Phoenix boomtown! Great place for real estate investors

Phoenix housing boomed with the housing market and then crashed hard with the subprime mortgage crisis. Now things are looking up again in the state. It seems as though when the national markets go up, Phoenix goes higher, and when they go down, Phoenix goes lower..

This makes Phoenix one of, if not, THE best place to invest in real estate. You can buy properties for cheap when the market is rough, then rent them for amazing cash flow and tax breaks, all the while riding it out to realize some significant gains from appreciation.

Phoenix is volatile, but for the cash flow investor, that’s good news!

Click here for to get started investing in Arizona real estate!

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Don’t Drink the Unemployment Kool Aid

No Jobs Just More Student Loans (Debt)

Written by: Joshua Gayman

Yesterday I posted a status on my Facebook fan page stating, “For those between the ages of 18 and 24, the unemployment rate is at a staggering 46 percent according to a recent report by the Pew Center. That equals the highest unemployment rate for this demographic since reporting began in 1948.” A friend commented saying that she feels many people between the ages of 18 and 24 are lazy. Too some extent I can’t help but agree with this young lady(who is an educated young professional and works very hard). However, I have to agknowledge that there always has been, and always will be, lazy people. The difference is that right now there are too many people unemployed in this younger demographic to simply chalk it up to laziness.

The numbers can be deceiving, as the latest unemployment numbers have the rate down to 8.3%(Down from 9% one year ago). But things may not be as good as they seem, especially for those under 30.

If you are to account for people who have given up on looking for a job, unemployment soars from 8% up to 17%!(Source: Boston Globe) This number equals 5.4 Million lost-workers over the past 3 years and a huge loss in productivity for our nation.  Losing this kind of productivity means that we will see a slower recovery, and have fewer people contributing to our nation’s output, less people buying goods and services, and less people paying taxes. These people are then much more likely to become poor, rely on government assistance, and develop mental health issues(too much stress). This means simply that 5 million people are now consuming and not producing, and are more likely to require money from a government that already spends nearly $1 Trillion more than it takes in every year.

For the future generation, unemployment is at an all time high(since they began reporting in 1948).

*Ages 18-24: 46% unemployment rate(source: Pew Center)

*Ages 18-34: more than 33% have gone back to school and taken on more debt because they can’t get a job.

*34% of those between the ages of 25-29 have moved back in with their parents, and almost 25% of those between 18-34 have!

*One in 5 have put off marriage or having kids because they don’t have the money 😦

TRANSLATION: Kids are not growing up, not producing, and not ready to take over for their aging parents or care for them when they retire.

Add college loans and entitlement programs like Social Security that transfer wealth from young to old, and you can see why kids are fleeing back to their parents’ houses and their childhood bedrooms.

Robert Kiyosaki(author of Rich Dad Poor Dad), puts it this way: “Rather than preparing the next generation to support our country, we’re taking their wealth, their jobs, and instead still taking care of them.”

2012 is an election year, so you can be sure the media and politicians will be serving the Kool Aid. Don’t drink it! Invest the time into yourself and increase your financial education! Invest to acquire assets that put money in your pocket before you buy liabilities that take money out!

Why Do Company’s Really Match 401k Contributions?

The average person, if they even have a retirement account, have a 401k which is investing in mutual funds. Don’t be average. Take responsibility and have some control 🙂 – Josh

There’s No Such Thing As Free Money

Posted on: Tuesday, January 31, 2012|Written by: Robert Kiyosaki

Get a Financial Education and Stop Thinking Like an Employee

Years ago I had a conversation with a young man about 401(k)s. “I have a question for you,” he said. “I’ve read that you say 401(k)s are the worst investments, but I don’t understand why you say that.”

“What is it that you don’t understand?” I asked.

“Well,” said the young man. “Most employers match your contribution. For instance, my employer matches up to four percent of my salary. Isn’t that a hundred percent return? Why is that a bad investment?”

“It’s a bad investment,” I said, “because it’s your money to begin with.”

He looked puzzled and perplexed.

“Listen,” I said, “if it weren’t for 401(k)s, your employer would have to pay you that money as part of your salary. As it is, they still pay it, but only if you give up four percent of your existing salary in to a retirement account where you have no control. And if you don’t, well the employer comes out ahead. It’s your money, but they’re in control.”

