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Mortgage Rates Jan. 20: Mostly Higher; Builder Confidence Is Strong

Thirty- and 15-year fixed mortgage rates closed out the week by rising five basis points each this morning, while 5/1 ARM rates fell by two basis points, according to a NerdWallet survey of mortgage rates published by national lenders on Friday.

Mortgage Rates Today, Friday, Jan. 20 (Change from 1/19) 30-year fixed: 4.46% APR (+0.05) 15-year fixed: 3.84% APR (+0.05) 5/1 ARM: 3.86% APR (-0.02) NAHB: Builders confident in 2017

Two reports released this week by the National Association of Home Builders expressed confidence in the construction of single- and multifamily homes for 2017.

Nationwide housing starts rose by 11.3% in December to a seasonally adjusted annual rate of 1.23 million units, according to yesterday’s NAHB report, which included data from the Department of Housing and Urban Development and the Census Bureau.

Overall, single-family starts rose 9% in 2016, while multifamily construction was down slightly, according to NAHB chief economist Robert Dietz.

» MORE: How the Trump presidency will impact housing in 2017

“We expect that 2017 will be another year of gradual, steady improvement in the housing market,” Dietz said. “Multifamily starts have been volatile in recent months but should level off as supply meets demand. Meanwhile, single-family production continues to gain momentum but is limited by supply-side headwinds.”

Dietz said the NAHB forecasts 10% growth in single-family construction this year, despite “concerns about rising mortgage interest rates” and “a lack of lots and access to labor.”

NAHB Chairman Granger MacDonald said builders have started this year “optimistic that a new Congress and administration will help create a better business climate for small businesses, particularly as it relates to streamlining and reforming the regulatory process.”

Homeowners looking to lower their mortgage rate can shop for refinance lenders here.

NerdWallet daily mortgage rates are an average of the published annual percentage rate with the lowest points for each loan term offered by a sampling of major national lenders. APR quotes reflect an interest rate plus points, fees and other expenses, providing the most accurate view of the costs a borrower might pay.

More from NerdWallet The pros and cons of home equity lines of credit Calculate how much house you can afford Best lenders for FHA loans

Michael Burge is a staff writer at NerdWallet, a personal finance website. Email: mburge@nerdwallet.com

Mortgage Rate Newsletter Get daily mortgage rate updates delivered straight to your inbox!

Mortgage Rates Jan. 20: Up and Down; Builder Confidence Is Strong

Thirty- and 15-year fixed mortgage rates closed out the week by rising five basis points each this morning, while 5/1 ARM rates fell by two basis points, according to a NerdWallet survey of mortgage rates published by national lenders on Friday.

Mortgage Rates Today, Friday, Jan. 20 (Change from 1/19) 30-year fixed: 4.46% APR (+0.05) 15-year fixed: 3.84% APR (+0.05) 5/1 ARM: 3.86% APR (-0.02) NAHB: Builders confident in 2017

Two reports released this week by the National Association of Home Builders expressed confidence in the construction of single- and multifamily homes for 2017.

Nationwide housing starts rose by 11.3% in December to a seasonally adjusted annual rate of 1.23 million units, according to yesterday’s NAHB report, which included data from the Department of Housing and Urban Development and the Census Bureau.

Overall, single-family starts rose 9% in 2016, while multifamily construction was down slightly, according to NAHB chief economist Robert Dietz.

» MORE: How the Trump presidency will impact housing in 2017

“We expect that 2017 will be another year of gradual, steady improvement in the housing market,” Dietz said. “Multifamily starts have been volatile in recent months but should level off as supply meets demand. Meanwhile, single-family production continues to gain momentum but is limited by supply-side headwinds.”

Dietz said the NAHB forecasts 10% growth in single-family construction this year, despite “concerns about rising mortgage interest rates” and “a lack of lots and access to labor.”

NAHB Chairman Granger MacDonald said builders have started this year “optimistic that a new Congress and administration will help create a better business climate for small businesses, particularly as it relates to streamlining and reforming the regulatory process.”

Homeowners looking to lower their mortgage rate can shop for refinance lenders here.

NerdWallet daily mortgage rates are an average of the published annual percentage rate with the lowest points for each loan term offered by a sampling of major national lenders. APR quotes reflect an interest rate plus points, fees and other expenses, providing the most accurate view of the costs a borrower might pay.

