December 3, 2008
The National Association for Fixed Annuities (NAFA) is launching a campaign for insurance professionals to pressure their elected national representatives against the Securities and Exchange Commission’s proposal to regulate indexed annuities.
The SEC proposed Rule 151A earlier this year to consider indexed annuities securities because the products are indexed to equities markets. NAFA and others argue they are insurance products because they have fundamental features of insurance. Also, the insurance company issuing the product bears the risk while the annuity holder is guaranteed the principal.
The rule’s comment period was shorter than usual and was extended another month to close Nov. 17. The SEC received more than 4,000 responses, according to some reports.
NAFA Executive Director Kim O’Brien said it is imperative that producers step up the pressure. SEC Commissioner Christopher Cox is stepping down at the end of this year and any action on Rule 151A before then would have to be announced soon.
“Your congressman is the last best resource to make sure that we do not rush to regulation without a proper analysis and due process,” O’Brien told her members.
NAFA has drafted a sample letter for members . It includes these points:
The proposal was written hastily, with an unprecedented short comment period.
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Proponents and detractors agree that the Proposal needs to be re-drafted with significant changes and modifications.
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The insurance industry and your business will suffer serious losses both in revenue and jobs.
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Regulation of this magnitude and economic impact should not be rushed without the proper vetting of all the issues.
“Let the congressional representatives know that you make your living by making sure people have the safety and security of fixed indexed annuities and that your clients have not lost one penny since they bought it which is extremely important in light of the trillions lost these past months,” O’Brien said. “Remind them of all the work the industry is doing to ensure a safe buying environment and suitable sales are recommended to all consumers, including seniors.”
© Entire contents copyright 2008 by InsuranceNewsNet.com, Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.
Jumat, 05 Desember 2008
Producers -- It's Now or Never to Fight SEC's 151A, NAFA Says
BIG “I” And Future One Release 2008 Agency Universe Findings
Anticipated Biannual Study Reveals Industry Growth and Stability
(ALEXANDRIA, VA – Dec. 4, 2008) —The number of independent agencies has stabilized---that’s one of the key findings of the 2008 Agency Universe Study. Future One, a collaboration of the Independent Insurance Agents & Brokers of America (the Big “I”) and leading independent agency companies, has released key findings from the recently completed study, hailed as the most comprehensive look at the independent agency system.
The study surveys a wealth of issues about independent agencies operating in the U.S. including their numbers, revenue base and sources, number of employees, ownership, mix of business, diversification of products, technology uses, non-insurance income sources, and marketing methods.
“The 2008 Agency Universe Study found that despite tough economic times in many areas of the financial services sector, independent agencies remain strong, stable, flexible and have much potential for growth,” says Robert Rusbuldt, Big “I” president & CEO.
“As predicted, the study found that the number of independent agencies has stabilized, halting a decade-long trend of larger and fewer firms,” says Madelyn Flannagan, Big “I” vice president for education and research. “More agencies are being formed than in past years, particularly in areas of the country suffering from difficulties in the availability of coverage, and their principals tend to be younger. This is a positive finding as the bulk of agents are baby boomers nearing retirement.”
Other key findings of the 2008 Agency Universe Study include:
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A long-term trend interrupted: The long-term trend toward fewer, larger agencies has been interrupted. Compared to 2006, the number of agencies has remained the same. This stabilization reflects a decrease in acquisitions and an increase in the number of start-up agencies.
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Growth in the number of small agencies: The percentage of small agencies (less than $150,000 in insurance revenue) grew between 2006 and 2008, while the percentage of all other size agencies decreased slightly.
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Doing more with less: Agency operations are becoming measurably more efficient. Apparently, agencies are able to do more work with fewer employees. Increased usage of technology likely contributes to more efficient processes.
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Satisfaction with carriers continues to improve: Satisfaction with personal lines and small commercial lines carriers is up since 2006. The area considered to be the most improved across carriers is that “they make it easy for CSR’s to write business.”
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Concern about controlling expenses: While ‘maintaining experienced staff’,’ finding carriers who will maintain their commitment to agent’s market and to providing the coverage agency’s customers need ‘still remain major concerns for agency future, ‘controlling expenses and reinvesting in agency’ has risen as a concern since 2006, as one might expect in tough economic times.
The 2008 Agency Universe Study is the ninth in a series that was first conducted in 1983. Subsequent studies were released in 1987, 1992, 1996, and 2000. Since 2000, the study has been completed biannually.
