All About Personal Accounting

If you have a checking account, of course you balance it periodically to account for any differences between what's in your statement and what you wrote down for checks and deposits. 


Many people do it once a month when their statement is mailed to them, but with the advent of online banking, you can do it daily if you're the sort whose banking tends to get away from them. 


You balance your checkbook to note any charges in your checking account that you haven't recorded in your checkbook. Some of these can include ATM fees, overdraft fees, special transaction fees or low balance fees, if you're required to keep a minimum balance in your account. 


You also balance your checkbook to record any credits that you haven't noted previously. They might include automatic deposits, or refunds or other electronic deposits. Your checking account might be an interest-bearing account and you want to record any interest that it's earned. 


You also need to discover if you've made any errors in your recordkeeping or if the bank has made any errors.  


Another form of accounting that we all dread is the filing of annual federal income tax returns. Many people use a CPA to do their returns; others do it themselves. Most forms include the following items:


Income:
Any money you've earned from working or owning assets, unless there are specific exemptions from income tax. 


Personal Exemptions:
This is a certain amount of income that is excused from tax. 


Standard Deduction:
Some personal expenditures or business expenses can be deducted from your income to reduce the taxable amount of income. These expenses include items such as interest paid on your home mortgage, charitable contributions and property taxes. 


Taxable Income:
This is the balance of income that's subject to taxes after personal exemptions and deductions are factored in.

All about mortgage loan

As the number of people undertaking loans to meet their personal expenses has risen significantly, a lot of people are undertaking mortgages in order to secure the loans. Mortgage can be best defined as the method of making use of personal property and giving it out as security in lieu of the payment of the debt undertaken by an individual. 


Mortgage is a term which has its origins from the French word, lit pledge which hints at a legal component used for procurement of a loan. Mortgages are generally given out on personal property, such as home. Most of the loans secured through the mode of mortgages are secured by mortgaging the real estate property i.e. the home of an individual. 


In some other cases, where the loan is to be procured for extremely professional purposes, lending companies even accept other personal properties, such as car, land or even ships to be mortgaged.


Mortgage loans are undertaken by the masses mostly when they want to make a new investment in the sphere of real estate, property and land. 
Before giving out any part of the personal property on mortgage, it is advisable for an individual to be well-versed with all the intricacies and legal formalities which are involved in the process of securing loans through mortgage. 


There are several types of mortgages available which can be undertaken by a person to secure his much-needed loan. One of the kinds of mortgage which can be undertaken by a person is mortgage by legal charge. In this situation, a person can mortgage his personal property in lieu of a loan, while retaining the authority to be the legal owner of his mortgaged private possessions. However, this also allows the creditor (financial institution) to access the right to exercise the power of their security and sell/lease the house, if the debtor fails to repay the loan in pre-determined time. 


A financial institution or the lending company which gives out the loan to an individual generally resists taking chances and gets the financial deal registered in public records so as to remain on the safer side. Also, the lending institutes insist that the property proposed by the debtor is not already given out for some other form of loan and is free from all legal hassles. 


There are two types of documents included in the mortgage loan. These include mortgage deed and deed of trust. The deed of trust can be described as a legal deed by the borrower to a trustee which is given out at the time of securing the loan. The deed of trust follows no standard and varies from deal to deal. Most of the mortgages are referred as legal deed of trusts officially. 


The other way of mortgage is mortgage by demise. In this scenario, the creditor i.e. the lender company becomes the official owner of the property, in case the debtor dies within the repayment period i.e. if the debtor dies before being able to repay the entire loan, the lender company becomes legally entitled to sell the land to recover its costs.

Advice for Making Online Banking Safe

Banking online can be a fantastic way to save you time and even money.  Most large banks now offer online banking or online account access, and for the most daring: some banks are only available online.  With the latest in web safety, these sites are heavily encrypted and designed to be hack-proof.  The largest cause of accounts being hacked into actually falls upon the account holders.  There are several simple steps that can be taken to avoid your account, money, and personal information being put at risk.  Some may seem simple, but it is better to be safe!


1) Never give out your username or password.  Your bank will not ask you for your password or even username.  They already have it.  They will not lose it, and only a very select group of employees can even access it.  If you think you need to address this issue, call them at the number your normally call, do not take the phone number off an email or a website, look in the phone book or just stop in at your local branch.


2) If you access your accounts from more than one computer, be sure that computers used by others have up-to-date antivirus software.  You should also make sure that the machine is running an up to date browser that can support the standard 128-bit encryption used by most secure websites.  When you are done, always be sure to log off and even clear the Auto complete bar also, it can make it too easy for someone to log in and guess your password.


3) A good password in very important, also, using more than one password can be just as valuable.  If a hacker, worm, or virus is to get into your computer and find a password, they will try that same password in all of your cached login areas.  It also helps drastically to use letters and numbers.  Birthdays, pet names, and nicknames also tend to be easiest to guess.


4) Never trust any email sent to you that links directly to your login page.  This is the number one trick for hackers to “cloak” or “phish” you out of your own private information.  Even though the site looks like the site you are familiar with, it may not be.  These thieves have become experts at copying the look of real sites with their own copies designed to extrapolate victim’s bank numbers and more!


By following these steps, you can be confident that your identity and information is still yours and still protected.  There are thousands of people and programs trying to steal your information, but you have plenty of tools, people and strategies on your side also!  Go ahead save yourself some time and gas money!

Advantages of Low Interest Credit Cards

Credit cards when used in a proper manner can be very beneficial to the cardholder.  And a credit card with lower interest is of utmost benefit to the consumer.  Some people stick to their first credit card, without even thinking of switching over to a credit card with a lower interest due to the habit of using the credit card for many years.  But switching over to a lower interest credit card will prove to be worth the hard work taken to do so by researching for the best option, as one can see by self how much money can save by paying a lower interest towards purchases done using the credit card.  Credit card customers have an option to choose between fixed lower interest rate credit card and a credit card which comes with lower introductory interest rates.  People who have good credit ratings can acquire a lower interest credit card with ease compared to those who don not have a good credit history, and can only get a credit card with a lower credit limit.  


As a result of stiff competition among credit card companies, negotiating and obtaining a lower interest credit card is very simple.  There are many websites which help the consumers find out a lower interest rate credit card, and promise the information needed for comparison, prevailing market rates, expected rates in the future etc which educates the consumer on the latest happenings in the industry.


