovated, including the entire kitchen. Their transaction seemed to go smoothly, and they were confident that they got a great deal on the price—until their home ownership dream quickly turned into a nightmare. In just a few months after closing, they started having extensive plumbing problems, and eventually their entire upstairs bathroom started sinking down into the kitchen directly below.

This sounds unimaginable, but this type of scenario can happen when renovations are completed without the owner taking the proper steps. The prior owner had removed a supporting wall to redesign the kitchen and failed to consult with an engineer and carpenters to ensure that a proper supporting beam was installed. In addition, the owner had renovated without applying for a permit or obtaining a certificate of occupancy (CO). The new buyers were completely unaware of the seller’s negligence. They were left with an overwhelming expense that they could not afford, and soon afterward the home went into foreclosure.

I tell this story because it is one that could have been avoided. Often, the importance of a CO is communicated to sellers, but it is even more important that CO’s be fully understood by buyer agents and homebuyers. The process for obtaining a CO starts with applying for a permit. Each town has a list of the types of renovations that require a permit and CO. Obtaining a permit requires paying a small fee (generally $10 to $13 per $1,000 worth of planned work) and presenting an outline of the work planned for the home. You might also have to visit several town departments to verify information about your home beyond your work’s scope.

Through this process you will get feedback from your local building department and other town agencies that will help you adjust and finalize your plans. Once the work is completed, an inspector will visit your home and determine if the project was completed in accordance with current building codes. If the inspection goes well, you will receive a CO for your records, which you can share with future buyers. The process is quite simple and requires just a few hours of time and interaction with experts that can turn out to be very helpful. You will gain knowledge about various town departments and how their services protect you, your home, and the property values in your community.

If you are a potential buyer and you notice renovations in a home that you plan to purchase, you should always ask for a CO. If there is none, you can request that the seller apply for a permit retroactively and obtain a CO before you close. Buyers that don’t require this tend to be experienced contractors or tradesmen. These types of professionals often have confidence that they can inspect renovations themselves and are comfortable with the risks involved with doing so. Most homebuyers should avoid that type of risk.

You can learn more and apply for permits online in most lower Fairfield County towns. Click the link for your town.

Stamford | Greenwich | Darien | Norwalk | Fairfield | Wilton

What do Expired Listings Teach?

I checked the expired listing count in Stamford this week. Since January there were 254 expired listings and 827 listings that closed. These numbers include single family homes and condos. If you just look at single family homes, 432 homes have closed and 151 have expired. I check these number from time to time and they tend to be consistent over the years. Roughly 30% to 40% of homes expire without selling in their first listing term, year after year after year.

Many people think that the primary reason expired listings don’t sell is price and that is technically true. However, to leave it at that does not tell the whole story. If expired properties were listed at a higher price per square foot on average, the story would be that simple. However, expired listings are generally not listed at a much higher price per square foot. In fact, since January the median sold price per square foot was about $230 in Stamford and the median price per square foot for expired properties was $225. The average agent is looking at homes of similar size and pricing “soon-to-be expired” listings accordingly.

If the initial list price per square foot of expired listings is not generally outrageous, why do so many agents miss the mark on pricing them each year? My observation is that they have a great deal of trouble adjusting for home factors that have nothing to do with size. These factors include awkward or unexpected floor plans, poor light flow, and deferred maintenance projects that buyers are not interested in taking on. The difficulty in explaining the impact of these factors can’t be overestimated, so many agents avoid talking about them with their sellers. Other agents choose to address these factors weeks later after they have priced the property incorrectly, conducted weeks of marketing that target the wrong buyers, and let the initial excitement about the new listing die down, never to be recovered.

My approach to this topic entails full disclosure before listing a home. By offering to tour similarly sized properties with my seller clients I provide them with a context for pricing that can take into account differences in floor plan, design, lot condition and maintenance. I also explain the real risks involved with pricing that does not reflect what buyers and appraisers are actually evaluating beyond size. The best buyers for your home (those that can and will pay the most) will not get exposed to it and your home will be constantly competing with homes that show better. Finally, I encourage discussions about challenging floor plans and maintenance issues, since it is a good opportunity to put many heads together and address everything that impacts a showing before the home is listed. I have seen ways that furniture can be added and rearranged to improve the flow of an awkward floor plan. I have had architects and contractors offer alternative designs and pricing that help buyers see more potential. I have also worked with sellers to get on top of the maintenance issues that buyers fear most.  These solutions can keep buyers interested in a home that they might have otherwise overlooked.

