The Fabulous Home Project

Saturday, March 21, 2009

Not So Fabulous Greenhouse

When we purchased our house last fall, one of the things I was most excited about was the back yard -- lots of room for a garden -- and a cement pad that looked like it was just waiting for a greenhouse.

We started keeping an eye out on Craigslist and UsedVictoria for people who might be getting rid of greenhouses and I started researching where to buy greenhouses. By the time February rolled around I was really itching to get something in place for the spring planting season. An inexpensive plastic/vinyl over aluminum frame "Deluxe Greenhouse" caught our eye while at Home Depot and we decided it would do.

Weather was not in our favour for several weeks -- we've had a rougher winter than usual -- but today, at last, we had a few hours of sunshine, enough to open the box and put it all together.

I was pleased to see that no tools are required but in hindsight, I will warn you that brute strength is needed to push some of the connections together. To get to the single page of instructions, I first had to unpack everything from the box.

The instructions were not completely clear (colour-coding would have been nice) and as a result, my first attempt at the base had to be taken apart when I realized I had used size B instead of size C in eight sections. Once I got the hang of it, I asked our daughter to help and she was able to pitch in but it took adult pressure to make sure the pieces fit properly. This became much clearer when we tried to put in the shelves which only fit when all the connections were tight.

Once the roof portion was complete, I had to get the plastic/vinyl cover on. This turned out to be a little like getting a double size fitted sheet on a queen size bed. Eventually, I got it in place and as I tried to secure it to the frame, one of the ties came off in my hand. Not a good start. Next I tied the door area to the frame, splitting another seam. When I finally got around to zipping the door shut, another seam split about an inch. Sigh. Duct tape will be added.

The last step was securing the corners to stakes that go into the ground; I had placed it close to the edge of the pad so that three of the four stakes could be put in the ground, the fourth corner is secured under a concrete stepping stone.

Even before putting it through the paces of holding plants, I wouldn't recommend this product. It was quite difficult to put together and seems flimsy. I have no idea if it will stand up to wind or rain; we should have saved up for a more fabulous greenhouse.

Labels: garden, greenhouse

Wednesday, February 11, 2009

Recession Relief For Americans: Federal Housing Tax Credit

Hopeful home owners can cash in on, newly enacted legislation providing a tax credit upto $7,500 for first-time home buyers might just be the opportunity of a lifetime.

The Housing and Economic Recovery Act of 2008 authorizes a $7,500 tax credit for qualified first-time home buyers who purchase homes after April 8, 2008 and before July 1, 2009. Here are some questions and answers about the tax credit. You should consult a qualified tax advisor or legal professional about your individual situation and how this tax credit may impact your ability to get a home. It's important to keep in mind that the tax credit is no substitution for being able to afford to pay for a mortgage and maintain a house.

Who is eligible to claim the $7,500 tax credit?
First time home buyers purchasing any kind of home are eligible for the tax credit, whether it's a new home or a resale. To qualify for the tax credit, a home purchase must occur after April 8th, 2008 and before July 1st, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs.
What is a "first-time home buyer"?
In the US, the law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. If you have a vacation home or rental property, but it isn't your principal residence then you still may disqualify a buyer as a first-time home buyer.
How can you claim the tax credit?
Easy: claim the tax credit on your federal income tax return when file your annual report after the purchase. No other applications or forms are required. Pre-approval is not necessary. Prospective home buyers will want to make sure they qualify for the credit under the income limits and first-time home buyer tests.
What types of homes will qualify for the tax credit?
Any home purchased by an eligible first-time home buyer will qualify for the credit. The home must be used as a principal residence and the buyer has not owned a home in the previous three years. This includes single-family detached homes, attached homes like townhouses and condos, mobile homes and houseboats.
Instead of buying a new home from a home builder, can I hire a contractor to construct a home on a lot that I already own?
Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been "purchased" on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after April 9, 2008 and before July 1, 2009.

In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.
What is "modified adjusted gross income"?
Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine "adjusted gross income" or AGI. AGI is total income for a year minus certain deductions (known as "adjustments" or "above-the-line deductions"), but before itemized deductions from Schedule A or personal exemptions are subtracted. Look for this on the forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). The AGI includes all forms of income: wages, salaries, interest income, dividends and capital gains.