Thinking like an employee

The young man still didn’t look convinced, but I could tell he was thinking hard about it. The reason this young man and many others don’t understand my reasoning is that they only think like employees. As an employer, I know that if it weren’t for 401(k)s, I’d have to pay that money to employees in their salary in order to be competitive.

For me, as an employer, a 401(k) is an advantage because I don’t have to pay the money unless an employee opts in, and if they leave my company too early, I don’t have to pay because they aren’t vested.

A recent study confirms what I’m saying and should help those of you who still find this logic confusing or not convincing.

A 401(k) steals your money

A recent study confirms what I’m saying and should help those of you who still find this logic confusing or not convincing. According to Steven Gandel, a study issued by the Center for Retirement Research indicates that, “All else being equal…workers at companies that contributed to their employees’ 401(k) accounts tended to have lower salaries than those at companies that gave no retirement contribution…In fact, for many employees, the salary dip was roughly equal to the size of their employer’s potential contribution.”

Translation, companies that don’t offer 401(k)s must pay a higher salary to compete with companies that do. Those company’s employees simply get their money as part of their salary rather than having to match it and save it in a tax-deferred retirement plan where they have no control and have high fees.

No financial intelligence? Stick with the 401(k)

Control is an important aspect of investing. As I mentioned, with a 401(k), you have no control over your investments as you generally invest in funds and indexes controlled by brokers, who are controlled by bankers, who invest in companies that are controlled by boards — all of which you have no control over.

If you want to be rich, you must have a financial education and control over your money and your investments. This is why I like to invest in my own business, purchase real estate and create products. I have a lot of control over those investments. Generally a good matrix is the more control you have, the higher your potential return. The less control you have, the lower your potential return.

Of course, it takes high financial intelligence to invest in things where you have control because you have to make a lot of important decisions. This is why being forced into a 401(k) probably isn’t a bad thing for most people. This is because most people have little-to-no financial education and wouldn’t know what to do with the extra money other than save it or spend it.

But I expect the average Rich Dad reader to be head and shoulders above the average person in terms of financial intelligence. The reality is that if you’re investing in a 401(k), you’re not making a return on your employer’s match. You’re simply getting what is owed you by your employer.

For some, this might be the first time you’ve ever thought of this. For others, I’m probably preaching to the choir.

Some questions for the Rich Dad community

If you’ve avoided the 401(k) trap, what ways are you using that money to build your wealth outside of a 401(k)?

How Your Taxes Can Help Build Your Wealth

Taxes are most people’s biggest expense. Therefore reducing that amount means more money immediately available to invest. The tax law is a series of stimulus packages for real estate investors and business owners.“- 

How Your Taxes Can Help Build Your Wealth
Most people view taxes as a drain on their wealth. If it weren’t for their taxes, they would have more money in their pocket, would finally be able to get ahead and could start investing.

I look at taxes very differently. I look at taxes as a way to increase cash flow. The tax law provides tons of opportunity to reduce your taxes. When you reduce your taxes, you increase your cash flow (often immediately) which can be used to increase your wealth.

Reducing your taxes goes hand-in-hand with your wealth strategy. For most people, taxes are their single biggest expense. This means that reducing their taxes results in instantly increasing the amount they have available to invest.

The Government Wants You to Reduce Your Taxes
The tax law is a series of stimulus packages for real estate investors and business owners. This is true in all developed countries.

The government wants to provide jobs and housing. To encourage others to do this for them, the government provides tremendous tax benefits to those who provide jobs (business owners) and those who provide housing (real estate investors).

Your Tax Strategy is Part of Your Wealth Strategy
Once you understand what the government wants you to do in order to reduce your taxes, you can use this information in your wealth strategy to invest in assets that not only fit with your wealth goals but also produce tax savings.

This is a powerful formula and one that can be used over and over and over again because many of the tax benefits for entrepreneurs and real estate investors produce annual tax savings.

Then, as your wealth grows, so do the opportunities for tax savings, which means not only does the cycle continue every year, it grows every year as well so your tax savings are more, your increase in cash flow is more and your wealth increases even more.

Do you see why I am so passionate about taxes? Taxes are a tremendous tool to build your wealth.

Tom Wheelwright

Are You Living On Financial Edge?

             Are You Living on the Edge without a Financial Education?

