Tag Archives: Property Taxes

Realty Check October 2012

MarketContinuesRebound

We’ve seen signs of an improving housing market all around us here in the Sacramento and Lake Tahoe region. Home sales have picked up, buyer demand is strong once again, and prices are ticking higher in many areas. Now, a number of key industry reports confirm what we’ve been seeing in our backyard – the nation’s housing market appears to be on the road to recovery.

The most recent S&P/Case-Shiller Home Price Index, one of the most widely followed housing market reports in metropolitan areas around the country, shows that U.S. home prices rose 1.6% in July compared to a year ago. Every city in the 20-city composite has seen prices rise for three consecutive months – in fact, four months, with the exception of Detroit.

“The news on home prices in this report confirm recent good news about housing,” said David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “Single family housing starts are well ahead of last year’s pace, existing home sales are up, the inventory of homes for sale is down and foreclosure activity is slowing. All in all, we are more optimistic about housing.”

S&P isn’t alone in its upbeat assessment. A number of industry analysts and leading business publications, fromForbes magazine to the Wall Street Journal, have reported that the nation’s real estate market has turned the corner and is heading higher once again.

Last month the National Association of Realtors® announced that existing home sales rose 9 percent nationally in August from the previous year, the latest in a string of year-over-year monthly gains in the market.

“The housing market is steadily recovering with consistent increases in both home sales and median prices,” said Lawrence Yun, NAR’s chief economist. “More buyers are taking advantage of excellent housing affordability conditions.”

Record-low mortgage interest rates have helped propel demand for new and existing homes. Additionally, gradual improvements in the labor force and the overall economy as well as recent gains in the stock market that have brought key indices back to pre-recession highs, are adding to consumer demand.

Mortgage rates continue to hit all-time lows. Freddie Mac reported that at the end of September, 30-year fixed-rate mortgages averaged 3.40 percent while 15-year fixed-rate mortgages averaged 2.73 percent, both record lows. A year ago at this time, the 30-year mortgage was over 4 percent.

“Fixed mortgage rates continued to decline this week, largely due to the Federal Reserve’s purchases of mortgage securities, and should support an already improving housing market,” said Frank Nothaft, vice president and chief economist for Freddie Mac.

With all signs pointing to a rebound underway, the question now becomes how quick the turnaround will be and what it all means for potential homebuyers, sellers and the future of the real estate market.

Of course, nobody has the luxury of a crystal ball so predicting the future is impossible. However, many industry observers believe we’ll see a slow but steady improvement in the coming years, both in terms of sales volume and home price appreciation in the low to mid single digits.

This kind of gradual improvement may not be as exciting for homeowners or investors as the red-hot market of the early-mid 2000s, but it could provide the solid foundation we need to build a healthy, stable housing market once again.

The three most important words in real estate have always been “location, location, location,” so it’s not surprising that the pace of recovery will vary depending upon the location of the housing market. On a broad scale, NAR has pegged the West for some of the nation’s fastest rebounds.

Within the West, CoreLogic, the financial information firm, recently named Utah as one of the 10 fastest recovering housing markets in the U.S. with an 8.3 percent price appreciation over the past year, and Colorado also among the top 10 states with a 6.2 percent price gain.

California is also seeing a solid rebound. Following a decrease in median home prices in 2011, the California median may climb a projected 10.9 percent in 2012 to $317,000, according to the California Association of Realtors®. Coastal areas are projected to outpace inland regions.

NAR’s Yun said inventories of homes for sale in many parts of the country are balanced, favoring neither sellers nor buyers, after years of a surplus. But markets in the West are experiencing inventory shortages, which are placing pressure on prices. We’ve seen that in some of our local markets here in the Sacramento and Lake Tahoe region.

Homebuilders have certainly taken notice of the recovery. New home construction is on the rise once again across the country. Housing starts – a key forward-looking barometer of the market – was up a whopping 29 percent in August compared to last year, according to the U.S. Census Bureau.

Still, with housing construction down significantly throughout the recession, it could take several years for new construction to make its way through the pipeline and bring new home inventories back to normal levels.

That imbalance has already led to bidding wars in some cities, and it makes a handful of industry analysts think prices could rise faster than expected in the coming years. NAR’s Yun is one of them.

Despite accelerated construction of new homes this year and next, Yun said the increased inventory is “insufficient to meet the growing housing demand. “ As a result, he estimates that prices of existing homes could rise 10 percent cumulatively over the next two years on sales increases of 8-9 percent in 2012, and 7-8 percent in 2013.

Of course, the housing market will continue to face economic and political challenges that could change those forecasts. Other factors could arise in some geographical areas due to weather or other unexpected events.

There’s always the chance that the nation’s economic recovery could slow further, that the job market softens, and that the so-called fiscal cliff leads to higher taxes and sharp spending cuts – all potentially reducing demand for homes.

But barring a sudden turn in the economy, Forbes magazine and others say it appears that the worst of the housing downturn is behind us and a solid foundation has been laid for a slow but steady recovery in the market.