A person habituated to carry a balance on the credit card every month can benefit by saving a huge amount of money with a credit card with lower interest rate.
Some people have an objective to pay off the credit card debt and the decrease in interest rate will enable them to clear off the debt faster than ever.  Lot of credit card companies promote their credit cards by giving a zero percent interest rate on balance transfers. Thus a person can clear his credit card debt without even paying any interest for it.


Normally incentives are provided to sign up for the lower introductory interest rates for the credit cards.  But caution is to be taken to read the fine print in order to find out if there are any higher rates charged after the introductory period.  Some might even charge a balance transfer fee for a low introductory interest rate credit card.  One can take advantage by transferring the debts from the higher interest rate credit card to a lower interest rate credit card.  


Before signing up for a credit card it is wiser to get the details regarding introductory interest offer, APR percent, introductory period time, charges if any for balance transfers, additional fee charged if any, security feature etc.

Advantages of a Home Equity Loan

A home equity loan is often referred to as a second mortgage and it allows homeowners to borrow money using the equity they have already built in their homes. With a home equity loan, homeowners can borrow up to $100,000. The interest on the loan is tax deductible, which brought home equity loans to popularity in the 1990s when the economy was not so good.


There are two types of home equity loans. One type is a fixed rate loan and one is a line of credit. Both loan types have terms ranging from five to fifteen years and both must also be paid in full if the house is ever sold.


A fixed rate home equity loan provides the borrower with a lump sum payment. It’s assumed that the borrower will pay the loan off over a set period of time with interest. The payments are usually paid monthly and remain the same amount over the entire life of the loan. The interest rate also remains the same over the life span of the loan.


A line of credit home equity loan works with a variable interest rate and uses the same principles as a credit card. It generally even comes with a credit card. Borrowers will be approved for a certain amount by the lenders. The borrower can then use this money by using the card or the special checks that the lender will provide. These payments will also be made monthly however the monthly payment will vary depending on what the current interest rate is and how much money was borrowed that month. When the term of the loan is up, any outstanding balances borrowed must be paid in full.


Home equity loans work well for homeowners who need a large amount of money fairly quickly. The homeowner may need the money for such things as paying off another loan, tuition money, home improvements, or other unexpected expenses. Home equity loans are a good option over other loans because the interest rate on them in generally quite low and is definitely lower than the interest on credit cards and other loans. Because of this, it makes good financial sense to pay off a credit card loan while using a home equity loan. It allows the homeowner to have one single monthly bill, a lower interest rate, and a loan that is partly tax deductible.


Home equity loans have many advantages for lenders as well. After the lender has collected on the original mortgage, they then are able to collect more payments and more interest. The lender is also entitled to keep all the money from the original mortgage and the home equity loan if the borrower defaults on payments. The lender is also allowed to repossess the home, sell it again and begin the cycle all over again with the next owner.


Home equity loans can be a very wise financial decision when homeowners are trying to lower their interest rates and pay off unforeseen expenses. Borrowers must carefully weight the advantages and disadvantages of taking out a home equity loan to see if it is the right choice for them.

Adjustable Rate Mortgages – How they work

Many homebuyers choose adjustable rate mortgages for the initial financing on their home purchase. Rising interest rates and other terms can be confusing to the borrower. 


Adjustable rate mortgages (ARMs) are loans in which the rate varies. Adjustable rate mortgages loans will follow how interest rates rise and fall. There are many reasons why a consumer might choose an ARM, but they can be risky loans. 
One reason a consumer might choose an adjustable rate mortgage is the rates are generally lower in the beginning than a fixed rate loan. If you expect to be in your property for a short time, say for 5 years, then an ARM with the first 5 years fixed can be a good choice. 


There are three main types of ARM loans offered by lenders. They include:
A 5/1 ARM loan is where the payment is fixed for 5 years adjusting for the remaining 25 years.
When you get a 3/1 loans payments are fixed for three years and adjust for 27 years.
The 2/1 ARM is fixed for two years and adjustable for 28 years. 


An adjustable rate mortgage works like this. It is usually fixed for a certain amount of time initially, anywhere from 1 month, 5 years or something in between. After this period the loan then becomes adjustable according to the published  “index”, such as LIBOR Prime rate, Cost of Funds Index, or other index plus a margin, which is the lender profit.  If the index rises, your rate rises. If it lowers, your rates should fall. There is a lifetime cap on the amount interest can increase over the life of the loan. 
What happens when there is a sudden higher mortgage rate?
You have some options when it comes to dealing with higher rates. 


The most common is to refinance to a mixed rate mortgage. If you have enough equity built up and can afford the higher payments this is a good option. Watch out for prepayment penalties in your current mortgage. Be sure to know what the costs of refinancing are and how they will affect your loan.


Another option is the talk to a reputable credit counselor. They may be able to help you lower your payments, deferring the unpaid interest. This will increase your loan balance though. On other debts try to work out a lower payment plan to offset the higher mortgage payment.  Or persuade your lender to agree to forbearance or have them postpone the increase to a future time when you will be able to pay.


You can also sell your home. List it with a real estate agent if you have the equity to pay commissions and costs of the sale. Or sell it yourself.  Deed your house to the lender in a deed-in-lieu-of-foreclosure agreement. You will receive no money for your equity and your credit will be adversely affected.


Of course foreclosure is an option, but it’s not desirable. The worst thing to do is to do nothing. 
When choosing an adjustable rate mortgage, be aware that rates could increase over the life of your loan. Your payments can rise and you may need to make adjustments in your other debt. If you plan on living in the home for only a short time, an ARM might be the best option in financing your new home.

Addiction: When Gambling Becomes a Problem

While most people enjoy casino gambling, sports betting, lottery and bingo playing for the fun and excitement it provides, others may experience gambling as an addictive and distractive habit. Statistics show that while 85 percent of the adult population in the US enjoys some type of gambling every year, between 2 and 3 percent of will develop a gambling problem and 1 percent of them are diagnosed as pathological gamblers. 


Where can you draw the line between harmless gambling to problem gambling? How can you tell if you or your friend are compulsive gamblers? Here you can find answers to these questions and other questions regarding problem gambling and gambling addiction. 


What is the Meaning of Problem Gambling?
Problem gambling or compulsive gambling is defined as an uncontrollable urge to gamble despite the destructive effect of gambling on the gamblers life and despite feelings of guilt and remorse. Problem gambling tends to have a negative effect on the gamblers financial state, relationships and daily life. Severe cases of problem gambling can be defined as pathological gambling. 


Am I a Compulsive Gambler?
1) Do you gamble until your last penny runs out?
2) Do you gamble to win back your former losses or debts?
3) Did you ever had to borrow money to continue gamble?
4) Did your gambling habit ever made you lie to your friends or family?
5) Did you ever skip work or other obligation to gamble?
6) Do you tend to gamble to forget about your personal problems or to celebrate happy occasions?
7) Does gambling have a negative affect on your daily life or relationships?


