4.3 Maintaining a Home, Auto Insurance & Taxes

For information about paying bills, see the section: Financial Strategies
Maintaining a Home

Leaving a home empty for a long time is a loss of rental income, as well as a security risk in some neighborhoods, but your home is there for you whenever you return, and you don't have to deal with storing your belongings, or fixing damage from tenants. You only have to make it look lived in, and have a friend check the premises periodically. If you are not going to leave it vacant, renting through a real estate agent or property manager is strongly recommended, since they can handle problems that may arise. Another option to look into is Home Exchange Clubs.

"I met two couples on my trip who rented their house to 'friends'. When they arrived back home they had to: wait for their 'friends' to move out of the house; pay a lot of mortgage because their 'friends' had not paid their rent; repaint and repair a *lot*." <Jeroen Houtzager>


Home Insurance

"Do not neglect home insurance. If you are leaving the house empty, you should check your fire insurance: there may be requirements for someone to enter the premises every sixty days or so to check for water, leaks, etc.; otherwise you may find you do not have any coverage." <Larry Cotter>

If you will be renting your home, look into a Landlords Package Policy, which covers property damage as well as harm to tenants.

"Your homeowners policy also provides coverage for lost or stolen items, even if you live in your parents' house. Check with the insurer, as you may need to be added to the policy. My brother was reimbursed for video and still cameras stolen in India on my mother's policy -- he is 38! A copy of a police report listing the stolen items is vital. An itemized list, with serial numbers, left at home is a good idea. The renters policy with Allstate that my wife and I maintained replaced thousands of dollars of our belongings that got wet in storage." <Scott Soper>


Auto Insurance

Remember to notify the Department of Motor Vehicles and your insurance company when you sell your car. In some States, if you let your insurance lapse, there is a penalty charged when you try to get new insurance, unless you can prove you sold the car. Worse, you cannot get cheap insurance after you have been without insurance for six months -- they bump you out of 'preferred' status and into a third tier risk group, unless you go back to the same insurance company, then they may re-activate you within two years, but only if you had sold the car. Sometimes you have to be explicit about telling that you went overseas and haven't lived or driven in the States since your insurance lapsed.

Some people lend their cars to family or friends, adding them to their policy and letting them pay the premiums in order to maintain the continuity, although you are still liable to a certain extent, too much for me in the US. Mechanically, it isn't good to let a car sit unused, and you will be required to maintain insurance by law, but it will be minimal if it isn't being driven.

"If you are leaving a car behind, you may want to discontinue car insurance except for comprehensive (theft) coverage. However, some States have special rules that should be understood: In California, if someone steals your uninsured car and has an accident, you are liable and you will not have any coverage whatsoever! This could be financially catastrophic, if the accident is really serious. The exception is if the car is up on blocks in locked storage, then you are not liable." <Larry Cotter>

If you plan to rent your car, then make sure the lease is clear regarding maintenance responsibility, liability, excessive mileage, who pays insurance, and who pays the deductible if damaged. Both leasor and leasee need to sign the condition report and rental agreement.

Regardless of what you decide to do with your car, schedule an appointment with your insurance agent to discuss your options and the cost of insurance when you return. Also verify that your driver's license and registration will not expire while you are gone. If it will, fill out a form and attach a check for the renewal, and arrange for this to be paid at the appropriate time.


Paying Taxes

If you will owe income taxes, and be travelling when they are due, the easiest way to file is on the Internet, and have any taxes owed automatically deducted from your bank account, or have the tax refund automatically deposited into your account. This may require the use of tax software, which is safest if you have your own laptop with you. Online versions are available for free at some financial institutions.

The next choice would be to print the tax forms off the IRS website, or get them from your embassy, and file them directly by mail or express delivery. Otherwise, make arrangements with a friend or an accountant to file them. They may have to express mail it to you for your signature.

"You do not have to file an Income Tax Return on time if you are out of the country. But you do have to request an extension (and pay any interest due when you file). Some extensions are automatic, others require IRS Form 4868. IRS Publication 17 explains the ins and outs of this. Some States give an automatic extension, so ask before you leave. These are usually extensions to file, not extensions to pay, so there may be penalties if you have not paid the correct amount of estimated tax. It is probably best to file for the extension before you leave home, and is certainly easier." <Larry Cotter>

Unless you leave at the end of the year, there is a good chance that you will be getting a tax refund. If you want the refund to be automatically deposited to your bank account, this can be specified at the bottom of the tax form, or on the new Form 8888. You can also have it deposited directly to your account with a financial institution, such as Fidelity or Vanguard. You will need to call them or visit their website for specific instructions, as this type of deposit may be subject to restrictions or require special handling.

If you do not want your refund automatically deposited, but do want someone else to deposit the check, without your signature on it, in one of your accounts, then they will have to write "For deposit only" in the endorsement section on the back of the refund check, then mail it with a deposit slip to your financial institution. This can be done for any checks issued in your name. If they walk into a bank with the form and check, they will be asked to have you sign the back of the check before it can be deposited.

"If you have to maintain a home while you are gone, do not neglect property taxes, or any Social Security Taxes you owe for household employees, the man who cuts the lawn, etc. The bill-paying services mentioned earlier usually will not pay taxes of any kind for you." <Larry Cotter>


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