So if you’ve been sitting on the sidelines waiting for the housing market to turn the corner, now may be a great time to jump in while prices are still very affordable and interest rates are at record lows. For homebuyers, that’s a rare combination that simply won’t last forever. Please give me a call and together we’ll find the home of your dreams.

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

 

Property Taxes Reassessed Upon Change of Ownership

This information was provided by my first choice in escrow, Cornerstone Title Company.

Since, based upon the title of this article, you now know that the county assessor will do a reassessment of your property when you change ownership, lets first look at some of the various forms of ownership.  Remember, I am a real estate agent with Coldwell Banker Residential Brokerage, not an attorney and I am not giving advise on how to hold title to real property.

Joint Tenancy
Under this method of holding title, each owner holds the property jointly with the other owners. Upon the death of one owner(s), the property passes to the surviving joint tenant(s). For assessment purposes, the termination of joint tenancy (other than husband/wife or parent/child transfers) causes a reappraisal.

Tenancy in Common
Under this method of co-ownership, each owner owns a specific percentage of the property. At death, a tenant in common passes their interest in the property at their discretion. The transfer of a tenancy in common interest will cause a reappraisal, unless it is a husband/wife or parent/child transfer, but only for the percentage of interest in the property that has been transferred.

Legal Entities (Partnerships & Corporations)
Under this method, a reassessment occurs when there is a change in the controlling interest of the corporation or partnership. A controlling interest is defined as an interest greater than 50%. These changes in ownership are monitored and reported by the State Board of Equalization.

Death of Real Property Owner
Death is considered a change of ownership and the property can be reassessed as of the date of death for property tax purposes, unless the property is held in a Trust.

Trusts
In this method of holding title, there is only a reassessment if there has been a change of beneficial interest or control. For example, revocable trusts (i.e. living trusts) are not subject to reappraisal. Irrevocable trusts are reappraisable if the recipient or beneficiary is not the current owner.

Methods of Holding Title
A change in the method of holding title in itself does not cause a reappraisal. For example, if two equal partners incorporate, and each owns 50% of the corporate stock, no appraisal is required. In this case, the proportional ownership has not changed, only the method of holding title.
If you are interested in knowing how title is held on a particular property, please call your CornerStone Title Company’s Sales Representative.

Summary
Under Proposition 13, a reassessment takes place upon a change of ownership or transfer of title. It is always best to review any proposed ownership change with the Assessor’s office in advance to determine any possible property tax consequences.

NOTE: For transfers that are not required to be reappraised, taxpayers should have their escrow and or title company note on the document the appropriate exemption recital, i.e. parent to child. This information may also be included on the Preliminary Change of Ownership Report (PCOR) which is filed with the deed. After the deed is recorded with the County Recorder, a Change of Ownership Statement (COS) form is mailed to the new owners within 30 days. It should be returned immediately or there may be a fine assessed by the county.

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

 

I heard that there are two new taxes associated with real estate transactions in 2013

Obama Care Federal 3.8% Sales Tax:

Q. Will my Real Estate closings, beginning in 2013, be subject to a new Federal 3.8% Sales Tax?

A. In conjunction with the significant new Federal Health Care Reform legislation passed in 2010, the law included a new 3.8% tax on Investment Income, which will take effect in 2013. The new tax, intended to generate revenue to help fund the new Healthcare Reform and Medicare overhaul plans, will not be imposed on all real estate transactions. When the new tax becomes effective January 1, 2013 it may impose a 3.8% tax on some (but not all) income from interest, dividends, rents (less expenses) and capital gains (less capital losses).

Don’t forget that most sellers will have very little or no capital gains when they sell their home because of the deductions currently allowed taxpayers if they are selling their primary residence, the home that they lived in for two of the past five years.

The tax will be applicable to individuals with an adjusted gross income (AGI) above $200,000 and to couples filing a joint return with more than $250,000 AGI.

 

Medicare Funding Additional or Alternative Tax on Earned Income at a Rate of 0.9%:

A Second New Tax, also dedicated to Medicare funding, is an additional or alternative tax imposed on Earned Income at a rate of 0.9% imposed on adjusted gross income thresholds of $200,000 for an individual and $250,000 on a joint return.

The National Association of Realtors has published a brochure, which explains the new taxes and also includes examples of various transactions that may be impacted by the new tax laws. The brochure and its discussion of the impact of the two new tax laws may be found on the following website: http://www.realtor.org.

See also: www.Realtor.org/healthreform for a discussion of Frequently Asked Questions not covered in the examples of the brochure.

