U.S. Bank State Farm Credit Cards Launch

It’s now possible to apply for the U.S. Bank State Farm cards. The cards are as follows:

  • State Farm Premier Cash Rewards Visa Signature® Card
    • Card earns:
      • 3% cash back on insurance premium payments, up to $4,000 spent annually
      • 2% cash back at gas stations, drugstores, grocery stores and on dining, including takeout and food delivery service purchases
      • 1% cash back on all other purchases
    • No annual fee
    • Double cash back on all purchases on up to $300
  • State Farm Good Neighbor Visa® Card
  • State Farm Business Cash Rewards Visa Signature® Card
    • Card earns:
      • 3% cash back on insurance premium payments, up to $4,000 spent annually
      • 3% cash back at gas stations, cell phone service providers, office supply stores and on dining, including takeout and food delivery service purchases
      • 1% cash back on all other purchases
    • $100 annual software subscription credit

The $100 annual software subscription credit is interesting on the business card, but that requires recurring payments for 11 months (e.g you’d need to be spending $100+ on software subscription for 11 month and then get $100 back in the 12th month). Otherwise the rest of the cards are boring.

Hat tip to Francisco

Source: doctorofcredit.com

What Does it Mean to Rent to Own?

Some things you don’t want to rent to own. Bowling shoes, for instance. But a home? Yes indeed, that’s a great option for many people.

A rent-to-own agreement is a solid option for people who long to live in an honest-to-goodness home, but who can’t get a mortgage or don’t have a lot of down payment money. Any legal agreement requires intense scrutiny and understanding, so read up on the basics of rent to own before going any further. It’s for your own good, promise.

What does rent to own mean?

The phrase “rent to own” is fairly straightforward.

Renters pay a set amount per month in rent. On top of that, the renter also pays a preset amount. These extra funds go into an escrow account for future use as a down payment on this particular home. This is also known as a rent credit or rent premium and is usually 20 percent above-market rent.

So, a person could pay $1,000 per month in rent, plus $250 per month for the eventual down payment. Think of it as forced saving, if you will. It’s also standard for the renter to put down 3 to 5 percent of the home’s value as a nonrefundable deposit before taking residence.

Rent-to-own agreements can vary in length but are usually one to three years.

A rent-to-town lease agreement A rent-to-town lease agreement

Types of rent to own agreements

Don’t make the mistake of assuming that legal mumbo jumbo sounds the same, so it means the same. In fact, that’s a pretty financially perilous error. There are a number of different ways to structure a rent-to-own agreement. These are the two most common.

Option to buy agreement

This type of agreement lets the tenant choose whether or not to buy the home at the end of the agreed-upon period. The risk here is that if the renter chooses not to purchase the home they forfeit any accrued rent premiums, not to mention the option fee. Ouch. This is also known as a lease-option agreement. In order to proceed at the end of the agreement, the renter must obtain a mortgage. The owner cannot sell the home out from under the renter during the agreement. The renter can also opt not to buy the home at the end of the agreement. The purchase price is usually frozen at the beginning.

Obligation-to-buy agreement

Also known as a lease-purchase agreement, there’s no wiggle room here. This type of contract means that you will buy the home once the lease expires. Hence, the word “obligation.” If you don’t buy the house, you’ll lose any premiums paid during the process. There might also be legal ramifications. Clearly, this is a much riskier option.

How to rent to own

So you want to rent to own. How do you go about it? Here are some solid options.

Find a real estate agent

It might be tempting to do the legwork yourself, but a great agent can save you tons of time and money. First, they have access to search resources and property networks that you don’t. Second, they work with sellers all the time and can spot crooks from a mile away. They are also adept at helping to negotiate a contract that’s reasonable to both the tenant and the seller.

Find a rent-to-own program

Companies have emerged in recent years that will actually buy the home you’re interested in, and agree to lease it to you for a period of time. After which you can choose whether or not to purchase. Renter and seller choose a purchase price at the beginning, which is a big boon for the renter if the market trends upward.

One of the most well-known such companies is Home Partners of America, which doesn’t even require the renter to build equity during the process. This is ideal in areas where rentals are scarce, such as good school districts.

Approach the landlord directly

Perhaps you’re already renting a home that you love. Ask the landlord if he’s interested in selling in the future. Who knows? He might be about ready to cash out. Or, keep an eye on the real estate listings. If a home hasn’t sold after a long time with no movement the owner could entertain other options.

A backyard of a blue house. A backyard of a blue house.

Things to remember before you rent-to-own

Whether you use an agent or not, denote in the contract if the landlord or the tenant (you) is responsible for home maintenance, repairs, landscaping, homeowners association dues, property taxes and so on. Failure to do so could cause some nasty and expensive surprises.

Also, complete a thorough home inspection before you sign the contract. No one wants to rent to own a home with a major foundation or other pricey problem. While you’re at it, check out the seller’s disclosure to find out about any hidden past problems.

Lastly, make sure to discuss your situation with a future lender. You’ll need to be able to afford the home in one to three years. Are you on the right path? If not, what needs to change?

