Wednesday, September 9, 2009
REAL ESTATE TAX APPEAL DEADLINE
There are only 10 Days left to register your tax appeal petition. If you believe your Taxable Assessed Value is to high you must submit Petition at your Local County Clerks office on or before the 18th of September.
Friday, July 24, 2009
MORTGAGE DISCLOSURE INFORMATION ACT
There are recent changes in the federal Truth in Lending Act regulations which will have an impact on mortgage processes. It will require a fundamental change in how lenders finalize loan terms for the borrower prior to closing. Changes at the closing table could require the borrower to reschedule the closing date if a revised Truth In Lending statement is needed.
Summary
The rules for the Mortgage Disclosure Improvement Act were finalized Friday, May 8th and it is applicable to all mortgage lenders (federally chartered or state licensed). For applications taken as of July 30, 2009, new requirements about the delivery and the accuracy disclosures will apply. One of the new requirements is that the borrower must be provided with an accurate APR (annual percentage rate) disclosure at least three business days prior to closing. It must be in their hands three business days prior to closing and they are permitted to close on the 3rd business day after receiving it or later
An easy way to remember new rule is 3/7/3. This means
3 days after application – An initial truth in lending statement must be provided no later than 3 business days after receipt of the application. Some lenders such as Coldwell Banker Mortgage have a current process which generates an auto-compliance package which complies with this requirement so no changes are needed.
7 business days after initial application – Waiting period - the borrower is not permitted to close until at least seven business days have passed since the TIL (Truth in Lending statement) was placed in the mail or provided to the borrower.
3 business days prior to closing – Waiting period - The borrower must receive an accurate APR on their TIL at least 3 business days prior to closing. If it was provided before that period of time because the loan terms were locked in earlier in the process, no new TIL is required if there is no change to the APR or the change is less than 1/8th (¼ for construction loans).
If the final loan terms cause the TIL APR to be understated by more than 1/8th, a revised TIL with an accurate APR must be provided to the borrower so they receive it at least three business days prior to closing. It must be in their hands at that time and they may close on the 3rd business day after it.
Some issues to consider and address:
New timing requirements will limit rush closings and could delay closings.
Closing table changes and redraws may result in having to reschedule the closing date.
Summary
The rules for the Mortgage Disclosure Improvement Act were finalized Friday, May 8th and it is applicable to all mortgage lenders (federally chartered or state licensed). For applications taken as of July 30, 2009, new requirements about the delivery and the accuracy disclosures will apply. One of the new requirements is that the borrower must be provided with an accurate APR (annual percentage rate) disclosure at least three business days prior to closing. It must be in their hands three business days prior to closing and they are permitted to close on the 3rd business day after receiving it or later
An easy way to remember new rule is 3/7/3. This means
3 days after application – An initial truth in lending statement must be provided no later than 3 business days after receipt of the application. Some lenders such as Coldwell Banker Mortgage have a current process which generates an auto-compliance package which complies with this requirement so no changes are needed.
7 business days after initial application – Waiting period - the borrower is not permitted to close until at least seven business days have passed since the TIL (Truth in Lending statement) was placed in the mail or provided to the borrower.
3 business days prior to closing – Waiting period - The borrower must receive an accurate APR on their TIL at least 3 business days prior to closing. If it was provided before that period of time because the loan terms were locked in earlier in the process, no new TIL is required if there is no change to the APR or the change is less than 1/8th (¼ for construction loans).
If the final loan terms cause the TIL APR to be understated by more than 1/8th, a revised TIL with an accurate APR must be provided to the borrower so they receive it at least three business days prior to closing. It must be in their hands at that time and they may close on the 3rd business day after it.
Some issues to consider and address:
New timing requirements will limit rush closings and could delay closings.
Closing table changes and redraws may result in having to reschedule the closing date.
Wednesday, July 22, 2009
Coconut Grove Pioneers; KIRK MUNROE
Coconut Grove, Florida had many interesting pioneers. Among the most influential was KIRK MUNROE who came up with the name for his neighbor's new estate; "Vizcaya" and suggesred its emblem; the seahorse. Kirk Munroe was born on September 15, 1850 in a log cabin near Prairie du Chien, Wisconsin. His youngest years were spent on the frontier and then his family moved to Cambridge, Massachusetts where he attended school until he was sixteen. Unsure of what he wanted to do in life, but loving the outdoors, he secured a job as a surveyor's helper on an expedition that crossed the great southwest from Kansas to California to find a route for the first transcontinental railroad. During this time he claimed he helped fight Indians and in one scrimmage he was wounded while eight of his comrades were killed. He met such famous characters of the old west as Custer, Wild Bill Hickok, and Kit Carson.
1876 - Becomes reporter for the New York Sun newspaper
1879 - Becomes the first editor of Harper's Young People magazine.
1879 - Commodore of New York Canoe Club for five years. He was one of the founders of the American Canoe Association in 1880. It still exists and in 2002 had 50,000 members.
1880 May 30 - A national organization of bicycle enthusiasts was founded by Kirk Munroe and a friend. Originally called the League of American Wheelmen, in 1994 it changed its name to the League of American Bicyclists. Munroe held the No. 1 ticket.
1881 - Resigns from Harper's. In future years he returns to the magazine during the summers as a substitute editor.
1881-82 - Takes a winter trip to Florida with his sailing canoe Psyche. Circles most of the state in a 1600 mile cruise.