Since 2004, the Agency Universe Study has relied on Internet data collection. A small sampling of agencies participated via fax, as well. Approximately 1900 agencies were included in the 2008 analysis.
For more information on the survey results or to request an interview with a national spokesperson, contact Sue Nester, IIABA broadcast media director, at (703) 706-5448; susan.nester@iiaba.net. Print journalists should contact Margarita Tapia, IIABA director of public affairs, at (703) 706-5473; margarita.tapia@iiaba.net. To order a copy of the 2008 Agency Universe Study Management Summary, which provides an overview of the highlights from the complete study, visit www.independentagent.com.
Founded in 1896, the Big “I” is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life, health, employee benefit plans and retirement products. Web address: www.independentagent.com.
Jumat, 28 November 2008
Insurance Nature of the Industry
Goods and services. The insurance industry provides protection against financial losses resulting from a variety of perils. By purchasing insurance policies, individuals and businesses can receive reimbursement for losses due to car accidents, theft of property, and fire and storm damage; medical expenses; and loss of income due to disability or death.
Industry organization. The insurance industry consists mainly of insurance carriers (or insurers) and insurance agencies and brokerages. In general, insurance carriers are large companies that provide insurance and assume the risks covered by the policy. Insurance agencies and brokerages sell insurance policies for the carriers. While some of these establishments are directly affiliated with a particular insurer and sell only that carrier’s policies, many are independent and are thus free to market the policies of a variety of insurance carriers. In addition to supporting these two primary components, the insurance industry includes establishments that provide other insurance-related services, such as claims adjustment or third-party administration of insurance and pension funds.
These other insurance industry establishments also include a number of independent organizations that provide a wide array of insurance-related services to carriers and their clients. One such service is the processing of claims forms for medical practitioners. Other services include loss prevention and risk management. Also, insurance companies sometimes hire independent claims adjusters to investigate accidents and claims for property damage and to assign a dollar estimate to the claim.
Insurance carriers assume the risk associated with annuities and insurance policies and assign premiums to be paid for the policies. In the policy, the carrier states the length and conditions of the agreement, exactly which losses it will provide compensation for, and how much will be awarded. The premium charged for the policy is based primarily on the amount to be awarded in case of loss, as well as the likelihood that the insurance carrier will actually have to pay. In order to be able to compensate policyholders for their losses, insurance companies invest the money they receive in premiums, building up a portfolio of financial assets and income-producing real estate which can then be used to pay off any future claims that may be brought. There are two basic types of insurance carriers: primary and reinsurance. Primary carriers are responsible for the initial underwriting of insurance policies and annuities, while reinsurance carriers assume all or part of the risk associated with the existing insurance policies originally underwritten by other insurance carriers.
Primary insurance carriers offer a variety of insurance policies. Life insurance provides financial protection to beneficiaries—usually spouses and dependent children—upon the death of the insured. Disability insurance supplies a preset income to an insured person who is unable to work due to injury or illness, and health insurance pays the expenses resulting from accidents and illness. An annuity (a contract or a group of contracts that furnishes a periodic income at regular intervals for a specified period) provides a steady income during retirement for the remainder of one’s life. Property-casualty insurance protects against loss or damage to property resulting from hazards such as fire, theft, and natural disasters. Liability insurance shields policyholders from financial responsibility for injuries to others or for damage to other people’s property. Most policies, such as automobile and homeowner’s insurance, combine both property-casualty and liability coverage. Companies that underwrite this kind of insurance are called property-casualty carriers.
Some insurance policies cover groups of people, ranging from a few to thousands of individuals. These policies usually are issued to employers for the benefit of their employees or to unions, professional associations, or other membership organizations for the benefit of their members. Among the most common policies of this nature are group life and health plans. Insurance carriers also underwrite a variety of specialized types of insurance, such as real-estate title insurance, employee surety and fidelity bonding, and medical malpractice insurance.
Other organizations in the industry are formed by groups of insurance companies, to perform functions that would result in a duplication of effort if each company carried them out individually. For example, service organizations are supported by insurance companies to provide loss statistics, which the companies use to set their rates.
Recent developments. Congressional legislation now allows insurance carriers and other financial institutions, such as banks and securities firms, to sell one another’s products. More insurance carriers now sell financial products such as securities, mutual funds, and various retirement plans. This approach is most common in life insurance companies that already sold annuities, but property and casualty companies also are increasingly selling a wider range of financial products. In order to expand into one another’s markets, insurance carriers, banks, and securities firms have engaged in numerous mergers, allowing the merging companies access to each other's client base and geographical markets.
