Category Archives: Taxes

PMI Tax Deductibility Expires December 31, 1012

If the increase in the upfront PMI and the increase in the monthly PMI for FHA buyers, wasn’t bad enough, it looks like these homeowners will also lose the tax deduction for these costs at the end of the year.

What does  the expiration of the Tax Relief and Health Care Act of 2006 mean to the home buyer or the home seller?

That means that the cost of home ownership will increase with for many because approximately  70% of all 1st time buyer use FHA loans. And when the cost of home ownership rises, there will be fewer buyers, and those remaining, will have to purchase lower priced properties because their purchasing power will decrease. That means that the sellers will get less for their houses.

It’s just this simple.  Here’s how the upcoming changes will affect your clients

For example, if a buyer is buying a home for about $311,000 the loan amount will be about $300,000 with the minimum 3.5% down.  The estimated monthly payment will be about $2146. (That would be a 30 year loan at 4%)

The mortgage insurance premium is approx. $320.

In California; a married couple with an adjusted gross income of $100,000 are typically in a 45% federal and state marginal tax bracket.

The loss of the PMI deductibility translates into a payment increase of $135 a month…or in other words a defacto 8.5% (after tax dollars) net increase in house payment.

This is not what our recovering housing market needs!!!!!!!!

If I were a home buyer, or even a home seller, I would be talking with my legislators and asking them to extend the tax deductibility of the Tax Relief and Health Care Act of 2006.

The following committees will have input to extending the life of the 2006 legislation.  The number in parenthesis indicates the number of California legislators on those committees.

House Committee on Ways and Means (5)

House Committee on Financial Services (7)

House Committee on the Budget (4)

At this time neither of our two Senators sit on committees that can influence this legislation on the committee level…but given their seniority in the Senate..it would be helpful to contact their offices as well.

Senator Barbara Boxer

Senator Diana Feinstein

Start building your memories,
as you turn your house into a home. 

As you might guess, this document is a compilation of information from our own efforts as REALTORS, as well as input from other REALTORS in our Coldwell Banker office.  I hope it has been of value to you.  Don’t hesitate to email us with any suggestions that will make this document better for you and your fellow homeowners!
Be sure to follow us on Facebook at www.Facebook.com/ElkGroveRealEstate.  For information about properties available for sale and for more information for buyers and sellers, please visit our website at www.ElkGroveRealEstate.com and don’t hesitate to give us a call or drop us an email with your questions.

WANT TO USE THIS ARTICLE IN YOUR E-ZINE OR WEB SITE? You can, as long as you include this complete blurb with it: Jack & Tracey Edwards, your real estate advocates, specialize in helping buyers and sellers in Elk Grove, CA,  and the greater Sacramento area.   Get information about available homes online at:  www.ElkGroveRealEstate.comOur mobile clients can find us at Mobile.ElkGroveRealEstate.com

 

The Great Recession and Attitudes Toward Home-Buying

Research Institute For Housing America:

Special Report

In the last few years, Americans have experienced the most severe housing-market downturn since the Great Depression. The national homeownership rate during this period has declined from a peak of 69 percent in 2004 to 66 percent presently. Unemployment is high, income growth is stagnant and home sales are low. Indeed, in this environment, many have questioned whether the American dream of homeownership has ended.

This report utilizes data from the University of Michigan’s Survey of Consumer Attitudes to examine consumer attitudes toward homeownership before, during and after the financial crisis. In particular, it measures the extent to which the recession has changed consumer sentiment toward home buying and selling.

There are a number of principal findings from the report which include:

• Despite high unemployment, slow economic growth and problems plaguing the economy, almost 80 percent of American households believe that now is a good time to buy a home.

• Positive sentiment is strong particularly among young, educated, white and Hispanic households, and is attributable to low house prices and low mortgage interest rates.

• The pattern of home-buying sentiment during the current recession looks similar to the pattern from past recessions. In fact, current positive home-buying sentiment is around its long-run average level.

• What is different about the current recession is that positive home-selling sentiment is at an historic low. Indeed, the sell-side of the market is dominated by deeply negative sentiment.

• Negative home-selling sentiment is strongly related to difficulty in finding buyers at desired sales prices, as well as the large overhang of mortgages past due or in foreclosure.

• Over the last two decades, the value of mortgage purchase originations has tracked home-selling sentiment more strongly than home-buying sentiment.

• Favorable sentiment and real activity in the housing and mortgage markets will be weighed down significantly until the overhang of troubled mortgages is cleared out.

• Over the next five quarters, positive home-buying sentiment is forecast to remain around current and long-run average levels. In contrast, positive home-selling sentiment is forecast to remain around current and historic-low levels. This suggests that selling sentiment and, hence, market activity, will remain sluggish in the near term.