1883 September 15 - Marries Mary Barr. They take a three month cruise from St. Augustine to Lake Worth.
1885 - They buy a property on Lake Worth.
1885-86 - Munroe and Mary cruise the great Florida reef, ending up in Biscayne Bay.
1886 - They buy a property on Biscayne Bay in Coconut Grove which they name "Scrububs". Later they build the first tennis court in Dade County and organize the first baseball team.
1886 - Wakulla, his first book is published.
1887 February 15 - Munroe becomes the co-founder of Biscayne Bay Yacht Club at a meeting at Scrububs along with Ralph Munroe. Kirk remains its secretary for thirty-five years. The Biscayne Bay Yacht Club still exists and is the oldest organization in Miami-Dade County.
1890-91 - Cruises from Coconut Grove to the Ten Thousand Islands in Allapata, his thirty-five foot sharpie-ketch sailboat.
1893 - Paul Ransom comes to Coconut Grove with a letter of introduction to Kirk Munroe. A week later Munroe sells Ransom the seven and one-half acre property next to Scrububs. This becomes in 1896 the Pine Knot Camp and eventually Ransom-Everglades School.
1893 - Invited to the World's Fair in Chicago where he is voted most popular author by ten thousand children.
1893 - Trip to Alaska four years before the gold rush.
1895 June 15 - The Coconut Grove Library was founded by the members of the "Pine Needle Club". Mary Munroe was the president of this club. In 1901 Kirk Munroe erected a library building on land donated by Ralph Munroe. For many years Kirk Munroe was the President of the Coconut Grove Library Association.
1896 - Munroe is authorized by Ransom to begin building the school. Munroe signs a contract in January with a contractor to begin construction. Munroe and his wife take a trip to Key West. He visits the warship Maine.
1899 - Cruises the Canadian coast from Newfoundland to Hudson's Bay.
1903 - Takes a world tour which includes North Africa, Tibet, Burma, Java, Borneo, China, Korea and Japan. Sees the Russian battleships gathered in Port Arthur just prior to the great battle with the Japanese.
1903 - Returns home to the US - meets wife in San Francisco, together they tour the Canadian northwest
1904? - Travels to Central America, Mexico.
1905 - Last book published, For the Mikado.
1909 - Kirk celebrates his 59th birthday with Cree indians on a thousand mile trip through Canada.
1914 - In discussions with his neighbor, Munroe helps come up with the name of Deering's estate, "Viscaya" and its emblem, the sea horse.
1919 - Coconut Grove is incorporated as a town. One source says that Kirk Munroe ensures that the incorrect spelling "cocoanut" is not approved, but another source says this was done by his wife.
1919 - Sells "Scrububs". Buys a property elsewhere in Coconut Grove on a street called Leafy Way which he names "Kirkland House".
1922 - September. Mary dies.
1924 - Kirk marries Mrs. Mabel Stearns.
1926 - Stearns places him in the Florida Sanatarium in Orlando.
1930 - June 16th. Kirk Munroe dies at age 79. He is buried next to his beloved wife, Mary, at the Woodlawn Park Cemetery on S.W. 8th Street in Miami.
1876 - Becomes reporter for the New York Sun newspaper
1879 - Becomes the first editor of Harper's Young People magazine.
1879 - Commodore of New York Canoe Club for five years. He was one of the founders of the American Canoe Association in 1880. It still exists and in 2002 had 50,000 members.
1880 May 30 - A national organization of bicycle enthusiasts was founded by Kirk Munroe and a friend. Originally called the League of American Wheelmen, in 1994 it changed its name to the League of American Bicyclists. Munroe held the No. 1 ticket.
1881 - Resigns from Harper's. In future years he returns to the magazine during the summers as a substitute editor.
1881-82 - Takes a winter trip to Florida with his sailing canoe Psyche. Circles most of the state in a 1600 mile cruise.
1883 September 15 - Marries Mary Barr. They take a three month cruise from St. Augustine to Lake Worth.
1885 - They buy a property on Lake Worth.
1885-86 - Munroe and Mary cruise the great Florida reef, ending up in Biscayne Bay.
1886 - They buy a property on Biscayne Bay in Coconut Grove which they name "Scrububs". Later they build the first tennis court in Dade County and organize the first baseball team.
1886 - Wakulla, his first book is published.
1887 February 15 - Munroe becomes the co-founder of Biscayne Bay Yacht Club at a meeting at Scrububs along with Ralph Munroe. Kirk remains its secretary for thirty-five years. The Biscayne Bay Yacht Club still exists and is the oldest organization in Miami-Dade County.
1890-91 - Cruises from Coconut Grove to the Ten Thousand Islands in Allapata, his thirty-five foot sharpie-ketch sailboat.
1893 - Paul Ransom comes to Coconut Grove with a letter of introduction to Kirk Munroe. A week later Munroe sells Ransom the seven and one-half acre property next to Scrububs. This becomes in 1896 the Pine Knot Camp and eventually Ransom-Everglades School.
1893 - Invited to the World's Fair in Chicago where he is voted most popular author by ten thousand children.
1893 - Trip to Alaska four years before the gold rush.
1895 June 15 - The Coconut Grove Library was founded by the members of the "Pine Needle Club". Mary Munroe was the president of this club. In 1901 Kirk Munroe erected a library building on land donated by Ralph Munroe. For many years Kirk Munroe was the President of the Coconut Grove Library Association.
