Money Management

When a home I think I might like comes on the market, I always take this first step. Read on to learn how it’s saved me time and hassle. 

When I’m looking for a house to buy, I get excited when a new property comes on the market. Each time I get notified of a new listing, I’m eager to rush over and look at the pictures to see if the home might be a good fit. That’s especially true if the property is well within my budget and I know I could get an affordable mortgage to buy it.

When I see a new home listing, though, I don’t actually click through to the posted pictures of the home as my first move after checking out the price. I do this instead.

Checking out the surrounding area is a key goal

The very first thing that I do when a property is listed is take a look at the satellite view of the property and the surrounding area.

This is very important to me for a few reasons.

First, I have been “tricked” before by listing pictures that make a home look like it is in a much more desirable area than it is. For example, I’ve seen properties for sale that make the back yard view look great — and it is, in one direction. But in the other direction, it overlooks unlovely views like an industrial waste dump or a factory or a railroad track. I am obviously not interested in living in a home that is near undesirable things like this, so I check out the satellite pictures to see what is around it.

Second, looking at a satellite picture of the house can give me a better idea of how close the home is to surrounding neighbors, what the backyard view will be, what the street is like, and where the house is located within a neighborhood relative to amenities like parks and pools. You often can’t get a very good sense of this from the listing pictures, but a satellite picture gives you context for the house that enables you to decide if it is a good fit or not.

Looking at the big picture can save you a lot of time and hassle

Before I started using Google maps to check out satellite pictures of homes I was interested in buying, I would end up wasting time going to showings at properties that would never actually work for me. Now, not only do I not spend unnecessary time at showings, but I don’t even bother to look at the listing pictures if the satellite aerial view of the house shows it’s not in a desirable location or has a bad view.

I know that no matter how nice the inside of a house looks, I’m not going to buy it if the location and exterior view are bad or if it is too close to the neighbors’ houses. So, why waste the time checking out the pictures or potentially falling in love with a beautiful interior for a home I ultimately won’t want?

If you are also looking for properties and you care more about where a house is and what it is near than what it looks like inside, you may want to consider checking out the satellite overhead view first as well. Doing so could save you a lot of time and aggravation.

Our picks for the best credit cards

Our experts vetted the most popular offers to land on the select picks that are worthy of a spot in your wallet. These best-in-class cards pack in rich perks, such as big sign-up bonuses, long 0% intro APR offers, and robust rewards. Get started today with our recommended credit cards.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More 

You don’t have to worry about taxes on gains when you save in a Roth IRA. Read on to see if a Roth IRA makes sense for you. 

A good 36% of Americans have an individual retirement account (IRA) for retirement savings purposes. But you don’t necessarily need to contribute to a traditional IRA when building your nest egg. You may decide you want to open a Roth IRA instead for the different benefits involved.

With a Roth IRA, you don’t have to pay taxes on the withdrawals you take from your savings plan during retirement. Roth IRAs also do not impose required minimum distributions, so you’re not forced to withdraw funds from your savings yearly once you reach a certain age. That means you can keep your money invested in a tax-advantaged manner for longer, and also, if you so choose, leave a nice portion of your savings behind to your loved ones.

You may be wondering what happens when the investments in your Roth IRA make money. After all, that’s your goal. The good news is that investment gains in a Roth IRA won’t result in a tax obligation for you — not in the near term or the long term.

You can take your profits without owing the IRS a dime

Capital gains in a brokerage account are subject to taxes the year those gains are realized (meaning, the year you sell and book your profit). And gains in a traditional IRA are tax-deferred, which means you don’t pay taxes on profits year after year, but rather, when you make withdrawals.

With a Roth IRA, investment gains in your account are never subject to taxes. And that’s just one reason why you may want to consider saving for retirement in one of these accounts.

Is a Roth IRA right for you?

Tax-free gains are a nice thing to have. But remember, there are other perks you get to enjoy with a Roth IRA, like tax-free withdrawals and the ability to leave your money alone as long as you want to.

That said, the one drawback of funding a Roth IRA is that you won’t get a tax break on your contributions. And losing out on that tax break could make it difficult to save for retirement in the first place. Let’s say you want to contribute $3,000 to a tax-advantaged retirement plan. You may not be able to swing that contribution without reaping some immediate savings.