If you have answered yes on at least one of the questions listed above, then you have a problem. 


Can Anyone Become a Compulsive Gambler?
Theoretically, yes. Any gambler can develop gambling problem regardless to the type of gambling he is occupied with, the amount of money and time he is spending on gambling. Researches show that slot machines that can be found in bars and convenient stores are the most addictive type of gambling activity, while lottery draws and bingo games are located on the other end of the scale. Gambling addiction is an emotional problem; its symptoms, causes and treatments are similar to any other form of addiction. 


How Can I treat Gambling Addiction?
1) Group Therapy:
Gamblers Anonymous offers a 12 step self help program similar to the one offered to alcohol addicts in Alcoholics Anonymous.  Group therapy also offers gambling addicts advice and support from professional counselors and other gambling addicts in different phases of their recovery process. Gambler Anonymous centers are available in more than 1,200 locations statewide.


2) Individual Therapy:
Cognitive or behavior therapy can help gambling addicts to identify their unaware thinking and acting patterns, which led them to gamble compulsively, and to replace them with controllable and healthier ways of thinking.


3) Psychiatric Medication:
It has recently been proven that antidepressant medications from the family of SSRIs, selective serotonin reuptake inhibitors can be affective in treatment of gambling addicts.

A Stockbrokers Advice

It can be a good idea to use a stockbroker for an active management of your stocks or mutual fund portfolio. It can be vital if you want a steady growth. It may also be unnecessary as a passive management alternative often is available for long term investing.


However, many prefer to use and pay for the services of a broker because they feel more comfortable making decisions about their finances with the interactive guidance of a licensed advisor.


Using a stockbroker for financial guidance one must be aware of the fact that they do get paid on a commission. This can be a reason for them to trade more often as more trades make them more commission. The stockbroker is also paid on the result they can achieve.


Furthermore a conflict of interest arises when a stockbroker offers his/her services as a financial planner, because their revenue is generated as a direct result of your investment in the stock or mutual fund that they broker to you.


Your return on investment may not be as great, and the advice they give you might not be in your best interest. However, some mutual funds and stocks can only be purchased through a broker. In such cases their services are required to purchase the financial instrument in question.


If you use the services of your bank there are some facts to consider. When you talk about the options you have to invest your money, they will certainly recommend the funds they control themselves.


In some countries you can for example invest in a portfolio with shares and have a guarantee to at least get your initial investment back in 2, 3 or 4 years. Sounds great to many and when they say yes to invest, the bank charge 110%. In that way the bank make a profit and secure the costs from start. Do the bank take a risk? No, they cover themselves with other types of investments that function as an insurance.


So now your portfolio starts off with a backlog of minus 10%. Often the investment will recover and take back most of the initial loss and the guarantee makes many invest as they feel comfortable and secure when they invest in this way.


Back to the question about what kind of investments the bank recommend. Do they recommend other banks portfolios? I don´t think so. If you go to a car dealer that sell Ford, do they recommend you to buy a Lexus? Certainly not. A stockbroker working in a bank is not neutral, their job is to make you invest in the shares they make the biggest profit for them. If you make a profit too, that is fine but not their prime priority.


There are the authorities though to help the customer out. And there are rules and regulations about the way stockbrokers can and shall work. Depending on in which country you are investing the rules can vary. In some countries stockbrokers can have his own portfolio and the company where he works can also have an portfolio of shares.


This makes an eventual conflict arise whenever something special happens. There are numerous customers that suspect that they have been recommended shares in companies that will face problems and where the stockbroker wants to sell his own shares before the market drops. To prove these cases are almost impossible and to win them very rare. The number of transactions are also so big that it is almost impossible to trace and see a pattern. There might be just a few that went the wrong way.


Stockbrokers in general are behaving in a professional way and realise that their business will benefit most if the outcome for their customers are great. As a customer you are advised to check the results that a stockbroker have produced, trace their records. Do not look at the advertisements, the truth about the results are not there.


On the internet you can now use the statistics by independent companies that range stockbrokers, funds, shares etc. Here you can find facts – vital facts for the outcome of your future incomes from investing.

A site that will take care of all factoring requirements of is finally at your fingertips.

A business can only grow when it makes more sales and wins the trust of the customers. However often the suppliers of raw materials want payment quickly while you have to sell finished goods to your clients on credit basis where the credit period may range from one to two months. Factoringquotes takes care of all your accounts receivable and by paying the seller of raw materials on your behalf and also paying you your dues from your clients. The company then recovers the dues from your client after the payment arrives. As a result your cash flows are not hampered and also you have money on hand to settle all your dues. Factoringquotes charges commission as a certain percentage from the total amount for rendering its services.    


Hence in case of accounts receivable factoring, you may get up to 98% of the outstanding  receivables. As a result the company will be able to process all orders and also increase its sales. Factoringquotes handles monetary transactions ranging from $5,000 to $30,000,000 per month. Also when you pay your supplier on time, often you can take advantage of supplier discounts. 


You can get all factoring quotes quickly. All you have to do is provide your company details and requirements and within a few hours a representative of the company will get in touch with you. Factoringquotes also assists in other factoring requirements such as small business factoring, construction factoring, export factoring and even cash flow factoring. 


Small business factoring proves to be a strong tool for small businesses who have just stepped on the path of progress. This is because a small business may not have the ability to sell goods on credit for 2-3 months as its funds will be locked up in accounts receivable. Factoringquotes comes to the rescue at it takes care of all accounts receivable of the company by providing immediate cash. The site also helps with purchase order financing where it pays for raw materials bought on behalf of the company. As mentioned before, the company stands to gain in the form of seller discounts.          


Factoringquotes has also diversified in other types of factoring such as medical factoring of accounts receivables. In this industry the site arranges for funds to be paid to a health care provider on the insurance claims that are frozen in accounts receivable. Then there is also freight bill factoring where the company buys your freight bills and invoices and then gives you advance cash in less than 24 hours. The customers are given an options as to which bills they want to factor. Hence factoringquotes proves to be a cash flow solution for all companies who don't want their funds blocked for a long period of time.

A Guide For Writing a Funding Proposal

No guide for writing a funding proposal would be complete without cautioning that a business looking for funding cannot do so without also presenting a completed business plan. Every lender, whether bank or other financial institution, venture capitalist, or private individual, will want to see the firm's business plan in addition to the project detail. They'll want to know the company's mission, its goals, its steps to achieving those goals, its products and services, its available resources, the market, the competition, and your firm's competitive edge. 


