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Real Estate news

Tax Exchanging on a Vacation Home

by Arnie Levine on March 9, 2012

in Finance,Latest News,Real Estate news

Make sure it qualifies as an “investment property” under IRS §1031

If your client is selling a vacation home, it is important to know that it is possible to defer any capital gains tax associated with the disposition, if the vacation home qualifies as “investment” property – as defined by the Internal Revenue Service – and your client uses the proceeds to purchase other investment property using the exchange rules outlined in Internal Revenue Code 1031.Revenue Procedure 2008-16, effective March 10, 2008, provides a safe harbor for exchanges of vacation homes. By following this guidance, taxpayers can have a clear understanding of the circumstances under which the IRS will not challenge whether a vacation home will qualify as property “held for investment” under §1031.Vacation Home as Relinquished Property. For a vacation home to qualify as relinquished property, it must meet the following criteria:

  • It is owned by the taxpayer for at least 24 months immediately before the exchange (“qualifying use period”); and
    •  

  • Within the qualifying use period, in each of the two 12 month periods, (1) the taxpayer rents the dwelling unit at fair rental to another person for 14 days or more and (2) the taxpayer’s personal use of the dwelling unit does not exceed the greater of 14 days or 10 percent of the number of days during the 12 month period that the dwelling unit was rented at fair rental value.

    •  

The first 12 month period immediately preceding the exchange ends on the day before the exchange takes place (and begins 12 months prior to that day). The second 12 month period ends on the day before the first 12 month period begins (and begins 12 months prior to that day).

Vacation Home as Replacement Property. For a vacation home to qualify as replacement property, it must meet the following criteria:

  • It is owned by the taxpayer for at least 24 months immediately following the exchange (“qualifying use period”); and
    •  

  • Within the qualifying use period, in each of the two 12 month periods, (1) the taxpayer rents the dwelling unit to another person at fair rental for 14 days or more and (2) the taxpayer’s personal use of the dwelling unit does not exceed the greater of 14 days or 10 percent of the number of days during the 12 month period that the dwelling unit was rented at fair rental.

    •  

The 12 month period immediately after the exchange begins on the day after the exchange takes place and the second 12 month period begins on the day after the first 12 month period ends.

Personal use is defined broadly. Use by the taxpayer, or other person having an interest in the dwelling unit and any family member[1] will be considered “personal use” by the taxpayer. Also, any arrangement whereby fair market rent is not paid will be considered “personal use” by the taxpayer. Notwithstanding the foregoing, use by family members will not be considered “personal use” by the taxpayer only if the dwelling unit is rented at fair market rent and the family member uses it as his principal residence.
Fair rental is based upon all of the facts and circumstances that exist when the rental agreement is entered into. All rights and obligations of the rental agreement are taken into account.

Note special rule for replacement property. If the taxpayer files a return reporting a transaction under §1031 based on the expectation that the dwelling unit will meet the qualifying use standards and subsequently determines that the dwelling unit does not meet the qualifying use standards, the taxpayer, if necessary, should file an amended return.

Exchanges of vacation homes outside the Rev. Proc. 2008-16 safe harbor. An exchange of a vacation home may still qualify under §1031 even though it falls outside the parameters of Rev. Proc. 2008-16. Any such circumstance will be subject to greater scrutiny and therefore should be carefully planned and reviewed by the taxpayer’s tax advisor.

Realtors are not tax attorneys or accountants. We do not give legal or tax advice, please, always seek the advice of your tax attorney/accountant.

Is San Diego Real Estate Turning into a Seller’s Market?

by Arnie Levine on March 2, 2012

in Current Affairs,Real Estate news,San Diego Foreclosure news,San Diego Investment Properties,San Diego Real Estate,San Diego Short Sales

It seems like the San Diego real estate market has been a buyers’ market since the crash the end of 2007. With low interest rates, plenty of inventory, and low housing prices, buyers have been in control for quite some time because they’ve had their pick of available properties and motivated sellers. With thousands in foreclosure or short selling, it seems as if San Diego real estate inventory would continue to go through the roof, leaving the market wide open for buyers and a tough go for sellers.

In a previous blog Feb. 4, 2012 I wrote about San Diego Housing Inventories dropped drastically, I mentioned the previous average number of active homes in all of San Diego County real estate MLS (multiple listing service) was 11,000 to 12,000 since the end of 2007.

The current number of active homes in all of San Diego County just dropped again.

Date # of Active homes and condos for sale
Mar 1. 2012 7333
Feb. 4, 2012 7,879
Dec. 2011 9,161
2007-2011 Average of 11,000-12,000

 Typically as the inventories in San Diego decrease below 8,000 the market goes from a buyers market to a sellers market. The national market trend has a similar trend. Good deals in this market can also mean multiple offers.