Michael Burge is a staff writer at NerdWallet, a personal finance website. Email: mburge@nerdwallet.com

Mortgage Rate Newsletter Get daily mortgage rate updates delivered straight to your inbox!

Credit Bureaus Fined For Hurting Consumers

MoneyTips

Credit bureaus are normally thought of as the record keepers of your financial information and the sources of your credit report. However, they also create credit scores and sell services — and sometimes they go too far in their practices. That's the recent conclusion of the Consumer Financial Protection Bureau (CFPB), which took punitive action against Equifax and TransUnion, two of the three major credit bureaus. (The CFPB has not taken any current action against Experian, the third major credit bureau.) In the settlement with the CFPB, the two bureaus agreed to pay $5.5 million in total fines to the CFPB and $17.6 million in restitution to affected consumers. The bureaus were cited for two primary concerns: deceiving consumers with respect to the value of the credit scores that they sold and tricking them into enrolling into subscription-based programs. In announcing the CFPB action, CFPB Director Richard Cordray said, "Credit scores are central to a consumer's financial life and people deserve honest and accurate information about them." Many people do not realize that there are many different credit scores, and not all scores are FICO scores (named for the Fair Isaac Corporation that developed the original scoring system) that are typically used by creditors for lending decisions. Further, not all FICO scores are the same, as there are several versions of the FICO scoring system used by creditors, and the information used to calculate them may not be the same between all lenders. In the services that they sell to consumers, TransUnion and Equifax use non-FICO scoring systems: TransUnion uses the VantageScore system and Equifax uses their own proprietary model (the Equifax credit score). There is nothing wrong with using these systems as frames of reference, but the CFPB concluded that both agencies falsely represented their scores to consumers as being the same scores that lenders use for credit decisions. Both bureaus also offered some credit service products under a subscription model with a free or nearly free trial period. Unless consumers cancelled during the trial period, they were enrolled automatically in the program and assessed recurring fees — known as a negative option because consumers must opt out of the service, not opt into it. According to the CFPB, this aspect was not "clearly and conspicuously disclosed" to consumers. As part of the settlement, both agencies agree to inform consumers clearly about the nature of the credit scores that they sell, obtain the consent of consumers before enrolling them in any product structured as an opt-out (negative option), provide easier ways for consumers to cancel their products and services, and stop billing upon cancellation. How can you avoid being taken advantage of by credit bureaus? In the same way that you avoid being taken advantage of by almost any organization — when you purchase something, read the fine print. Understand the purpose and value of what you are purchasing, and understand the payment terms and conditions of use. Credit scores created by the bureaus can still be a useful reference as a baseline to monitor changes in your credit, but they do not necessarily translate to the score that a lender will use. Don't take the score from a credit bureau as an absolute, or decide that once you hit a certain value that your credit score is "good enough" for all purposes. Regardless of whether or not you are applying for new credit, check your credit score periodically using Credit Manager by MoneyTips. Investigate in detail anything that is listed as free or available for an extremely low cost. Anything that is truly free is free for a reason. Make sure that you check for automatic renewals or fees that kick in over time (or under certain conditions). The credit bureaus perform a useful function, but they have limitations. Know why you're using them, and if you decide to purchase a product from them, make sure that you are receiving proper value for your money — just as you would with any vendor. You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips. Photo ©iStockphoto.com/cnythzl

Originally Posted at: http://www.moneytips.com/credit-bureaus-fined-for-hurting-consumers/428

Credit-Reporting Agencies

Fixing Credit Reports Just Got Easier

Bad Credit Can Affect Being Hired

Credit Bureaus Fined For Hurting Consumers

MoneyTips

Credit bureaus are normally thought of as the record keepers of your financial information and the sources of your credit report. However, they also create credit scores and sell services — and sometimes they go too far in their practices. That's the recent conclusion of the Consumer Financial Protection Bureau (CFPB), which took punitive action against Equifax and TransUnion, two of the three major credit bureaus. (The CFPB has not taken any current action against Exp...

How to Use the ‘Rule of Three’ to Create a Business Credit Profile

Did you know a business credit profile plays a direct role in a company’s ability to obtain credit that it can use to purchase products or services?

Whether you are a startup or existing...

Ask Brianna: How Do I Start Strong With a New Roommate?

“Ask Brianna” is a Q&A column from NerdWallet for 20-somethings or anyone else starting out. I’m here to help you manage your money, find a job and pay off student loans — all the real-world stuff no one taught us how to do in college. Send your questions about postgrad life to askbrianna@nerdwallet.com.