We know real estate value is about so much more than size, so it is important to address the bigger picture. Ignoring the myriad of factors that impact perceived value is not wise, unless your goal is an expired listing. Since every buyer eventually becomes a seller, I make sure my buyer and seller clients tour enough homes to see the correlations between price and factors unrelated to size for themselves.

Ensuring my clients are well-informed before they make important, irreversible decisions is a priority. Some sellers might still want to price too high, wish for luck and accept the negative consequences of being in the wrong price category. Others might price to generate the most traffic and excitement among agents, which usually brings the highest possible sales price. Unless a property is in the extreme luxury or custom designed category (in which none of the above applies), I encourage sellers to go in the later direction.  In the end, a list price is the seller’s decision, but it should never be misguided because important and challenging conversations are avoided.

Energy Efficiency Improvements Can Save You Tax Dollars

For my clients in their first home in 2015, this year will be the first time that many will be able to write off expenses such as closing costs, job related moving expenses and mortgage interest. Also, anyone who owns a home also gets a benefit from being earth-friendly. You can receive a tax credit for many energy efficiency improvement expenses that you had in 2015. According to Turbotax, here’s what can and can’t be claimed:

You can claim:
Solar water heating costs
Solar electric costs
Fuel cell property costs
Small wind energy property costs
Geothermal heat pump property costs
Qualified central air conditioners
Certain advanced main air circulating fans
Exterior doors, exterior windows and skylights
Metal or asphalt roofs with qualified coatings
Insulation material or system to reduce heat loss
Certain electric heat pump water heaters, electric heat pumps
Furnaces and hot water boilers powered by natural gas, propane or oil


You can’t claim:
Energy Star appliances
Low-flow showerheads
Low-flush toilets


The Residential Energy Credits for 2015 are:

  • The nonbusiness energy property credit
  • The residential property credit.


If you use less than 80% of an energy efficient item for personal (not business) purposes, you can claim the personal use portion of the costs to determine the credits.

Example: John’s business usage of the doors and windows he installed is 82%. He can claim only 18% of the cost of these items when determining his credit.

If you received a subsidy from a public utility company for your energy-efficient purchase, remember to reduce the subsidy amount from the purchase price before you claim it. If you include the subsidy in your income, you don’t have to make this adjustment.

The residential energy efficient property credit equals 30% of what you spend on qualifying property such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property. These credits are claimed on Form 5695. Here’s a bit more information on this credit provided by Turbotax.

  • Generally, labor costs are included when calculating this credit. Also, no cap exists on the amount of credit available except in the case of fuel cell property. Qualified fuel cell property is limited to $500 for each one-half kilowatt of capacity of the property.
  • Not all energy-efficient improvements qualify for these tax credits. For that reason, you should check the manufacturer’s tax credit certification statement before purchasing or installing any of these improvements. The certification statement can usually be found on the manufacturer’s website or with the product packaging.
  • The IRS cautions that the manufacturer’s certification is different from the Department of Energy’s Energy Star label, and not all Energy Star labeled products qualify for the tax credits.
  • If you’re eligible, you can claim both of the residential energy credits. Because these are credits, not deductions, they increase a taxpayer’s refund or reduce the tax he or she owes.
  • Keep in mind, these are not refundable credits, which means you can take the credit up to the tax owed. There is no refund of any credit amount left over.
  • Further information on these credits can be obtained in IRS Form 5695. This form and more information can also be obtained through You should also consult with your accountant for tax advice.

What Renters Don’t Know

I remember what it was like to be a renter in my twenties. I watched the rent creep up each year and worried about how I would afford it. I also knew so many things about my space were beyond my control. I was stuck with the appliances and the mediocre finishes because the apartment I lived in was not mine. At the time, I also was completely unaware of what it would be like to buy a property and what I should be doing to plan for becoming a property owner.

