Monday, August 8, 2016

Buying a Co-op vs. a House in New York: 4 Differences

 Buying a Co-op vs. a House in New York: 4 Differences

1. The Way You Own.

A house and a condominium are real property, a piece of land with a structure attached.  A Cooperative (Co-op) building is owned by a corporation and your apartment is one unit within that corporation.  When you purchase your co-op apartment, you are buying a certain number of shares in the corporation that owns the entire building.  The number of shares is based on the size and location of your unit in relation to the entire building. You are essentially "going into business" with the other unit owners, or shareholders.  Along with your particular unit, you purchase an interest in the "common areas," of the entire building, such as the entrance, hallways, and elevators.

2.  The Approval Process.

As with any corporation, there is a Board of Directors that manages the daily business of the organization.  This is the same for a Co-op.  Since the ownership structure is such that you are essentially entering into business with the Co-op corporation, you are able to review the corporation's financial data and they are also allowed to review your financial data.  This makes things a bit tricky because it means that the Board of Directors, who are also some of your neighbors, get to see your earning reports, tax returns and other financial information to determine whether they feel you are a good fit (or risk) for the corporation.  Part of the review process is also an interview with the Board of Directors where they can ask you about those financials and other personal information. 

3. The Amount of Your Tax Advantage

As stated before, every unit in a Co-op has a certain number of shares allotted to it.  This number of shares helps determine the monthly maintenance for the unit.  Each month your maintenance pays your units' percent of the underlying mortgage on the entire building and the percent of the taxes for the entire property.  When you own a single family home, you are responsible to pay the entire amount of real estate taxes for your property.  Typically, real estate taxes and mortgage interest on a primary residence are deductible on your federal income tax return.  Therefore, owning a co-op may provide you with a tax deduction, but it would likely not be as much as if you were paying the taxes on a single family home.

4.  The Affordability.

If you are looking to get into your first home, a co-op may be the answer because prices are generally lower than single family homes.  However, many co-ops require their sellers to only accept buyers who will have a down payment of a certain percentage.  If you do not have a lot of money saved, say 20%, for your down payment, you may not be accepted by the Board.  The good news is that 20 percent of a lower sales price is less money, so saving up should take less time.

Wednesday, June 22, 2016

Have a Home Alarm System? Permit Registration Began June 1st in Suffolk County.

Do I Have to Get a Permit?

Beginning June 1, 2016, Suffolk County requires any home or business with an alarm system to register and obtain a permit.  Permits for residential buildings are $50 and commercial are $100. Permits must be renewed every year.

How Do I Get a Permit?

Homeowners with alarm systems can obtain a permit by CLICKING HERE.


Why do I Have to Get a Permit?

The law requiring permits was created to prevent false alarms and help the Suffolk County Police Department cover the costs associated with responding to false alarms.

What if I Don't Register?

Households with a permit will not be assess a fee for the first two (2) false alarms at their home, but will have a fee for the third.  Homes without a permit will be charged for the first false alarm and subsequent fees will be higher after that.

The Penalties for Registered Owners:

Residential    Commercial
1.Warning       Warning
  2.Warning     Warning
3.$100             $150
4.$150             $200
5.$200             $250
6.$250             $500
7.$300             $500
8.$350             $500
9.$450             $500 
10.$500           $500     

Penalties for Non-Registered Owners

Residential   Commercial
1.$100            $200
2.$150            $250
3.$200            $300
4.$250            $300
5.$300            $500
6.$350            $550
7.$400            $600
8.$500            $650
9.$500            $750
10.$500          $750

Thursday, June 16, 2016

I'm a Stay at Home Spouse, How Do I Save for Retirement?

I'm a Stay at Home Spouse, How Do I Save for Retirement?

While its clear that a Stay at Home parent usually does the job of many (chauffeur, personal chef, housekeeper, etc.), they often don't save for retirement like they are employed that way.  Many rely on their spouse to save for their joint retirement, but you could be shortchanging yourselves (quite literally) by doing so.  Many families could benefit from having something called a "Spousal IRA."

What is a Spousal IRA?

A Spousal Individual Retirement Account (IRA) is just a regular IRA account.  As with any other IRA account, the account must be set up in one person's name.  In this case, it is set up in the name of the stay at home spouse.  However, the IRS allows the working spouse to contribute money each pay period directly into the Spousal IRA, even though it is not in their name.

Why Do I Care? 

Advantage #1 - Boost Your Joint Retirement Income

One advantage to contributing to a Spousal IRA is that it allows the couple to boost their joint retirement income.  Each spouse will have contribution limits.  If your spouse has a contribution limit of $5500 and you have a contribution limit of $5500, you can now put away twice as much pre-tax money for retirement.  This matters because without a Spousal IRA, you are saving for two people's retirement, but only putting away enough retirement money for one. 

Advantage #2 - Diversify Your Investment Portfolio as a Couple

Another advantage is that the non-working spouse can have the same or different investment choices from the working spouse.  An employer sponsored retirement account may limit your investment choices, but you can choose which type of Spousal IRA account you open and what types of investments, mutual funds, stocks, bonds, and diversify your overall portfolio as a couple.

Advantage #3 - Account in Your Name

Since the Spousal IRA is the non-working spouses' account, they can name their own beneficiary and continue saving for retirement in their name.  If you once worked and already had an IRA, you can have these contributions put into that account and continue to build that investment, instead of letting it sit.  If you get divorced, the account is in your name and will be subject to division according to the divorce law in your jurisdiction.

What Kind of Account Can I Have?

A Spousal IRA can be either a Traditional IRA or a Roth IRA.  Once opened, you must comply with the rules for that type of account.  You can either open a new IRA account, or if you worked in the past and already have an IRA through a previous employer, add to the value of that account. 

What's the Catch?

The eligibility requirements for the Spousal IRA are:
  • You must be MARRIED
  • You must have JOINT COMPENSATION or earned income of at least the amount you contribute to the Spousal IRA and any IRA you contribute to on behalf of your spouse.
  • The non-working spouse must be under 70 1/2 in the year of the contribution for a traditional IRA. There are no age restrictions on a Roth IRA for a non-working spouse.

Thursday, January 21, 2016

NY's New Spousal Support & Maintenance Law

The new law regarding spousal support and maintenance in New York goes into effect at the end of January 2016.  Two big changes to the law are as follows:

One major change is that the law provides a guideline for the duration of maintenance.  Since the duration is a guideline, divorcing spouses still have negotiating power in determining how long maintenance should last.  In determining duration, couples should consider things such as whether there are young children in the home, if a spouse must return to school, and how long it could take for the person receiving maintenance to become self-sustaining.

Another change to the law is that there are two different calculations, one for where a non-custodial parent is paying child support and another for where there are no children or the custodial parent is the one responsible for paying spousal maintenance.  The change now factors in the cost of child support being paid so that there is no "double-dipping."  

These two changes to the maintenance law, among others, were meant to provide a better formula for calculating support and help couples, attorneys and mediators in negotiating fair and effective divorce settlements.

The bill summary can be found at: