Real Estate Sales Tax

Very Few Will Pay 3.8 Percent “Sales Tax” on Homes
Despite misinformation circulating, only top 2 percent of population will be subject to tax

A big piece of legislation like the health care reform act understandably sparks a lot of questions. The massive law, officially known as the Patient Protection and Affordable Care Act, was signed into law by President Obama in March but it will take some time for the American public to understand the nature of the changes.

The law includes provisions about how the government will pay for health care services, one of which is a “sales tax” on real estate. This issue has caused some concern among real estate professionals and consumers alike, and it’s important to understand that, while this tax does exist, it’s unlikely to affect a wide portion of your clients. In fact, The Tax Foundation estimates that only the top-earning two percent of families in this country are likely to be impacted at all.

In short, information is circulating that homeowners will face a 3.8 percent tax on the profit they may earn when selling their homes. The reality is this:


* The 3.8 percent tax on profits from the sale of investments, which includes real estate, applies only to individuals who make more than $200,000 per year, or married couples filing jointly who earn more than $250,000 per year.
* For those who make more than the cut-off, the tax won’t be applied to the first $250,000 in profit from the sale of a personal residence—or $500,000 if a married couple sells their home.
* The exclusion for the first $250,000 in profit (or $500,000 for a married couple) does not, however, apply to vacation homes or rental properties. Those properties—only for those who exceed the income limitations—will be subject to the tax.
* This new rule does not take effect until January 1, 2013.


This blog at Factcheck.org by Brooks Jackson contains a lot of information that clarifies the 3.8 percent real estate tax situation. In it, the author quotes William Ahern of the Tax Foundation: “Some home sales would see a tax increase under this bill, but it would have to be a second home or principal residence generating [a gain of] more than $250,000 ($500,000 for a couple).”

I encourage you to arm yourself with these details as concerns from sellers pop up. There are several resources available to you and your clients, including some clarification from the National Association of Realtors.

Everything we do begins with a real estate transaction and a professional
Sales Associate and we recognize and celebrate that fact.
Courtesy: Jeff Detwiler/Long & Foster

Multiple offers on a Town Home in Germantown

The seller was great in listening to suggestions on getting the property ready for the market and then taking my advice on price suggestion. The property was on the market one day and received 2 offers. Three other people asked for disclosures but decided not to write because they didn't want to compete.
The market is always good for a property priced right to sell.

Short Sales - do the banks know what is going on with these properties?

I finally have an approval on a short sale contract I wrote back in August of 2009. Wow, what a long time to wait for a first-time home-buyer? Two mortgages to get approved. I'm happy the buyer wanted to wait for this process. I have another short sale listing with BOA and everything have been completed and waiting for an approval. No one at the bank is returning calls or emails. When I call, they're going to escalate the process. Well I've called several times and each time they've escalated and still nothing. I have a buyer who is waiting patiently but what happens when the buyer decides they don't want to wait and back out of the contract. Well what happens is the process with the bank starts all over again with another contract. There has got to be a better way for these banks to get these approvals in a timely manner. Meanwhile properties are sitting vacant which in reality will lessen the value even more. Mold is setting in everywhere. So the banks were the problem with lending to anyone basically. Now they are the problem again because the properties are going down even more in value than the regular depreciation because the properties are sitting vacant. Some of them even need to be gutted with only the shell left. Then what price will a buyer pay for a property that has to be gutted? Or completely filled with mold?

Existing Home Sales

Existing-home sales, increased 7.6 percent to a seasonally adjusted annual rate of 5.77 million units in April from an upwardly revised 5.36 million in March, and are 22.8 percent higher than the 4.70 million-unit pace in April 2009.

pameladubois.com

New Tax Proposals for Real Estate

Congress is considering new tax proposals that would place additional burdens on owners and investors in residential and commercial real estate.

The real estate industry is still very fragile and likely to remain so. In better times, the real estate industry would be a dynamic engine of job creation. Any new tax burdens on real estate owners will impair and delay further recovery. These proposals are ill-advised, inopportune and potentially destructive. Please take action today to tell Congress "No New Real Estate Tax Burdens".

Re-insurance and loan program to help stabilize insurance rates

H.R. 2555: "Homeowners' Defense Act" (Klein, D-FL) would provide for a federal reinsurance and loan guarantee program to help stabilize insurance rates for states that implement mitigation and building code programs and meet stringent credit-risk requirements. Without stable funding alternatives, states must maintain artificially inflated rates to hedge against risk in an increasingly volatile global reinsurance market.

www.pameladubois.com

Selling your home in today's market

The National Association of Realtors suggests that your first course of action should be removing clutter. The reasoning behind this is simple. Clutter distracts the mind and it distracts the imagination. A potential buyer needs to be able to see themselves and their own style in your home.

By banishing disorder and welcoming in neatness you can give your house an advantage over any competition who is lesser prepared.

2. After decluttering, the next step is to clean. In the same sense that decluttering is removing "you" from the potential home of another, cleaning is removing your grimy mark. Have carpets cleaned, wax the floors, and remove any odors of pets or smoking.

3. Luxurious bathrooms are a must. A bathroom that is clean and full of comfort is appealing to most every buyer. Arrange new towels and rugs, as well as burn fresh smelling candles. Consider adding rich decor, such as paintings.

4. Windows that shine. We can become desensitized to the finer details of our home, but buyers will hone in on each and every imperfection. Be sure that during your cleaning and decluttering, you don't forget to wash your windows. This way buyers will be able to focus their attentions on the beautiful grounds of your property, as opposed to the spots on the glass.

5. Let there by light. Burned out bulbs can make rooms look dark and dingy. Consider buying eco-friendly fluorescent or LED lights for use in your home.

6. Minor repairs are important. There are buyers who are turned off by even minor repairs. They see that loose cabinet door or that warped deck board as a two-fold evil. Either the house has been poorly cared for with bigger repairs waiting for discovery under the surface, or that the home may be too much work for them.

7. Don't neglect your yard. For many buyers, a yard is an extension of the home. Be sure that for each showing, your yard is freshly mowed and any debris, trash, or clutter (toys, tools, etc) are put away. A great way to make flower beds appear neat and well tended is to add mulch. Clean off sidewalks with a quick powerwash.

8. Add punches of seasonal color. Even if you aren't a garden guru, you can still plant low maintenance flowers in beds and pots. Some examples of low maintenance flowering plants are: petunias, pansies, and vincas.

9. A petless home. We all love our pets, sometimes like they're our own children. But they should be safely at a friend's house or kennel during showings. While you're at it, take your children and yourself out of the home during the showing as well!

10. Lock up your valuables. It would be nice to think that no potential buyer would steal from your home, but it could happen. Be sure that anything easily removed is locked away for safe keeping. And be sure that your real estate agent gets anyone's contact information before they are allowed into your home.

Provided by NAR.