1896 - Munroe is authorized by Ransom to begin building the school. Munroe signs a contract in January with a contractor to begin construction. Munroe and his wife take a trip to Key West. He visits the warship Maine.
1899 - Cruises the Canadian coast from Newfoundland to Hudson's Bay.
1903 - Takes a world tour which includes North Africa, Tibet, Burma, Java, Borneo, China, Korea and Japan. Sees the Russian battleships gathered in Port Arthur just prior to the great battle with the Japanese.
1903 - Returns home to the US - meets wife in San Francisco, together they tour the Canadian northwest
1904? - Travels to Central America, Mexico.
1905 - Last book published, For the Mikado.
1909 - Kirk celebrates his 59th birthday with Cree indians on a thousand mile trip through Canada.
1914 - In discussions with his neighbor, Munroe helps come up with the name of Deering's estate, "Viscaya" and its emblem, the sea horse.
1919 - Coconut Grove is incorporated as a town. One source says that Kirk Munroe ensures that the incorrect spelling "cocoanut" is not approved, but another source says this was done by his wife.
1919 - Sells "Scrububs". Buys a property elsewhere in Coconut Grove on a street called Leafy Way which he names "Kirkland House".
1922 - September. Mary dies.
1924 - Kirk marries Mrs. Mabel Stearns.
1926 - Stearns places him in the Florida Sanatarium in Orlando.
1930 - June 16th. Kirk Munroe dies at age 79. He is buried next to his beloved wife, Mary, at the Woodlawn Park Cemetery on S.W. 8th Street in Miami.
Monday, June 22, 2009
Article from St. Petersberg Times:
Million-dollar homes hard to move in down economy
By James Thorner, Times Staff Writer In Print: Sunday, June 21, 2009
A particularly stubborn segment of the real estate market is the super-premium home. Examples include the 25,000-square-foot mansion in Avila, built by corporate raider Paul Bilzerian. It includes a full basketball gym, a racquetball court, a fitness room, a music room and a home theater. It is not on the market now, and was last under contract for $15 million about two years ago. Matt Geiger’s 26,000-square-foot, six-bedroom mansion in East Lake, at left, has a stocked lake and sits on 40 acres next to Crescent Oaks Country Club. Geiger also owns 60 acres of adjacent land. The house is now listed at $12.5 million. It had been for sale for more than $20 million.
From a bunkhouse-turned-sales office on the shores of Lake Thonotosassa, Steve Powell manages home sales at the millionaire enclave of Stonelake Ranch.
It's 98 rural home sites set serenely in rolling horse country 30 minutes east of downtown Tampa. Despite the 13,000- and 20,000-square-foot mansions taking shape at Stonelake, real estate isn't exactly rocking on Lake Thonotosassa.
Developers have trimmed prices as much as 30 percent, and sales have crumbled by about two-thirds the past couple of years. Powell spots fewer Mercedes and Lexuses rolling up the wooded, winding lanes of Stonelake.
"The fact is you're dealing with a more discriminating buyer," Powell said. "Although they may have the money, a lot of them are holding back."
What happens when big spenders with disposable income neither spend nor dispose? The area's high-end real estate market is finding out.
Sales of million-dollar-plus homes in Hillsborough and Pinellas counties plunged 42 percent from 2006 to 2008, from 554 to 321. This year, million-dollar transactions are even harder to find.
As of early June, the two counties had recorded about 70 sales in the million-plus category, the slowest pace in more than a decade. Sometimes the homes have sold, but price chopping knocked them out of the million-dollar club.
North of Tampa in Avila, more than 30 resales clog the listings. Popular with professional athletes and other "new money," Avila is taking it hard. At the top of the sale listings is gold dealer Mark Yaffe's $25 million mansion.
The down market is weighing on prices for condominiums on the St. Petersburg and Clearwater waterfronts, as well. It didn't help when financially distressed Opus Development announced hurried plans to auction luxury units in its new condo tower at 400 Beach Drive.
Several condos have sold this year at Clearwater's ritzy Sandpearl Resort, but prices are hundreds of thousands of dollars less than they were even a year ago.
In classic neighborhoods like Snell Isle in St. Petersburg, buyers demand substantial cuts before they bite. A new house at 851 Brightwaters Blvd., for example, was listed for $4.5 million but sold in May after being discounted to $3.4 million.
Some luxury builders who specialize in the million-dollar-plus market report peak-to-valley sales declines of 80 percent. Upscale builder Mark Maconi declared bankruptcy, and some of its competitors are adjusting to leaner times.
"The meat of our market is in the million-dollar price range — or was," said Charley Hannah of Tampa's Hannah Bartoletta Homes.
To be sure, recession-proof professionals and wealthy retirees are still scarfing up luxury real estate.
In Avila, Mariano Rivera, the New York Yankees' veteran relief pitcher, spent $8.9 million this year for a 9,200-square-foot mansion with a theater, billiard room, guest house and gated motor court with five-car garage. Teammate Derek Jeter is building a 30,875-square-foot home on Davis Islands.
Harold "Hal" Steinbrenner, Yankees executive and son of George Steinbrenner, plunked down $2 million in March for a waterfront house near West Shore Boulevard.
Former University of Florida quarterback Rex Grossman, late of the Chicago Bears, paid $1.7 million in February for a country spread northwest of Tampa.