This week’s question: I’m on the hunt for a new roommate. How can we make our living space conflict-free?

I’ve had my share of subpar roommates, as I’m sure you have: weeknight partiers, late rent payers, loud phone talkers.

I never would have guessed it, but I loved sharing an apartment once I found my people. For much of my 20s I lived with three roommates who became family. We lived above a dive bar, fought a rotating cast of mice and roaches, and shared one bathroom smaller than the average closet. But we also lent each other outfits for roller-disco parties and made our way through life together.

Since you have the luxury of picking your own roommate, take time to do it purposefully. Find someone with similar goals, financial means and sense of responsibility, so you can avoid chasing down their share of the rent, or worse, facing the potentially costly decision of parting ways midlease. A thoughtful approach means you can create a home you love, whether you found your roommate on Craigslist or first met them in third grade.

Decide on your nonnegotiables

Before you sift through candidates, first decide on the cohabiting style you’re looking for, says Megan Ford, a financial therapist at the University of Georgia and president of the Financial Therapy Association.

Think about your ideal Monday evening. Do you want to process the workday over a shared dinner? Or would you rather eat alone in your room, cozied up with a Netflix marathon? Both approaches are valid. But if you and your roommate aren’t looking for the same thing, you’ll face the daily frustration of either a housemate who hovers, or one who leaves you feeling lonely.

“People interpret that relationship in different ways,” Ford says. “Really, the tip is: Know thyself.”

You also should be able to clearly articulate the behaviors you would not be able to deal with. Ford recommends bringing up the following questions, plus any others specific to your circumstances, with potential roommates:

  • How clean do you want to keep the apartment?
  • Do you want the space to be a gathering place for friends or a quiet refuge?
  • Is alcohol or drug use in the apartment OK?
Draw up a roommate contract

Once you’ve found someone who’s on your wavelength, set ground rules as soon as you decide to move in together. Ford recommends creating a contract that specifies how many nights per week each roommate can have guests and how you’ll pay for utility bills. If a bill is in your name, pay it on time or you’ll see a hit to your credit score; use an expense-splitting app to keep track of who owes what by each due date.

You might decide that a contract sounds too formal and that you’d rather simply agree on some baseline rules. But cleaning is one area that could benefit from a specified schedule, says Alyssa Favreau, author of “Stuff Every Graduate Should Know: A Handbook for the Real World.” I can attest that when my roommates and I wrote up a monthly bathroom cleaning schedule and posted it inside the medicine cabinet, that tiny space was suddenly spotless.

Address conflict constructively

Even the best-intentioned housemates will deal with the occasional conflict. Maybe your roommate’s newfound passion for the electric guitar means she cranks up her amp whenever she’s home.

Instead of letting your anger fester, approach your roomie. Open the conversation using “I” or “we” instead of the accusatory “you,” Ford says, and include some positive with the negative. You could try something like: “I’m so pumped you’re taking guitar lessons, Amelia. I know that’s something you’ve wanted to do for a long time. Can we talk about setting up specific practice hours so it doesn’t disturb others?”

Be prepared for pushback, but maintain your positive stance. You and your roommate might decide plugged-in practices are only for weekends, except for the hour before her Thursday evening lesson. Be attentive to your roommate’s needs, too, Favreau says.

“The willingness to compromise, or work toward a middle ground, is really what’s going to save your living situation,” she says.

Brianna McGurran is a staff writer at NerdWallet. Email: bmcgurran@nerdwallet.com. Twitter: @briannamcscribe.

This article was written by NerdWallet and was originally published by The Associated Press.

These 5 Credit Cards Can Help You Reach Your 2017 Money Goals

You start out every new year with the best of intentions — This is the year you’re going to go to the gym more, start eating better and finally pay off your credit card debt. Sound familiar?

It’s great to aspire to these big changes, but sometimes lofty goals can be hard to keep. After all, even if your goal is to shed a couple pounds, who can turn down the friend who brings cookies right out of the oven?

We can’t quite help you fit into your skinny jeans, but what if we told you it’s possible to achieve the financial successes you’re hoping for in 2017 without feeling like it’s an uphill battle? You may not believe this, but a credit card, so long as it’s used responsibly, can help. These pieces of plastic can make it easier for you to stick to your goals — maybe even surpass them — all while spending the way you usually would.