Posted on: Tuesday, January 24, 2012|Written by: Robert Kiyosaki

When I was a young boy, the path to retirement was simpler. For the most part, if you saved your money regularly, paid your mortgage off, and lived modestly, you could retire well. This was partly because inflation was low since the dollar was pegged to gold and also because most employees could expect a company pension and health benefits until the day they died. It did not take much intelligence to have a secure, financial future.

Today, we live in a world that requires an extremely high, financial intelligence to retire well.

It is no longer enough to save money, as higher inflation and taxes wipe out your earnings. You can’t rely on a company pension because most companies don’t offer one. Instead, it is expected that you contribute to a 401(k) plan that may or may not provide you a secure retirement and that is simply a glorified, tax-deferred savings account that benefits the rich, not you.

These changes are because of two actions by the U.S. government that I’ve written extensively about, most notably in my book Conspiracy of the Rich. In 1971, Nixon took the dollar off the gold standard, making the dollar a currency instead of money. And in 1974, the Employee Retirement Income Security Act was passed, paving the way for 401(k) plans, forcing uneducated workers into the stock market, and creating the financial services industry.

It’s taken about three decades, but we’re seeing the devastating effects of those actions today as individuals and countries are living on the edge of financial disaster.

On an individual level, take for instance a young friend of mine’s father whose dad worked his whole life in an old-world industrial plant. Every time my friend talked with his dad, his dad would mention how long it was until his retirement, where he’d collect a pension and health benefits and enjoy golf a few times a week and sports on TV. There were no savings to speak of, some stock options decimated by the economic downturn, much debt, and no other plan. Unfortunately, only a few months before my friend’s dad hit the minimum retirement age, the plant went for sale, found no buyers, and closed. Now he, along with hundreds of others at that plant, cannot find a new job, have no savings, and are looking at a very insecure, financial future. For him, it may be too late.

On a national level, look at the Euro Zone. According to The Wall Street Journal, “The global economy faces a depression-era collapse in demand if Europe doesn’t quickly act to dramatically boost the size of its debt-crisis firewall, implement pro-growth policies and further integrate the euro zone, the head of the International Monetary Fund warned Monday.”

As IMF Managing Director Christine Lagarde remarked over the weekend, the Euro Zone’s efforts to stymie debt problems “is about avoiding a 1930s moment, in which inaction, insularity, and rigid ideology combine to cause a collapse in global demand… A moment, ultimately, leading to a downward spiral that could engulf the entire world.” If Europe collapses, the world goes down with it — and the jury is still out on what will happen. But the world’s financial experts are sending out the warning cry.

As you read these stories above, they probably sound vaguely familiar, have little emotional impact on you, and you may have even skipped over them.

Why?

These stories echo stories that have been shared for many years now. The news is filled with stories of people living in countries on the edge of financial collapse, and then buffered by good news here and there to keep us all from falling into complete despair.

The reality is that we have become used to living on the edge, and we’re forgetting what it means to live comfortably inland. This is not all bad, if you have the right mindset.

Living on the Edge Requires a Financial Education

Living on the edge requires alertness and intelligence, you cannot give up or be lulled or else you will fall. Each step must be calculated and taken carefully, but confidently, to get to safety. The only other option is to do nothing and hope someone will save you —which is akin to suicide.

It’s for times like these that the Rich Dad Company was formed. This website, our books and DVDs, our coaching, and financial education all exist to help equip you for the perils of our modern economy so that you can be sure to have the knowledge and practical application required to survive and thrive while others fail and fall.

For many, there is no choice about living on the edge. The die has been cast for us by people much more powerful and influential than us. But we can control our actions on the edge. It’s my hope you’ll step forward confidently and smartly, equipped with as much financial knowledge and courage as you can gain and muster. It sure beats the alternative.

To increase your financial education now, click here to find out about our free resources and online community.

Using Your Retirement Plan in Your Wealth Strategy

Your wealth strategy and your retirement plan are one in the same. Don’t just hand your money to someone else to do what’s in your best interest for you and your family’s future. If it is up to be, it is up to you! -Joshua Gamen

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Using Your Retirement Plan in Your Wealth Strategy
One of the most popular questions I receive about a wealth strategy is this:I want to use the money in my retirement plan for a specific investment. Should I make the investment inside my retirement plan or should I distribute the money from my retirement plan and make the investment outside of my retirement plan?

My answer (of course) is it depends. It depends on your specific facts and circumstances.

Today, I’ll share some of the key factors to consider to help make this decision.