With a traditional IRA, that contribution will make it so the IRS can’t tax you on $3,000 of earnings. Your actual savings there will depend on the tax rate that applies to you. But with a Roth IRA, your $3,000 contribution won’t give you any tax benefit the year you put that money in. You may find that aspect of funding a Roth IRA difficult.

You should also know that you may be barred from funding a Roth IRA if your income is too high. The thresholds change annually, but right now, Roth IRA contributions are off the table if you earn more than $153,000 as a single tax-filer or $228,000 as a married couple filing taxes jointly. However, if you don’t qualify to fund a Roth IRA directly based on income, you could always put money into a traditional IRA and then convert it to a Roth after the fact (known as a Backdoor Roth IRA).

Our best stock brokers

We pored over the data and user reviews to find the select rare picks that landed a spot on our list of the best stock brokers. Some of these best-in-class picks pack in valuable perks, including $0 stock and ETF commissions. Get started and review our best stock brokers.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More 

You may or may not have to pay taxes on a home sale. Read on to learn how capital gains taxes work for selling your house. 

You may not qualify for the exclusion or your profits may exceed the exempt amount.

When you list your house on the market, the goal is to find someone who is buying a property who will pay you a fair price for yours. Ideally, you will get a great offer, make enough money to pay off your mortgage loan, and even make a tidy profit.

But, what happens if you do make money off selling your home? Will you owe taxes on the gains? Here’s what you need to know.

You may owe capital gains taxes on the profits from a home sale

Whether your home was a place you lived or an investment, you can still potentially owe taxes when you sell it for a profit. That’s because the money you make is considered a capital gain.

If you buy something and you sell it for more than you paid for it, the IRS wants a cut of the money that you made. The profits from the sale (minus certain expenses that you incurred) can be subject to capital gains taxes. Depending on how long you owned the property, you could end up having to pay either short-term capital gains taxes (which means you would be taxed at your ordinary income tax rate) or long-term capital gains taxes.

If you have owned your home for at least a year, then you’d pay taxes on profits at the long-term capital gains tax rate. This is lower than your ordinary income tax rate and, for many people, their long-term capital gains tax rate is as low as it can go. That’s because the long-term capital gains tax rates are typically either 0%, 15%, or 20% depending on your earnings (although there are different rates for investment properties).

It’s important to consider how long you’ve owned the property, whether it was a personal or an investment property, and how much of a profit you made minus expenses, so you’ll understand if you may owe taxes.

You can qualify for an exclusion

While capital gains taxes can be charged on profits from a home sale, in practice, many people do not end up paying them. That’s because of something called a Section 121 exclusion. This tax rule allows you to exclude up to $250,000 in gains from the sale of a home from your income, or up to $500,000 if you are married and file taxes jointly with your spouse.

In order to qualify for this exclusion, you must have owned the home and used it as your primary residence for at least two out of the prior five years. These two years do not have to have been the same periods, but you must fulfill both requirements unless you fall within a limited exception, such as those who are performing qualified military service, who are able to suspend the five-year test period for as long as a decade.

Since many people do meet these requirements, there’s a good chance the sale of your home will go untaxed. If you don’t, though, or if your profits exceed the excludable amount, you need to be ready to write a check to the IRS. Don’t let this come as a surprise, especially if you make a big profit and could have a hefty bill to pay.

Our picks for the best credit cards

Our experts vetted the most popular offers to land on the select picks that are worthy of a spot in your wallet. These best-in-class cards pack in rich perks, such as big sign-up bonuses, long 0% intro APR offers, and robust rewards. Get started today with our recommended credit cards.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More 

Faced with increasing pressure to tip in a variety of scenarios, Americans are wondering whether — and when — they can say no. Find out how to decide. 

The following scenario may sound familiar: You’ve just ordered an ice cream at the counter. You go to pay by credit card. You’re faced with a screen that gives you the option to pay 20%, 25%, or even 30% in tips, even though the person serving you hasn’t really done anything. Gone are the tip jars of old where you could throw in your change and add extra when someone’s gone above and beyond. Automatic tip screens with pre-suggested percentages are the new normal — and it isn’t easy to refuse when the person’s right in front of you.