Insurance carriers have discovered that the Internet can be a powerful tool for reaching potential and existing customers. Most carriers use the Internet simply to post company information, such as sales brochures and product information, financial statements, and a list of local agents. However, an increasing number of carriers are starting to expand their Web sites to enable customers to access online account and billing information, and some carriers even allow claims to be submitted online. Many carriers also provide insurance quotes online based on the information submitted by customers on their Internet sites. In fact, some carriers will allow customers to purchase policies through the Internet without ever speaking to a live agent.
In addition to individual carrier-sponsored Internet sites, several “lead-generating” sites have emerged. These sites allow potential customers to input information about their insurance policy needs. For a fee, the sites forward customer information to a number of insurance companies, which review the information and, if they decide to take on the policy, contact the customer with an offer. This practice gives consumers the freedom to accept the best rate.
Hours. Many workers in the insurance industry—especially those in administrative support positions—work a 5-day, 40-hour week. Those in executive and managerial occupations often put in more than 40 hours. There are several occupations in the insurance industry where workers may work irregular hours outside of office settings. Those working in sales jobs need to be available for their clients at all times. This accommodation may result in these individuals working 50 to 60 hours per week. Also, call centers operate 24 hours a day, 7 days a week, so some of their employees must work evening and weekend shifts. The irregular business hours in the insurance industry provide some workers with the opportunity for part-time work. Part-time employees make up 8 percent of the workforce.
Work environment. Insurance employees working in sales jobs often visit prospective and existing customers’ homes and places of business to market new products and provide services. Others working in the industry may need to frequently leave the office to inspect damaged property, and at times can be away from home for days, traveling to the scene of a disaster—such as a tornado, flood, or hurricane—to work with affected policyholders and government officials.
A small, but increasing, number of insurance employees spend most of their time on the telephone working in call centers, answering questions and providing information to prospective clients or current policyholders. These jobs may include selling insurance, taking claims information, or answering medical questions.
As would be expected in an industry dominated by office and sales employees, the incidence of occupational injuries and illnesses among insurance workers is low. In 2006, only 1.3 cases per 100 full-time workers were reported among insurance carriers, while just 0.7 cases per 100 full-time workers were reported among agents and brokers. These figures compare with an average of 4.4 for all private industry.
credit card Verified by Visa
As part of ongoing initiatives in our fight against fraud, we’re working alongside Visa International to take card security to the next level.
Since the introduction of ‘Chip and Pin,’ there has been a significant reduction in card fraud, however, with online shopping rapidly becoming part of everyday life, fraudulent activity on the Internet has increased.
We are introducing to our customers the Verified by Visa scheme (VbV), an initiative that makes shopping online even more secure. This is an industry-wide effort, with APACS (the UK’s payment association) recently announcing, that ten million UK-issued cards have been registered with online security systems, (either Verified by Visa (VbV) and Mastercard Securecode) to date.
The Verified by Visa scheme is quick and easy to use and features:
* Greater protection against the unauthorised use of your card for online purchases
* A straightforward and hassle-free service that fits neatly into the online buying process
* Enhanced online security with the use of a password/memorable name, without the need for any additional software.
We are introducing Verified by Visa (VbV) to our customers on a phased basis and you will be contacted when your details have been updated to the scheme.
To learn more about Verified by Visa, take a look at our online demo, find out more with the links below or contact us on 08457 212 212.
* About Verified by Visa
* Registering for Verified by Visa
* Shopping with Verified by Visa
* Activation During Shopping
* Account Management
* Security and Privacy
* How to Cancel
* Common enquiries
http://www.co-operativebank.co.uk
Hair removal
As you browse the aisles of your local drugstore, you may feel a little dizzy. Next to the dozens of products devoted to making the hair on your head thicker or shinier, you’ll see dozens more promising to get rid of unwanted hair. So which hair removal methods work best? And do you need any of them?
Different Types of Hair
Before removing hair, it helps to know about the different types of hair on our bodies. All hair is made of keratin, a hard protein that's also found in your fingernails and toenails. Hair growth begins beneath the surface of your skin at a hair root inside a hair follicle, a small tube in the skin.