Start building your memories,
as you turn your house into a home. 

As you might guess, this document is a compilation of information from our own efforts as REALTORS, as well as input from other REALTORS in our Coldwell Banker office.  I hope it has been of value to you.  Don’t hesitate to email us with any suggestions that will make this document better for you and your fellow homeowners!
Be sure to follow us on Facebook at www.Facebook.com/ElkGroveRealEstate.  For information about properties available for sale and for more information for buyers and sellers, please visit our website at www.ElkGroveRealEstate.com and don’t hesitate to give us a call or drop us an email with your questions.

WANT TO USE THIS ARTICLE IN YOUR E-ZINE OR WEB SITE? You can, as long as you include this complete blurb with it: Jack & Tracey Edwards, your real estate advocates, specialize in helping buyers and sellers in Elk Grove, CA,  and the greater Sacramento area.   Get information about available homes online at:  www.ElkGroveRealEstate.comOur mobile clients can find us at Mobile.ElkGroveRealEstate.com

 

Have You Been Cheating On Your Taxes???

Before I get too far into this article, I want to remind you that I am a real estate professional, not a tax professional. When we work our way through the home buying process, buyers almost always ask about property taxes and Mello-Roos fees, and tax impounds. Those are all a part of the real estate transaction. I am doing this blog post to provide you some important information so that you will remember to hold on to your tax bill and to be ready next tax season to talk to your tax professional to make sure that you don’t find yourself in trouble for accidentally cheating on your taxes. If you need tax advise, please talk to your tax professional or your accountant.

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I would venture a guess that most homeowners have been accidentally cheating on their taxes, and getting away with it for years, but that will come to an end next year.

Yes, starting with 2012, taxpayers will no longer be able to illegally deduct their complete property tax bill from their taxes. It has not been legal to do so, but more often than not, taxpayers usually take the number from the 1098 form they receive from their lender and put that on their Schedule A when reporting the amount that they paid in property taxes.

Unfortunately, that number usually includes amounts for various miscellaneous fees, that are not property taxes, and they are not tax deductible expenses.

I think this is another unintended consequence of Prop 13. Adding non deductible fees to the tax bill because they could not increase the taxes. So, what kind of fees are we talking about? Generally anything that is not based on the property value, generally called ad valorem taxes.

Things like Mello-Roos fees, or lighting and landscape fees, or water and drainage studies, or college district fees, are not taxes, therefore they are not deductible even though they show up on your property tax bill.

These fees are also called Direct Levies. On my tax bill, the total each year is about $4,508 of which only $3,096 is property taxes and $1,412 are direct levy fees. That is not as bad as it will be for some taxpayers. Those who bought new homes in the past few years often have Direct Levies that are higher than their ad valorem taxes. If your house was built in the 1970s, then it may not be much of a big deal to you, but if it was built in 2010, you will be paying a little more in income taxes next year.

According to Franchise Tax Board, beginning with the 2012 tax bill (the one due in April 2013), they will require property owners to break down their property taxes into deductible and non-deductible portions. In fact, here is the link to the info so that you can read it yourself if you don’t believe me.

For some people, this will be a real challenge since they are not in the habit of putting the copy of their tax bill with their tax records. All too often, since the mortgage company is taking care of the taxes, they don’t even know where their copy of the tax bill is located when they sit down to do their taxes. For those of you in Sacramento or Placer Counties, you can go online and get your property tax info, if you know your assessors parcel number. In Sacramento, go online to www.eproptax.saccounty.net and in Placer County, go to www.placer.ca.gov/Departments/Tax/Taxes/TaxBillSearch.aspx.
In either case, taxpayers will need their parcel number in addition to the deductible/non-deductible breakdown for their 2012 state income tax filing. If you need help in finding the information, don’t hesitate to contact your real estate professionals at www.ElkGroveRealEstate.com
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Start building your memories,
as you turn your house into a home. 

As you might guess, this document is a compilation of information from our own efforts as REALTORS, as well as input from other REALTORS in our Coldwell Banker office.  I hope it has been of value to you.  Don’t hesitate to email us with any suggestions that will make this document better for you and your fellow home owners!
Be sure to follow us on Facebook at  www.Facebook.com/ElkGroveRealEstate.  For information about properties available for sale and for more information for buyers and sellers, please visit our website at www.ElkGroveRealEstate.com and don’t hesitate to give us a call or drop us an email with your questions.

Make sure to click the Comment box below and share this article with your friends as well.

Requests For Property Tax Reductions In Sacramento County

You may have missed this post last month, so I am publishing it again.

Its November now and you should have recently received your property tax bill.  Do you believe that your house has dropped in value and is worth less than what shows on the tax bill?  If so, it is time to request a reduction in your property taxes.  The Sacramento County Tax Assessor accepts  requests until November 30th.

