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Gotta Shovel Your Sidewalks–It’s Now the Law!

December 25, 2010
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Just a reminder that starting this year, everyone in Massachusetts is legally required to keep their sidewalks clear of ice and snow.  Many cities already had ordinances requiring landlords and homeowners to keep their sidewalks clear, such as in Cambridge, but now the state requires it.

The Cambridge city website states:

City Ordinance requires property owners to remove snow from sidewalks next to their property or business within 12 hours of daytime snowfall and before 1:00 pm when it has fallen overnight. They must also remove or melt all ice within 6 hours of the time it forms.

Attorney Rich Vetstein has a nice article on the new Massachusetts law on the Massachusetts Real Estate Law Blog, and the Boston Globe also writes about it in today’s edition.  Note that in Boston, according to the Globe, “City Hall, however, still bears the ultimate responsibility for injuries that occur on those sidewalks, White said. For that reason, communities that compel residents to shovel the sidewalks have financial and legal incentives to enforce their ordinances.”

 

 

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Popular Kitchen Countertop Material Overview

July 27, 2010
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There are a lot of options available to you when selecting kitchen countertops. Natural stones are very popular, and can be both beautiful and durable. Some of the stone options can be quite pricey however. Manmade countertops range from inexpensive laminate to the industrial look of stainless steel. The final choice of material often comes down to a value-weighted evaluation of style, price, durability, and maintenance hassle.

Laminate

Wilsonart

Laminate has been the practical, economical countertop choice for many decades. It comes in a wide variety of colors and patterns, including look-alike versions for more expensive options like natural stones. Decorative edge treatments are also available, but can raise the cost noticeably. The main drawback has always been durability, as laminate scratches fairly easily (although scratch resistance has improved in recent years) and can be quickly damaged by hot pots and pans. On the plus side, laminate can be quite stain resistant except for things like inks and dyes. It is usually glued onto an inch-and-a-half particleboard base, which means a cosmetic update using new laminate can be relatively quick and inexpensive. Particleboard is susceptible to water damage, however, so improper installation or water leaks can mean major damage.  Cost is around $20 per sq.ft. installed.

Solid Surface

Dupont Corian

Solid surface countertops have been around for a while now (think Dupont Corian) and can be quite varied in color, design, edge treatments, and shape. One major advantage of this option is that the material is consistent in color and pattern throughout the thickness, which means scratches and other damage can be repaired using the proper scrubbing pad. Hot pans can scorch the surface, however, and improper installation near heat sources can result in cracks. Solid surfaces can stain as well, so things like wine and some sauces need to be cleaned up quickly. A very popular feature of solid surface countertops is the option of putting in sinks and backsplashes as an integral part of the countertop with no joints or seams. The sink is often given a different color/finish to create a nice visual separation. Cost is usually in the range of $60 per sq.ft. installed.

Wood

Devos Custom Woodworking

Wood undoubtedly owns the distinction of being one of the first kitchen countertop materials, but it’s still a viable option even with all the modern alternatives available. Wood can give a warm, natural feel to a kitchen that many proponents enjoy. Hardwoods like oak, cherry, maple, walnut, and mahogany are popular wood choices. Maintenance can be a little more involved, with regular mineral oil treatments recommended (especially near the sink – some design layouts even separate the sink with another material to avoid problems down the road). Although wood is sometimes thought to be less sanitary than other surfaces, manufacturers say this just isn’t true. If the surface is treated properly with non-organic oil, wood actually has inherent properties that prevent bacteria growth. Cost runs about $100 per sq.ft. installed, but can vary quite a bit.

Concrete

Slab Lab Concrete Studio

Concrete is a newer entry into the countertop field, but has become quite popular in certain areas. It can be stained almost any color and can be cast in unusual shapes relatively easily compared to other materials. Options such as integral sinks, backsplashes, and even imbedded objects are also available.  Manufacturing know-how and proper installation are critical for concrete, as mistakes and inexperience can easily lead to visible cracks. Even one manufacturer might have a couple dozen formulas tailored to particular applications. Different sealants are available and getting better all the time, but most concrete countertops require frequent waxing (up to once a month). Sealants are necessary because concrete is naturally quite porous and will stain easily without care. Concrete countertops can also be quite heavy, but kitchen cabinets can generally handle the weight without any issues. Cost averages about $110 per sq.ft. installed.