Pinellas' largest sale this year was a $5.2 million, St. Pete Beach home sold to David Coterel. He's the former Ohio autoworker who won $314 million in the Powerball lottery in 2007.
But million-dollar homes are hardly an easy sell. The buying pool is narrow. House hunters are demanding. Financing is tough.
A particularly stubborn segment are super premium Taj Mahal homes. Examples include the 25,000-square-foot mansion in Avila built by ex-corporate raider Paul Bilzerian and the $19 million bachelor pad near Tarpon Springs owned by former NBA basketball player Matt Geiger. Both have languished.
"Baseball player Derek Jeter paid $7 million for the lot alone. No one's ever going to buy that house," said Ed Gunning, a Realtor who sells luxury homes with Smith & Associates. "Why would you buy someone else's house for $25 million? You'd build your own house. Those are monuments to yourself."
Another problem is appraisals. With so few sales against which to compare prices, banks are going with the lowest, to the chagrin of sellers and Realtors. Even in a market heavy with all-cash deals, many buyers still like to finance part of the purchase price.
Hannah has weathered another phenomenon: wealthy buyers who want the shirt off his back, and maybe the skin underneath for good measure.
Hannah faced the wrath of disappointed buyers when he listed a former $2 million model home in MiraBay, a Key West-style saltwater community in Apollo Beach.
Hannah chopped the price to $1.2 million, but the house hunter offered $700,000. That didn't even cover Hannah's land and construction costs.
"I can appreciate them being savvy buyers, but at some point reasonable is reasonable," the builder said. "The anger has caught me off guard. They'll call you names and fault your morality. I've been called stupid and crazy for not taking the deal."
Bob Glaser, owner of Smith & Associates, expects such "price sensitivity" to last another two years. But one of his agents, Frank Malowany, spies hopeful signs.
Malowany was the agent for the $10 million sale of MarineMax owner Bill McGill's Belleair home last year. It broke a Pinellas County price record.
He said the high-end selection can be so slim that people entering the market these days often express interest in homes not for sale.
"As tough as times are," Malowany said, "the general response is, 'No, we're not interested in selling at any price.' "
By James Thorner, Times Staff Writer In Print: Sunday, June 21, 2009
A particularly stubborn segment of the real estate market is the super-premium home. Examples include the 25,000-square-foot mansion in Avila, built by corporate raider Paul Bilzerian. It includes a full basketball gym, a racquetball court, a fitness room, a music room and a home theater. It is not on the market now, and was last under contract for $15 million about two years ago. Matt Geiger’s 26,000-square-foot, six-bedroom mansion in East Lake, at left, has a stocked lake and sits on 40 acres next to Crescent Oaks Country Club. Geiger also owns 60 acres of adjacent land. The house is now listed at $12.5 million. It had been for sale for more than $20 million.
From a bunkhouse-turned-sales office on the shores of Lake Thonotosassa, Steve Powell manages home sales at the millionaire enclave of Stonelake Ranch.
It's 98 rural home sites set serenely in rolling horse country 30 minutes east of downtown Tampa. Despite the 13,000- and 20,000-square-foot mansions taking shape at Stonelake, real estate isn't exactly rocking on Lake Thonotosassa.
Developers have trimmed prices as much as 30 percent, and sales have crumbled by about two-thirds the past couple of years. Powell spots fewer Mercedes and Lexuses rolling up the wooded, winding lanes of Stonelake.
"The fact is you're dealing with a more discriminating buyer," Powell said. "Although they may have the money, a lot of them are holding back."
What happens when big spenders with disposable income neither spend nor dispose? The area's high-end real estate market is finding out.
Sales of million-dollar-plus homes in Hillsborough and Pinellas counties plunged 42 percent from 2006 to 2008, from 554 to 321. This year, million-dollar transactions are even harder to find.
As of early June, the two counties had recorded about 70 sales in the million-plus category, the slowest pace in more than a decade. Sometimes the homes have sold, but price chopping knocked them out of the million-dollar club.
North of Tampa in Avila, more than 30 resales clog the listings. Popular with professional athletes and other "new money," Avila is taking it hard. At the top of the sale listings is gold dealer Mark Yaffe's $25 million mansion.
The down market is weighing on prices for condominiums on the St. Petersburg and Clearwater waterfronts, as well. It didn't help when financially distressed Opus Development announced hurried plans to auction luxury units in its new condo tower at 400 Beach Drive.
Several condos have sold this year at Clearwater's ritzy Sandpearl Resort, but prices are hundreds of thousands of dollars less than they were even a year ago.
In classic neighborhoods like Snell Isle in St. Petersburg, buyers demand substantial cuts before they bite. A new house at 851 Brightwaters Blvd., for example, was listed for $4.5 million but sold in May after being discounted to $3.4 million.
Some luxury builders who specialize in the million-dollar-plus market report peak-to-valley sales declines of 80 percent. Upscale builder Mark Maconi declared bankruptcy, and some of its competitors are adjusting to leaner times.
"The meat of our market is in the million-dollar price range — or was," said Charley Hannah of Tampa's Hannah Bartoletta Homes.
To be sure, recession-proof professionals and wealthy retirees are still scarfing up luxury real estate.
In Avila, Mariano Rivera, the New York Yankees' veteran relief pitcher, spent $8.9 million this year for a 9,200-square-foot mansion with a theater, billiard room, guest house and gated motor court with five-car garage. Teammate Derek Jeter is building a 30,875-square-foot home on Davis Islands.