If my parents had not encouraged me to buy a condo in my late twenties, I am not sure the thought would have occurred to me at the time. My parents are Jamaican immigrants who I admire so much for achieving the American dream despite various obstacles. Homeownership and responsible money management were always something they took very seriously. They knew I should not rent long-term well before I did, and they were happy and able to help me with the down payment on my first home. When I look back on those years I think about what I did not know as a renter and how many renters lack the information they need to make the best financial decisions before they are ready to buy. Now, as a Realtor, when I meet with renters for a counselling session they either want to buy soon or they are thinking of buying in the next few years. There are a few things that many are surprised to learn:

Renters can get my assistance to negotiate rents and renewal lease terms even if I was not engaged to secure the rental. I offer this service at no cost.

Landlords in Fairfield County consider many factors when it is time to renew a lease. They tend to want to keep current tenants in place as long as they pay on time and take care of the property. They also know that there is a risk of having 2-3 weeks of vacancy if a tenant moves out. This does not mean that landlords will not raise rents for tenants that are in place. However, it does mean that they are responsive to what the market for rentals is like when leases have to be renewed and they make decisions accordingly. When I advise renters on how to respond to proposed rental increases, I am able to provide the renter and landlord with facts about the current rental market and discern if an increase is justified. In a market where rents are improving, I can generally negotiate rents to stay the same or I can negotiate a rent that does not reflect the full market increase for comparable properties. Accordingly, if the market demand is declining and rents are going down, I can often negotiate a decrease in rent for tenants that are in place.

Middle and upper middle class renters often qualify for first-time home buyer programs.

These programs are not just for low-income residents. There are many good loan products for first-time buyers that offer reduced interest rates and savings on loan costs. May also offer low down payment options, which can allow you to buy sooner rather than later and lock in the low interest rates that we are currently experiencing. In our currently market, many condo owners have a lower monthly housing cost than renters in similar sized spaces. I help renters explore and compare the various first-time home buyer options offered by banks and also through the FHA (Federal Housing Authority) and HDF (Housing Development Fund) programs.

Buying a property in Fairfield County still affords you the opportunity to move quickly.

Of course, it is a bit easier to move if you rent versus buy. However, if you own, moving is not as difficult as many people think. We are so lucky to live in Fairfield County. We have a very strong rental market. It is fairly easy for a Realtor to rent out any property at market value and if you are really in a hurry you can rent it below market value and have basically no vacancy losses. I generally rent properties in 2-3 weeks and most or all of my owner’s expenses are covered by the tenant even when we experience the weaker rental markets. Selling a small property (especially condos) can also happen relatively quickly, and on average in about 3-4 months. I advise my clients to secure properties that have the features and locations that most buyers and renters want, so renting out and selling these properties quickly is not a huge challenge unless we are in an extreme economic downturn; and even then, you have the choice to rent or sell. Usually, one choice is better than the other and affords you the option to move with minimized risk.

I offer free counselling sessions to help people prepare for a variety of lifestyle options including, renting, buying, investing, selling, downsizing or moving into assisted living. It is never too early to start planning, so call for an appointment or let me know if you know anyone who needs assistance.

Your Home is a Small Business

This month, I reached out to Elizabeth Clark from Consider It DONE! Bookkeeping Services to have her share her take on proper bookkeeping for home owners and investors. Even if you don’t run your own business, bookkeeping is incredibly important. Every property renter and property owner should take the same care to track expenses and revenue to make the best lifestyle decisions over time.

You can apply business bookkeeping techniques to your household management so you know where you are spending your home maintenance, repair, design and home improvement budget. Tracking allocated resources and expenses is essential, not only for tax purposes but for comparing expenses over time and figuring out ways to manage them. It is also great for comparing the quality, relative cost and types of services of different vendors. I posed the following questions to Elizabeth to shed more light on the issue.

Often clients who are just starting out on their own don’t really know their cost to live. Should proper bookkeeping precede the development of a budget? 

You can’t have a budget without proper bookkeeping. In today’s world, it is easy to keep track of your finances. You can literally scan receipts on your phone and they go directly into software that will keep all expenses categorized. At the end of the month you know how much you spent on household utilities, morning coffee runs, gas for your car, and other household expenses. Once you have that information you are dealing with facts.  It probably takes about three months to put together a real working budget.  Once you have a budget, you can start saving towards an addition on your home, a startup venture, retirement, and other long-term planning.

What are the biggest mistakes that your business clients make in the bookkeeping process?