Stone

Holbrook Granite and Marble

Granite is the undisputed sales champ for natural stones, but other options include marble, slate, soapstone, limestone, travertine, and sandstone. Natural stones can vary drastically in color, pattern, and other unique features such as fissures, which is all part of the allure. Granite and other silica-based stones such as slate and soapstone tend to be more scratch and stain resistant than carbonate stones like marble, limestone, and travertine. The less durable stones can be easier to restore to like-new condition, however. Most stone countertops require the use of a sealant that must be reapplied every few years to protect the stone. Acidic foods like lemon juice are well known for causing stains, but this can usually be avoided by cleaning the counter reasonably quickly. Extremely hot pans can crack even the strongest stone, so it’s important to be careful when cooking. Stone countertops can also crack depending on many different factors such as installation, care, and the characteristics of the particular piece of stone. Scratches and chips can be repaired by polishing and resin injection, but it can be expensive depending on the damage. In general, however, stone countertops are very durable compared to other materials in they are cared for properly. Cost for natural stone can vary considerably, but most are in the neighborhood of $85 per sq.ft. installed.

Tile

Wallflower Design

Tile countertops can be a very attractive option given their relatively low cost combined with durability and ease of repair. Tile also opens up a world of design possibilities and creativity. While ceramic tile is often what people think of first in kitchens, many other materials such as marble, granite, and porcelain are available and can be a more affordable alternative to a solid version of the material. The main drawback to tile is the grout. Common issues include staining, chipping, cracking, and water penetration. Proper care in the form of frequent sealing of the grout can eliminate problems with stains and water but requires vigilance. Quality installation is important, but even the best jobs can succumb to settling floors and the occasional dropped pot. Stone tiles also have all the issues associated with their solid counterparts such as scratching, chipping, and staining. Tile is great for quick repairs, however, as the grout can be chiseled out and one or two offending tiles replaced with new ones (getting the grout to match perfectly after a repair can be a trick, however). Cost for tile also varies quite a bit, but expect to pay something like $40 per sq.ft. installed.

Stainless Steel

Specialty Stainless

The king of the industrial kitchen, stainless steel also has many great features for the home. Durability is high on the list of positives, but stainless steel is just as often chosen for its clean style and contemporary look. Scratches and dents can be issues, but new brushed and textured finishes help with scratches and wood substrates or thicker gauge material can help prevent dents. Minor scratches can often be blended in with the proper abrasive pad as well. Stainless steel can also stain and corrode, but proper cleaning and maintenance should eliminate this problem. Welded-in integral sinks are also an attractive option. Cost is probably going to run in the range of $150 per sq.ft. installed, but complexity of the countertop can affect the value noticeably.

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from → Renovations

Gift Taxes

July 27, 2010
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Many times when younger people buy homes, parents get involved and assist with down payments and renovations.  Sometimes it’s a big down payment as a wedding gift, or just a way for a parent to help their son or daughter settle down.  Be sure to consult your accountant or attorney for any questions, as this is merely a brief overview.

The Basics

The federal government taxes all gifts, and this tax is always paid by the giver, never the receiver (or donee, as used in IRS documents).
There are two major exceptions.
  1. Each giver can give a specific receiver $13,000 per year.  A married couple can give $26,000 per year to an individual.
  2. Each giver has a lifetime exclusion of $1,000,000, which is used up after one uses the $13,000.  So if you give $23,000 to an individual in one year, then $10,000 is subtracted from your $1,000,000 lifetime exclusion.

How to Use the Gift Tax Exclusions

If you’re married, and your child is married, you can give $13,000 x 4 = $52,000 each year to your child and her spouse.  If you need to give more, or if you aren’t married, or your child is not married, then you need to spread the money out over more than a year or use up some of your $1,000,000 lifetime exclusion.
If you’re needing to give more than the annual exclusion to your child, you can set up a bank account where you and your child both have access, and deposit the annual exclusion limits into it every year.  If you don’t trust your child completely, then there are other ways such as with a simple trust that your attorney can assist you with.  This trust could have rules on it saying that your child doesn’t have access to it for 3 years, but that it belongs to the child alone.