Harold "Hal" Steinbrenner, Yankees executive and son of George Steinbrenner, plunked down $2 million in March for a waterfront house near West Shore Boulevard.
Former University of Florida quarterback Rex Grossman, late of the Chicago Bears, paid $1.7 million in February for a country spread northwest of Tampa.
Pinellas' largest sale this year was a $5.2 million, St. Pete Beach home sold to David Coterel. He's the former Ohio autoworker who won $314 million in the Powerball lottery in 2007.
But million-dollar homes are hardly an easy sell. The buying pool is narrow. House hunters are demanding. Financing is tough.
A particularly stubborn segment are super premium Taj Mahal homes. Examples include the 25,000-square-foot mansion in Avila built by ex-corporate raider Paul Bilzerian and the $19 million bachelor pad near Tarpon Springs owned by former NBA basketball player Matt Geiger. Both have languished.
"Baseball player Derek Jeter paid $7 million for the lot alone. No one's ever going to buy that house," said Ed Gunning, a Realtor who sells luxury homes with Smith & Associates. "Why would you buy someone else's house for $25 million? You'd build your own house. Those are monuments to yourself."
Another problem is appraisals. With so few sales against which to compare prices, banks are going with the lowest, to the chagrin of sellers and Realtors. Even in a market heavy with all-cash deals, many buyers still like to finance part of the purchase price.
Hannah has weathered another phenomenon: wealthy buyers who want the shirt off his back, and maybe the skin underneath for good measure.
Hannah faced the wrath of disappointed buyers when he listed a former $2 million model home in MiraBay, a Key West-style saltwater community in Apollo Beach.
Hannah chopped the price to $1.2 million, but the house hunter offered $700,000. That didn't even cover Hannah's land and construction costs.
"I can appreciate them being savvy buyers, but at some point reasonable is reasonable," the builder said. "The anger has caught me off guard. They'll call you names and fault your morality. I've been called stupid and crazy for not taking the deal."
Bob Glaser, owner of Smith & Associates, expects such "price sensitivity" to last another two years. But one of his agents, Frank Malowany, spies hopeful signs.
Malowany was the agent for the $10 million sale of MarineMax owner Bill McGill's Belleair home last year. It broke a Pinellas County price record.
He said the high-end selection can be so slim that people entering the market these days often express interest in homes not for sale.
"As tough as times are," Malowany said, "the general response is, 'No, we're not interested in selling at any price.' "
Wednesday, April 15, 2009
Tree Hugger's Ultimate Hero
SAVE THE TREES!*The power of one woman to vastly improve the lives of millions of suffering people against all odds is proven by the story of Wangari Maathai, the founder of The Green Belt Movement in Kenya, Africa who, with one simple idea; that women should plant trees, was able to overcome years brutal government opposition including death threats and bloody beatings and go on to see her simple idea become a highly successful, international movement and for which she was awarded the Nobel Peace Prize in 2004. Why would the Kenyan government want to kill one woman who simply wanted to teach other woman how to plant trees? If you don't already know Wangari's story you should take the time to learn it...it will inspire the tree-hugger in you or just the human being in you!
http://greenbeltmovement.org/blog/index.php
* Very sadly Wangari Maathai died last year, a great loss for all who love trees and those who defend them from predation.
Wednesday, February 4, 2009
The Ongoing Problem of SQUARE FOOTAGE
I have been trying for over 10 years now to get the local Real Estate Board here in Miami-Dade County to require our Multiple Listing Service (MLS) to have a uniform source for the square footage figures quoted online for listings. To date, they have not done this. So, beware, the square footage shown on realtor's listings may or may not be accurate. Here is a copy of my latest letter to our local real estate board which defines the problem and how it adversely affects the public.
February 3, 2009
Dear MLS Board of Directors,
I am hoping you can help me solve the long-standing problem of deceptive square footage quotes on our MLS system and, if not, perhaps you can direct me to someone who can.
Today is the 10 year anniversary of my quest to have our MLS require all MLS users to use one, authenticated source for the square footage quoted on listings published on MLS yet today, as per usual, a random sampling of several listings on MLS still shows that square footage of listings on MLS can be just about anything the listing agent decides to put in there. This has been the case for many years now and really needs to be corrected. Obviously, without one, agreed upon standard for the source, accuracy and authenticity of square footage figures on MLS our Real Estate Boards continue to fail, with impunity, in their legal duty to protect the public from dishonest real estate practices and I am still requesting that something be done about it soon. Too many realtors are getting away with "puffing up" their square footage on their listings on MLS which throws off all the computations we make on our CMAs and is a huge disservice to the honest realtors who refuse to puff their square footage and whose listings are then rejected by the buyers in favor of the ones with the faked, bigger square footage.
Right now MLS square footage for properties shown in the computer field marked LA: which stands for SqFt Liv Area and from which all our CMA's draw their SQ. FT. data, is auto populated from a feed from the Miami Dade County Tax Assessor but can be manually altered using many possible other sources such as; other public records data bases, an architect's rendering, an appraisal, a builder's spec sheet, a survey, an owner's opinion or a realtor's imagination. There is also no requirement for MLS users to identify the source from which the square footage comes when it has been changed from the auto-populated figure. Some realtors identify the source of the altered square footage in the comments section and some don't. Some diligently upload the document as an attachment on MLS (ideal!). Some realtors identify the source of the altered data but do not have a copy of the document from which they are quoting available to others who wish to check it. And since all of the above sources of square footage figures use completely different methodologies of calculating square footage using MLS square footage figures for "comps" is totally useless and all CMA estimates of value, routinely disseminated to the public upon request, are bogus. All of this is totally unacceptable, unprofessional, completely misleading and easily correctable.