Factor #1: What Investment Options Are Available in Your Retirement Plan?
The term “retirement plan” covers a huge range of retirement plans – each of which has their own specific set of rules.You will first want to determine what your investment options are in your retirement plan. Some retirement plans, like an employer sponsored retirement plan, limit your investment options. Other retirement plans offer a broader range of investment options.

Factor #2: Are the Distributions Subject to Penalties?
While the rules vary by the specific type of retirement plan, in general, if money is distributed from a retirement plan early, meaning before the date allowed by the government and/or employer rules, then the distribution will most likely be subject to penalties.Penalties don’t rule out distributing the money, they just need to be factored in to your analysis.

Factor #3: Are the Distributions Subject to Income Tax
Depending on the type of retirement plan or when the distribution is taken, retirement plan distributions may be subject to income tax.Like penalties, just because the distributions may be taxed doesn’t rule out distributing the money – it just needs to be factored into your analysis.

Factor #4: What is Your Personal Situation?
Your personal situation plays a big role here. For example:– Is your tax bracket low or high?
– When can you take distributions from your retirement plan without penalty?
– What is your expected return on investment inside of your retirement plan?
– What is your expected return on investment outside of your retirement plan?
– What will you do with the investment long term?

Factor #5: What Type of Income Will Your Investment Produce?
Investments can produce different types of income including ordinary income, interest income, dividend income, rental income and capital gain. Some income types work very well inside a retirement plan, and others may cause your retirement plan to pay tax.
Factor #6: Does Your Investment Involve Leverage (Debt)?
If your investment involves debt, then this is a critical factor to understand.In some retirement plans, the tax implications of debt can be significant. For example, income generated from the debt can be taxable. Or, if you guarantee the debt personally, there could be tax consequences.

It’s important to not only understand the tax implication of using debt in your retirement plan, but also to understand how it can impact your investing. Many lenders are not willing to make a loan to a retirement plan without a personal guarantee. However, a personal guarantee, as noted above, could trigger tax. Lenders who are willing to lend to a retirement plan without a guarantee are usually not willing to lend as much as they would if there were a guarantee and the rate is usually higher.

It is extremely important to understand your leverage options inside and outside of your retirement plan before moving forward with your investment.

Factor #7: What Tax Benefits Will Your Investment Generate?
While retirement plans are often viewed as a great tax deferral vehicle, many tax benefits can be lost in retirement plans.For example, if a distribution is taxable from a retirement plan, it is generally taxable at ordinary income tax rates. This is true even if the income inside the retirement plan was capital gain income – which outside of a retirement plan has lower preferred tax rates. The tax benefit of the lower rate is lost.

Another example is investments that create losses for tax purposes. Some investments, like rental real estate or oil and gas, often create losses for tax purposes even though they generate positive cash flow. Losses inside a retirement plan are typically lost because the retirement plan usually doesn’t have any tax for the losses to offset.

Your Retirement Plan and Your Wealth Strategy
Your retirement plan can give your wealth strategy a tremendous boost. The key is understanding the best way to integrate your retirement plan into your overall wealth strategy.

Written by: Tom Wheelwright

Tom Wheelwright

5 Tips to Keep Your Wealth Strategy on Track

There is so much more to building wealth than making money. A Wealth Strategy is crucial. If you do not have a wealth strategy, use December to educate yourself and build one, think about what your goals are and write down a plan to get there. A wealth plan is not a “get rich quick” plan, so think education first.  -Joshua Gamen
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5 Tips to Keep Your Wealth Strategy on Track
With a new year right around the corner, it’s a good time to think about the activities that have a positive impact on your wealth strategy.
Here are 5 Tips to Keep Your Wealth Strategy on Track:
Tip #1: Avoid Winging It
Winging it means taking action without a strategy to support the action.

For example, buying gold because it seems like a good investment, or buying a rental property because it seems like a good investment.

What makes an investment a good investment is how it works toward the goals in your wealth strategy. Simply making an investment because it seems like a good investment isn’t enough – what will it do in your wealth strategy to achieve your wealth goals?

While it is great to take action, there needs to be a strategy behind the action so the actions lead to the results you want.

Winging it in a wealth strategy can set the wealth strategy behind by years – even decades.

Tip #2: Make Your Wealth a Priority
Letting your wealth strategy slip as a priority is something that can often sneak up on us.

For example, let’s say you have a goal to invest in a rental property and have a plan to look at prospective properties this month.