Proposition 8, which passed in 1978, amended Proposition 13 to recognize declines in value for property tax purposes. As a result, the Assessor is required to annually update the assessed value either a property’s Proposition 13 base year value factored for inflation, or its market value as of January 1st, whichever is less.  The Proposition 8 decline in market value assessments are temporary reductions that recognize the fact that the market value has fallen below its current Prop 13 factored value. Here is more info on Prop 8.

After the property value has been decreased and the assessment adjusted by the tax assessor, that property’s value must be reviewed each year as of the January 1st lien date, to determine whether its market value is less than its Prop 13 factored value. Prop 8 values can change from year to year as the market fluctuates. When the market value of the Prop 8 property increases above its Prop 13 factored value, the Assessor will once again update the assessment to the property’s Prop 13 factored value. In no case may a value higher than a property’s Prop 13 factored value be enrolled.

So, what to you need to do?  You need to contact us at www.ElkGroveRealEstate.com and request comps for your home so that you can complete the Assessor’s form. Here is a link to the Sacramento County Assessor’s Office.

Remember these important tips:

1.  You will need comparable sales(comps) from the time period of January 1st to March 31st.

2.  You should start the appeal process (information is on the application) if you have not heard back from the Assessor within a week to 10 days after sending in your application.  Don’t wait until the end of the month to send it in.  Do it now.

The process can be fairly simple and there are companies out there who can do it for you buy why would you want to spend a hundred dollars or so to have someone fill out a simple form for you.  You are trying to save money here.

Just email us at Jack.Edwards@cbnorcal.com with your address and contact info and we’ll pull the comps for you for you to complete the process on your own.

Start building your memories,
as you turn your house into a home. 

As you might guess, this document is a compilation of information from our own efforts as REALTORS, as well as input from other REALTORS in our Coldwell Banker office.  I hope it has been of value to you.  Don’t hesitate to email us with any suggestions that will make this document better for you and your fellow home owners!
Be sure to follow us on Facebook at  www.Facebook.com/ElkGroveRealEstate.  For information about properties available for sale and for more information for buyers and sellers, please visit our website at www.ElkGroveRealEstate.com and don’t hesitate to give us a call or drop us an email with your questions.

Make sure to click the Comment box below and share this article with your friends as well.

Is Your Home Worth Less Than It Was Last Year?

Do you believe that your house has dropped in value?  If so, it is time to request a reduction in your property taxes.  The Sacramento County Tax Assessor accepts  requests until November 30th each year.

Proposition 8, which passed in 1978, amended Proposition 13 to recognize declines in value for property tax purposes. As a result, the Assessor is required to annually update the assessed value either a property’s Proposition 13 base year value factored for inflation, or its market value as of January 1st, whichever is less.  The Proposition 8 decline in market value assessments are temporary reductions that recognize the fact that the market value has fallen below its current Prop 13 factored value. Here is more info on Prop 8.

After the property value has been decreased and the assessment adjusted by the tax assessor, that property’s value must be reviewed each year as of the January 1st lien date, to determine whether its market value is less than its Prop 13 factored value. Prop 8 values can change from year to year as the market fluctuates. When the market value of the Prop 8 property increases above its Prop 13 factored value, the Assessor will once again update the assessment to the property’s Prop 13 factored value. In no case may a value higher than a property’s Prop 13 factored value be enrolled.

So, what to you need to do?  You need to contact us at www.ElkGroveRealEstate.com and request comps for your home so that you can complete the Assessor’s form.

Remember these important tips:

1.  You will need comparable sales(comps) from the time period of January 1st to March 31st.

2.  You should start the appeal process (information is on the application) if you have not heard back from the Assessor within a week to 10 days after sending in your application.  Don’t wait until the end of the month to send it in.  Do it now.

The process can be fairly simple and there are companies out there who can do it for you buy why would you want to spend a hundred dollars or so to have someone fill out a simple form for you.  You are trying to save money here.

Just email us at Jack.Edwards@cbnorcal.com with your address and contact info and we’ll pull the comps for you for you to complete the process on your own.

 

Start building your memories,
as you turn your house into a home. 

As you might guess, this document is a compilation of information from our own efforts as REALTORS, as well as input from other REALTORS in our Coldwell Banker office.  I hope it has been of value to you.  Don’t hesitate to email us with any suggestions that will make this document better for you and your fellow home owners!
Be sure to follow us on Facebook at  www.Facebook.com/ElkGroveRealEstate.  For information about properties available for sale and for more information for buyers and sellers, please visit our website at www.ElkGroveRealEstate.com and don’t hesitate to give us a call or drop us an email with your questions.

Make sure to click the Comment box below and share this article with your friends as well.