As an investor, picking the right property insurance policy to protect your properties is vital!  Before making your decision, be sure you're informed of all your options and ask the right questions.  These steps could save you valuable time, money and heartache later.

1 - KNOW YOUR OPTIONS
The most important step is researching your options.  You won't know for sure that you are getting the best coverage and price unless you compare and contrast policies and get price quotes from multiple companies.

Prices vary widely between carriers due to each company using different algorithms to calculate their customers' premiums.  Comparison shopping could save you hundreds of dollars each year.

You can save time by using an insurance aggregating website such as homeinsurance.com to view multiple quotes at once.  You can check average insurance premiums by state, also.  By taking the time to speak with an agent individually, you will be more likely to receive an accurate quote, based on your credit score, location, type of home and coverage needs.

It can be beneficial to look at surveys of the best insurance companies, which ask real consumers about their policies and experiences.  Consumer Affairs recently published their list of the Top Ten Best Rated Homeowners Insurance Companies for 2016.  The smaller company with the better price may seem good, but it may not be worth it in the long run.  Remember "large national companies" are more likely to invest in emergency response equipment and technology, which gives them an edge.  While you may pay a little bit higher of a premium, you are more likely to receive a swift response in a disaster.

2 - BUY THE BUNDLE
When searching, ask if they are willing to bundle your home and auto coverage.  Discounts for bundling will vary by carrier, but opening a multi-line policy can save you anywhere from "3 percent to 22 percent" according to Amy Danise, editorial director of www.insure.com/ in an interview for Equifax.

3 - TALK TO AN EXPERT
You may have better luck finding the best policy by talking with an independent insurance agent who works with many different carriers.  Because they are not tied to just one company, they may be able to find you the best coverage for your needs. 

Streamline their interview process by having the answers to the following questions ready:

• What type of property are you insuring (townhome, condo, single-family, duples, etc.)
• How many residents will live in the unit?
• What is the square footage - How many stories does it have?
• What type of siding and roof does the property have?
• Number of fireplaces - wood burning, gas log?
• Does the property have a monitored alarm system?
• What is the approximate value of the personal property you want to protect in case of loss?

4 - INTERVIEW THE CARRIER
You will be asked seemingly endless questions, but don't forget to ask your share of the questions, too.  Remember to ask the following questions:

• What is included in the policy?  Is there coverage for just the home dwelling or for the actual housing structure, as well as for personal property and people, too.
• What are the limits for coverage on personal property?
• What is the liability coverage?
• What is the loss of use coverage?
• What coverage is offered for flooding and weather-related issues?

5 - UNDERSTAND THE COVERAGE
Understand your coverage before you sign.  People tend to think of their property insurance as one big safety net and catch all that will protect them in any kind of disaster or emergency.  Unfortunately, many kinds of natural disasters are not covered under standard policies.

For example, if your property is in a state prone to hurricanes, you will need to ask about buying window protection coverage.  In states prone to sinkholes, earthquakes or mudslides, you would need to pay for additional "earth movement coverage".  Flood damage is also not covered by standard homeowner's insurance.  Speak to an agent about any of the additional coverages you may need before purchasing a policy.

FINDING THE RIGHT POLICY
While taking the time to interview companies and pouring over the fine print of policies may seem like a hassle now, you will rest easier knowing that you will have the help you need in the event of a disaster.  Selecting the right insurance coverage for your investment property will give you the peace of mind while knowing your asset is protected.

No one wants to pay more taxes than absolutely necessary!  Here are some potential tax strategies to consider and discuss with your tax advisor as you plan for 2017.
 
REPAIR OR IMPROVEMENT FOR REAL ESTATE?
 
Why is it important to consider the difference?  Repairs are deductible in the year they are paid, while improvement must be capitalized and only a portion is deductible each year.  The $150 you spend on a plumber to fix the bathroom sink would be expensed the same year, but the $10,000 you spend on a new roof will likely need to be capitalized. 
 
You may want to have a mix of both, as having deductions “waiting” for you next year, might not be a bad thing.
 
How do you determine the difference?  Some say, if it’s something you would brag about, it’s likely an improvement.  If it’s something you don’t want to let people know about, then it’s likely a repair.
 
IRS rules are a bit more complicated.  If you are telling a potential renter that the bathroom is newly remodeled or that the house has a brand-new roof, these are likely improvements.  Repairs are generally things such as the burst pipe under the kitchen sink or the termite damage around the roof trim.
 
The newest IRS rules state if it cost $2,500 or less, it generally is a repair.  Over $2,500, then you must determine if it more likely to be considered an improvement. 
 
Discuss expenditures with your tax advisor.  With items that could fall into both categories, you can decide which deduction would help you the most.
 
CAPTURING BUSINESS DEDUCTIONS
 
Make sure you gather your business expenses.  You have more costs than you may realize.  Even if you pay a Property Manager for most repairs and deduct the bare bone expenses of Mortgage interest, property tax and insurance, you still have administrative expenses such as postage, office supplies, bank charges, etc.  These add up.
 
If you manage your own rental property, don’t forget to deduct gardening, advertising, business license, etc.  Investors who do fix and flip need to remember the miscellaneous expenses in addition to purchase price, sales price and re-hab costs.
 
Don’t forget Home Office deductions.  Many investors do not want to take the time to figure out their expenses, but home office deductions generally provide thousands of dollars of write offs.  Your investment is your business and you should get a deduction for your in-home business office. Ask your tax advisor and search on-line for tips on how to maximize this deduction.
 
The home office deduction is also available to renters, as well as home owners!  Although renters do not get a deduction for mortgage interest or property taxes, rent payments can be factored into the home office deduction.  It might take a bit more time, but if you are in a 40% bracket between fed and state, then every $1,000 of deductions can save you $400.  Saving and sorting those receipts can be worth it!
 
ACCELERATED DEPRECIATION
 
Accelerated depreciation or a cost segregation study is a way to take more depreciation now by breaking down your depreciable basis into shorter periods of time.  A residential rental property typically has a building depreciable life of 27.5 years.  With accelerated depreciation, you can break down that building into other types of property that have 5, 7 or 15-year lives. 
 
If this is something you want to do, make sure you start the process now. 
 
Keep in mind that taking more depreciation now also means that you will have less depreciation 5, 7 and 15 years down the road.  Your decision may depend on the length of time you plan to keep the property.  Be sure to discuss this strategy with your tax advisor in detail before making any decisions!
 
RETIREMENT CONTRIBUTIONS
 
Flippers, if you have positive active income such as commissions or income from flips, you may be eligible to contribute to retirement accounts.  This does not apply to rental real estate, as rentals are considered passive activity.  However, flip or wholesale income are types of income that may qualify.
 
A powerful retirement account is a SEP IRA.  If you have positive self-employment income, then you may be able to contribute up to 25% of your net profit.  For example, if you made a $50K profit from your flip, then you may be able to set up and contribute $12,500 to a SEP IRA.  The contribution can also potentially be a tax deduction against your other income and reduce your taxes due.  Remember you must have a net profit to use this strategy.  If you have a loss, a SEP may not benefit you.
 
ESTIMATED TAXES FOR THE FOLLOWING YEAR

If you have an overpayment from one year’s taxes, consider applying it to the next year, if you are generally required to make estimated tax payments.  This could help you to minimize or avoid estimated tax penalties.  If you missed estimated taxes for the current year, consider increasing you W-2 withholdings.  Since W-2 withholdings are considered to be done evenly throughout the year, increasing your withholding amount can help you significantly reduce any underpayment penalties.

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