The brochure addresses examples of:

1. Capital Gain: Sale of a Principal Residence

2. Capital Gain: Sale of a Non-Real Estate Asset

3. Capital Gains, Interests, Dividends, and Securities

4. Rental Income: Income Sources Including Real Estate Investment Income

5. Rental Income: Rental Income as Sole Source of Earnings – Real Estate Trade or Business

6. Sale of a Second Home with No Rental Use (or no more than 14 days rental)

7. Sale of an Inherited Investment Property (Residential or Commercial)

8. Purchase and Sale of Investment Property (Residential or Commercial)

 

Q. Will these new taxes affect my Title and Escrow?

A. Neither of these taxes will be collected and paid at the close of your transaction. Just like regular capital gains taxes, most sellers will deal with these taxes when they do their annual income tax filing. Sellers are encouraged to review their tax liabilities related to these new laws with their Tax Attorney and/or Certified Public Accountant (CPA) prior to selling their properties.

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

 

Coldwell Banker Realty Check — September 2012

 

FirstTimeHomebuyers

Now that the housing market is picking up once again, a growing number of first-time homebuyers are jumping in, attracted by relatively low home prices in some areas and historically low mortgage interest rates. In fact, many first time homebuyers have discovered that for the first time in years it’s actually cheaper to own a home than it is to rent one.

The Joint Center for Housing Studies at Harvard recently reported that the median priced home in the U.S. (when calculated in today’s dollars) is roughly half as much as it was in 1990! And as rents have steadily risen in recent years, the Harvard study found that mortgage payments on the median U.S. home is now 23 percent less than rent payments for the same home.

So as new buyers look to take advantage of this great opportunity, what are they looking for in their first home – and what do they need to know about buying real estate for the first time? We thought it would be interesting to take a look at the wants and needs of new buyers, as well as offer them some tips as they enter the housing market.

What are new buyers looking for in a starter home? In a survey of 300 consumers who purchased their first home in the last year, Coldwell Banker found that the vast majority wanted a move-in ready home near work and good schools. Specifically:

  • 87 percent said finding a move-in ready home was important or very important to them;
  • 78 percent said they wanted the home to be convenient to shops and services;
  • 75 percent said they wanted to be near their job;
  • 66 percent chose proximity to highly rated schools;
  • 61 percent noted they wanted to be close to extended family;
  • 61 percent said they preferred having lots of open space nearby;
  • 51 percent cited the importance of a lively neighborhood with restaurants and nightlife;
  • 45 percent wanted accessibility to public transportation;
  • 36 percent said being near recreational venues like golf was important;
  • 36 percent preferred being close to galleries, museums and theaters;

According to a recent survey from the National Association of Realtors, seven out of 10 renters say owning a home is a top priority.

If first time homebuyers are trying to decide whether buying a home is the right decision for them, there are a couple of things they should consider.

At or near the top of every potential homebuyer’s mind is whether or not they can afford to buy a home right now. Buying a home remains a sound financial decision for those with documented income and a good credit history, and a steady income can provide a strong backbone for the initial down payment and future mortgage payments.

Also, potential buyers should consider what their other options are and make a cost comparison. For renters, calculating month-to-month housing expenses is as easy as inquiring about the monthly rent and average utilities. The calculation gets a bit more complicated when considering the monthly cost of owning a home.

A real estate professional and a mortgage broker can help a first-time buyer understand the range of financial considerations including annual property taxes.

While buying a home today is a great value compared to renting, there are a number of additional costs that come with homeownership. All buyers need to be aware of these expenses and to incorporate those costs into a budget.

Some of these expenses can be planned for in advance, while others may require homeowners to set aside funds each month to cover their needs. Here are a few important ones to keep in mind:

Furniture
Homes can appear smaller than they actually are when individuals are visiting an open house. This is primarily because the house is full of furniture, accent pieces and accessories. But when first-time homeowners relocate from a one or two-bedroom apartment to a home, they may find that they don’t have enough furniture to fill the place. Owners can keep their costs low by picking up accent pieces here and there, rather than all at once. In addition, purchasing furniture from warehouse factories, collecting trinkets and accessories from yard sales and shopping for used items online can help buyers find pieces that appeal to their tastes without breaking the bank.

Property insurance
New homeowners will want to protect their assets by providing sufficient insurance coverage. It’s crucial to shop around for an affordable plan that adequately covers all of a homeowner’s needs. Insurance experts urge owners to choose a policy that covers rebuilding costs, rather than the initial purchase price or value of their home. In addition, homeowners should read the policy carefully to make a determination about purchasing additional coverage for disasters or scenarios their standard policy may not cover.

Maintenance
Properly maintaining a home, such as cleaning the roof, ensuring the wiring and structure is sound and replacing appliances can be expensive over the years. It is important to realize that maintenance can be financially rewarding in the long run, as it may help avoid structural, water and electrical damage.

Utility Bills
The costs of electric bills, water, heat and air conditioning can run significantly higher in a home than an apartment. It may take homeowners some time to determine how often to actually run the heating and air conditioning and get into the practice of turning off lights and appliances when they are not in use to keep utility costs low.

Buying your first home can be an exciting endeavor, but it’s a big step and thus first-timers will have lots of questions. That’s where I can help as a professional Realtor. Don’t hesitate to contact me even before you’re ready to buy a home. I can answer questions about the process and help new buyers find that perfect starter home when they’re ready to move forward.

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

 

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