The business plan that accompanies the funding proposal you write and present should also include the owners or officers and all major players such as executives and others instrumental in the day to day workings of the company. 


If you're new to writing a funding proposal a guide is essential, whether a written brochure or publication, online assistance, or a counselor at the local small business development center. SCORE, the Service Corps for Retired Executives, is another top-notch resource that can guide you through writing a funding proposal. The volunteers are all retired executives and other experts who have been where you are and have succeeded. 


In addition to the standard documents that the bank or credit union will require for the loan application, the lender also expects to see a written funding proposal when you apply for the loan. Rather than looking at writing a funding proposal as a tedious chore, look at it as the guide for your lender to see just how exciting, promising and profitable your idea and firm could be and what an opportunity they have to be a financial part of your great venture. 


Give your funding proposal a zippy but clear title, then talk about the overview of the project you've planned, supplying background information on the problem as you see it, the details of the project that will solve the problem, what resources you have available and what resources you'll need to get the job done, what staff and administration help you have and what else you might need, the facilities available for your project and any that you'll need to lease or buy in addition, any supplies or equipment or personnel that will be added, and any communication capabilities or requirements that are pertinent. Present a budget for your project. 


Step by step, you should....


* Write a cover letter with your funding proposal, both as an enticement to read the proposal and a guide to what will be found in the funding proposal pages. Included in the cover letter, besides the title, are a brief introduction to your firm, the purpose of the loan and the amount of money you are requesting. 


* The funding proposal should begin with the company name, address, and contact information such as phones and e-mails. Here should also be the names, titles and social security numbers of all the principals, the reason for the loan, the amount requested and details of what you will be doing with the money including the equipment and supplies purchase, perhaps the lease of new facilities, the resources now available, the staff that might be added, and the administration personnel that will oversee the project. 


* Next offer extensive details about the firm, including any previous projects and performance, clientele, overall goals and objectives, unique aspects of the firm and the ownership and legal structure. 




* Background information is next, with details about the company budget, as well as the project budget, the market and the competition, and your firm's standing among the competition. Details on the current clientele as well as an evaluation plan for determining the company's overall financial and competitive health and for that of the project itself should be included as well. 




* All key personnel should be profiled, including their education, the accomplishment both as a firm member and prior, as well as their qualifications. Along with background information and a budget for the project, you should provide all information and documents about the last three years of the company's operations. If not in business that long, provide the financial statements including balance sheets and income statements that you have. Collateral should be pledged for the funding. 


* Written communication is a crucial part of your funding proposal and someone should guide you through the process by proofreading the materials, to check for spelling, grammar, factual accuracy and overall quality of presentation. 


Any time you apply for a loan, whether the details of the needed resources, the project overview, the statement of the problem, and the budget are already in the application or the cover letter, you should still submit a funding proposal as an overall guide to the loan officer and other funding decision makers.

A Debt Consolidation Loan Help Get Your Finances Back On Track

Recent studies have shown that an average individual in a developed country spends almost forty per cent of his or her monthly salary before earning it. Today’s society runs on credit and with loans being easily available for the fulfillment of each and every desire, be it owning a new car or going on a holiday, we can easily be labeled a credit dependent society. However, a major downside to this credit trend that we are living with is that more and more people are finding it difficult to manage their numerous loans and landing themselves into bad credit situations. While some people actually end up in bad credit situations because of over spending and mismanagement, the majority of people who are finding it difficult to pay back their loans on time are those who have been faced with sudden job losses, illnesses, transfers or accidents. If you are also on the verge of getting into a bad credit situation or are already knee deep in loans that you are finding hard to pay back, then you should avail the help of a debt consolidation service as soon as possible. 


Many financial institutions offer debt consolidation services to people who want to make their debts more manageable. A debt consolidation firm can be of great help to people who cannot pay back their numerous debts on time and are being forced to pay back even higher amounts as a result of increasing APRs and late fees. A debt consolidation service will pay off all your outstanding debts and consolidate the amount into a single loan which you will be required to pay back. So a debt consolidation loan will be the sum of all your debts put together. However, taking a debt consolidation loan is a better option than paying many separate loans with different terms of payments and different rates of interest. This is because companies offering debt consolidation loans will provide you with better rates of interest (much cheaper than what you were paying earlier) and more flexible terms of repayment. Apart from having to pay lesser amounts, a debt consolidation loan is easier to manage than your previous outstanding balances since you only have to make a single payment per month at a constant rate of interest. 


Based upon your needs and requirements, you can avail different types of debt consolidation loans. The cheapest and the most easy to get debt consolidation loan is the home equity loan where you get the loan after putting your house as collateral. This is also known as a secured debt consolidation loan. The major disadvantage associated with such loans is that you might end up losing your house if you default on paying back the loan. You can also get an unsecured debt consolidation loan where you do not provide any collateral, but these loans carry a much higher rate of interest than secured loans and also have stricter repayment terms. Many credit card companies also offer balance transfer cards where you can transfer all your outstanding balances to a single credit card which has a very low APR for the first few months.

9 Places You Can Save Money For Your Family

Most families are spending more and more money every year (and not just because the cost of living rose) while also saving less and less. One reason is that few household managers spend much time reviewing expenses and expenditures to find ways they can save money. However almost every family has places where costs can be cut and pennies can be pinched -- and if those freed up funds are then used to pay down debt and save for the future it could have a dramatic impact on their quality of life.


Food is one big area where many families could be more thrifty. Families spend an average of $2,434 on food away from home, according to the Consumer Expenditure Survey from the U.S. Bureau of Labor Statistics. If you (and your spouse and your children) eat lunch out every day of the week then try brown-bagging at least one of those days. If just one of you does it you may save up to $400 a year and if you can double or triple that savings you could finance a family vacation with it.


Another major expense is your home. When was the last time you looked at refinancing? Can you find a lower interest rate? Can you renegotiate to a shorter time frame? Even if you can't change your mortgage payment you may be able to pay a bit extra each month which over time will help pay down your mortgage faster. Also, don't overlook your utilities. There are ways to save in this area as well including updating your insulation and weather stripping, keeping up-to-date with maintenance and cleaning of your furnace and air conditioner or using a programmable thermostat to take advantage of those times when your house is empty or the family is asleep.


