October 13, 2015
5 Signs You Probably Need an Accountant
WiseBread quoted me in 5 Signs You Probably Need an Accountant. It reads, in part,
Do you dread filing your income taxes each year? Does preparing your taxes take weeks of your time? And once you’ve sent your papers to the IRS, do you have the sneaking suspicion that you might not have taken all the deductions to which you are entitled?
You might need to hire an accountant.
“Hiring an accountant depends on whether your knowledge, time, and money are best spent on bookkeeping, loan application, and tax preparation, or whether you have higher priorities,” says Valrie Chambers, associate professor of taxation and accounting at Stetson University in Celebration, Florida. “A business owner who excels at sales should probably use her time increasing sales rather than learning and doing accounting. That strategy is just more profitable for the business.”
Here are five signs that you need to hire an accountant.
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4. You Own Rental Real Estate
Renting an apartment or two is a great way to earn passive income. But doing so can also complicate your finances. That’s why it makes sense to hire an accountant to make sure that you don’t miss any important tax deductions related to rental income, and that you file all the paperwork necessary when working as a landlord.
“There comes a point when personal tax software is not sophisticated enough to take into account the complexities of real estate investments,” says David Reiss, professor of law and research director for the Center for Urban Business Entrepreneurship at Brooklyn Law School in New York City. “If a taxpayer has multiple properties that have both a personal and investment component, tax software may not be able to accept all of the relevant inputs and generate the correct output.”
October 13, 2015 | Permalink | No Comments
Tuesday’s Regulatory & Legislative Round-Up
- A bill to reform Housing Assistance including programs like section 8 and project based assistance was introduced in the House Financial Services Housing Subcommittee by Republican Blaine Luetkemeyer (MO). The bill (HR 3700) seeks to streamline costs to increase efficiency and to reduce energy and water waste.
- The Chairman of the House Financial Services Committee, Texas Republican Jeb Hensarling, will be hosting a Hearing entitled The Future of Housing in America: 50 years of HUD and its Impact on Federal Housing Policy. The hearing is scheduled for Oct. 22 at 10 am and Rep. Hensarling has released a statement calling for public input. Hensarling characterizes HUD as having failed to live up to its mission, despite 1.6 trillion dollars in spending, he then calls for innovation in solving the generational cycle of poverty which, in his view, is the real issue.
October 13, 2015 | Permalink | No Comments
October 12, 2015
The Explorer
A poem to commemorate exploration on Columbus Day:
Ulysses
Alfred, Lord Tennyson
It little profits that an idle king,
By this still hearth, among these barren crags,
Match’d with an aged wife, I mete and dole
Unequal laws unto a savage race,
That hoard and sleep, and feed, and know not me.
I cannot rest from travel: I will drink
Life to the lees: All times I have enjoy’d
Greatly, have suffer’d greatly, both with those
That loved me, and alone; on shore, and when
Thro’ scudding drifts the rainy Hyades
Vext the dim sea: I am become a name;
For always roaming with a hungry heart
Much have I seen and known; cities of men
And manners, climates, councils, governments,
Myself not least, but honor’d of them all;
And drunk delight of battle with my peers,
Far on the ringing plains of windy Troy.
I am a part of all that I have met;
Yet all experience is an arch wherethro’
Gleams that untravell’d world, whose margin fades
For ever and for ever when I move.
How dull it is to pause, to make an end,
To rust unburnish’d, not to shine in use!
As tho’ to breathe were life. Life piled on life
Were all too little, and of one to me
Little remains: But every hour is saved
From that eternal silence, something more,
A bringer of new things; and vile it were
For some three suns to store and hoard myself,
And this gray spirit yearning in desire
To follow knowledge like a sinking star,
Beyond the utmost bounds of human thought.
This is my son, mine own Telemachos,
To whom I leave the sceptre and the isle-
Well-loved of me, discerning to fulfill
This labour, by slow prudence to make mild
A rugged people, and thro’ soft degrees
Subdue them to the useful and the good.
Most blameless is he, centred in the sphere
Of common duties, decent not to fail
In offices of tenderness, and pay
Meet adoration to my household gods,
When I am gone. He works his work, I mine.