Remember, part of qualifying for new plastic is your credit score. So the first step in your journey is to find out where your credit stands. You can do this by taking a look at two of your free credit scores on Credit.com. Once you know what types of cards you’re eligible for, you can take the next step in the process of achieving your goal.

If Your Goal Is to Save for a Dream Vacation: Chase Sapphire Reserve

This card really captured everyone’s attention when it was announced last fall, thanks to its 100,000-point signup bonus. While that offer is no longer available online (you have until March 12 to apply in person at a branch), new card members can earn 50,000 bonus points after spending $4,000 in the first three months. This equals $750 in travel rewards (like airfare or hotel rooms, for example) when booked through the Chase Ultimate Rewards portal. Best of all, there’s a $300 annual travel credit each year. Cardholders earn 3x the points on travel and dining. Just make sure your budget can handle the card before you apply: There’s a $450 annual fee and a 16.49% to 23.49% variable annual percentage rate (APR), depending on your creditworthiness.

If that $450 annual fee is a bit much for your budget, you may want to consider the Chase Sapphire Preferred credit card (find the full review here). You’ll get two times the points on travel and at restaurants but only get hit with a $95 annual fee (waved the first year). 

If Your Goal Is to Put More Money Aside for Retirement: Fidelity Rewards Visa Signature Card

Sure, you can put money in your company 401K plan (which is a really smart idea, especially if your company matches your contributions). But you can take it one step further and use the spending you’re doing now to benefit you down the road. With the Fidelity Rewards Visa Signature credit card, you’ll get 2% cash back on every net purchase deposited into your eligible Fidelity account. Best of all, there are no limits and no annual fee with this card. The variable APR for purchases is 14.49%.

If Your Goal Is to Pay Off Your Credit Card Debt: Citi Simplicity

Wait — are we really suggesting you get another credit card when you’re already carrying credit card debt? Yes. Well, sort of. First, you have to make sure you look at your budget and have a plan in place if you’re going to use a balance transfer credit card, as these cards can be really effective but come with a time limit.

Here’s what we mean: When you transfer your credit card balance to the Citi Simplicity credit card (full review here), you will enjoy 21 months with no interest charges. That gives you almost two years to focus on paying down your balance without tacking on additional charges. (Note: After the introductory APR expires, the variable APR will be 13.49% to 23.49%, depending on creditworthiness.) You won’t be paying an annual fee with this card either.

Not sure how long it will take you to pay down your balance or how much you should be aiming to pay each month? Consider playing around with our credit card payoff calculator tool to see different possibilities.

If Your Goal Is to Develop Better Financial Habits: Citi Double Cash

Do you have a habit of missing deadlines, one of which includes paying your bills on time? Hey, we get it — life gets busy and the statement that came in the mail gets buried under other things on your kitchen counter. But paying your bills on time not only helps you avoid late fees, but will also have a positive effect on your credit scores (payment history is the largest influencer of your scores).

Even with all that said, sometimes a little extra motivation can help. Enter the Citi Double Cash credit card. You’ll get 1% cash back on all your purchases, but there’s incentive to pay your statement off because, when you do, you earn another 1% cash back. That’s like being handed money for being responsible. These cash back rewards are unlimited, with no caps or category restrictions, and you can redeem them for statement credits, gift cards or checks. And if you do slip up again, you won’t get a late fee the first time it happens. There is no annual fee and your variable APR is 13.49% to 23.49%, based on your creditworthiness. 

If Your Goal Is to Build Up Your Emergency Fund: Discover it Card

There are a lot of cash back cards on the market, all with different tiers and offerings. But one that is going to offer some of the biggest kickbacks is the Discover it credit card.

Each quarter, there are new reward categories that offer you 5% cash back on up to $1,500 in purchases — through March this includes gas stations, ground transportation and wholesale clubs — and an unlimited 1% cash back on all other purchases. Discover will match whatever cash back you’ve earned at the end of the first year. There’s no limit, no expiration date and no annual fees with this card, either. So as long as you’re paying on time so you don’t pay interest (there’s a variable 11.49% to 23.49% APR, after the 14-month 0% introductory rate expires) you’ll really be able to increase your rainy day savings.

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

Related Articles

This article originally appeared on Credit.com.

Western Union Fraud Case: Are You Owed Money?

Consumers who think they were affected by fraud perpetrated by Western Union agents should visit the Department of Justice’s victim website to determine how to request and receive compensation.