Transportation is another major expense for many families. Not only are vehicles expensive to buy but also to maintain and operate especially with gasoline prices at such high levels. Is carpooling an option for any members of the family on at least a part-time basis? Make sure to combine errands and trips to cut down on your travel and save money when buying gasoline by taking advantage of special programs and discounts and remaining vigilant about gas prices. In addition, following a regular maintenance schedule and proper tire inflation can also help you achieve maximum gas mileage for your vehicle.


Choosing your bank wisely can be another way to save money. Make sure the bank you use offers free (or at least low cost) checking as well as electronic bill-paying. Electronic bill-paying and a debit card can cut down on your need to use checks and postage which will save you in the long run as well as help you better manage payments so you will avoid fees, penalties, and higher interest rates.


Cutting your credit card costs can be another major savings. This means making sure you are using the best possible credit card with a low interest rate and low or no annual fee. Shop around until you find your perfect match and don't forget to cancel and cut up those rejected suitors.


Health care is not really an area where you can cut expenses but you can save money by taking advantage of special offers and programs. For example, many employers offer a Flexible Spending Account where you can save money before taxes for out-of-pocket medical expenses for prescription and nonprescription drugs, dental expenses, and eye care.


Tuning up your insurance policies can also help you save money. When did you last compare rates for your home, your vehicles, and yourself? Some other ways to cut costs are to raise your deductible level or using the same company for multiple coverage (your home and vehicles). When you are shopping around make sure to give your current company a shot at keeping you. Sometimes they can offer a better rate too.


Another major expense for many families is the cost of communication including local and long distance phone service, cell phones, cable or satellite television, and Internet access. Review your expenditures and cut out the services you don't need. Can some of these expenses be bundled to save money? Are there better plans for your needs?


When looking to save money it is important to become an aggressive shopper. The Internet makes it possible today to compare prices and product reviews while not spending a lot of time and money driving from store to store. Any big ticket item (and that includes your weekly groceries, cleaning products and health and beauty aids) deserves a closer study.


Over the next, month take time to review your family expenses and expenditures in each of these nine areas. Making a few alterations in your family's spending habits will soon make a difference in the overall household budget. You can raise your family's quality of life by making just a few changes in your monthly budget.

6 Questions to Ask When Choosing a Home Equity Loan

So you need some money for unexpected expenses. The roof took on a leak, the deck rotted through and a new family addition tightened living space. You bought too much Christmas on credit now the bills are overwhelming. Junior got accepted to that Ivy League school. Tapping into your home equity can help ease your financial burden. Before deciding on borrowing ask yourself a few questions first.


1. Do I need a home equity loan or a home equity line of credit?
If interest rates are low, a loan is a smarter choice. You can borrow the full amount at once ant get a fixed rate on the entire amount.  The advantage allows you to know how much to budget for monthly payments.


On the other hand, a line of credit will let you borrow from a revolving line of credit with variable interest rates. You access the money just like a checking account by writing a check for the purchase. Then the amount used is paid back. If the rates fluctuate, your payments will also.


2. Are there restrictions on how I use the borrowed money?


Most loans and lines of credit can be used for a variety of things. Whether you want to consolidate all your debts into one, do some home improvements or pay for college tuition, an equity loan or line of credit can be the answer. 


Be sure to ask yourself if you can afford the extra payments. Is your budget flexible enough? Will adding another payment won’t over-extend a tight budget? 


3. How do I find the best interest rate?


Your best bet to determine the variety of interest rates offered by financial services companies is to shop around. Ask questions. Try to find a company your comfortable doing business with. Look for ones that don’t charge application fees. Ask about charging a penalty for early payoff.


4. What is the term of the loan? Is it better to get a 5- 10- or 15 year term?


You’ll want to determine what your financial future strategy is when deciding on the term of the loan. If you’re planning to retire soon, you may want to ask for a shorter term. The longer your loan terms, the lower your monthly payments. 


5. Are there any tax advantages to borrowing with a home equity loan?


There are many good tax advantages to home equity loans and lines of credit. The interest is tax deductible on your federal income tax. Be sure to consult your tax advisor before applying for a loan to be certain of the deductions.  


6. Is the loan application lengthy and how long before I get an answer?


More and more lenders are allowing consumers to apply for loans over the phone or on the Internet. It can take as little as 10 minutes for the application process. And many pre-approvals can be delivered in a few hours.  Final approval often takes any where from 5 – 10 days while evaluating your house is taking place. Often the entire process can be completed without leaving your home with final documents and checks being sent through the mail.


Tapping into your home equity to ease financial burdens can be a good idea. Do your homework. Shop around. Set up your budget. Use the money for what you need.

5 Great Reasons To Refinance

There are many great reasons to refinance. With lower cost, adjustable rate, and 0-down options, traditional loan programs like 30-year or 15-year fixed rate mortgages don't always allow us to meet our financial goals. Today, even reducing your mortgage interest rate a little can save you big over the life of your home loan. Take a look below at 5 great reasons to refinance.


1. Lower Your Monthly Payment
If you plan to live in your home for a few years, it may make sense to pay a point or two to decrease your interest rate and overall payment. Over the long run, you will have paid for the cost of the mortgage refinance with the monthly savings. On the other hand, if you plan on moving in the near future, you may not be in your home long enough to recover the refinancing costs. Calculating the break-even point before you decide to refinance can help determine whether it makes sense.


2. Switch From an Adjustable Rate to a Fixed Rate Mortgage
Adjustable rate mortgages (ARMs) can provide lower initial monthly payments for those who are willing to risk upward market adjustments. They're also ideal if you don't plan to own your property for more than a few years. However, if you have made your house a permanent home, you may want to swap your adjustable rate for a 15-, 20- or 30-year fixed rate mortgage. Your interest may be higher than with an ARM, but you have the confidence of knowing what your payment will be every month for the rest of your loan term.


3. Escape Balloon Payment Programs
Like adjustable rate mortgage programs, balloon programs are great when you want lower rates and lower initial monthly payments. However, if you still own the property at the end of the fixed rate term (usually 5 or 7 years), the entire balance of your mortgage is due to the lender. If you are in a balloon program, you can easily switch over into a new adjustable rate mortgage or fixed rate mortgage.


4. Remove Private Mortgage Insurance (PMI)
Zero or Low down payment options allow homeowners to purchase homes with less than 20% down. Unfortunately, they also usually require private mortgage insurance, which is designed to protect the lender from loan default. As the value of your home increases and the balance on your home decreases, you may be eligible to remove your PMI with a mortgage refinance loan.


5. Cash In on Your Home's Equity
Your home is a great resource for extra cash. Like most homes, yours has probably increased in value, and that gives you the ability to take some of that cash and put it to good use. Pay off credit cards, make home improvements, pay tuition, replace your current car, or even take a long-overdue vacation. With a cash-out mortgage refinance transaction, it's easy. And it's even tax deductible.