More Information

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from → Taxes and Refunds

4 Ways to Reduce your Rental Property Hassles

July 1, 2010
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Managing a rental property can sound like a hassle, but with some recalibration of your expectations, delegation of tasks, and setting up of a couple systems, you can be on your way to easier and simpler landlording.

Liability–Set up an LLC!

First, with liability, you gotta have an LLC for your rental property.  Some landlords will place each property in a separate LLC, whereas others will limit the number of units or tenants per LLC.  The LLC basically helps with shielding your personal assets from lawsuits should anything go wrong in a property under the LLC.  For things like this, I consult with Attorney Jason Cohen at Pressman & Kruskal.

Taxes–Have Separate Bank Accounts

Open up a separate checking account with an associated credit/debit card and escrow account.  This way any money you spend or collect related to the rental property will be easily trackable when it comes to filing your taxes.  Write all checks out of this account when paying contractors, and use the associated credit/debit card whenever buying things that are for the property.  Also, deposit all rents into this account–for more on this, see the next point.

Rent Collection–Use Automatic Deposit or Mail-in Deposit Slips

Have your tenants deposit the checks themselves.  Give them a stack of “Bank by Mail” deposit slips and pre-stamped deposit envelopes from your bank, and have them deposit the rents by mail.  Make sure they drop you an email whenever they send it out.  Note that you will have to give them your bank account # so they can write it on the back of their checks, along with the ubiquitous “FOR DEPOSIT ONLY” label.  Some people might not be comfortable with this, though keep in mind that every time you write a check out to somebody, they automatically get your bank account # and the bank’s routing information.

Repairs–Give your Tenants Permission to Call the Plumber

For minor repairs, arrange with your tenants to have them call the relevant plumber or handyman whenever something goes wrong.  You might have them email you or call you first to approve it if you’re worried about too many unnecessary plumber visits.  Technically, in Massachusetts, you can’t make your tenants call the plumber and wait for her to let her in, but you can set up an arrangement with them.  Most tenants tend to appreciate being to call in the plumber or handyman on their own, since they get instant service, and things actually get fixed.  Landlording is a pretty sleazy industry in the city, so tenants are generally impressed that you’re actually willing to have things fixed and that you’re willing to pay for it.  For plumbing issues, which tend to be the main reason tenants need things fixed, I use Barbara Taggart of Cambridgeport Plumbing.   Make sure to find a small plumber’s outfit that specializes in small jobs–the big companies will charge you an arm and a leg.  Same thing with a handyman–check out Angieslist to find a handyman or a small contractor–the big ones will overcharge, or not even want the small jobs.  As always, make sure any contractor is licensed and insured.
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from → Investment Property

How to Calculate Property Taxes

June 9, 2010
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Quick 2010 #s for Property Tax Rates

If you’re here just to find the quick #s for various towns’ property taxes, see the numbers below.  This is for 2010 only.  Read on if you want more information.

Arlington Property Tax Rate

  • Residential Property Tax: $12.11/$1000

    • Boston Property Tax Rate

    • Residential Property Tax: $11.88/$1000
    • Residental Exemption: $125.090 off the assessed value, or $1,486.07 off the tax

    Brookline Property Tax Rate

    Cambridge Property Tax Rate

    • Residential Property Tax: $7.72/$1000
    • Residental Exemption: $198,423 off the assessed value, or $1,531.83 off the tax

    Somerville Property Tax Rate

    • Residential Property Tax: $12.30/$1000
    • Residental Exemption: $138,011 off the assessed value, or $1,697.54 off the tax

    Why do you want to know how much property tax you’ll be paying on your future home?

    Basically, it affects your monthly payment amount and how much house you can afford to buy.  In some cities, property taxes are far from trivial amounts, so it’s important to have a good grasp of how much you can expect to pay.