Global money transfer service Western Union has agreed to pay the government $586 million as part of a settlement with the Department of Justice, the Federal Trade Commission and other government agencies for “willfully failing to maintain an effective anti-money laundering (AML) program and aiding and abetting wire fraud,” according to a DOJ press release Thursday.

Western Union knew of fraud, failed to act

Western Union’s “system facilitated scammers and rip-offs,” FTC Chairwoman Edith Ramirez said Thursday in a press release, which also stated that the business violated U.S. laws by processing “hundreds of thousands of transactions for Western Union agents and others involved in an international consumer fraud scheme.”

Western Union knew of these infractions but failed to take “corrective action against Western Union agents involved in or facilitating fraud-related transactions,” according to the DOJ press release. The bulk of the misconduct occurred between 2004 and 2012, and involved 2,000 Western Union agents.

Claiming to be related to their victims, fraudsters contacted people and told them to send money via Western Union in return for prizes or job opportunities. Western Union agents were involved in these transactions, “often processing the fraud payments for the fraudsters in return for a cut of the fraud proceeds,” the FTC’s press release said.

As part of the settlement, Western Union must incorporate anti-fraud practices into its business model.

In a company press release Thursday, Western Union said it would “pay a total of $586 million to the federal government, which is to be used to reimburse consumers who were victims of fraud during the relevant period.”

Western Union wasn’t available for comment at the time of reporting.

Tips to avoid fraud

There are precautions you can take to avoid money transfer fraud:

  • Never wire money to people you don’t know. Scammers may pretend to be a family member or might say you won a lottery or sweepstakes. Don’t send them money.
  • Don’t send money if you’re feeling rushed or confused. If you’re being asked to send money immediately, first make sure that you know who the recipient is and why he or she is asking you for money.

Visit the FTC website for more tips about avoiding scams.

Tony Armstrong is a staff writer at NerdWallet, a personal finance website. Email: tony@nerdwallet.com. Twitter: @tonystrongarm. NerdWallet writer Spencer Tierney contributed to this report.

How to Prepare Your Money for a Trump Presidency

After a volatile election, President-elect Donald Trump will be inaugurated as the 45th president of the United States on Jan. 20. Consumers are divided over what this means for their finances — some are eager to bet big on American stocks, while others are considering hiding their cash under a mattress. To help you prepare for the changes ahead, we spoke with a handful of financial experts who shared their thoughts on investing with caution.

‘Dysfunctional Politics Aren’t New’ 

“We tend to invest based on emotion, and some people are really high on Trump, and some people are scared to death of Trump,” said Allan Roth, founder of Wealth Logic, a financial planning firm in Colorado Springs, Colorado. “When Obama was elected, a lot of people were like, ‘We’re going to print money, U.S. stocks are horrible, put everything in gold, avoid the dollar, avoid the stock market’ — and the absolute opposite happened. I’m a believer in capitalism, and capitalism trumps dysfunctional politics. And dysfunctional politics aren’t new.”

Roth won’t be the only financial expert keeping a grounded outlook. Jude Boudreaux, a financial planner based in New Orleans, said the main question around investing should be your goals and time horizon, not what we expect to happen in the next four years. “The biggest message I have is not to overreact,” he said. “The next 12 months, from a market standpoint, are not going to be the difference between you being able to retire successfully or not.”

“My advice to consumers is boring,” said Michael Falk, CFA and partner with Focus Consulting in Long Grove, Illinois. “Spend less than you earn, keep your focus on your goals, which are likely more than four years away, and never stop learning.” (You can see how your financial decisions are affecting your credit by viewing your free credit report snapshot, with updates every two weeks, on Credit.com.)

Hedge Against Inflation 

Many investors are rightly concerned about inflation, said Robert Dowling, a financial planner with Modera Wealth Management in Westwood, New Jersey. Employment is up, and Fed Chair Janet Yellen recently said it “makes sense” for the U.S. central bank to gradually raise interest rates. For these reasons, he said investors may want to give themselves exposure to Treasury Inflation-Protection Securities, or TIPS, which provide a hedge against inflation, as well as commodities. “I would never suggest selling everything and buying these two different asset classes,” he said, but if investors have exposure to these, it could benefit their portfolio when inflation takes hold.

Think Globally

Another option for concerned investors is adding more global exposure, Dowling said. Again, you’ll want to broadly diversify, not concentrating too much on one country or type of investment, and avoid currency risks by choosing a quality mutual fund with help from an expert. “There is a portion of exposure we always like to have to emerging markets — small economies and small countries offer lots of growth (and volatility),” Boudreaux said. Investing no more than 5% “has always helped us.”