You have two types of hair on your body. Vellus hair is soft, fine, and short. Most women have vellus hair on their chest, back, and face. It can be darker and more noticeable in some women than others, especially those with darker complexions. Vellus hair helps the body maintain a steady temperature by providing some insulation.
Terminal hair is coarser, darker, and longer than vellus hair. It's the type of hair that grows on your head. Around puberty, terminal hair starts to grow in the armpits and pubic region. On guys, terminal hair begins to grow on the face and other parts of the body such as the chest, legs, and back. Terminal hair is there to provide cushioning and protection.
In some cases, excess hair growth, called hirsutism (pronounced: hur-soo-tih-zum), may be the result of certain medical conditions. In girls, polycystic ovary syndrome and other hormonal disorders can cause dark, coarse hair to grow on the face, especially the upper lip and chin, as well as on the chest, belly, and back. Some medications, like anabolic steroids, also can cause hirsutism.
Getting Rid of Hair
Shaving
How It Works: Using a razor, a person removes the tip of the hair shaft that has grown out through the skin. Some razors are completely disposable, some have a disposable blade, and some are electric. Guys often shave their faces, and women often shave their underarms, legs, and bikini areas.
How Long It Lasts: 1 to 3 days
Pros: Shaving is fairly inexpensive, and you can do it yourself. All you need is some warm water, a razor, and if you choose, shaving gel or cream.
Cons: Razor burn, bumps, nicks, cuts, and ingrown hairs are side effects of shaving. Ingrown hairs can happen with close, frequent shaving. When the hair begins to grow, it grows within the surrounding tissue rather than growing out of the follicle. The hair curls around and starts growing into the skin, irritating it.
Tips: You'll get a closer shave if you shave in the shower after your skin has been softened by warm water. Go slowly, pulling looser areas of skin taut before running the razor over them. Change razors often to avoid nicks. Using shaving cream may also help protect sensitive skin, like the skin around the genitals. If you’re nervous about cutting yourself, you can try an electric razor instead.
Although most people shave in the opposite direction from the hair growth, if you want to avoid ingrown hairs it can help to shave in the direction the hair grows.
Plucking
How It Works: Using tweezers, a person stretches the skin tightly, grips the hair close to the root, and pulls it out.
How Long It Lasts: 3 to 8 weeks
Pros: Plucking is inexpensive because all you need are tweezers. But it can be time-consuming because you can only remove one hair at a time. Devices called epilators, which cost around $25 to $70, can pull out multiple hairs at once.
Cons: Plucking can be painful. If the hair breaks off below the skin, a person may get an ingrown hair. After plucking, you may notice temporary red bumps because the hair follicle is swollen and irritated. Epilators aren't a good idea for use on areas like eyebrows because they pull out a bunch of hairs at once and don't give you precise control.
Tips: Make sure you sterilize your tweezers or other plucking devices with rubbing alcohol before and after use to reduce the chance of infection.
Depilatories
How They Work: A depilatory is a cream or liquid that removes hair from the skin's surface. They work by reacting with the protein structure of the hair, so the hair dissolves and can be washed or wiped away.
How Long They Last: Several days to 2 weeks
Pros: Depilatories work quickly, are readily available at drugstores and grocery stores, and are inexpensive. They're best on the leg, underarm, and bikini areas; special formulations may be used on the face and chin.
Cons: Applying depilatories can be messy and many people dislike the odor. If you have sensitive skin, you might have an allergic reaction to the chemicals in the depilatory, which may cause a rash or inflammation. Depilatories may not be as effective on people with coarse hair.
Tips: Read product directions carefully and be sure to apply the product only for the recommended amount of time for best results. Before using a depilatory on pubic hair, read product labels to find one that says it's safe to use on the "bikini" area or genitals.
Waxing
How It Works: A sticky wax is spread on the area of skin where the unwanted hair is growing. A cloth strip is then applied over the wax and quickly pulled off, taking the hair root and dead skin cells with it. The wax can be warmed or may be applied cold. Waxing can be done at a salon or at home.
How Long It Lasts: 3 to 6 weeks
Pros: Waxing leaves the area smooth and is long lasting. Waxing kits are readily available in drugstores and grocery stores. Hair regrowth looks lighter and less noticeable than it is after other methods of hair removal, such as shaving.
Cons: Many people say the biggest drawback to waxing is the discomfort: Because the treatment works by pulling hair out at the roots, it can sting a bit as the hair comes off — luckily that part is fast. People may notice temporary redness, inflammation, and bumps after waxing.