To determine modified adjusted gross income (MAGI), add to AGI certain amounts such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for applicable education costs.
If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
You may still qualify: it will depend on your income. Partial tax credits are available for some taxpayers whose MAGI exceeds the limits. The credit is not available for individual taxpayers with a modified adjusted gross income of more than $95,000 and for married taxpayers filing joint returns with an AGI of more than $170,000.
What's an example of how the partial tax credit is determined?
Just as an example, assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $7,500 by 0.5. The result is $3,750.

Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $7,500 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,625.

Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.
Does the credit amount differ based on tax filing status?
No. The credit is in general equal to $7,500 for a qualified home purchase, whether the home buyer files taxes as a single or married taxpayer. However, if a household files their taxes as "married filing separately" (in effect, filing two returns), then the credit of $7,500 is claimed as a $3,750 credit on each of the two returns.
Are there any circumstances for which buyers whose incomes are at or below the $75,000 limit for singles or the $150,000 limit for married taxpayers might not be able to claim the full $7,500 tax credit?
In general, the tax credit is equal to 10% of the qualified home purchase price, but the credit amount is capped or limited to $7,500. For most first-time home buyers, this means the credit will equal $7,500. For home buyers purchasing a home priced less than $75,000, the credit will equal 10% of the purchase price.
Is the tax credit refundable?
The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.

For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 after he or she files their income tax return. If the taxpayer qualified for the $7,500 home buyer tax credit, the taxpayer would receive a check for $6,500 ($7,500 minus the $1,000 owed).
What is the difference between a tax credit and a tax deduction?
A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $7,500 in income taxes and who receives a $7,500 tax credit would owe nothing to the IRS.

A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $7,500 in income taxes. If the taxpayer receives a $7,500 deduction, the taxpayer’s tax liability would be reduced by $1,125 (15 percent of $7,500), or lowered from $7,500 to $6,375.
Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?
No. The tax credit cannot be combined with the MRB home buyer program.
Does the credit have to be paid back to the government?
Yes, the tax credit must be repaid. This will not be something you can keep. Home buyers must repay the credit to the government, without interest, over 15 years or when they sell the house, if there is sufficient capital gain from the sale. For example, a home buyer claiming a $7,500 credit would repay the credit at $500 per year. The home owner does not have to begin making repayments on the credit until two years after the credit is claimed. So if the tax credit is claimed on the 2008 tax return, a $500 payment is not due until the 2010 tax return is filed. If the home owner sold the home, then the remaining credit amount would be due from the profit on the home sale. If there was insufficient profit, then the remaining credit payback would be forgiven.
Why do I have to pay back the money? I want to keep the cash!
Congress’s intent was to provide as large a financial resource as possible for home buyers in the year that they purchase a home. In addition to helping first-time home buyers, this will maximize the positive impact on the housing market. The goal is to kick-start the economy use the same mechanism that seized it up. The goal of the program is to increase home sales. The repayment requirement reduces the effect on the Federal Treasury and assumes that home buyers will benefit from stabilized and, eventually, increasing future housing prices.
If the money must be repaid, isn’t the first-time home buyer program really a zero-interest loan rather than a traditional tax credit?
Yes. Because the tax credit must be repaid, it operates like a zero-interest loan-- one the bank cannot call you on when they fall on hard times. Assuming an interest rate of 7%, that means the home owner can save the equivalent of up to $4,200 in interest payments over the 15-year repayment period. Compared to $7,500 financed through a 30-year mortgage with a 7% interest rate, the home buyer tax credit saves home buyers over $8,100 in interest payments. The program is called a tax credit because it operates through the tax code and is administered by the IRS.
If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?
Yes. The law allows taxpayers to elect to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.
For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?
Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit may be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount for you and your family.
Is there any way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2008 tax return?
Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding from their payroll deductions. Reducing tax withholding (up to the amount of the credit) will enable the future home buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the down payment. Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.

Labels: Federal relief, TARP

Monday, February 09, 2009

Recession Help for Canadians : The Renovation Tax Credit

To provide needed stimulus in these challenging economic times, the Harper government has a plan to stabilize the construction industry and cushion its potential for a free fall.

Home Renovation Tax Credit

Home renovations can represent a smart investment in the long-term value of a home and generate broad-based economic activity. They can also reduce energy consumption and the long-term cost of owning a home. To support economic growth during these challenging times, Budget 2009 proposes to introduce a temporary Home Renovation Tax Credit (HRTC).

