West Michigan’s Down Economy—Can Anything Be Done?
With all the negative news regarding Wall Street, Washington, the Michigan Economy, the Credit Crunch, the Auto Industry and Job Losses, it is hard to feel good about where we are today. The nightly news is filled with negative stories on these and other issues. Is it as bad as they make it out to be? Not necessarily. The fact is we are in very difficult economic times in West Michigan. However, negative stories sell; good news does not sell. While we have problems in West Michigan, there are success stories and good economic things happening right in our back yard. Many employers have added employees in the past year; our local community banks are well capitalized and have money to loan; fuel prices have been dropping for the past few months and are now under $1.70 per gallon.
The agricultural economy in West Michigan is strong with crop prices recently being at historic highs. Dairy operations are seeing record profits as milk prices have remained high over the past 18 months. Businesses that support the agricultural industry in Michigan are having their best results in many years, including equipment sales, repair facilities, grain mills, and feed stores. Construction for agricultural facilities (barns, milking parlors, and fence installers) is very strong. Remember, agriculture is the second largest industry in Michigan.
The health care industry is also experiencing phenomenal growth in West Michigan. Pennock Hospital recently received five awards of excellence from Governor Granholm and is planning a major expansion in the coming years. With MSU moving their school of medicine from East Lansing to Grand Rapids, the addition of the Meijer Heart Center, and Helen DeVos Children’s Hospital at Spectrum, the New York Times recently reported that West Michigan will be one of the top ten medical research corridors in the country within five years. This expansion, coupled with the businesses necessary to support the health care industry, will provide additional opportunities for our small communities and small businesses.
Yes, there are a lot of good things going on in West Michigan, but you may ask, "What can I do to help make our economy and my business better?" First, bring a positive attitude to the table. Yes, it is tough now, but it will get better. We have been through downturns before and have always rebounded stronger. Bring your "A-Game" to the table everyday whether managing your business or your personal financial affairs. Buy local from a locally owned business. As a small business owner, support your other small business owners by purchasing from them. A dollar spent with a local business will change hands amongst local residents seven times before leaving the community. Money spent at a big box store out of our local community is lost forever. Even if you spend a few dollars more, you will help your local community, and in turn yourself, when you support local businesses. This is just good business for all of us.
We have had ups and downs in our economy before and we will have them in the future. Stay positive, spend your dollars locally and be smart. Call us if you have questions or need help getting through these difficult times. We are here and ready to help.
REAL ESTATE TAX BREAKS
Here is a look at the Top 10 Tax Breaks for the homeowner and investor:
Mortgage Loan Interest: Deductions reduce your taxable income against which your taxes due are calculated.
Home Improvement Loan Interest: You can deduct all the interest on a home improvement loan provided the work is a "capital improvement" rather than repairs, maintenance or cosmetic upgrades. Capital improvements typically increase your home's value.
Points: You can fully deduct points associated with a home purchase mortgage, but not a mortgage broker's commission.
Property Taxes: Property taxes or real estate taxes are fully deductible.
Capital Gains Exclusion: Allows married taxpayers who file jointly to keep, tax free, up to $500,000 in profit on the sale of a home used as a principal residence for two of the prior five years. The amount is halved for those filing single or separately
Home-Based Business Deduction: Home offices that use a portion of your home exclusively for business could qualify you to deduct a percentage of costs related to that portion. Included are a percentage of your insurance and repair costs, utility bills and depreciation.
Selling Costs and Capital Improvements: When you sell your home, you can reduce your taxable capital gain by the amount of your selling costs, which include real estate commissions, title insurance, legal fees, advertising and inspection fees. Costs typically stemming from decorating or repairs -- painting, planting flowers, maintenance -- are also selling costs if you complete them within 90 days of your sale and with the intention of making the home more saleable.
Moving Costs: To qualify, you must meet certain requirements including, moving within one year of starting your new job, moving 50 miles farther from your old home than your old job was and working full-time at the new job for 39 of 52 weeks following the move. Deductions include travel or transportation costs and expenses for lodging and storing your household goods.
Mortgage Tax Credit: Mortgage Credit Certificates allow qualifying low-income, first-time home buyers to take a mortgage interest tax credit of up to 20 percent (the amount varies by jurisdiction) of the mortgage interest payments made on a home.
Energy Tax Credits: The newest home-based tax credits were made possible last year by the Energy Policy Act of 2005. Tax credits of up to $500 in 2006 and 2007 are available for upgrading heating and air conditioning systems, insulation, windows, doors and thermostats, caulking leaks, and installing pigmented metal roofs.
If you have any questions on the above Real Estate Tax Breaks, call our office and speak with one of our accountants (269) 945-9452 (Hastings) or (616) 522-0792 (Ionia).