However, when you get the call to go look at the properties, you’re in the middle of running errands, or too busy with work, or need to finish a project. The list goes on and on. Looking at properties gets put on hold and your wealth strategy quickly falls off track.

There is always something else to do if your wealth strategy is not a priority.

Tip #3: Your Neighbor’s Plan Isn’t Your Plan
I’ve had people share with me many times that they made an investment because their neighbor (friend, co-worker, colleague, etc.) made the same investment.

What works for your neighbor will not necessarily work for you.

Your wealth strategy must be specific to you based on your likes, your dislikes, your family, your goals, your dreams, and your financial situation. To maximize the results of your wealth strategy, it must be customized to you.

Tip #4: Succeed With a Team
I always share that the 3 most expensive words in the English language are “Do-It-Yourself.”

The road to achieving your wealth goals is not always a smooth one. In fact, it is common to hit several bumps along the way.

Those who have a team are less likely to get off track when they hit that first bump, or maybe they make it to the second or third bump before turning around. Navigating with an entire team supporting you makes the process much smoother.

Build a team around you to support you and help you achieve your wealth goals.

Tip #5: Avoid Taking it to the Extreme
Taking it to the extreme means you have no balance in your wealth goals. You are trying to go at a speed that no one can possibly sustain – and that means a lot coming from me because I like things to move fast.

The challenge with going at an unsustainable speed is it all too often leads to crashing and burning, and that can be devastating in a wealth strategy.

Set reasonable goals and make your wealth building part of your everyday life.
                                                                                                                  
Tom Wheelwright

Making Your Tax Savings a Reality

No tax strategy is bad and will cost you a lot of money that you never even knew you had – Joshua Gamen
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Last week I shared a few tips about forming your tax strategy.

A tax strategy is a step-by-step action plan that ensures you are paying the least amount of tax allowable by law, regardless of your business or investment situation.

A tax strategy is comprehensive. It considers:

– Your personal and financial goals and dreams
– Your business, your investments and your family situation
– How your businesses and investments are owned
– The appropriate entity structure for your business and investments
– Your current situation to uncover deductions and other permanent tax saving opportunities

Those who are most successfully in their tax strategy make it a part of their every day activities. To them, a tax strategy is not a one-time event. Rather, it is something that becomes part of their routine.

A tax strategy helps you to view your every day activities in a different way – one that works toward the goal of permanently reducing your taxes.

The reality is that just about everything you do can have an impact on your taxes. So, why not make sure that impact is a positive one?

Here are a few examples of every day activities that can impact your taxes:
– Paying expenses
– Receiving money from an entity you own
– Putting money into an entity you own
– Having a meeting with partners, vendors or advisors
– Buying or selling investments
– Having an important discussion about your business or investments

The above items are activities you probably already do on a regular basis. By keeping your tax strategy in mind while doing these activities, you can improve the results of your tax strategy – all without having to do anything out of the ordinary.

Paying your expenses
When you pay your expenses, who is paying for that expense? Is it you personally? Should it be your entity instead? What type of documentation do you need to keep for your tax strategy?

Unless you have your tax strategy in mind, it is easy for this ordinary transaction to have a negative impact on your taxes.

You may pay for business expenses personally and forget to have your business reimburse you – this means the expense gets missed as a tax deduction.

When you keep your tax strategy in mind, it will be routine to have your business reimburse you. Or, even better, it will feel wrong to not have your business pay for the expenses in the first place.

Receiving money from an entity you own
Every payment you receive from your entity can have an impact on your taxes. This may include salary, distributions, expense reimbursements or other forms of payments.

Your tax strategy maps out the best way to take money out of your entity. Making sure those payments are treated as they are supposed to be, should be part of your every day activities.

For example, if you are receiving a salary, it should look like salary. This means it’s paid on a set schedule (weekly, bi-weekly, bi-monthly, monthly, etc.) and the proper taxes are withheld.

Similarly, if you are taking a distribution, it should look like a distribution. Distributions are usually not paid more frequently than quarterly. Also, distributions are usually not a set amount as they are typically tied to the profitability of the entity. If your distribution is paid every two week, it looks more like a salary and this can have a negative impact on your tax strategy.

Keeping this in mind, as you receive payments from your entity, helps the success of your tax strategy.

Having a meeting with partners, vendors or advisors
If you are meeting with a partner, vendor or advisor, odds are you are discussing items that impact your tax strategy. These meetings likely cover topics important to your tax strategy, like investments, new opportunities, strategic decisions or major purchases.