    All home owners know about property taxes.  If you’re from the suburbs in Massachusetts, or from places like Northern California, you’ve probably heard homeowners complaining about property taxes, and seeing lots of news about property tax hikes and voters’ protests about the same.  Generally property taxes are the main way for towns to raise money to pay for their services.  For example, in Cambridge, about 60% of the town’s revenues come from property taxes.  Generally education is the largest expense–Cambridge spends ~30% on education, while a suburban town like Lexington spends ~50% on education.  The rest of the budget is allocated to important things like physical maintenance of the town, community centers, public safety, and government.
    a $400k condo in Arlington will cost you the same per month as a $445k condo in Cambridge
    Property taxes can also vary greatly from town to town.  In the figure below, a person will pay only $1,466/yr in property taxes for her $400k condo in Cambridge.  A similarly priced home in Arlington will cost $4,380/yr in property taxes.  (Note–these #s are from FY07–many towns adjust their tax rates annually based on previous year’s income).  The practical implications of this are in a person’s monthly payment.  For example, a $300k mortgage at 5.0% over 30 years will cost a person $1,600/month.  The additional tax in Arlington compared to Cambridge is $2914/yr, or $243/mo.  $243/mo will cover an additional $45k of mortgage.  In other words, a $400k condo in Arlington will cost you the same per month as a $445k condo in Cambridge.  That’s a big difference!

    Rough Comparison of Property Taxes in Different Towns

    Note that the property tax is usually a % of a property’s assessed value.  The term “assessed” value is a little misleading, as it is affected largely by town politics and need to raise revenue.  For example, in the current economy, properties in Dorchester tend to sell below their assessed values, while in Cambridge, properties are selling above their assessed values.  Sometimes towns will lower their tax rates only to increase their assessed values.  So make sure when calculating your property tax to use the official assessed value, and not the sale price or the appraisal value.

    So how do you calculate the property tax on a place?

    The basic steps are as follows, and then below I’ll walk you through specifically how to find the property tax rate on properties in Cambridge and Boston.
    1. Find the website of the town the property is in.  Specifically, the assessor’s office.  Some larger towns have special property tax websites.  A google search should find it pretty quickly.
    2. Input the address of the property
    3. See the assessed value.  Some websites will show the actual property tax being paid, but this isn’t as informative since you don’t know if the residential exemption has been applied or not.
    4. Multiply the assessed value by the tax rate.  Tax rates can be found on the assessor’s office sites pretty quickly via google.
    5. Subtract the residential exemption if applicable.  You may have to hunt around the town website to figure out what the amount of the residential exemption is.  The residential exemption is a benefit that communities give to owner-occupied homes.  When you do buy a home, or if you’re already in one, make sure to apply for the residential exemption–it’s not automatically given to you!

    Calculating the Cambridge Residential Property Tax

    Here’s an example of a Cambridge tax bill from the city’s annual flier:

    Sample Cambridge Tax Bill

    To  understand how the property tax is calculated, do the following steps:

    1. Go to the Cambridge Property Database
    2. Input the address of the property
    3. See the assessed value.  Let’s say the assessed value is $400k.  The tax rate is $7.72/$1000 (see the 2010 Flier on Taxes in Cambridge)
    4. Multiply the assessed value by the tax rate:  $400,000 * $7.72 / $1,000 = $3,088
    5. According to page 5 of the flier, the residential exemption exempts $198,423 off the assessed value, or $1,531.83 off the tax.  The final property tax amount on a condo with an assessed value of $400k in Cambridge is $3,088 – $1531.83 = $1,556.17/yr.
    To see the actual tax owed on a specific property (which automatically includes a residential exemption if it has been filed for), you can look at Cambridge’s Real Estate Property Taxes site.

    Calculating the Boston Residential Property Tax

    Boston’s property tax can be calculated as follows:
    1. Go to Boston’s Assessing Online Website.
    2. Input the address of the property.  Here, I picked a random house that’s currently on sale that I wouldn’t mind living in–49 Chesnut, Boston.
    3. On Boston’s site, you can actually see if the residential exemption is applied or not.  See the figure below of the Assessing Online Website’s results of 49 Chestnut.  You can see that the net tax w/out exemption is $31,121.80.
    4. If you are going to live in the property you are buying, then you’d need to subtract the exemption.  The Boston residential exemption is $1,486.07 off the tax amount. See the City of Boston’s 2010 Residential Exemption flier.
    5. The total tax is $31,121.80 – $1,486.07 = $29,635.73.

    Boston's Assessing Online Results for 49 Chestnut

    So hopefully now you can calculate property taxes on any property you’re interested in.  Note that some very small towns may have limited online presence–don’t be shy, pick up the phone and call up the city’s office to find the #s and information that you need.  Small towns in Massachusetts tend to have very friendly folks working the government offices, and you’ll find them very helpful.  Better yet, ask your broker to do the research for you!
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