When betting on emerging and developed markets — which are all available in inexpensive index funds — “don’t pick stocks just to pick them,” advised William Bernstein, author of The Investor’s Manifesto. “The transaction costs will eat you alive.” Keep your risk tolerance in mind and try not to overestimate it. “If you think you can [tolerate more risk], maybe you want to tamp it down,” he said. “Once every 10 years you get a real financial crisis. You want to have an allocation you can live with when that does happen — and that’s not an if, that’s a when.”

Set Aside Cash

“Because I think the potential impacts are so opaque,” Falk said, referring to the Trump presidency, “I lean toward avoiding leverage and major directional bets, and maintaining some dry powder (cash) or quick access to capital.”

Dowling agreed, suggesting consumers shore up at least two years’ worth of living expenses, which can be stashed in a CD or money market account. For retirees, having the cash to draw from while they work to replenish their lagging portfolio — a popular strategy known as cash-flow management — can be invaluable. For young professionals, it can help to have those savings on hand in case of emergency. “Pay yourself first, fund your Roth IRA and build good spending habits,” Boudreaux advised. “The spending habits you develop in your 20s and 30s will have a much greater impact on your financial future than what the market does in the next two to four years.”

Related Articles

This article originally appeared on Credit.com.

Inauguration Rental Hosts May Get Tax Break

Big events bring big money to host cities. Free-spending visitors flock to the sites of Super Bowls, art and music festivals and, every four years, presidential inaugurations.

But it’s not just municipal treasuries that benefit. Residents who flee to avoid the hoopla can charge prime rates for a few days in their homes. For example, attendees of President-elect Donald Trump’s inauguration events could choose from more than 300 listings on Airbnb this week, averaging around $700 per night.

Even better, Airbnb hosts and other short-term landlords might not owe the IRS a cent. The federal tax code carves out an exclusion for profits from homes leased for two weeks or less. Here’s how it works.

Short-term rental rules

To take advantage of the tax exclusion, the property you’re renting out must be your primary residence, the one where you live during the tax year.

The 14 days of tax-free rental income is also available on a vacation property as long as you or a family member stay in it for at least 14 days during the same year or for at least 10% of the days you rent it, whichever is greater. Because you’re aiming for the tax-free rental income, this means you need to also stay in your mountain cabin or lake house yourself for two or more weeks.

Thinking of leasing only your spare bedroom during the celebration? That gets a tax-free OK from the IRS, too, as long as you rent the space for no more than two weeks.

The 14-day limit applies to the whole tax year, not each time you rent your home. A couple of weeklong events will get you to the limit quickly. 

You need to ask and receive a fair price for your home’s rent. The IRS defines this as the amount of rent that an unrelated person would be willing to pay. Of course, fair is fluid when it comes to scarce space and major events.

Potential pitfalls

Because you receive the short-term rent tax-free, you aren’t allowed to deduct related expenses, such as cleaning supplies to ready the property for visitors.

Keep close track of the days you lease your home. If you hit rental day 15, you must include all of your rental income when you file your taxes, not just the amount collected after the 14-day free period. And because you used the dwelling unit for personal purposes, you must divide your expenses between rental use and personal use. This means more record-keeping.

You’ll also have to determine which tax form to use. When you rent all or part of your main home or vacation home for 15 or more days per year, you normally report the income on Schedule E, Supplemental Income and Loss. That’s also where you can write off allowable expenses.

If, however, you provide substantial services to your guests, such as meals or cleaning the property during their stay, the IRS tends to view the rental as a business activity. In this case, you’ll report the taxable rent on Schedule C, Profit or Loss From Business, or Schedule C-EZ, Net Profit From Business. And you’ll probably owe self-employment tax. This additional 15.3% tax goes toward Medicare and Social Security. It’s required when you have business income of $400 or more.

» MORE: 10 tax forms you need to know before you file

If you rent your residence or a second home for substantial periods during the year, it’s a good idea to talk with a tax professional, especially one who specializes in rental properties. The amount you’ll save by submitting correct taxes will likely offset the price of the advice.

Watch out for local fees

Even if you don’t have to pay federal income tax on your rental earnings, you might be subject to local fees. Some states, cities and counties categorize home rentals like hotels and impose lodging occupancy taxes across the board.

The types of taxes and rates vary by jurisdiction, so ask local officials about your tax responsibilities when renting your home.

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