Professional waxing is more expensive than other hair removal methods. However, it can help to get a first waxing treatment done in a salon to watch how the professionals do it (because salon staff are used to waxing all parts of the male and female body there's no need to feel embarrassed!).
Teens who use acne medications such as tretinoin and isotretinoin may want to skip waxing because those medicines make the skin more sensitive. People with moles or skin irritation from sunburn should also avoid waxing.
Tips: For waxing to work, hair should be at least ¼ inch (about 6 millimeters) long. So skip shaving for a few weeks before waxing. Waxing works well on the legs, bikini area, and eyebrows.
Electrolysis
How It Works: Over a series of several appointments, a professional electrologist inserts a needle into the follicle and sends an electric current through the hair root, killing it. A small area such as the upper lip may take a total of 4 to 10 hours and a larger area such as the bikini line may take 8 to 16 hours.
How Long It Lasts: Intended to be permanent, but some people have regrowth of hair
Pros: Some people have permanent hair removal.
Cons: Electrolysis takes big bucks and lots of time, so it's usually only used on smaller areas such as the upper lip, eyebrows, and underarms. Many people describe the process as painful, and dry skin, scabs, scarring, and inflammation may result after treatment. Infection may be a risk if the needles and other instruments aren't properly sterilized.
Tips: Talk to your doctor if you're interested in this method. He or she may be able to recommend an electrologist with the proper credentials.
Laser Hair Removal
How It Works: A laser is directed through the skin to the hair follicle, where it stops growth. It works best on light-skinned people with dark hair because the melanin (colored pigment) in the hair absorbs more of the light, making treatment more effective.
How Long It Lasts: Intended to be permanent, but people often need to return every 6 months to a year for maintenance
Pros: This type of hair removal is long lasting and large areas of skin can be treated at the same time.
Cons: A treatment session may cost $400 or more. Side effects of the treatment may include inflammation and redness.
Tips: Using cold packs may help diminish any inflammation after treatment. Avoiding the sun before a treatment may make results more effective.
Prescription Treatments
A cream called eflornithine is available by prescription to treat facial hair growth in women. The cream is applied twice a day until the hair becomes softer and lighter — more like vellus hair. Side effects may include skin irritation and acne. Talk to your doctor or dermatologist if you are concerned about hair growth and removal.
Antiandrogen medications are another method that doctors prescribe to reduce the appearance of unwanted hair. Because androgen hormones can be responsible for hair growth in unwanted areas, these medications can reduce hair growth by blocking androgen production. Doctors often prescribe oral contraceptives in conjunction with these medications to enhance their effect, avoid pregnancy (since antiandrogens can be harmful to a developing fetus) and help regularize the menstrual cycle in girls who need it.
Deciding to remove body hair is a personal choice. Getting rid of body hair doesn't make a person healthier, and you shouldn't feel pressured to do so if you don't want to. Some cultures view body hair as beautiful and natural, so do what feels right to you!
Reviewed by: Larissa Hirsch, MD
Date reviewed: January 2008
Nature of the Work
The legal system affects nearly every aspect of our society, from buying a home to crossing the street. Lawyers form the backbone of this system, linking it to society in numerous ways. They hold positions of great responsibility and are obligated to adhere to a strict code of ethics.
Lawyers, also called attorneys, act as both advocates and advisors in our society. As advocates, they represent one of the parties in criminal and civil trials by presenting evidence and arguing in court to support their client. As advisors, lawyers counsel their clients about their legal rights and obligations and suggest particular courses of action in business and personal matters. Whether acting as an advocate or an advisor, all attorneys research the intent of laws and judicial decisions and apply the law to the specific circumstances faced by their clients.
The more detailed aspects of a lawyer’s job depend upon his or her field of specialization and position. Although all lawyers are licensed to represent parties in court, some appear in court more frequently than others. Trial lawyers, who specialize in trial work, must be able to think quickly and speak with ease and authority. In addition, familiarity with courtroom rules and strategy is particularly important in trial work. Still, trial lawyers spend the majority of their time outside the courtroom, conducting research, interviewing clients and witnesses, and handling other details in preparation for a trial.
