How the Government Shut Down Could Effect the Real Estate Market

It’s not totally cut and dry on the government shutdown and it’s effects on the real estate market, but hopefully it will be resolved quickly. The last shut down occurred in 1997 and lasted 21 days. A long term shutdown would potentially hurt the real estate market because the feds would cut federal expenditures and interest rates could spike. Most believe the impact will hit the stock market as we have seen the last few days.

Owners who are selling their homes and home buyers should have minimal impact according to most experts unless the shut down lasts long term. Any buyers should contact their current lender to gauge their view on the process and ensure their loan can proceed as normal. Likewise, sellers can visit with their real estate agents so they can be in communication with the other brokers.

Let’s all hope for the best!

The Big Move

The Big Move

So It’s time to move and you are overwhelmed with what to do first. Don’t worry, I have some great tips and suggestions to help with this crazy time.

I would suggest taking the time to make a list and go through each room 1 by 1 in your home and figuring out what you want to keep and what you want to get rid of. Chances are you have many pieces that may not work in your new place. Start taking measurements, and pictures, and see if you can return to measure the new place you are moving into. This will help you place each item your keeping just in the right spot in the new home you’re moving into. Next give unwanted items to friends, goodwill, a cancer center, or place on Craigslist to make a little extra money for the move. Make sure you start looking on Craigslist too for free boxes, wrapping paper and bubble wrap. There are always people coming and going and they want an easy way to get rid of their boxes. Many times, they place them on the curb or street and they are free for the taking. This is a great way to recycle and save money at the same time. Another great way to get boxes, is to call your local grocery store and they will save them for you if you call ahead. Then it’s time to start packing. Most of us have a friend or 2 that will offer to help. Make a great lunch for them, put on some great tunes and start packing away. I know in many instances some of us don’t have time to plan. Do what you can and try to make sure to take some time for yourself to go on a small walk in the am or pm to decompress. This will help give you clarity and perhaps some more ideas for the new place! Happy moving!

New 3.8% Real Estate Tax in 2013

There has been much talk about the new 3.8% real estate tax coming in 2013 and how it will affect investors and owners of real estate. We manage property for many investors so I wanted to show a recent article put out by the National Association of Realtors. (Washington Report)

Learn the most important takeaways for REALTORS® when it comes to the 3.8% tax that’s part of health care reform:
1. When you add up all of your income from every possible source, and that total is less than $200,000 ($250,000 on a joint tax return), you will not be subject to this tax.
2. The 3.8% tax will never be collected as a transfer tax on real estate of any type, so you’ll never pay this tax at the time that you purchase a home or other investment property.
3. You’ll never pay this tax at settlement when you sell your home or investment property. Any capital gain you realize at settlement is just one component of that year’s gross income.
4. If you sell your principal residence, you will still receive the full benefit of the $250,000 (single tax return)/$500,000 (married filing joint tax return) exclusion on the sale of that home. If your capital gain is greater than these amounts, then you will include any gain above these amounts as income on your Form 1040 tax return. Even then, if your total income (including this taxable portion of gain on your residence) is less than the $200,000/$250,000 amounts, you will not pay this tax. If your total income is more than these amounts, a formula will protect some portion of your investment.
5. The tax applies to other types of investment income, not just real estate. If your income is more than the $200,000/$250,000 amount, then the tax formula will be applied to capital gains, interest income, dividend income and net rents (i.e., rents after expenses).
6. The tax goes into effect in 2013. If you have investment income in 2013, you won’t pay the 3.8% tax until you file your 2013 Form 1040 tax return in 2014. The 3.8% tax for any later year will be paid in the following calendar year when the tax returns are filed.
7. In any particular year, if you have no income from capital gains, rents, interest or dividends, you’ll never pay this tax, even if you have millions of dollars of other types of income.
8. The formula that determines the amount of 3.8% tax due will always protect $200,000 ($250,000 on a joint return) of your income from any burden of the 3.8% tax. For example, if you are single and have a total of $201,000 income, the 3.8% tax would never be imposed on more than $1,000.
9. It’s true that investment income from rents on an investment property could be subject to the 3.8% tax. But: The only rental income that would be included in your gross income and therefore possibly subject to the tax is net rental income: gross rents minus expenses like depreciation, interest, property tax, maintenance and utilities.
10. The tax was enacted along with the health care legislation in 2010. It was added to the package just hours before the final vote and without review. NAR strongly opposed the tax at the time, and remains hopeful that it will not go into effect. The tax will no doubt be debated during the upcoming tax reform debates in 2013.

If you are looking to buy, sell, or need a property management company, please contact me at 512-423-069eight.