The HRTC will provide a temporary incentive for Canadians to undertake new renovation projects or accelerate planned future projects, thus providing timely stimulus to the Canadian economy while boosting energy efficiency and the value of Canada’s housing stock.

How the Temporary HRTC Will Work

The proposed HRTC will provide a temporary 15 percent income tax credit on eligible home renovation expenditures for work performed, or goods acquired, after January 27, 2009 and before February 1, 2010, pursuant to agreements entered into after January 27, 2009. The credit may be claimed for the 2009 taxation year on the portion of eligible expenditures exceeding $1,000, but not more than $10,000, and will provide up to $1,350 in tax relief.

Who Can Claim the HRTC

The HRTC will be family-based. For the purpose of the credit, a family will generally be considered to consist of an individual, and where applicable, the individual’s spouse or common-law partner. Family members will be able to share the credit.

The amount eligible for the credit will be based on the total value of eligible expenditures incurred across all eligible dwellings. A dwelling will generally be considered eligible if it is used for personal purposes. This will include a house, a cottage, and a condominium unit.
It is estimated that about 4.6 million families in Canada will benefit from the HRTC.

Benefits of the Temporary Home Renovation Tax Credit—Examples

The following examples illustrate how homeowners can benefit from the HRTC.

1. Sally and Ed are a couple who have recently purchased a house. To take advantage of the temporary HRTC, they decide to replace their windows and improve the insulation in their home in 2009, instead of waiting, incurring $10,000 in expenditures. After taking account of the $1,000 minimum threshold, a 15-per-cent credit will be available on $9,000 in eligible expenditures, providing tax relief of $1,350.

2. William and Marie are a couple who are planning to purchase a more energy-efficient furnace for their home, and build a deck at their cottage sometime later. To take full advantage of the temporary HRTC, they decide to do both projects in 2009 rather than waiting. They pay $5,000 for the furnace and $3,500 for the deck. They also decide to have the area around the deck landscaped for $2,500, bringing their total costs to $11,000 ($5,000 + $3,500 + $2,500). Marie claims a credit of $1,350 on the maximum allowable amount of $9,000. This credit is in addition to the ecoENERGY Retrofit grant that William and Marie expect to receive for installing a more energy-efficient furnace.

3. Karen and Heather are sisters who share ownership of a condominium unit. They each incur $7,500 in expenditures renovating the kitchen in the condominium, in part to provide access for Heather’s wheelchair. Karen and Heather each claim a $975 credit on eligible expenditures of $6,500 ($7,500 – $1,000).

This credit is in addition to the Medical Expense Tax Credit that Heather may claim on the portion of expenses eligible for that credit.

Expenditures Eligible for the HRTC

It is proposed that the HRTC be claimed for renovations and alterations to a dwelling or the land on which it sits that are enduring in nature. For example, homeowners will be able to claim expenditures for major renovation projects such as finishing a basement, renovating a kitchen, or building an addition. Costs associated with such projects will be eligible for the credit, including permits, professional services, equipment rentals and incidental expenses.

Routine repairs and maintenance normally performed on an annual or more frequent basis (e.g. cleaning, lawn fertilization, and snow removal) will not qualify for the credit.

The cost of purchasing furniture, appliances, audio-visual electronics and construction equipment will not be eligible.
Individuals will need to keep receipts for expenditures, and may claim the HRTC when filing their income tax returns for 2009.

Examples of HRTC-Eligible and Ineligible Expenditures

Eligible

Renovating a kitchen, bathroom or basement

New carpet or hardwood floors

Building an addition, deck, fence or retaining wall

A new furnace or water heater

Painting the interior or exterior of a house

Resurfacing a driveway

Laying new sod

Ineligible

Purchase of furniture and appliances (e.g. refrigerator, stove, and couch)

Purchase of tools (I totally need a reciprocating nail gun!)

Carpet cleaning (I need to live in squalor?)

Maintenance contracts (e.g. furnace cleaning, snow removal, lawn care, and pool cleaning)

The HRTC will complement support provided by the Government for Canadians to undertake energy-saving improvements to their homes. Federal grants paid through the ecoENERGY Retrofit program will not reduce the value of claims made for these expenditures under the HRTC.

Eligible renovation expenditures claimed under the Medical Expense Tax Credit may also be claimed under the HRTC.

The effectiveness of the HRTC will be enhanced to the extent that retailers also encourage homeowners to undertake renovations to their properties.