Since the number one thing people want to know, prior to making an offer on a property, is what they are paying on a cost per square foot basis and how that compares to other recent sales, on a cost per square foot basis, realtors have a legal duty to make a reasonable effort to have a competent system in place to facilitate client requests for "comps". When the public asks members of the realtor community for "comps" the realtors have a duty to at least attempt to provide accurate data. While realtors cannot be expected to guarantee the accuracy of all square footage data they acquire from the public records they should not be allowed to knowingly disseminate data to the public which will be relied upon by the public to make important financial decisions that the realtors know may be flawed because there are no standards in place to insure its accuracy. This an open invitation for a class action lawsuit from members of the public who relied upon realtor CMAs to their detriment.
Another problem is that Realtors who choose to overstate the square footage of their listings in the MLS gain an unfair advantage over the honest realtor who declines to engage in such deception. Sellers who hire honest realtors may lose money as their listings do not compare as well to the listings of dishonest realtors who make their listings seem like better deals on a cost per square foot basis by inflating the square footage figures.
Charlette Seidel, manager of Coldwell Banker's Coral Gables office at 1501 Sunset, and I have offered solutions to this problem for the last 10 years, over and over again yet our real estate boards have never acted to fix this problem. Coldwell Banker has a policy that requires a listing agent to have, on hand, proof of square footage claims if they deviate from the public records figures. But we have no control over all the other non-Coldwell Banker realtors who input listings on MLS and whose often flawed data we must rely upon for CMAs which the public demands.
We have suggested, over and over again, that MLS go back to their previous system of blocking any changes on the one computer field that shows adjusted sq. footage which is drawn from the Miami-Dade Public Records and which is used in our CMAs to produce "comps". Obviously, this is not a perfect solution as the public records can be wrong but if the listing agent has an authenticated document that can be posted as an attachment on MLS which authoritatively shows different square footage, calculated using Public Records methodology, then that document can be referred to in the comments section. But, adhering to a strict policy of requiring the square footage quotes in MLS to all come from exactly the same authoritative source is an absolute statistics 101 must. Allowing realtors to post an attachment on MLS claiming different square footage allows for gross errors in the public records. Owners can also lobby the public records to correct their square footage figures. This way realtors and the public will be able to compare apples to apples when they use MLS data to compare properties and not be deceived by the occasional dishonest watermelon thrown in there.
Please let me know how we can go about correcting this problem. I realize that you are not a working realtor out in the field dealing with these issues on a day to day basis and so may not really have insight into how adversely this affects our business and I would be glad to sit down with you and show you specific examples of these problems and explain more fully how and why this really is such a serious and time consuming problem for all us realtors working out here in the trenches.
The market is so difficult right now and with the public really soured on real estate in general we really need to try everything we can to restore the public's confidence in the real estate industry. Having no standards whatsoever that MLS users must adhere to for the square footage we quote on our listings to the public is just absurd and I feel like an idiot having to admit that to my clients. Correcting this problem would go a long way toward trying to build up confidence again in our industry. After 10 years of asking for this to get fixed I don't hold out much hope but, hope springs eternal, right?
Thanks, Laura Mullaney
February 3, 2009
Dear MLS Board of Directors,
I am hoping you can help me solve the long-standing problem of deceptive square footage quotes on our MLS system and, if not, perhaps you can direct me to someone who can.
Today is the 10 year anniversary of my quest to have our MLS require all MLS users to use one, authenticated source for the square footage quoted on listings published on MLS yet today, as per usual, a random sampling of several listings on MLS still shows that square footage of listings on MLS can be just about anything the listing agent decides to put in there. This has been the case for many years now and really needs to be corrected. Obviously, without one, agreed upon standard for the source, accuracy and authenticity of square footage figures on MLS our Real Estate Boards continue to fail, with impunity, in their legal duty to protect the public from dishonest real estate practices and I am still requesting that something be done about it soon. Too many realtors are getting away with "puffing up" their square footage on their listings on MLS which throws off all the computations we make on our CMAs and is a huge disservice to the honest realtors who refuse to puff their square footage and whose listings are then rejected by the buyers in favor of the ones with the faked, bigger square footage.
Right now MLS square footage for properties shown in the computer field marked LA: which stands for SqFt Liv Area and from which all our CMA's draw their SQ. FT. data, is auto populated from a feed from the Miami Dade County Tax Assessor but can be manually altered using many possible other sources such as; other public records data bases, an architect's rendering, an appraisal, a builder's spec sheet, a survey, an owner's opinion or a realtor's imagination. There is also no requirement for MLS users to identify the source from which the square footage comes when it has been changed from the auto-populated figure. Some realtors identify the source of the altered square footage in the comments section and some don't. Some diligently upload the document as an attachment on MLS (ideal!). Some realtors identify the source of the altered data but do not have a copy of the document from which they are quoting available to others who wish to check it. And since all of the above sources of square footage figures use completely different methodologies of calculating square footage using MLS square footage figures for "comps" is totally useless and all CMA estimates of value, routinely disseminated to the public upon request, are bogus. All of this is totally unacceptable, unprofessional, completely misleading and easily correctable.