5 Advantages Of Long Term Trading

Both short term and long term trading can be effective trading strategies, however, long term trading has several significant advantages. These include the effect of compounding, the opportunity to earn from dividends, reduction of the impact of price fluctuations, the ability to make corrections in a more timely manner, less time spent monitoring stocks.


1. Compounding


Time can be investor’s best friend because it gives compounding time to work its magic. Compounding is the mathematical process where interest on your money in turn earns interest and is added to your principal.


2. Dividends


Holding a stock to take advantage of payouts from dividends is another way to increase the value of an investment. Some companies offer the ability to reinvest dividends with additional share purchases thereby increasing the overall value of your investment. Additionally, dividends are more a reflection of a company’s overall business strategy and success than volatile price fluctuations based on market emotions.


3. Reduction Of The Impact Of Price Fluctuations


In the long term investment the persons is less affected by short term volatility. The market tends to address all factors that keep changing in the short term. So a person involved in long term investment or trading will not be affected as much by short term instability due to factors such as liquidity, fancy of a particular sector or stock which may make the price of a stock over or undervalued. In the long term, good stocks which may have been affected due to some other factors (in the short term) will give better than average returns.


Long-term investors, particularly those who invest in a diversified portfolio, can ride out down markets without dramatically affecting his or her ability to reach their goals.


4. Making Corrections


It is highly likely that you could achieve a constant return over a long period. The reality is that there will be times when your investments earn less and other times when you make a lot of money in short term. There may also be times when you lose money in short term but as you are in quality stocks and have long perspective of investment you will earn good returns over a period of time.


There are always times when some stocks do not perform and it is the wise choice to pull out of an investment. With a long term perspective based on quality stocks, it is easier to make decisions to change in a more timely manner without the urgency that accompanies short term and day trading strategies chasing volatile changes.


5. Less Time Spent Monitoring Stocks


Unlike day trading that can require constant monitoring of stocks throughout the day to capitalize on intraday volatility, long term trading can be carried out effectively using a weekly monitoring system. This approach is most often far less stressful than watching prices constantly on a daily basis.


Overall, investors that begin early and stay in the market have a much better chance of riding out the bad times and capitalizing on the periods when the market is rising.

401k Retirement Plans Explained

401k retirement plans are special types of accounts, financed through pre-tax payroll deductions. The funds in your account are invested in various ways. Your funds can be invested through any number of stocks, mutual funds, and other ways, and it is not taxed on any capital gains or interest until the money is pulled out or withdrawn. Congress approved this retirement savings plan in 1981, and its name was rooted from the section of the Internal Revenue Code that contains it, which is obviously, section 401k. One great advantage of this retirement plan is that the tax treatment is complimentary. Moreover, capital gains, interest and dividends are not levied until they are pulled out or withdrawn. 


In terms of its investment customization and flexibility, 401k retirement plans offer employees and workers an extensive array of options and preferences as to how their property and assets are invested through time. Moreover, many businesses and companies permit employees to obtain company stock for their 401k retirement plan at a cut rate. However, many pecuniary consultants and counselors are not in favor of holding a significant percentage of your 401k plan in the shares of your boss or manager. 


So what are 401k plans? If you are like most people, you probably have questions about your 401k retirement plan. You may be wondering how a 401k actually takes place, precisely what a 401k retirement plan is, or how you can be capable of stimulating the diminishing balance in your 401k plan. So how does a 401k plan actually work? If your company offers a 401k retirement plan, you can agree to join. You can also have the selection option of choosing the amount of funds you wish to put in from an inventory of funds presented in the 401k plan. Your payment will routinely be deducted from your pay check before taxes. 


Every worker can invest up to a defined proportion of his wage into a 401k plan. Your involvement, along with any coordinated contributions from your employer, are then endowed into your chosen funds. These funds will produce interest before being taxed, and can be withdrawn when you reach 60 years of age. At this point in time, you must pay the income tax on the withdrawn funds. Furthermore, there are methods and means wherein you can pull out your funds before age 60. However, these early withdrawals frequently call for a penalty in conjunction with the payment of taxes. 


A 401k retirement plan is an employer-subsidized retirement plan, and it is categorized into two groups: defined benefit and defined contribution. With this defined benefit plan, the employer pledges to give a distinct sum to those who want to retire and those who meet specified eligibility standards and measures.

4 Benefits of Long Term Trading vs Short Term Trading

Both short term trading and long term trading can be effective trading strategies, however, long term trading has several significant advantages. These include the effect of compounding, the opportunity to earn from dividends, reduction of the impact of price fluctuations, the ability to make corrections in a more timely manner, less time spent monitoring stocks.


1. Compounding


Time can be investor’s best friend because it gives compounding time to work its magic. Compounding is the mathematical process where interest on your money in turn earns interest and is added to your principal. 


2. Dividends


Holding a stock to take advantage of payouts from dividends is another way to increase the value of an investment. Some companies offer the ability to reinvest dividends with additional share purchases thereby increasing the overall value of your investment. Additionally, dividends are more a reflection of a company's overall business strategy and success than volatile price fluctuations based on market emotions.


3. Reduction Of The Impact Of Price Fluctuations


In the long term investment the persons is less affected by short term volatility. The market tends to address all factors that keep changing in the short term. So a person involved in long term investment or trading will not be affected as much by short term instability due to factors such as liquidity, fancy of a particular sector or stock which may make the price of a stock over or undervalued. In the long term, good stocks which may have been affected due to some other factors (in the short term) will give better than average returns.


Long-term investors, particularly those who invest in a diversified portfolio, can ride out down markets without dramatically affecting his or her ability to reach their goals.


4. Making Corrections


It is highly likely that you could achieve a constant return over a long period. The reality is that there will be times when your investments earn less and other times when you make a lot of money in short term. There may also be times when you lose money in short term but as you are in quality stocks and have long perspective of investment you will earn good returns over a period of time.


There are always times when some stocks do not perform and it is the wise choice to pull out of an investment. With a long term perspective based on quality stocks, it is easier to make decisions to change in a more timely manner without the urgency that accompanies short term and day trading strategies chasing volatile changes.


Investors that begin early and stay in the market have a much better chance of riding out the bad times and capitalizing on the periods when the market is rising by taking a longer term view using long term trading strategies.