If you’re considering selling your San Diego property, however, I’ve got some great news! Conditions are rapidly changing to favor sellers. How, you ask? The answer is really quite simple.
 
Foreclosures are being released onto the market quite slowly and being snapped up by bargain hunters. Bargain hunters are bidding early on San Diego short sales in search of a great bargain, as well, so those properties are disappearing almost before they hit the market. At the same time, banks are holding onto “shadow inventory” in order to keep their stocks from becoming devalued, disorganization, and political pressure. House flipping has slowed because profit margins are so thin, meaning there are fewer flipped properties on the market, as well. In fact, many who would have previously flipped real estate may be holding onto it and renting until the market picks up or getting out of the game altogether.
 
Because it’s an election year and nobody wants to be the one forcing people out of their homes, the government is pressuring banks to modify loans for delinquent homeowners rather than pushing a short sale or foreclosure. Likewise, homeowners facing foreclosure have gotten much more savvy about gaming the system, and some are managing to stay in their homes rent-free for months or years before the bank finally forecloses or they are forced to short sell. All of these factors create a perfect storm, where inventory finds its way onto the market very slowly – a situation that is quite different from the flooded markets of 2008-2011.
 
Inventory is only half of the picture, however. At the same time that listings are slowing, more motivated buyers are entering into the picture due to record low 30-year fixed interest rates (below 4 percent!), record low home prices, and an uptick in employment. The result of all of this is an influx of available cash to purchase San Diego homes with decreasing availability of properties for sale.

More questions we can help you, at County Properties, 25 years of brokerage experience, trust and a Member of the local Better Business Bureau!

If you have equity in your home, we will sell your home and get top dollar in this challenging market with our  Internet Marketing and Sales Program or click Want to know what your home is worth? .

 If you do not have enough equity, and you must sell your property as a short sale we have the expertise to do so also, go to www.ShortSaleRealtors4U.com

New Pro-Property Search. We will setup a customized search for you by our professional REALTOR® Team. Sit back relax and shop at home! We will make changes to your Pro-Property Search any time you like, just let us know. Have fun!

Want to know what your home is worth?

Commercial Real Estate Vacancy Rates Improving Rents Firming

by Arnie Levine on March 2, 2012

in Commercial Real Estate,Finance,Latest News,Real Estate news,San Diego Investment Properties

According to the National Association of Realtors® quarterly commercial real estate forecast, all of the major commercial real estate sectors are seeing improved fundamentals, but multifamily housing is becoming a landlord’s market commanding bigger rent increases. These trends also are confirmed in NAR’s recent quarterly Commercial Real Estate Market Survey.

Lawrence Yun, NAR chief economist, said vacancy rates are improving in all of the major commercial real estate sectors. “Sustained job creation is benefiting commercial real estate sectors by increasing demand for space,” he said. “Vacancy rates are steadily falling. Leasing is on the rise and rents are showing signs of strengthening, especially in the apartment market where rents are rising the fastest.”

NAR forecasts commercial vacancy rates over the next year to decline 0.4 percentage point in the office sector, 0.8 point in industrial real estate, 0.9 point in the retail sector and 0.2 percentage point in the multifamily rental market.

“Household formation appears to be rising from pent-up demand,” Yun said. “The tight apartment market should encourage more apartment construction. Otherwise, rent increases could further accelerate in the near-to-intermediate term.”

The Society of Industrial and Office Realtors® shows a notable gain in its SIOR Commercial Real Estate Index, an attitudinal survey of 297 local market experts.1

The SIOR index, measuring the impact of 10 variables, jumped 8.3 percentage points to 63.8 in the fourth quarter, following a gain of 0.6 percentage point in the third quarter. The index remains well below the level of 100 that represents a balanced marketplace, which was last seen in the third quarter of 2007.

Most market indicators posted advances in the fourth quarter, but 71 percent of respondents said leasing activity is below historic levels in their market – an improvement from 83 percent in the third quarter. Only 29 percent report there is ample sublease space available.

Office and industrial space remains a tenant’s market – 87 percent of participants feel that tenants are getting a range of benefits ranging from moderate concessions to deep rent discounts.

Construction activity is still low, with 95 percent of experts reporting it is below normal, and 83 percent said it is a buyers’ market for development acquisitions; prices are below construction costs in 78 percent of markets.

Participants are broadly expecting stronger conditions for the current quarter, with two out of three expecting market improvement.

NAR’s latest Commercial Real Estate Outlook2 offers projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas were provided by REIS, Inc.,3 a source of commercial real estate performance information.