It is estimated that this measure will cost $500 million in 2008-09 and $2.5 billion in 2009-10. It's ONLY eligible for work carried out this year. So hire the guys and tell them to bring their hammers. It's Building Time!

Labels: Canada, HRTC, tax credit

Wednesday, October 08, 2008

Bridge to a New Home

Are you moving from your current fabulous home to your next? If you already own a home, chances are you are going to need to consider bridge financing to purchase your next home to make ends meet between selling your current home and buying the next.

Bridge loans are secured loans, requiring you to pledge your property as collateral. The lender will approve an amount of up to the full value of the property. This way, you can borrow greater amounts for purchasing a new home.

Residential bridging loans are short-term financial arrangement. This implies that the money is borrowed for few weeks to a year. It is when you have found the money from own source like by selling some old property that you can repay the principal amount in one time. Until then, you have the option of making the interest payments only.

However, despite being secured loans, interest rate is generally higher. This is because these are short-term loans.

See the full original article by Eva Baldwyn.

Labels: bridgeloans, finances, financing, real estate

Saturday, October 04, 2008

Add to the Fabulous: Dig out your Basement

The cost to dig a basement hole on our 1800 sq. ft. house was only $790. However, I have a feeling you want to know more than simply the cost of digging the basement hole.

Some of the other costs that you likely want to know about are::

........You need to dig the basement hole, which as I said was $790.
........How about pouring footings and foundations, which costs $6 to $7K
.......Then there is pouring flatwork cement for a tune of $1.00+ per square foot x 1800 sq ft = $1800.
.......Putting in sub-rough plumbing which can be $1,000 plus the cost of gravel and the excavator's charges.

.......There's the windows for your basement which includes window bucks of close to $500 (4 windows) and the corrugated window wells of $500 ...total $1000 + or -.

.......The actual windows cost $400+ depending on if you have a walkout basement with sliding glass doors, which would be plus the cost of the sliders.

.......Sealing the basement walls to prevent water leakage through the walls will be another several hundred dollars.

.......The cost to backfill around your basement adds a few hundred more.

.......Now the last question is how big is your basement going to be?

That $790 figure of digging a basement suddenly became a whole lot more didn't it? The reality is, however, that the real cost only involves a few of the above: digging the hole, flatwork cement, and windows, window bucks and window wells.

You still have to either poor a cement slab, or put in footings and foundations, which in the case of the later, go down to frost level. You still have backfill whether you have a basement or not. You still have sub-rough plumbing, with gravel before the slab. With a slab you will have furnace ducting to consider too.

Even though you have all the above items to consider in building a basement, it is still only a few thousand dollars more to add a basement, in comparison to the total cost of building your home.

Considering that your home may be worth $250 thousand to $400,000, your basement will probably only cost $7K-$10K+ added to the cost. All things considered, there isn't a better investment for that extra 10K in comparison to doubling the living space of the first level, that a basement adds.

As an example, consider the storage space it adds to your home. If you didn't have to rent storage space, what would it save you each month? Or wouldn't it be nice to park the car in the garage instead of using it for storage space?

In addition, the basement maintains an even temperature of around 59 degrees all year, so the cost of air conditioning in the summer is drastically reduced when compared with air-conditioning an upper story with the same amount of floor space.

If you build your home on a hillside, a walkout basement makes for a nice feature opening up the basement so it doesn't feel so “deep” in the ground.

Many people are putting home theaters in the area of the basement that doesn't have any windows.

The furnace, hot water tank and water softener can all go in the basement utility-furnace room and not take up precious main floor living space.

Some areas of the country are too close to sea level to have a basement, but if you live inland, having a basement is a real advantage when compared to the cost of putting one in. To dig a basement is a an economical way to increase the square footage of your home.

In reality, what is the cost to dig a basement? Very little, and the benefits far outweigh the negatives.

Labels: basement, renovations

Friday, October 03, 2008

A Fast Lesson In Mortgage Terminology

Adjustable Rate Mortgage (a.k.a. ARM Loan): An Adjustable Rate Mortgage is a home loan where the interest rate adjusts throughout the term of the loan. ARM Loans usually have an initial interest rate that is lower than that of a Fixed-Rate Mortgage. This low interest rate is locked for a set length of time. Once that time has expired, the interest rate can go up based on market factors. The lower initial interest rate helps those who can't afford a fixed-rate mortgage get financing for their home. However, the interest rate will most likely increase after the initial term of the low interest rate expires.