Learn How You can Make Gains from Using the Forex trading Grid Technique

The most important part of how to make money using the no stop, hedged, Forex trading strategy will now be covered. In the preceding articles in this series we reviewed trading without stops, not being concerned about which way the price moves and places to cash in on profitable transactions. We are now going to show how you would make money buying and selling simultaneously using the grid strategy.


The no stop, hedged currency trading grid system uses the rule that one should be able to close a transaction at a gain no matter which way the market moves. The only way this is logically possible is that one would have a buy and a sell transaction active simultaneously. Most traders will say that doing this is not recommended but let’s look at this in more detail. 


Assuming a grid with grid gaps of 100 pips. We are going to use the simplest formation to show the principles involved. This formation is the 100% retractment formation where the price goes up to a grid level and then returns back to the starting grid level. Regrettably things become quite mathematical from here. We are also ignoring broker spreads to keep things simple. 


Let us say that a trader enters the market with a buy (buy 1) and sell (sell 1) deal active when a currency is at a level of say 1.0100. The price then goes to level 1.0200. The buy will then be positive by 100 pips. The sell will be negative by 100 pips. Now we would cash in our positive deal and bank our 100 pips. The sell is now however is carrying a loss of -100 pips. The grid system requires one to ensure that the trader can cash in on any movement in the Forex market. To do this one would again enter into a buy (buy 2) and a sell (sell 2) deal at this level (level 1.0200). 


Now, for convenience let us say that the price moves back to level 1.0100 (the starting point). 


The second sell (sell 2) has now gone positive by 100 pips and the second buy (buy 2) is making a loss of -100 pips. According to the grid trading rules you would cash the sell (sell 2) in and another 100 pips will be added to your account. That brings the grand total cashed in at this point to 200 pips (buy 1 and sell 2). At this stage the first sell that is active has moved from level 1.0200 where it was -100 to level 1.0100 where it is now breaking even. 


The 4 transactions added together now  incredibly show a gain:- 1st buy (buy 1) cashed in +100, 2nd sell (sell 2) cashed in +100, 1st sell (sell 1) now breaking even and the 2nd buy (buy 2) is -100. This gives an overall a gain of 100 pips in total. We can liquidate all the deals and have some champagne as we have made a profit of 100 pips.


Please make sure you understand the mathematics behind the activities discussed above. You may have to reread and draw the movements on a piece of paper to make sure you understand the concept. 


This formation is the 100% retracement formation where the price goes up to a grid level and then returns back to the starting grid level and results in a nice profit for the forex trader. There are many other market movements that turn this strange Buy and Sell at the same time activity into profits. The next article will cover the 50% retractment formation which produces the same amount of profit.


There will be much more on the no stop, hedged grid trading system in future articles in this directory. Do not miss them, whatever you do.

What To Look For In A Home Purchase Lender Online

If you're ready to buy a new house, you're going to need a Home Purchase lender. And finding one online is convenient and simple! However, there are a few things you should look out for to ensure that your lender has your interests--and not his--as his top priority.


Make sure your lender offers options


There are a lot of options other than the traditional 30-year fixed rate mortgage. Depending on your needs and personal situation, an Adjustable Rate Mortgage (ARM) or Interest-Only mortgage might be a better fit for you. Or, possibly, you may prefer a loan with a longer or shorter term. A good lender should be able to offer you a variety of options so you can find the one that best suits your needs. Be wary of any lender that tries to push one particular type of loan.


Get your "pre-approval" in writing


Some Home Purchase lenders will "pre-qualify" you--but that doesn't mean you're guaranteed to get the loan! In fact, in most cases, "pre-qualification" means almost nothing at all. Choose a lender who will "pre-approve" your application instead, which is a more involved process. When you've been "pre-approved," the loan officer has contacted your employer, bank, credit card companies, etc. Once you're "pre-approved," you're a lot more likely to get the final approval on your loan.


"Lock in" the rate you're quoted


Interest rates change almost daily--they can be down on Monday, and sky-high by Friday! And some lenders will quote you a super low rate to get your business, even though they know the rate may change by the time your loan is finalized. If a lender quotes you an interest rate, ask him/her to "lock it in" for 30, 60 or 90 days. Reputable online Home Purchase lenders will guarantee you your promised rate even if it takes another month or two until you close the loan.


Once you know your online Home Purchase lender is willing to offer you options, pre-approve your loan, and lock-in your rate, it's time to compare rates, fees and other charges to make sure you're getting the best deal.

15 Great Day Trading Tips

Reports of people making huge gains in stock markets have been carried in newspapers around the world. This has attracted many first time investors to the stock market. Day trading is one of the systems gaining in popularity with investors. But day trading is fraught with risks. Though you can make huge gains in day trading, you are also likely to lose huge money. However, if you want to do day trading here are some tips to succeed:


Who is day trader?
A person who actively participates in stock market and buys and sells many times a day to make quick profits is called a day trader.


What are the tips to succeed in day trading?


1. Study the basics of the system like the working of the market, which way the stocks will move, the long and short calls, and the time to buy and sell. You should also learn to take care of the profits while reducing the losses.


2. Since mastering day trading is a time consuming process, use the trading platform available on the trading websites before you actually start.


3. Do not let the thought of making losses scare you. Use methods like stop orders to reduce your losses.


4. If you suffer some loss, do not worry, as it is a part of the process.


5. Once you have earned your expected profit, stop trading. Do not hunger after more money and throw away your profit.


6. If the market does not meet your expectations on any particular day, do not trade.


7. As your experience in day trading increases, you gain the ability to foresee the direction in which the stock price moves. But do not go for the topmost or the lowermost stocks.


8. If you find it difficult to decide in which way the market is going, do not trade but just wait.


9. Maintain a record of the results of the day trading. It allows you to learn the things which are effective, as well as ineffective.


10. Learn the buying and selling tactics of successful day traders. They usually sell when there is good news and buy when there is bad news.


11. Do not get emotionally involved in trading but stay aloof and professional.


12. Rely on your instincts as depending excessively on the analysis means skipping some good trading chances.


13. Learn and use top strategies to trade.


14. Concentrate only on select stocks. Focusing your attention on multiple stocks will make it difficult for you to track the movement of each stock.


15. Learn new trading strategies daily and use them to your benefit.

1031 Tax Exchange : Frequently Asked Questions

After years of conducting tens of thousands of successful 1031 exchanges, we found that there are a number of frequently asked questions related to this type of transaction…


Equity and Gain


Is my tax based on my equity or my taxable gain?


Tax is calculated upon the taxable gain. Gain and equity are two separate and distinct items. To determine your gain, identify your original purchase price, deduct any depreciation which has been previously reported, then add the value of any improvements which have been made to the property. The resulting figure will reflect your cost or tax basis. Your gain is then calculated by subtracting the cost basis from the net sales price.