Office Markets
Vacancy rates in the office sector are projected to fall from 16.4 percent in the current quarter to 16.0 percent in the first quarter of 2013.

The markets with the lowest office vacancy rates presently are Washington, D.C., with a vacancy rate of 9.5 percent; New York City, at 10.0 percent; and New Orleans, 12.4 percent.

After rising 1.6 percent in 2011, office rents should increase another 1.9 percent this year and 2.4 percent in 2013. Net absorption of office space in the U.S., which includes the leasing of new space coming on the market as well as space in existing properties, is forecast at 20.1 million square feet in 2012 and 28.1 million next year.

Industrial Markets
Industrial vacancy rates are likely to decline from 11.7 percent in the first quarter of this year to 10.9 percent in the first quarter of 2013.

The areas with the lowest industrial vacancy rates currently are Orange County, Calif., with a vacancy rate of 4.8 percent; Los Angeles, 4.9 percent; and Miami at 7.6 percent.

Annual industrial rent is expected to rise 1.8 percent in 2012 and 2.3 percent next year. Net absorption of industrial space nationally is seen at 40.6 million square feet this year and 57.7 million in 2013.

Retail Markets
Retail vacancy rates are forecast to decline from 11.9 percent in the current quarter to 11.0 percent in the first quarter of 2013.

Presently, markets with the lowest retail vacancy rates include San Francisco, 3.6 percent; Fairfield County, Conn., at 5.1 percent; and Long Island, N.Y., at 5.4 percent.

Average retail rent should rise 0.7 percent this year and 1.2 percent in 2013. Net absorption of retail space is projected at 9.9 million square feet this year and 23.9 million in 2013.

Multifamily Markets
The apartment rental market – multifamily housing – is likely to see vacancy rates drop from 4.7 percent in the first quarter to 4.5 percent in the first quarter of 2013; multifamily vacancy rates below 5 percent generally are considered a landlord’s market with demand justifying higher rents.

Areas with the lowest multifamily vacancy rates currently are New York City, 1.8 percent; Minneapolis and Portland, Ore., each at 2.5 percent; and San Jose, Calif., at 2.7 percent.

After rising 2.2 percent last year, average apartment rent is expected to increase 3.8 percent in 2012 and another 4.0 percent next year. Multifamily net absorption is forecast at 209,900 units this year and 223,600 in 2013.

The Commercial Real Estate Outlook is published by the NAR Research Division for the commercial community. NAR’s Commercial Division, formed in 1990, provides targeted products and services to meet the needs of the commercial market and constituency within NAR.

More questions we can help you, at County Properties, 25 years of brokerage experience, trust and a Member of the local Better Business Bureau! Want to know what your home is worth? Click here for a free market evaluation !

Commercial Multi Unit Properties We will setup a customized search for you by our professional REALTOR® Team. Sit back relax and shop at home! We will make changes to your Pro-Property Search any time you like, just let us know. Have fun!

By the way…if you know of someone who would appreciate the level of service in real estate we provide, please call me or have them go to www.CountyProperties.net and I’ll be happy to follow up and take great care of them.

Homeowners should be aware of these tax breaks

by Arnie Levine on March 2, 2012

in Finance,Latest News,Real Estate news

  • Homeowners should be aware of these tax breaks that they may be eligible to receive.
  • Mortgage interest: Homeowners are generally entitled to reduce their taxable income by the amount of mortgage interest they pay, as long as they itemize deductions on their tax returns. 
  • Private mortgage insurance: Homeowners who are paying PMI likely will be able to fully deduct the amount, as long as their adjusted gross income is $100,000 or less ($50,000 for married taxpayers filing separately).  Borrowers with incomes above $100,000 may qualify for a partial deduction.
  • Energy-efficient home improvements: If windows, doors, or skylights that meet the requirements of the federal Energy Star program were installed in 2011, homeowners can get a tax credit equal to 10 percent of the product’s costs.
  • Points: The charges a borrower paid in points to get a mortgage are generally deductible if it was a first mortgage on the property.  In the case of a refinance loan, all or some of the point charges might be deductible, but it gets complicated.
  • Property taxes: The amount paid in property taxes is deductible as long as it is based on the assessed value of the property.  If the mortgage company collects money for property taxes, the amount actually paid should be on the 1098 form lenders send out each January.

Please seek legal or tax advise from a professional Tax Consultant or CPA to confirm any of the information provided.

More questions we can help you, at County Properties, 25 years of brokerage experience, trust and a Member of the local Better Business Bureau!

If you have equity in your home, we will sell your home and get top dollar in this challenging market with our  Internet Marketing and Sales Program or click Want to know what your home is worth? .