Annual Percentage Rate (APR): APR is the interest rate quoted by the lender plus additional home loan costs. Additional costs include origination fees, points, etc. APR is often higher than the stated interest rate. This is because the additional costs will alter the originally advertised interest rate accordingly.

Bridge Financing. A method of financing, used to maintain liquidity while waiting for an anticipated and reasonably expected inflow of cash. Bridge financing is commonly used when the cash flow from a sale of an asset is expected after the cash outlay for the purchase of an asset. For example, when selling a house, the owner may not receive the cash for 90 days, but has already purchased a new home and must pay for it in 30 days. Bridge financing covers the 60 day gap in cash flows.

Another type of bridge financing is used by companies before their initial public offering, to obtain necessary cash for the maintenance of operations. These funds are usually supplied by the investment bank underwriting the new issue. As payment, the company acquiring the bridge financing will give a number of stock at a discount of the issue price to the underwriters that equally offsets the loan. This financing is, in essence, a forwarded payment for the future sales of the new issue.

Bridge financing may also be provided by banks underwriting an offering of bonds. If the banks are unsuccessful in selling a company's bonds to qualified institutional buyers, they are typically required to buy the bonds from the issuing company themselves, on terms much less favorable than if they had been successful in finding institutional buyers and acting as pure intermediaries.

There are 2 types of bridging finance. Closed bridging and Open Bridging.

Closed bridging finance is where you have a date for the exit of the bridging finance and are sure that the bridging finance can be repaid on that date. This is less risky for the lender and thus the interest rate charged are lower.

Open bridging is higher risk for the lender. This is where the borrower hasn't got an exact date for the bridging finance exit and may be looking for a buyer of the property or land.

Closing Costs: Closing costs are the expenses involved in finalizing a mortgage. Closing costs include lender/agency fees, loan origination costs, escrow payments, title insurance, attorney fees, etc. Closing costs are often shared between both the buyer and the seller.

Escrow: Escrow is at the end of the mortgage process where a neutral third party obtains the documentation and money involved in the transaction until the transaction is complete. An escrow account is also used to hold the property tax and insurance monies that are collected during payment of the loan.

Fixed-Rate Mortgage: A fixed-rate mortgage is a loan where the interest rate stays the same. It does not fluctuate while the loan is being paid off. Financing for fixed-rate mortgage loans are commonly spread out over 10, 15, 20, or 30 years. This type of loan is popular because there are typically no surprises. Since the interest rate remains the same, the monthly mortgage payments are static, and don't change year to year.

Points: Points are a percentage of the principal of the loan used to lower the interest rate of a loan. There are two types of points: Discount Points and Origination Points. Discount Points reduce the interest rate of a loan by having the lender pay more at closing. One point equals one percent. So, if you want to lower your interest rate by one percent, the borrow needs to pay one percent of the principal at closing. However, this does not lower the principal amount. It merely lowers the interest rate. Origination Points are used is the same fashion and utilized to cover the loan processing expenses.

Principal: Principal is the original amount borrowed from the lender. It does not include interest or other fees. It's the lump sum the borrower gets from the lender.

Knowing the lingo involved in your mortgage will help you stay on top of the mortgage process and allow the entire process to run smoothly. Read up on these terms and keep yourself out of the dark.

Labels: mortgage terminology

Tuesday, September 30, 2008

Building Permit Gotchas

Almost every county, township, or municipality has a local department that is dedicated to reviewing residential house plans and issuing permits to build. If you are hiring a licensed general contractor to build your home, the GC should be intimately familiar with the local building codes and procedures for permits.

But, if you are going to manage the construction project yourself, by being an owner builder, you need to learn all you can from your local permit office before signing a purchase contract for a piece of land - and before starting any owner builder construction loan application process.

Owner builders, because they are their own general contractors, are fully responsible for the building permits. You need to know your county's requirements before moving forward. It may end up causing you to change your mind on the land and home design you picked.

Even if you are hiring a builder, remember that the house will still be yours. Stay involved with the planning and permitting process.

The building departments around the country all go by slightly different names, such as The Office of Code Compliance, The County Plans Examiner Office, The Office of Building Permits, etc. The name isn't really important, but the function is.

The purpose of these local building departments is to protect residents from building homes that are structurally unsound. And, in doing so, they protect future homeowners from buying a house that was built improperly. Thus, they are protecting the value of all of the homes in the county.