Lawyers may specialize in a number of areas, such as bankruptcy, probate, international, elder, or environmental law. Those specializing in environmental law, for example, may represent interest groups, waste disposal companies, or construction firms in their dealings with the U.S. Environmental Protection Agency and other Federal and State agencies. These lawyers help clients prepare and file for licenses and applications for approval before certain activities may occur. Some lawyers specialize in the growing field of intellectual property, helping to protect clients’ claims to copyrights, artwork under contract, product designs, and computer programs. Other lawyers advise insurance companies about the legality of insurance transactions, guiding the company in writing insurance policies to conform to the law and to protect the companies from unwarranted claims. When claims are filed against insurance companies, these attorneys review the claims and represent the companies in court.
Most lawyers are in private practice, concentrating on criminal or civil law. In criminal law, lawyers represent individuals who have been charged with crimes and argue their cases in courts of law. Attorneys dealing with civil law assist clients with litigation, wills, trusts, contracts, mortgages, titles, and leases. Other lawyers handle only public-interest cases—civil or criminal—concentrating on particular causes and choosing cases that might have an impact on the way law is applied. Lawyers are sometimes employed full time by a single client. If the client is a corporation, the lawyer is known as “house counsel” and usually advises the company concerning legal issues related to its business activities. These issues might involve patents, government regulations, contracts with other companies, property interests, or collective bargaining agreements with unions.
A significant number of attorneys are employed at the various levels of government. Some work for State attorneys general, prosecutors, and public defenders in criminal courts. At the Federal level, attorneys investigate cases for the U.S. Department of Justice and other agencies. Government lawyers also help develop programs, draft and interpret laws and legislation, establish enforcement procedures, and argue civil and criminal cases on behalf of the government.
Other lawyers work for legal aid societies—private, nonprofit organizations established to serve disadvantaged people. These lawyers generally handle civil, rather than criminal, cases.
Lawyers increasingly use various forms of technology to perform more efficiently. Although all lawyers continue to use law libraries to prepare cases, most supplement conventional printed sources with computer sources, such as the Internet and legal databases. Software is used to search this legal literature automatically and to identify legal texts relevant to a specific case. In litigation involving many supporting documents, lawyers may use computers to organize and index material. Lawyers must be geographically mobile and able to reach their clients in a timely matter, so they might use electronic filing, web and videoconferencing, and voice-recognition technology to share information more effectively.
Work environment. Lawyers do most of their work in offices, law libraries, and courtrooms. They sometimes meet in clients’ homes or places of business and, when necessary, in hospitals or prisons. They may travel to attend meetings, gather evidence, and appear before courts, legislative bodies, and other authorities. They may also face particularly heavy pressure when a case is being tried. Preparation for court includes understanding the latest laws and judicial decisions.
Salaried lawyers usually have structured work schedules. Lawyers who are in private practice may work irregular hours while conducting research, conferring with clients, or preparing briefs during nonoffice hours. Lawyers often work long hours; of those who work full time, about 37 percent work 50 hours or more per week.
Taxes on home equity
I have some questions regarding taxes and home equity lines of credit, or HELOCs. I owned a home with a mortgage balance of $360,000. I used all of the funds from a $90,000 HELOC to put a down payment on a second home, renting out the first. I bought a second home with a mortgage balance of $287,000, and took a $57,000 HELOC out on the second home (now my primary residence). I used $30,000 of this HELOC to make repairs and the rest to consolidate some debt.
How much of the interest paid on each of these four loans (two mortgages, two HELOCs) is deductible? (i.e.: What are the deduction thresholds given this situation?)
Does it matter what the money used from a HELOC is spent on? Do home improvements count as a deduction, but not other kinds of spending? How does the IRS track this?
-- Brian
Dear Brian,
First off, the IRS doesn't track this, you do. The general rule is that you can deduct as home mortgage interest the interest paid on up to $1 million in mortgages used to acquire or substantially improve a principal residence and a second home that you use personally. You can also deduct the interest on up to $100,000 of home equity debt that is used for any purpose.
Because the $90,000 HELOC is on a rental property, it does not qualify as home mortgage interest unless you use the home as a vacation home during the year. Furthermore, because the $90,000 loan was used for personal purposes, it is not deductible against rental income. The $360,000 mortgage would be deductible against the rental property income.
The $287,000 debt was used to acquire your home, so that is home mortgage interest, deductible within the $1 million ceiling. The $57,000 HELOC is home equity debt within the $100,000 limit. In fact, the $30,000 used to make repairs can be considered part of the acquisition debt, so that only $27,000 of this HELOC fits within the $100,000 ceiling. Because you have $73,000 available under the $100,000 ceiling, you might want to consider refinancing the HELOC that is not deductible on the rental property.