Since the number one thing people want to know, prior to making an offer on a property, is what they are paying on a cost per square foot basis and how that compares to other recent sales, on a cost per square foot basis, realtors have a legal duty to make a reasonable effort to have a competent system in place to facilitate client requests for "comps". When the public asks members of the realtor community for "comps" the realtors have a duty to at least attempt to provide accurate data. While realtors cannot be expected to guarantee the accuracy of all square footage data they acquire from the public records they should not be allowed to knowingly disseminate data to the public which will be relied upon by the public to make important financial decisions that the realtors know may be flawed because there are no standards in place to insure its accuracy. This an open invitation for a class action lawsuit from members of the public who relied upon realtor CMAs to their detriment.
Another problem is that Realtors who choose to overstate the square footage of their listings in the MLS gain an unfair advantage over the honest realtor who declines to engage in such deception. Sellers who hire honest realtors may lose money as their listings do not compare as well to the listings of dishonest realtors who make their listings seem like better deals on a cost per square foot basis by inflating the square footage figures.
Charlette Seidel, manager of Coldwell Banker's Coral Gables office at 1501 Sunset, and I have offered solutions to this problem for the last 10 years, over and over again yet our real estate boards have never acted to fix this problem. Coldwell Banker has a policy that requires a listing agent to have, on hand, proof of square footage claims if they deviate from the public records figures. But we have no control over all the other non-Coldwell Banker realtors who input listings on MLS and whose often flawed data we must rely upon for CMAs which the public demands.
We have suggested, over and over again, that MLS go back to their previous system of blocking any changes on the one computer field that shows adjusted sq. footage which is drawn from the Miami-Dade Public Records and which is used in our CMAs to produce "comps". Obviously, this is not a perfect solution as the public records can be wrong but if the listing agent has an authenticated document that can be posted as an attachment on MLS which authoritatively shows different square footage, calculated using Public Records methodology, then that document can be referred to in the comments section. But, adhering to a strict policy of requiring the square footage quotes in MLS to all come from exactly the same authoritative source is an absolute statistics 101 must. Allowing realtors to post an attachment on MLS claiming different square footage allows for gross errors in the public records. Owners can also lobby the public records to correct their square footage figures. This way realtors and the public will be able to compare apples to apples when they use MLS data to compare properties and not be deceived by the occasional dishonest watermelon thrown in there.
Please let me know how we can go about correcting this problem. I realize that you are not a working realtor out in the field dealing with these issues on a day to day basis and so may not really have insight into how adversely this affects our business and I would be glad to sit down with you and show you specific examples of these problems and explain more fully how and why this really is such a serious and time consuming problem for all us realtors working out here in the trenches.
The market is so difficult right now and with the public really soured on real estate in general we really need to try everything we can to restore the public's confidence in the real estate industry. Having no standards whatsoever that MLS users must adhere to for the square footage we quote on our listings to the public is just absurd and I feel like an idiot having to admit that to my clients. Correcting this problem would go a long way toward trying to build up confidence again in our industry. After 10 years of asking for this to get fixed I don't hold out much hope but, hope springs eternal, right?
Thanks, Laura Mullaney
Wednesday, October 1, 2008
Real Estate Tax Tips
Selling a Principal Residence Formerly Used for Investment Purposes?Amendment to IRC §121 May Reduce the $250,000/$500,000 Exclusion
Internal Revenue Code (“IRC”) §121 allows taxpayers selling a principal residence to exclude $250,000 of gain from taxation (or, $500,000 for married taxpayers, filing jointly) as long as they have lived in the residence for 2 out of the preceding 5 years.
Alternatively, for taxpayers selling investment/rental property, while they may not exclude gain from taxation, they can nonetheless defer payment of taxes by completing their disposition as an exchange under IRC §1031.
While the rules for excluding gain from taxation or deferring payment of taxation may seem fairly straightforward under the above code sections, they become more complicated if the property was used as both a principal residence and for investment/rental purposes.
Fortunately, in February of 2005, the IRS issued Revenue Procedure 2005-14 clarifying that taxpayers are entitled to take advantage of both the §121 capital gains exclusion and the §1031 capital gains deferral. However, Rev. Proc. 2005-14 only addresses situations wherein the property being sold is investment property formerly used as a principal residence; it does not address how to apply §121 to situations when the property being sold is a principal residence formerly used for investment purposes.
Now, pursuant to the Housing Assistance Tax Act of 2008, taxpayers selling a principal residence formerly used for investment purposes, have specific guidance on the application of §121. Specifically, IRC §121 has been amended, effective January 1, 2009. Again, the amendment only affects taxpayers who are selling a principal residence (“qualified use”), which they formerly used for investment (“non-qualified use”). The central point of the §121 amendment is that these taxpayers are not entitled to the full §121 exclusion because the prior investment use is considered “non-qualified” use and any gain allocated to the period of non-qualified use may not be excluded under §121.
How to determine the amount of gain that is not eligible for exclusionThe period of non-qualified use (period not used as a principal residence) must be divided by the total years of ownership to determine the amount of the gain that is not eligible for exclusion under §121.
Any period of non-qualified use before January 1, 2009 should not be included in the calculation. And, depreciation should also be excluded from the calculation and is simply taxed at the applicable recapture rate.