 If you do not have enough equity, and you must sell your property as a short sale we have the expertise to do so also, go to www.ShortSaleRealtors4U.com

New Pro-Property Search. We will setup a customized search for you by our professional REALTOR® Team. Sit back relax and shop at home! We will make changes to your Pro-Property Search any time you like, just let us know. Have fun!

Want to know what your home is worth?

NAR Video: Pending home sales hit 21-month high

by Arnie Levine on March 2, 2012

in Finance,Latest News,Real Estate news,San Diego Real Estate

 
ForSaleHouseYellowPhoto NAR Video: Pending home sales hit 21 month highPending home sales rose to their highest level in 21 months in January, according to the National Association of Realtors® , as agents signed more contracts for existing homes.

More questions we can help you, at County Properties, 25 years of brokerage experience, trust and a Member of the local Better Business Bureau! Want to know what your home is worth?

If you have equity in your home, we will sell your home and get top dollar in this challenging market with our  Internet Marketing and Sales Program. If you do not have enough equity, and you must sell your property as a short sale we have the expertise to do so also, go to www.ShortSaleRealtors4U.com

New Pro-Property Search. We will setup a customized search for you by our professional REALTOR® Team. Sit back relax and shop at home! We will make changes to your Pro-Property Search any time you like, just let us know. Have fun!

Housing Expected to Add to GDP in 2012

by Arnie Levine on March 2, 2012

in Finance,Latest News,Real Estate news

housing GDP Housing Expected to Add to GDP in 2012 The 2012 outlook is improving modestly from a disappointing 2011. Economic growth picked up in the fourth quarter of 2011 to 2.8 percent and is expected to come in at 2.3 percent for 2012, up from 1.6 percent growth for all of last year, according to Fannie Mae’s  Economic & Strategic Research Group. However, the year-end growth rate was due largely to a positive swing in business inventory growth, which is not indicative of underlying consumer demand or the overall health of the economy. Nevertheless, consumer spending improved modestly and manufacturing and services activity expanded at a strong pace.

 Importantly, labor market conditions continued to improve with nonfarm payroll job growth increasing nearly 250,000 across many industries, including construction. The unemployment rate dropped to 8.3 percent, down from 8.5 percent the month prior, as the large increase in employment outweighed a growing number of people joining the workforce—indicating a genuine improvement in the labor market. If we continue to see this level of positive data, the Group notes, the labor market may become an upside determinant for an improved outlook.

Housing also showed signs of improvement late last year with existing home sales rising in December for the third consecutive month. Indicators point to some good pickup in construction of apartment buildings and modest pickup in single-family construction in some locations. Overall, housing is expected to add to gross domestic product (GDP) for the first time in seven years, albeit by a very modest amount. Near-term improvement in housing sales is expected to be quite modest due to the very low current level of sales and continued expected declines in home prices, which remain a challenge to the housing market.

“Risks to the forecast are more balanced between the upside and downside since our January forecast,” says Fannie Mae Chief Economist Doug Duncan. “The economy appears to be more resilient than in previous months, and should be less vulnerable to shocks, including any spillover from the European sovereign debt crisis. However, economic growth will remain constrained by various headwinds, such as a potential spike in oil prices due to tension in the Middle East; an expected decline in net exports from the global slowdown; and an expected increase in fiscal drag, including the fading of federal spending from the stimulus and a decline in defense spending for operations in Iraq and Afghanistan.”

County Properties, 25 years of brokerage experience, trust and a Member of the local Better Business Bureau! We offer free counseling in real estate regarding; home values and information on options of selling vs. Foreclosure.

Click here to get loan informationbefore the rates go up. To get started on viewing homes, condos, investment properties, pre-foreclosures, bank owned foreclosures (REO’s) or thinking of selling your property, please contact me today for free counseling at (619) 540-5811.

New Pro-Property Search. We will setup a customized search for you by our professional REALTOR® Team. Sit back relax and shop at home! We will make changes to your Pro-Property Search any time you like, just let us know. Have fun!

By the way…if you know of someone who would appreciate the level of service in real estate we provide, please call me or have them go to www.CountyProperties.net/ and I’ll be happy to follow up and take great care of them.

Fannie REO inventory declines 27%

by Arnie Levine on March 2, 2012

in Latest News,Real Estate news,San Diego Foreclosure news,San Diego Investment Properties

BankOwnedRedDoorPhoto 0 Fannie REO inventory declines 27%

4 questions to determine if Keep Your Home California could work for you

by Arnie Levine on February 26, 2012

in loan modification,Real Estate news

Four easy-to-answer questions will determine if Keep Your Home California could work for you. And we’re not talking about fingers-and-toes counting, mind-numbing questions.