There lies the port, the vessel puffs her sail:
There gloom the dark broad seas. My mariners,
Souls that have tol’d and wrought, and thought with me-
That ever with a frolic welcome took
The thunder and the sunshine, and opposed
Free hearts, free foreheads – you and I are old;
Old age hath yet his honour and his toil;
Death closes all: but something ere the end,
Some work of noble note, may yet be done,
Not unbecoming men that strove with Gods.
The lights begin to twinkle from the rocks:
The long day wanes: the slow moon climbs: the deep
Moans round with many voices. Come, my friends,
‘Tis not too late to seek a newer world.
Push off, and sitting well in order smite
The sounding furrows; for my purpose holds
To sail beyond the sunset, and the baths
Of all the western stars, until I die.
It may be that the gulfs will wash us down:
It may be that we shall touch the Happy Isles,
And see the great Achilles, whom we knew.
Tho’ much is taken, much abides; and tho’
We are not now that strength which in old days
Moved heaven and earth; that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.
October 12, 2015 | Permalink | No Comments
Columbus Day
- “One of the greatest discoveries a man makes, one of his greatest surprises, is to find he can do what he was afraid he couldn’t.” – Henry Ford
October 12, 2015 | Permalink | No Comments
October 9, 2015
Loose Credit. Plummeting Prices.
Christopher Palmer has posted Why Did So Many Subprime Borrowers Default During the Crisis: Loose Credit or Plummeting Prices? to SSRN. While this is a technical paper, it is clear from the title that it addresses an important question. If it can help us get to the root causes of the foreclosure crisis, it is worth considering. The abstract reads,
The surge in subprime mortgage defaults during the Great Recession triggered trillions of dollars of losses in the financial sector and accounted for more than 50% of foreclosures at the height of the crisis. In particular, subprime mortgages originated in 2006-2007 were three times more likely to default within three years than mortgages originated in 2003-2004.
In the ensuing years of debate, many have argued that this pattern across cohorts represents a deterioration in lending standards over time. I confirm this important channel empirically and quantify the relative importance of an alternative hypothesis: later cohorts defaulted at higher rates in large part because house price declines left them more likely to have negative equity.
Using comprehensive loan-level data that includes much of the recovery period, I find that changing borrower and loan characteristics can explain up to 40% of the difference in cohort default rates, with the remaining heterogeneity across cohorts caused by local house-price declines. To account for the endogeneity of prices — especially that price declines themselves could have been caused by subprime lending — I instrument for house price changes with long-run regional variation in house-price cyclicality.
Control-function results confirm that price declines unrelated to the credit expansion causally explain the majority of the disparity in cohort performance. Counterfactual simulations show that if 2006 borrowers had faced the price paths that the average 2003 borrower did, their annual default rate would have dropped from 12% to 5.6%.
Ok, ok — this is hyper-technical! The implications, however, are important: “These results imply that a) tighter subprime lending standards would have muted the increase in defaults, but b) even the relatively “responsible” subprime mortgages of 2003–2004 were sensitive to significant property value declines.” (40) It concludes that, “In reality, cohort outcomes are driven by both vintage effects (i.e. characteristics bottled into the contracts at origination) and path dependency in that exposure to economic conditions affect cohorts differently depending on their history.” (40)
So, the bottom line is that loose credit and plummeting prices were both causes of the defaults during the crisis. Mortgage underwriters and policymakers are on notice that they need to account for both of them in order to be prepared for the next crisis. This paper’s contribution is that it has quantified the relative impact of each of those causes.
October 9, 2015 | Permalink | No Comments
October 8, 2015
Thursday’s Advocacy & Think Tank Round-Up
- Citylab finds that urban farmers and real estate developers are teaming up in an unlikely alliance to create housing which incorporates on site food production, the latest in trendy, locavore hip.
- Enterprise Community Partners has launched a national sign on letter to oppose Cuts, lift spending caps and restore funding to the Home Investment Partnership Program (HOME). HOME, according to Enterprise, is “the only Federal Housing Program exclusively focused on providing states and localities flexible gap financing for affordable housing development” for the low and very low income populations (seniors, the disabled, etc.)
- A New York Times editorial argues that the relief promised to homeowners facing foreclosure only materialized for banks, who unloaded toxic loans on the government, and private equity firms, who are now purchasing loans back from the government, at a discount and continuing to foreclose.
- National Association of Realtors finds that most Zombie homes (think unoccupied – long term vacancy) are not foreclosures but owned free and clear of mortgages.
October 8, 2015 | Permalink | No Comments