All of these are great to have documented in the form of meeting minutes. Meeting minutes provide tremendous support for deductions, investments and business purpose – all of which help the success of your tax strategy.

Your Tax Strategy
Those who are most successful in their tax strategy are those who have incorporated it into their routine. When reaching for a credit card to pay for lunch, they are asking themselves, “Should I pay with the business card or my personal card?”

It is the every day activities that make tax savings a reality.

                                                                                                                                            
Tom Wheelwright

Business Owners & Investors: What to Do Before the End of the Year to Reduce Your Taxes

The end of the year is an important time in an overall tax strategy. Often times, there are things that must be done before the end of the year in order to receive certain tax benefits for that year.
Here are 3 items I find all business owners and investors can benefit from by reviewing them before the end of the year (and on a regular basis).
Item 1: Get Your Books in Order
Many people view bookkeeping as a necessary evil. I see bookkeeping a little differently. I see bookkeeping as a tool to boost tax deductions.

It’s one thing to know what’s deductible and how to maximize your deductions, but unless that gets reflected in your bookkeeping, it’s as if the tax planning never happened at all.

Here are a few tips on what to look for to make sure your books are in order:

Make sure your bookkeeping is current
Ideally, this means your bookkeeping is up-to-date through the end of last month, or last quarter. As time goes by, so does the likelihood of capturing deductions that have been missed – this is why keeping your bookkeeping current is so important to your tax savings.

Verify accounts are reconciled
This simply means making sure the balances that show for your bank accounts, credit cards, receivables and liabilities are accurate. Reconciling your asset and liability accounts is the first step to making sure your bookkeeping is accurate and deductions are not missed.

Look for what’s missing
It is very common to pay for business or investment expenses personally. This can result in missing these expenses in the bookkeeping for your business or investment which means missing potential tax deductions. Be sure to reimburse yourself for these expenses – the reimbursement puts the deductions on the books.

Item 2: Check Your Vehicle
The vehicle deduction is one of my favorite tax deductions because it has the ability to turn non-deductible personal expenses into legal tax deductions. This creates permanent tax savings.

To make this tax reduction strategy work, there are a few things that need to be reviewed and the end of the year is a great time to do that.

Review your mileage log
Your mileage log should tell you how many business miles versus total miles you have year-to-date.

Review your vehicle expenses
Vehicle expenses include maintenance, tune-ups, replacement parts, new tires, gas, oil, washes, car loan interest, depreciation & lease payments.

These expenses add up, which can mean big tax savings.

Understand how to actually claim your deduction
How your vehicle deduction is claimed depends on your business or investing activity and the type of entity (or entities) you have in your tax structure. You may need to be reimbursed by your business – before the end of the year – or you may claim the deduction directly. This is one to discuss with your tax advisor.

Item 3: Secure Your Home Office Deduction
The home office deduction is another great example of a deduction that creates permanent tax savings. It takes expenses you already have for your home (many of which are not otherwise deductible) and turns them into legal tax deductions.

Here are the areas to review for your home office:

Review the home office requirements
Home office requirements are very specific. It is good to review these requirements before the end of the year to make sure your home office meets the requirements.

Generally, the requirements that must be met include:

  • You own a business (if you are an employee, you must meet the “for the convenience of the employer” test)

  • You have an area set aside in your home used regularly and exclusively for specific administrative or management activities for your business

  • There is no other place of business where you conduct those activities

If you don’t think your home office qualifies, you may just need to change your facts in order to qualify it. For example, are there too many non-business items in your home office area that can be moved to another room? Or, can you modify the activities you do in your home office?

Review your home office expenses
Once you have determined you have an area that qualifies as a home office, it’s time to start tracking your home office expenses.

Allowable home office expenses include utilities, mortgage interest, property taxes, homeowners and liability insurance, repairs, maintenance and depreciation.

These expenses are then allocated based on the percentage of your home used for your home office area.

Understand how to actually claim your deduction
As with the vehicle deduction, how you claim your home office deduction depends on your business or investing activity and the type of entity (or entities) you have in your tax structure. You many need to be reimbursed by your business – before the end of the year – or you may claim the deduction directly. This is another one to discuss with your tax advisor.

                                                                                                    Written by: Tom Wheelwright                                      
Tom Wheelwright