All in all, we’re being asked to tip more — and in more situations. One New York Times columnist complained of being asked for a 10% to 30% tip in a grocery store. Nobody wants to be a bad tipper, but many people feel tipping has gotten out of control. On the other hand, in a lot of these situations, the person being tipped likely isn’t earning a lot of money. The company may use this guilt-laden tipping process to justify low wages, putting the onus on you as a consumer to make up the difference.

The average American spends around $600 a year on restaurant tips, according to The Ascent’s calculations. That’s before you factor in all the other tips we pay every month. It’s no wonder, then, that people are looking for ways to reduce this cost. There are a lot of things we could do with an extra couple of hundred dollars or more a year in our bank accounts. Here are some scenarios when it’s OK to say no to tipping.

1. It’s already included

A handful of restaurants have experimented with no-tipping policies, so far with limited success. More commonly, eateries will automatically tack a 15% to 20% service charge onto your bill, particularly if you’re a large group. Check your bill before you pay an additional charge. Of course, if the service was exceptional, you may want to pay more. Just know that it isn’t compulsory.

2. The tip recipient really didn’t do anything

Generally speaking, whenever someone does something for you — whether that’s mixing a cocktail or taking your food wrappers to the trash — it’s good form to tip. But if you’re in a drive-thru line, a gas station, or a fast food restaurant where the service involved is limited, a tip is often not necessary.

When it comes to counter service, things get a bit more complicated. In theory, the person serving your cup of coffee or scoop of ice cream is being paid to do that job. Unfortunately, you don’t know how much they rely on tips to keep their heads above water. And if you’ve ordered something complicated or they’ve gone the extra mile, a tip is a good way to recognize their effort.

3. You’re using a self-checkout machine

If you’re doing the work of scanning and bagging your items, being asked for an automated tip can rankle. After all, who is the tip going to and what is it for? There are stories of people being asked to tip at self-checkout points in airports, sports stadiums, stores, and cafes.

If the company has already replaced the human cashier with a machine, you really don’t need to pay the machine anything extra.

4. Professional services

You don’t need to tip someone like a doctor, lawyer, accountant, or teacher who earns a salary. Many may not be allowed to accept the money, and it could wind up being awkward.

Instead, if you want to show your thanks, consider giving the person who performed the service a small gift or sending them a thank-you card.

What about when the service is really bad?

Think twice before you skip a restaurant tip because of bad service. There are many situations where the tip isn’t a bonus for good service, it’s what the employee needs to survive. Indeed, in some states, companies can pay tipped workers as little as $2.13 an hour as long as the expected tips take the total to the minimum wage.

Plus, tips usually get distributed among all the staff. So it may not be fair to take out your frustrations with an individual server on the people behind the scenes who did a perfectly good job. And if the service is slow, it may not even be the wait staff’s fault — it could be that the restaurant owner doesn’t employ enough people or hasn’t fully trained them.

You might opt to tip less if the service is poor. Just know that not tipping at all could unfairly punish the wrong people.

Reaching a tipping point

Tipping can be a minefield, and consumers are starting to rebel against the ever increasing pressure to tip in almost every service interaction. Use your judgment about what feels fair. If you’re being asked to tip for a service that never used to involve one, or where you don’t think it is justified, it’s OK to say no.

Shubhranshu Singh, an associate professor of marketing at Johns Hopkins Carey Business School, says this is an evolving situation, and a backlash from consumers could see a return to lower tips. “We may go back to lower tips if consumers really feel that’s the way to go and react strongly,” he says.

As such, if you aren’t comfortable with the surge in tipping, speaking out might stop it becoming the norm.

Alert: highest cash back card we’ve seen now has 0% intro APR until nearly 2025

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR for 15 months, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More 

If you add the proceeds from the sale of your house to your bank account, be sure the amount isn’t more than $250,000. Keep reading to learn why. 

Selling a home can be cause for celebration — especially if you make more than enough money to repay your outstanding mortgage loan balance and you have a lot of cash left over.

If you aren’t planning to buy a new house right away — or ever — after a home sale, you’ll need to decide what exactly to do with the money that you get at closing when your sale goes through. For many people, the right answer is to put the money in a savings account. But if that’s your plan, there’s one key mistake you can’t afford to make.

