HOT Home Trends for 2013

13 Hot Home Trends for 2013

Whether you’re staging homes or giving past clients advice, here are several design trends to keep in mind next year.

The design choices of 2013 will be shaped by uncertainty over how long current home owners will stay and what future buyers’ tastes may be. So, home owners’ needs and style preferences are more influential in today’s designs than what buyers want.
Here is a baker’s dozen of changes that design pros and manufacturers say are emerging and will make greater inroads:
1. Smarter, Less Costly Automated Controls: With lives continuing to be busy and automation costs coming down, it’s become more affordable to control a home’s systems—temperature, security, electronics, lighting, and more—through a single device, even from an iPhone, iPad, or iPod. Doing so can eliminate multiple controls and make it easy for home owners to manage things around their home, even when they aren’t there, says Jim Carroll, a founder of Savant Systems in Cape Cod, Mass., which designs and develops integrated automation solutions. “The average family has more than 80 different devices that can be controlled with one system,” he says. Anna Lowder and husband Harvi Sahota are incorporating more of these systems in homes they build for their Mercer Home residential building company in Montgomery, Ala. One example is the Nest Intelligent Thermostat, which can be controlled remotely, react intuitively to home owners’ habits, and adjust to conserve energy costs.
2. Outdoor Living Rooms and Screened Porches: A trend that began a few years ago continues to inspire home owners to think beyond terraces and decks. These spaces have more of the feeling and function of an indoor room—better furnishings, fire pits, curtains, and even televisions and audio systems. Some spaces are designed as courtyards for greater privacy, yet with high-efficiency glass windows and doors to make them energy-smart and seamless with indoor rooms, says Lowder of Mercer Home. Further helping to blur lines between outdoor and indoor spaces is the rise of screened porches, which have gained more indoor accoutrements such as fireplaces, making them livable nearly year-round.
3. Outdoor Kitchens, Vegetable Gardens, and More: Interest continues in outdoor food preparation of all kinds—as simple as a grill and as elaborate as a built-in cook’s station with sink, storage, beer tap, pizza oven, refrigerator, and countertops. Newer amenities include a hybrid grill that permits cooking with both gas and wood or charcoal and prefabricated kitchens that save funds, says landscape designer Michael Glassman in Sacramento, Calif. With a kitchen in place, many home owners move on to plant a vegetable garden, preferably including raised beds to avoid bending too much, Glassman says. He suggests starting with what home owners want to eat and cook—tomatoes, peppers, garlic, and herbs for gazpacho or spaghetti sauce—and learning through practice what thrives in an area’s soil and climate. Essentials are healthy soil, drainage, and readily available water. The next new food trend is a backyard pond with organically-raised fish that home owners can consume without trekking to a market, says Erik Coffin, CEO and owner of Gotham Capital Management in West Hollywood, Calif.
4. Themed Designs: After years of stark contemporary design, themed decorating is making a comeback, according to Montclair, N.J.-based designer Blanche Garcia. “There are more home owners asking for a European flair, perhaps antique sconces and velvet pillows,” she says. And partly due to excitement from the recent royal wedding, British-style motifs continue to proliferate, including Union Jack flags, red phone booths, and hounds tooth, floral, and crown patterns, says Paul Berberian, creative director of Brewster Home Fashions, a wallpaper company in Randolph, Mass.
5. Media Frenzy: With more families remaining home for “staycations” rather than traveling, rooms are being devoted to TV and other multimedia entertainment with comfortable seating, tables, and good lighting. They’re designed to have a more “home-y” feel than media rooms of the past, Garcia says.
