On the Move?
Moving is painful enough without the added anxiety of losing your low-interest mortgage rate when you change homes. Now E*Trade Group Inc.'s new portable mortgages let homeowners move their mortgages along with their other belongings.
A relative newcomer to the mortgage industry, E*Trade is making a splash with its "Mortgage on the Move" program, which lets sellers transfer the terms of their home loans to their new residences. There's no denying the appeal of portability, but it comes with a price tag and restrictions. "They're offering it at a rate above market and with stringent rules," says Doug Duncan, senior vice president and chief economist at the Mortgage Bankers Association of America. "It can only be applied to a new purchase [as opposed to refinancing], and you can only apply your existing loan balance to your next home. So if you buy a more expensive home, you may need to take out another mortgage on the difference."
Will portability pay off? "It depends on the financial management characteristics and needs of the household," says Duncan. "If you expect to be in your current [home] for 15 years and then move into a similar or smaller property, it's definitely worth looking at."
Most entrepreneurs who launched businesses in 2002 bemoan the lingering market downturn. Not Haris Tajyar, because the market woes of struggling firms are fueling the growth of his investor relations firm, which specializes in working with undervalued firms in danger of being delisted from Nasdaq. "In this market, that's where the demand is," explains Tajyar, 27, who spotted the niche while a vice president at investor relations firm FRB/Weber Shandwick. "There are thousands of companies in danger of being delisted because the market is doing badly."
Since founding Los Angeles-based Investor Relations International Inc. (IRI) in 2002, Tajyar says his company has prevented seven firms from being delisted. "We've never failed," asserts Tajyar, who attributes his firm's track record to an arduous screening process. "Out of every 200 companies we talk to a month, we'll only take on one or two." And IRI's services don't come cheap. A company fighting delisting will pay fees up to $200,000. Tajyar argues that his firm's intensive communications program and contacts are worth the hefty price tag. Judging by IRI's projected 2003 revenues of $3.2 million, lots of clients are just as impressed.
Who better to teach your kids the value of a dollar than Big Bird, Cookie Monster and Elmo? Thanks to a financial literacy campaign developed by Merrill Lynch & Co. Inc. and Sesame Workshop, producers of Sesame Street, these popular children's TV show characters have a new mission: bringing basic business concepts and financial skills to preschool kids. Dubbed "Investing Pays Off," or "IPO," the campaign provides print, video and online educational resources to teach kids ages 3 to 5 to spend and save responsibly.
"Most educational information about finances is geared toward school-age children, so we developed resources to set a foundation for financial literacy later on," explains Jeanette Betancourt, assistant vice president of Sesame Workshop's education and research division in New York City. "A magazine, Talking Cents, gives parents ideas about ways to give kids a basic foundation by fitting financial basics into everyday children's activities, such as running a lemonade stand or setting up a make-believe restaurant. There are also games and a video featuring the Cookie Monster, which presents the concepts visually to young children, as well as online activities and educational components."
The program has launched in eight major cities with print materials distributed in 80 child-care centers, and Betancourt hopes to see both the content and the distribution expand over time. Until then, parents and their budding entrepreneurs can find the learning tools and activities at www.sesameworkshop.org.
If you've been too anxious about losing a potential real estate windfall to take a tax deduction for the business use of your home, fear no more.
The IRS has long offered homeowners a potentially lucrative tax shelter: Live in a home for two of the previous five years, and receive a tax-free profit of $250,000 per person or $500,000 per couple on any gains on the sale of the property. It also allows homeowners to take a deduction for any portion of the home used for business.
The catch? "If you wrote off 10 percent of your home as a home office, you would lose the residential exclusion on that part of the sale," explains Lee Steinmetz, a principal at New York City-based financial advisory firm Joel Isaacson & Co. Inc. Many homeowners sacrificed the home office write-off in favor of the potentially lucrative tax shelter-but thanks to a new IRS ruling, taxpayers no longer have to make that choice.
"Now the IRS is saying that as long as your home office is in the same building- not located in a detached garage, guest house or second structure- can write off the home office and still take the $250,000 or $500,000 exclusion on the whole structure," explains Steinmetz, who is quick to add that other IRS rules regarding home offices are still in full force. "You have to have a separate area that's used exclusively for business," he warns. "You can't take a bedroom with a bed in it and claim it's your office."
Jennifer Pellet is a freelance writer in New York City specializing in business and finance.