Deferring All Gain


Is there a simple rule for structuring an exchange where all the taxable gain will be deferred?


Yes, the gain will be totally deferred if you:


1) Purchase a replacement property which is equal to or greater in value than the net selling price of your relinquished (exchange) property, and
2) Move all equity from one property to the other.


Definition of Like-Kind


What are the rules regarding the exchange of like-kind properties? May I exchange a vacant parcel of land for an improved property or a rental house for a multiple-unit building?


Yes, "like-kind" refers more to the type of investment than to the type of property. Think in terms of investment real estate for investment real estate, business assets for business assets, etc.


Simultaneous Exchange Pitfalls


Is it possible to complete a simultaneous exchange without an intermediary or an exchange agreement?


While it may be possible, it may not be wise. With the Safe Harbor addition of qualified intermediaries in the Treasury Regulations and the recent adoption of good funds laws in several states, it is very difficult to close a simultaneous exchange without the benefit of either an intermediary or exchange agreement. Since two closing entities cannot hold the same exchange funds on the same day, serious constructive receipt and other legal issues arise for the Exchangor attempting such a simultaneous transaction. The addition of the intermediary Safe Harbor was an effort to abate the practice of attempting these marginal transactions. It is the view of most tax professionals that an exchange completed without an intermediary or an exchange agreement will not qualify for deferred gain treatment. And if already completed, the transaction would not pass an IRS examination due to constructive receipt and structural exchange discrepancies. The investment in a qualified intermediary is insignificant in comparison to the tax risk associated with attempting an exchange, which could be easily disqualified.


Property Conversion


How long must I wait before I can convert an investment property into my personal residence?


A few years ago the Internal Revenue Service proposed a one-year holding period before investment property could be converted, sold or transferred. Congress never adopted this proposal, so therefore no definitive holding period exists currently. However, this should not be interpreted as an unwritten approval to convert investment property at any time. Because the one-year period clearly reflects the intent of the IRS, most tax practitioners advise their clients to hold property at least one year before converting it into a personal residence.


Remember, intent is very important. It should be your intention at the time of acquisition to hold the property for its productive use in a trade or business or for its investment potential.


Involuntary Conversion


What if my property was involuntarily converted by a disaster or I was required to sell due to a governmental or eminent domain action?


Involuntary conversion is addressed within Section 1033 of the Internal Revenue Code. If your property is converted involuntarily, the time frame for reinvestment is extended to 24 months from the end of the tax year in which the property was converted. You may also apply for a 12-month reinvestment extension.


Facilitators and Intermediaries


Is there a difference between facilitators?


Most definitely. As in any professional discipline, the capability of facilitators will vary based upon their exchange knowledge, experience and real estate and/or tax familiarity.


Facilitators and Fees


Should fees be a factor in selecting a facilitator?


Yes. However, they should be considered only after first determining each facilitator's ability to complete a qualifying transaction. This can be accomplished by researching their reputation, knowledge and level of experience.


Personal Residence Exchanges


Do the exchange rules differ between investment properties and personal residences? If I sell my personal residence, what is the time frame in which I must reinvest in another home and what must I spend on the new residence to defer gain taxes?


The rules for personal residence rollovers were formerly found in Section 1034 of the Internal Revenue Code. You may remember that those rules dictated that you had to reinvest the proceeds from the sale of your personal residence within 24 months before or after the sale, and you had to acquire a property which reflected a value equal to or greater than the value of the residence sold. These rules were discontinued with the passage of the 1997 Tax Reform Act. Currently, if a personal residence is sold, provided that residence was occupied by the taxpayer for at least two of the last five years, up to $250,000 (single) and $500,000 (married) of capital gain is exempt from taxation.


Exchanging and Improvements


May I exchange my equity in an investment property and use the proceeds to complete an improvement on a vacant lot I currently own?


Although the attempt to move equity from one investment property to another is a key element of tax deferred exchanging, you may not exchange into property you already own.


Related Parties


May I exchange into a property that is being sold by a relative?


Yes. However, any exchange between related parties requires a two-year holding period for both parties.


Partnership or Partial Interests


If I am an owner of investment property in conjunction with others, may I exchange only my partial interest in the property?


Yes. Partial interests qualify for exchanging within the scope of Section 1031. However, if your interest is not in the property but actually an interest in the partnership which owns the property, your exchange would not qualify. This is because partnership interests are excepted from Section 1031. But don't be confused! If the entire partnership desired to stay together and exchange their property for a replacement, that would qualify.


Another caveat. Those individuals or groups owning partnership interests, who desire to complete an exchange and have for tax purposes made an election under IRC Section 761(a), can qualify for deferred gain treatment under Section 1031. This can be a tricky issue! See elsewhere in this publication for more information. Then, only undertake this election with proper tax counsel and only with the election by all partners!


Reverse Exchanges


Are reverse exchanges considered legal?


Although reverse exchanges were deliberately omitted from Section 1031, they can still be accomplished with the aid of an experienced intermediary. Since reverses are considered an aggressive form of exchanging, your intermediary and tax advisor should assist you with exchange and tax planning based upon successful reverse exchange case law.


The Taxation Section of the American Bar Association has submitted suggested guidelines for the IRS in evaluating reverse exchanges and issuing new regulations. Although it is unknown when the IRS will make a definitive reverse exchange ruling, one is expected in the future.


Identification


Why are the identification rules so time restrictive? Is there any flexibility within them?


The current identification rules represent a compromise which was proposed by the IRS and adopted in 1984. Prior to that time there were no time-related guidelines. The current 45-day provision was created to eliminate questions about the time period for identification and there is absolutely no flexibility written into the rule and no extensions are available.


In a delayed exchange, is there any limit to property value when identifying by using the 200% rule?


Yes. Although you may identify any three properties of any value under the three property rule, when using the 200% rule there is a restriction. It is when identifying four or more properties, the total aggregate value of the properties identified must not exceed more than 200% of the value of the relinquished property.


An additional exception exists for those whose identification does not qualify under the three property or two hundred percent rules. The 95% exception allows the identification of any number of properties, provided the total aggregate value of the properties acquired totals at least 95% of the properties identified.


Should identifications be made to the intermediary or to an attorney or escrow or title company?


Identifications may be made to any party listed above. However, many times the escrow holder is not equipped to receive your identification if they have not yet opened an escrow. Therefore it is easier and safer to identify through the intermediary, provided the identification is postmarked or received within the 45-day identification period.