Be aware of this risk to your money

Putting the proceeds of your home sale into a savings account can make sense because savings accounts don’t really present a risk of loss in typical situations. You’ll be able to earn some interest on the money until you decide what to do with it (like use it to buy a new house or to invest it if you won’t need it for the long term). And you won’t risk your investment value going down like you would if you put the money into the stock market.

You should also have the peace of mind that comes with knowing if the bank fails, you won’t lose your money because you can pick an FDIC-insured savings account. This means the Federal Deposit Insurance Corporation will make sure you get your full deposited amount back if your bank fails.

The issue, though, is that the FDIC only insures up to $250,000 per person per account. This means that if you have more than that amount (or if you and your spouse have more than $500,000 in a joint account), you may not be fully protected against the risk of bank failure.

Now, if the proceeds from your home sale are below these thresholds, you can park the money in savings without worrying about this. But if you make a really generous profit, then you need to know that the FDIC may not fully cover all of your deposited funds.

How much should you worry about going over the FDIC insured limit?

Going over the FDIC limit may not seem like a big risk, but the reality is that banks can and do fail, even in this day and age. In fact, several banks collapsed just this year alone. These were trusted banks used by many businesses and individuals, but they still had serious problems that led to their collapse.

Now, the FDIC ended up taking care of the people who had money deposited at these banks even if their accounts were above FDIC limits. But there’s no guarantee that will happen in every situation since there is that $250,000 or $500,000 limit in place.

In many cases, rather than take the chance, you’re better off splitting the money into a few separate accounts. Remember, the FDIC-insured limit applies per person, per account, so if you spread your money around just a few different savings accounts with different banks, you shouldn’t have to worry that a bank collapse could lead to the loss of the proceeds from your sold home.

These savings accounts are FDIC insured and could earn you 11x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you 11x the national average savings account rate. Click here to uncover the best-in-class picks that landed a spot on our shortlist of the best savings accounts for 2023.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More 

Getting a degree can be costly. Read on to learn about some accounts that could help you save for one efficiently. 

Going to college isn’t a given, and for some people, it may not be worth it. In fact, investing legend Warren Buffett says that he doesn’t think going to college is the right choice for everyone, and he isn’t even sure he got so much out of it.

But a good 75% of Americans say a post–high school education is important for becoming wealthy, according to data from Vanguard. So if it’s important to you that your kids attend college, then your best bet is to start saving for it as early as possible.

That doesn’t mean you should stick some money in a savings account and call it a day, though. A better bet is to invest the funds you have earmarked for higher education so that money can grow over time. And if you’re not sure where to put your college money, here are two accounts worth considering.

A 529 plan

A 529 plan allows you to enjoy tax-free gains in the course of saving and investing for college. To be clear, you won’t get a federal tax break on the money you put into a 529 (some states provide a tax break). But investment gains in your account, as well as withdrawals, will be tax-free as long as that money is used to pay for educational expenses.

And it doesn’t even have to be college expenses. You could decide to take a 529 plan withdrawal to pay for private high school tuition, and that’s allowed.

However, you should know that if you end up with too much money in your 529 and you take withdrawals for non-educational purposes, you’ll be penalized 10% on the gains portion of your withdrawals and taxed on that sum as well. You won’t be penalized on the principal portion, since your contributions were never eligible for a federal tax break in the first place.

A Roth IRA

A Roth IRA could be another good place to save and invest for college. Like a 529 plan, you won’t get a tax break on the money you put into a Roth IRA, but investment gains and withdrawals are yours to enjoy tax-free.

Now, you may be thinking, “Hold up — isn’t a Roth IRA supposed to be used for retirement?” And you’d be correct. After all, IRA stands for “individual retirement account.”

However, these accounts allow you to take withdrawals without a penalty in order to pay for college. And if you wind up with excess money in a Roth IRA, it’s really not a problem, because at that point, you can simply reserve those funds for retirement and put them to good use down the line.

It’s not a given that a college education will lead to a higher-paying job and more wealth-building opportunities. But if it’s important to you that your kids attend college, you’ll likely want to save and invest for it in the most efficient manner possible. And so it pays to consider a 529 plan or a Roth IRA if you’re looking to find a home for your college fund.

Our best stock brokers

We pored over the data and user reviews to find the select rare picks that landed a spot on our list of the best stock brokers. Some of these best-in-class picks pack in valuable perks, including $0 stock and ETF commissions. Get started and review our best stock brokers.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More