Consider a county in which homes have been poorly built. Think of how that will affect the value of the rest of the homes in the area.

No one wants to buy in an area where the quality of the homes cannot be trusted. So, when you are jumping through hoops as an owner builder to get your building permits, try not to get too frustrated. The county office is actually trying to protect you, your safety, and the value of your home.

Every county (or town, etc.) is different, though. Some counties only require a couple of sets of stock blueprints. Other counties, require the full nine yards, from engineered prints to soil tests to site plans to engineered sub-flooring and trusses.

For extremely strict counties or states, owner builders may become overwhelmed with this process if they do not have professional help. You may consider hiring an architect or engineer who can easily take you through the process.

Also, visit the building department as soon as you have determined that you want to buy land in that area. Owner builders, especially, should go in person, instead of just calling by phone. By going in person, owner builders can pick up important documents that the county may provide. And, you will have better access to the people who can answer your questions.

10 Questions Owner Builders Should Ask the Local Building Department:

Are you allowed to apply for permits before the land is officially deeded in your name? If not, and you are doing an owner builder construction loan that incorporates the purchase of the land, talk to your loan officer about what you will need to do to close on the loan.
Ask about all the permit fees involved and find out when you have to pay them. Some counties allow you to pay after the permits are approved and ready for pickup. Other counties force you to pay upfront. Depending on the answer to this question, it may affect your costs out of pocket with your construction loan.
Ask about any other fees involved with building. For instance, are there impact fees and highway taxes and school fees, etc? In some areas, such as most counties in California, these extra impact fees can cost thousands of dollars.
Ask about the timeline involved. How long does it take to issue permits? Owner builders often underestimate the amount of time required to get fully approved permits.
Ask about the most common mistakes and delays that people make, including contractors and other owner builders.
Ask if they are familiar with the architect or blueprint source that is providing your plans.
Ask if you can get an initial plan review and foundation permits issued prior to the full set of building permits. If the county takes a long time to issue permits, sometimes owner builders can speed up the process by getting the foundation permits issued to allow construction of the foundation and sub-flooring while the county reviews the rest of the plans. This could save you precious months, depending on your county.
What is the way to track permitting progress? Do they tell you how many plans are in front of you? Is there an online tracker?
Ask about the building codes that are used by the county. Are there additional code requirements on top of the standard building code, such as snow load requirements or high wind requirements? Many counties follow building codes that are stricter than the standard code. For owner builders, this may mean that the plan you bought online will need additional, local engineering.
What about the code inspections during construction? Get a list of all of the stages that will require an inspection by the code compliance inspector. Being familiar with this list will help any owner builder plan their work management strategy and construction timeline.

All of these questions are important. But, pay special attention to the first question if you are buying land and doing an owner builder construction loan. Your failure to know when you can apply for permits could stop your loan process in its tracks. The smart owner builder will stay ahead of the game by immediately contacting the local building department as soon as a lot is chosen.

By knowing the rules early, the majority of mistakes and delays can be avoided. This will make your entire owner-builder experience more enjoyable.

How to Turn Your Building Plans into Approved Permits
Most house plans include everything you need to build your home; however, additional items may be needed to obtain a building permit. You will need a site plan which shows the location of your house on the property, the property line, and the setbacks. Other items may or may not include a septic tank system design if your lot is not serviced by the city or county sewer system.

Depending on the part of the country you live in, you will need to insure your house plans are in compliance with local codes. Many areas have specific energy codes and/ or special engineering requirements that are to be followed. For instance, the west coast area have strict engineering requirements for areas subject to earthquakes. Areas such as Florida, the Gulf of Mexico, and the southeast coast line are areas with high risk of hurricanes requiring special engineering to withstand such risk. North east areas such as New York, New Jersey, Baltimore and surounding areas require houseplans to stamp by a local licensed professional such as an architect or engineer. Building in these areas, will likely require the need to hire a local licensed structural engineer to analyze the house plans and provide additional drawings and calculations required by your building department. If you are unsure as to what is required in you area, check with your building department. They usually have some form of written instructions listing all of the items they require to submit for and obtain a building permit.

You will want to submit your plans and other require documents for a permit as soon as possible so you can begin construction at your scheduled time. Residential permits can take up to 3 months if everything is in order. If it is rejected for any reason this can extend well into your schedule and disrupt the entire building process in the beginning. So be smart and properly plan for the permitting process.

Labels: building permits