The biggest mistake that my clients make is not having a bookkeeper! Many of my clients come to me with a shoe box filled with receipts and beg for me to get them caught up. Thankfully, at the end of the catch-up process I am able to provide reports that can be used for tax filings, budgets, and overall business planning. It forces my clients to work with facts and not assumptions; usually resulting in a new excitement and passion for their business.

Can you share some tools and tips that can help my clients stay financially organized, whether he or she is an investor, renter or home owner?

I recommend keeping business and personal expenses separate. If you were walking in to a grocery store to buy food for your family, do not use your business credit card. If you are enjoying a dinner with a client make sure you use your business account. Many business write-offs are lost because their bookkeeper does not have access to their personal bank statements.

Can you share what homeowners can learn from small businesses?

So many people run their homes and businesses in financial fear. Household management should be approached like a business. If you are building a home (or adding an addition), hiring staff, or have a philanthropic tendency, all of these expenses should be accounted for carefully. There are other tasks that my firm can accomplish such as bill paying, project management, and overall household organization. Consider it DONE! can provide efficiency to a household. This results in more time with your family and a better sense of well-being. Everyone can use that.

Is there anything else you’d like to add?

I am passionate about business.  The ApprenticeThe Profit and Shark Tank are some of my favorite shows!  I have owned 4 companies and I know the juggle of being a working mom.  As a business owner, I have been the office manager, administrative assistant, bookkeeper, sales team and marketing guru!  Wanting to focus my skills, Consider it DONE! Services LLC was born.

Our primary focus is bookkeeping, but sometimes we are hired for administrative or organizational tasks.  Our list of clients is varied – retail, restaurants, real estate development, art consultation, trades, interior design and even a pizza truck!  We enjoy watching our client’s companies thrive and we do our best to keep clean books for accurate financial reporting.  Also, discretion and respect for all things private are always considered. It may be a shoe box filled with receipts or just a fresh look at your books….we are here to help!

For more information about organizing your financial life, contact Elizabeth Clark at:
Consider it DONE!   
Bookkeeping & Administrative Services


Chinese Investors Still Love NYC

Since I work with investors as well as home buyers and sellers, I have to stay up-to-date on the NYC market. I partner with NYC agents and agents in all major metro areas to make sure I can provide a full range of services, not only in the US, but all over the world. I recently had a chat with a colleague in NYC, Cici Cao, to keep my investors in-the-know about Chinese demand.

What is the state of the Chinese buyer market in NYC right now?

As of right now, a lot of high end Chinese buyers are making decisions much slower than a few years ago. Because of the 10 year visa being approved, it’s much easier to get in and out of the US. Some of them will make multiple trips to see properties before deciding on one. Most of the Chinese buyers are still thinking of buying here for their children, either for school or for a residence for them to live while they work in the States.

Aside from the usual marketing venues, what is the best way to appeal to this market when I have a property listing?

Other than the usual staging, video and 3d floor plans we have started to test out another app called “Periscope”. It’s an app where you can do  your open house on live stream and people can join in and watch the live house tour. This is definitely something interesting and I just started to test this out so I can’t tell you if it is effective yet. I also have connections with other websites in China where they would advertise my listings in Chinese so this doubles my exposure for my listings.

Are there any specific types of properties that interest Chinese buyers in NYC over others?

Chinese buyers in Manhattan particularly like Central Park view apartments and water view apartments. Also, they typically like newer buildings rather than older structures. If there’s a kid involved, then they would care very much about the schools around the property.

What are the obstacles for Chinese investors in the US?

Getting the money to purchase in the US has always been an obstacle to Chinese buyers since they are limited to transferring only $50,000 per year per person out of China. I hope this will change soon so there will be more buyers that will be able to invest in the States. A lot of them also don’t really know the whole picture for investing since they only are exposed to the things that are being talked about on social media. Some think the only good areas to purchase are around Central Park.

Also, many Chinese buyers don’t really understand the different types of properties in Manhattan. For instance, they have no idea what a co-op is and why it would be very difficult for them to purchase one even though the prices are much lower than a condo. This is why having a good agent is very important for pursuing the right property and getting the best value.

For more information about NYC real estate, contact Cici Cao at  or at Make sure to let her know I sent you.