  1. Do you own and occupy your home as your primary residence?
  2. Is your home in California?
  3. Is the current amount you owe on your first mortgage equal to or less than $729,750?
  4. Did you get your current mortgage on or before January 1, 2009?

Check the complete list –  at www.KeepYourHomeCalifornia.org/qualify.aspx.

Rather easy questions, huh? But how you answer could determine if you are eligible for Keep Your Home California, a state-run program with $2 billion from the U.S. Treasury’s Hardest Hit Fund.

Now, the four questions are just the beginning of the process, but a huge step. After answering the questions and getting the thumbs up, check if your mortgage servicer – such as Bank of America, Chase Bank or Wells Fargo — is participating in the program at http://www.keepyourhomecalifornia.org/participating.htm.

We can’t stress this enough, your mortgage servicer must be on the list. But if your mortgage servicer isn’t participating, don’t be discouraged, just check back in a few weeks. Mortgage servicers are added to the program almost every week. We have more than 50 participating servicers that cover about 90% of the mortgages held by California homeowners, a dramatic increase from when the program launched in February.

If your mortgage servicer is on the list, then we urge you to call the counseling center at 888-954-5337. A counselor will discuss the available mortgage assistance programs and learn more about your situation. Each homeowner and situation is different. In fact, some homeowners could be eligible for multiple programs and more assistance.

You can learn more about Keep Your Home California and the four programs at http://www.keepyourhomecalifornia.org/. We also encourage you to check the frequently asked questions page, which offers more details on Keep Your Home California.

Of course, just as when you bought your home, there is some paperwork involved, including financial information, with the program. But a representative will go over the details and the documents required.

Answering the four questions is just the beginning, but it opens the door to Keep Your Home California – and possibly save your home.

And you are not alone. More than 11,000 homeowners have benefited or are in the pipeline to receive funds from the state-run program, which will help about 90,000 families during the next several years.

If you do not have enough equity, and you must sell your property as a short sale we have the expertise to do so also and close escrow in 45-60 days or less. Learn more about mortgage relief options and how to take advantage of our FREE REALTOR (R)  CONSULTATION for loan modification and or selling .  or go to www.ShortSaleRealtors4U.com

More questions we can help you, at County Properties, 25 years of brokerage experience, trust and a Member of the local Better Business Bureau! Want to know what your home is worth? Click here for a free market evaluation !

By the way…if you know of someone who would appreciate the level of service in real estate we provide, please call me or have them go to www.CountyProperties.net and I’ll be happy to follow up and take great care of them.

Stop Foreclosure Now

Jobless claims at lowest level since 2008

by Arnie Levine on February 26, 2012

in Finance,Latest News,Real Estate news

The Labor Department said the seasonally adjusted figure of initial claims for the week ended Feb. 18 was 351,000 unchanged from the previous week, which was revised upward 3,000.

Analysts surveyed by Econoday expected 355,000 new jobless claims last week with a range of estimates between 330,000 and 363,000. Most economists believe initial claims lower than 400,000 indicate a strengthening employment situation. Claims have been lower than this threshold for most of the past four months.

The four-week moving average, which is considered a less volatile indicator than weekly claims, decreased by 7,000 claims to 359,000 from the prior week’s revised slightly 366,000.

The seasonally adjusted insured unemployment rate for the week ended Feb. 11 was unchanged at 2.7%, according to the Labor Department.

The total number of people receiving some sort of federal unemployment benefits for the week ended Feb. 4 fell to 7.5 million from 7.68 million the prior week.

County Properties, 25 years of brokerage experience, trust and a Member of the local Better Business Bureau! We offer free counseling in real estate regarding; home values and information on options of selling vs. Foreclosure.

Click here to get loan informationbefore the rates go up. To get started on viewing homes, condos, investment properties, pre-foreclosures, bank owned foreclosures (REO’s) or thinking of selling your property, please contact me today for free counseling at (619) 540-5811.

New Pro-Property Search. We will setup a customized search for you by our professional REALTOR® Team. Sit back relax and shop at home! We will make changes to your Pro-Property Search any time you like, just let us know. Have fun!

By the way…if you know of someone who would appreciate the level of service in real estate we provide, please call me or have them go to www.CountyProperties.net/ and I’ll be happy to follow up and take great care of them.

Proposed bill for home loan principal reduction in bankruptcy courts

by Arnie Levine on February 26, 2012

in Latest News,loan modification,Real Estate news,Short Sales

CapitolDomeCloseupPhoto Proposed bill for home loan principal reduction in bankruptcy courts

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