6. New Neutrals and Color Pops: With the country still in the financial doldrums, neutrals remain more popular than vibrant hues, says Erika Woelfel, director of color marketing at Behr Paint in Santa Anna, Calif. Nevertheless, neutrals aren’t the same whites, creams, and beiges, she says. “A blue-gray that works well with the range of popular blues and the purples they’ve replaced are making inroads; they offer a fresh background,” she says. In contrast, bright new accents such as such as raspberry-pink may attract greater attention than a straightforward red. There’s also a range of yellows, which complement blue-grays. And designer Ron Marvin of Ron Marvin Design in New York also sees a trend toward orange and purple accents. How long will these colors last? “Paint colors tend to move in cycles of five to 10 years and follow other home-décor categories, which in turn follow fashion,” Woelfel says.
7. More Double-Duty Furnishings: With homes continuing to be scaled back and many baby boomers moving into condos, more furniture and furnishings need to do double duty in smaller spaces. Expect to see ottomans used for seating and storage, couches that convert to beds, and coffee tables that can rise for dining. This trend means that the one “room” in a house that’s not shrinking is the garage, which is often still big enough for two cars and storage.
8. Lighter Looks: Smaller homes and spaces call for scaled-back pieces and better illumination that makes rooms look larger. “I don’t like overwhelming rooms,” says Courtney Fohrman of Fohrman Interiors in Chicago. To achieve this, she suggests swapping out large bookshelves for wall-mounted shelves, opting for tailored furniture over clunky items, and welcoming natural light.
9. Green Merchandise: Interest in sustainable products and materials keeps attracting attention—particularly when it comes to choosing paints, adhesives, countertops, and flooring. “Most furniture companies and paint manufacturers have at least one item or line that fits the green movement,” Garcia says. Large paint companies such as Benjamin Moore, Glidden, Kelly Moore, and Sherwin Williams offer zero-VOC or odor-free paints, according to Healthy Homes Plans, founded by Linda Mason Hunter, author of The Healthy Home: An Attic to Basement Guide to Toxin-Free Living.
10. Energy and Water Efficiency: Efforts to conserve energy and water throughout the home continue to be popular, including low-water toilets and sinks, better functioning furnaces, and improved insulation. Solar panels are more integrated into roofs so they’re less of an eyesore. Gray recycled water can be used in toilets and to water gardens, while more drought-tolerant plants and replacements for impermeable hardscape allow greater water retention, Coffin says.
11. Panelized Homes: More factory-built homes help to cut building costs at the site by reducing the amount of labor time needed in the field. Besides cost savings, there’s the ability to improve quality control, says Eric VanDerHeyden, executive vice president of RSI Development in Newport, Calif., which uses a variety of plans ranging from 1,232 square feet to 2,500 square feet. “It can cut the cost in half and construction time from a year to eight weeks,” he says.
12. Handcrafted Elements: Many home owners desire hand-crafted artisanal pieces for a greater personalized look. Some are made from reclaimed rustic wood, which adds a homey, inviting feeling, says Brad Ford of Brad Ford ID in New York.
13. Stylish Kitchens and Bathrooms: These remain at the top of many home owners’ wish lists, as they reflect the trend of remodeling rather than adding on, says Bill Millrolland, executive vice president of Case Design Remodeling in Bethesda, Md. The transitional look—a middle ground between traditional and contemporary—has become more popular. This is evidenced by choices such as cove rather than crown molding, dark-stained or painted finishes rather than natural maple or cherry, and larger format 24” by 24” tiles rather than smaller 12” by 12” and 6” by 6” ones, he says. Designer Wendy Johnson in Manchester Village, Vt., also sees continued interest in kitchens, particularly when they become even more open “live-in” spaces for cooking, eating, socializing, doing homework, or paying bills. Likewise, master suites serve multiple functions, including unwinding, sleeping, and bathing. Millrolland reports more requests for Universal Design features that permit home owners to age in place but don’t convey an institutional look: Grab bars masquerading as towel bars, kitchen counters of different heights for wheelchair access, and wider hallways and doors to permit walkers and wheelchairs through.
No matter what the market’s doing though, the best advice you can give to home owners is to make design decisions based on their hearts and wallets rather than media predictions and hype.