Pros and cons of rent-to-own

  • Pro: A rent-to-own agreement with a rent credit forces the renter to put away money. Saving for the future is a good thing!
  • Pro: Rent to owns are a good way to break into a desirable area.
  • Pro: The purchase price is typically set at the beginning of the agreement, so this could be great if the market explodes.
  • Pro: A contract leaves little doubt as to who’s on the hook for what.
  • Con: If a renter chooses not to purchase the home they forfeit rent credit money (and any deposit).
  • Con: Many rent-to-own homes are not located in such desirable areas, so it might take extra legwork and patience to find one.
  • Con: The market could also tank, leaving you to weigh whether to pay more than the current value of the home or not.
  • Con: Be sure to follow your contract to a “t,” so that you don’t wind up losing a deposit or get fined.

There’s no place like a rent-to-own home

The path to homeownership has changed tremendously just in the last decade or two. As long as you consult with trusted experts and weigh your individual situation carefully, selecting a rent-to-own home is a great route to take.

The information contained in this article is for educational purposes only and does not, and is not intended to, constitute legal or financial advice. Readers are encouraged to seek professional legal or financial advice as they may deem it necessary.

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Source: apartmentguide.com

Medical Expenses Retirees (and Others) Can Deduct on Their Taxes

Individuals with big medical bills got a tax win in late 2020. Taxpayers who itemize on Schedule A can continue to deduct qualifying medical expenses to the extent that the total amount exceeds 7.5% of adjusted gross income. The AGI threshold was scheduled to climb to 10% beginning in 2021, but instead, Congress permanently kept the 7.5% threshold. 

You can claim medical expenses that are not reimbursed by insurance for yourself, a spouse and your dependents. To qualify as a deduction, the expense must be incurred primarily to alleviate or prevent a physical or mental disability or illness. 

The broad list of eligible expenses includes out-of-pocket payments for medical services rendered by doctors, dentists, optometrists and other medical practitioners; mental health services; health insurance premiums (including Medicare Parts B and D); annual physicals; prescription drugs and insulin (but not over-the-counter drugs); hearing aids; and transportation to and from the doctor’s office. But cosmetic surgery to improve your general appearance, hair transplants and teeth whitening are not eligible. For more information, about what qualifies, see IRS Publication 502.

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Long-Term Care and Insurance

A nurse helps a nursing home resident get tucked into bed.A nurse helps a nursing home resident get tucked into bed.

If you or your spouse requires long-term care, you may be able to deduct the unreimbursed cost for in-home care, assisted living and nursing home services as medical expenses. The long-term care must be medically necessary for a chronically ill person. A person is considered chronically ill when at least two activities of daily living cannot be performed without help for 90 days or more. Anyone in need of long-term care because of dementia or another cognitive impairment is also considered chronically ill if substantial supervision is needed to protect the individual’s health and safety. The chronic illness must be certified by a licensed health care practitioner. The cost of meals and lodging at an assisted living facility or a nursing home also counts if you are there mainly for medical care. 

If you purchased a long-term-care insurance policy, a portion of your premium payment qualifies as a medical expense. The deduction is capped based on age. For 2020 returns, the maximum per-person limits are $5,430 for taxpayers 71 or older, $4,350 for taxpayers 61 to 70, $1,630 for individuals who are 51 to 60, $810 for people 41 to 50 and $430 for those 40 and younger. These amounts are a bit higher for 2021: $5,640, $4,520, $1,690, $850 and $450, respectively.

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Home Improvements

A house that is being renovated. A house that is being renovated.

The cost of certain home improvements to accommodate a disability or physical illness may also be deducted as a medical expense—for instance, ramps, wide doorways or entrances, railings and wheelchair lifts. But an elevator is generally not deductible because it adds value to the house.

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Weight Loss Programs

A man standing on a scale.A man standing on a scale.

Weight reduction programs that are ordered by doctors to treat obesity or hypertension or alleviate another ailment are deductible medical expenses.

Diet foods, weight loss supplements or reduced-calorie beverages, however, are not. A weight reduction plan to improve your appearance doesn’t count either.

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Expenses for Service Dogs

A man petting a service dog.A man petting a service dog.

Veterinary costs for a service dog to assist the visually impaired and others with physical disabilities are eligible medical deductions. The same is true for the cost to buy and train the dog, plus feed and groom it. An emotional support animal also counts if it’s needed primarily to alleviate a mental disability or illness.

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Genetic Testing

A scientist doing a genetic test.A scientist doing a genetic test.

If you use a DNA ancestry company for genetic health testing, such as 23andMe, the portion of the DNA collection kit’s cost that pertains to genetic testing may be treated as a deductible medical expense. 

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Deductions for Self-Employed Workers

The owners of a bakery smile and laugh. The owners of a bakery smile and laugh.

Self-employed individuals get an even greater tax benefit. They can deduct the cost of health insurance and long-term-care premiums (subject to the age caps above) for themselves, a spouse and any dependents, regardless of whether they itemize on Schedule A. The costs can be claimed on Form 1040, Schedule 1, line 16, without regard to the 7.5% threshold.

Source: kiplinger.com