Top 10 Real Estate Tax Deductions

Top 10 Real Estate Tax Deductions

1.  Mortgage Interest Deduction

The mortgage interest deduction has always been the most-beloved tax benefit of home buyers in the U.S.  New homeowners’ monthly mortgage payments are made up almost entirely by interest for the first few years. Their ability to deduct that interest can result in a healthy reduction in tax liability. Affordability for first-time home buyers is directly linked to their ability to deduct the interest on their mortgage.

Homeowners who itemize their deductions can deduct the interest paid on a mortgage with a balance of up to $1 million. While there is some movement to limit the total itemized deductions for taxpayers with higher incomes (over $400,000), the current deductions holds for all tax brackets. Americans save around $100 million every year by deducting mortgage interest on their tax returns.

2.  Home Improvement Loan Interest Deduction

The interest on home equity loans used for “capital improvements” to a home can also be a tax deduction. On loans with balances of up to $100,000, the interest is tax-deductible for a homeowner who uses the loan to make improvements to the home such as adding square footage, upgrading the components of the home, or repairing damage from a natural disaster. Maintenance items like changing the carpet and painting a home are usually not included as capital improvement projects.

3.  Private Mortgage Insurance (PMI) Deduction Homeowners who make a down payment of less than 20% are usually paying some sort of Private Mortgage Insurance. PMI (sometimes abbreviated MIP or just MI), can be a few dollars to hundreds of dollars per month, and it is a large portion of many homeowners’ mortgage payments.If your mortgage was originated after Jan 1, 2007, and you have PMI, it can be a tax deduction. The deduction is phased out, 10% per $1,000, for taxpayers who have an adjusted gross income between $100,000-$109,000 and those above that level do not qualify. The extension of this tax deduction in 2013 was one of many last-second saves by real estate industry advocates.

4. Mortgage Points/Origination Deduction

Homeowners who paid points on their home purchase or refinance can often deduct those points on their tax returns. Points, often called origination fees, are usually percentage-based fees which a lender charges to originate a loan. A one percent fee on a $100,000 loan would be one point, or $1,000.On a home purchase loan, taxpayers can deduct the entirety of the points that they paid in the same year. On a refinance loan, the points must be deducted as an amortization over the life of the loan. Many taxpayers forget about this amortized benefit over time, so it’s important to keep good records on the deduction of points on a refinance.

5. Energy Efficiency Upgrades/Repairs Deduction

Homeowners can deduct the cost of the building materials used for energy efficiency upgrades to their home. This is actually a tax credit, one which is applied as a direct reduction of how much tax you owe, not just a reduction in your taxable income.

10 percent of the total bill for energy-efficient materials can be used as a tax credit, up to a maximum $500 credit. Insulation, doors, new roofs, and many other items qualify for the energy efficiency credit. There are also individual limits for certain items, such as $150 for furnaces, $200 for windows, and $300 for air conditioners and heat pumps.

6. Profit on Sale of Real Estate Deduction

If you’ve sold a home in the past year, you’re likely aware that individuals can claim up to $250,000 of profit from the sale tax-free, and married couples can claim up to $500,000 tax-free. Of course, there are some requirements to escaping the capital gains tax on this profit.

The home must be a primary residence. This means that you must have lived in the home, as your primary residence, for two of the past five years. You could rent it out for years one, three, and five, while living in it for years two and four. In this way, a homeowner could potentially claim this tax break on multiple homes within a fairly short time frame, but each tax-free sale must occur at least two years apart from the previous tax-free transaction.

7. Real Estate Selling Cost Deduction

For those lucky folks whose profits on the sale of their home might exceed the $250k/$500k limits, there are still some ways to reduce the tax burden.  The costs of selling the home can be significant, and those in themselves can be claimed as tax deductions.

By adding up all of the fees paid at closing, capital improvements made to the home while you owned it, money spent to make repairs to damaged property, and marketing costs necessary to sell the home, you can add a significant figure to the cost basis of your home.  This basically raises the original price you paid for the home.  Your cost basis begins with the original price of the home, and then adds in the improvement and selling costs.  When the new cost basis price is compared to your selling price, it reduces your potentially-taxable profit on the home significantly.

8. Home Office Deduction

The home office tax deduction is often cited as a deduction that increases your likelihood of being audited.  While the raw numbers might add some credibility to that perception, it’s really the way a home office is deducted that gets some taxpayers into audit purgatory.This deduction, when used correctly, is just as safe as any other.  Homeowners deduct a percentage of their mortgage, utilities, and repair bills in direct proportion to the amount of their home that is dedicated office space.

There are a few hard and fast rules to live by when deducting the costs of your home office. The home office must be your principal place of business (the primary office location where you get the majority of your work done).  It needs to be exclusively used for business (it can’t be your kitchen by day and office by night).  You need to be realistic with its size and use (unless you enjoy audits).

9. Property Tax Deduction

New homeowners often don’t know that their property taxes are deductible.  While it may sound strange to have a tax-deductible tax, the overall effect is that you don’t pay income tax on money that was spent on property taxes.Homeowners should be careful to only deduct the amount of property tax actually paid to their local municipality for the year. This is not necessarily the amount you paid to your escrow account, and should not include any other city/county fees that might potentially be on the same bill as your property taxes.

10. Loan Forgiveness Deduction

The Mortgage Debt Forgiveness Relief Act of 2007 was created when short sales were becoming a new and growing part of the real estate market. An underwater homeowner might convince their lender to agree to a short sale of their home at $100,000, even though they owe $150,000 on their mortgage. While the lender forgives the extra $50,000 owed after the short sale, the government views it as $50,000 in taxable income (a gift from the lender to the borrower).The Debt Forgiveness Act temporarily relieved the taxpayer of that burden, but was set to expire this year. Through much effort, it was extended along with many other homeowner tax relief measures this year and homeowners can continue to claim this tax relief in 2013.

IRS-suggested disclaimer: To the extent that this message or any attachment concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.  This message was written to support the promotion or marketing of the transactions or matters addressed herein, and the taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.