Summary of the rules under §121 amendment
Sale of residence that was formerly investment property – the taxpayer is entitled to only a prorated portion of the $250,000/$500,000 exclusion.
Non-qualified use prior to January 1, 2009 is disregarded, except for purposes of meeting the 5 year rule under HR 4520, if applicable1
Gain resulting from depreciation is taxed and is disregarded for purposes of determining the prorated amount of the exclusion
The application of the amendment is illustrated by the following examples:
Example 1: Taxpayer acquires an investment property, rents it for 3 years and then occupies it for 5 years as his principal residence (no use prior to 2009) before selling it and realizing $350,000 of gain of which $40,000 is from depreciation deductions.
$40,000 of gain is depreciation and is excluded from the calculation. The remaining $310,000 is subject to the prorata calculation as follows:
3 (years of non-qualified use) =
3 (37.5%) x $310,000=$116,250
8 (years total ownership)
8
Thus $116,250 is not eligible for exclusion and is taxed at the applicable capital gains rate. $40,000 of gain is from depreciation and is taxed at the applicable recapture rate. The remaining gain of $193,750 may be excluded from taxation under §121.
Example 2: Taxpayer acquires an investment property in 2007, rents it until 2010, and then occupies it for three years as his principal residence before selling it in 2013, realizing $400,000 of gain. The two years prior to January 1, 2009 are disregarded (but included for determining the five year period).
1 year non-qualified use (disregard 2007, 2008) =
1 (16.66%) x $400,000=$66,640
6 years of total ownership
6
Thus, $66,640 is not eligible for exclusion and is taxed at the applicable capital gains rate. $250,000 of the remaining gain may be excluded under §121, with the balance of the gain, $83,360 taxed at the applicable capital gains rate. In sum, $250,000 is not taxed and $150,000 is taxed.
Taxpayers selling a principal residence after January 1, 2009, which was formerly used as an investment/rental property should consult with their tax or legal advisors regarding the application of the amendment to §121 to their particular situation.
1
If property was originally acquired as part of a 1031 exchange, H.R. 4520 mandates that the property must be owned by the taxpayer for at least 5 years in order to get the §121 exclusion (note: this is in addition to having lived in the property for 2 of the preceding 5 years.)
SOURCE: From a Newsletter from Old Republic Exchange Company, Charlotte, North Carolina 28202
Internal Revenue Code (“IRC”) §121 allows taxpayers selling a principal residence to exclude $250,000 of gain from taxation (or, $500,000 for married taxpayers, filing jointly) as long as they have lived in the residence for 2 out of the preceding 5 years.
Alternatively, for taxpayers selling investment/rental property, while they may not exclude gain from taxation, they can nonetheless defer payment of taxes by completing their disposition as an exchange under IRC §1031.
While the rules for excluding gain from taxation or deferring payment of taxation may seem fairly straightforward under the above code sections, they become more complicated if the property was used as both a principal residence and for investment/rental purposes.
Fortunately, in February of 2005, the IRS issued Revenue Procedure 2005-14 clarifying that taxpayers are entitled to take advantage of both the §121 capital gains exclusion and the §1031 capital gains deferral. However, Rev. Proc. 2005-14 only addresses situations wherein the property being sold is investment property formerly used as a principal residence; it does not address how to apply §121 to situations when the property being sold is a principal residence formerly used for investment purposes.
Now, pursuant to the Housing Assistance Tax Act of 2008, taxpayers selling a principal residence formerly used for investment purposes, have specific guidance on the application of §121. Specifically, IRC §121 has been amended, effective January 1, 2009. Again, the amendment only affects taxpayers who are selling a principal residence (“qualified use”), which they formerly used for investment (“non-qualified use”). The central point of the §121 amendment is that these taxpayers are not entitled to the full §121 exclusion because the prior investment use is considered “non-qualified” use and any gain allocated to the period of non-qualified use may not be excluded under §121.
How to determine the amount of gain that is not eligible for exclusionThe period of non-qualified use (period not used as a principal residence) must be divided by the total years of ownership to determine the amount of the gain that is not eligible for exclusion under §121.
Any period of non-qualified use before January 1, 2009 should not be included in the calculation. And, depreciation should also be excluded from the calculation and is simply taxed at the applicable recapture rate.
Summary of the rules under §121 amendment
Sale of residence that was formerly investment property – the taxpayer is entitled to only a prorated portion of the $250,000/$500,000 exclusion.
Non-qualified use prior to January 1, 2009 is disregarded, except for purposes of meeting the 5 year rule under HR 4520, if applicable1
Gain resulting from depreciation is taxed and is disregarded for purposes of determining the prorated amount of the exclusion
The application of the amendment is illustrated by the following examples:
Example 1: Taxpayer acquires an investment property, rents it for 3 years and then occupies it for 5 years as his principal residence (no use prior to 2009) before selling it and realizing $350,000 of gain of which $40,000 is from depreciation deductions.
$40,000 of gain is depreciation and is excluded from the calculation. The remaining $310,000 is subject to the prorata calculation as follows:
3 (years of non-qualified use) =
3 (37.5%) x $310,000=$116,250
8 (years total ownership)
8
Thus $116,250 is not eligible for exclusion and is taxed at the applicable capital gains rate. $40,000 of gain is from depreciation and is taxed at the applicable recapture rate. The remaining gain of $193,750 may be excluded from taxation under §121.
Example 2: Taxpayer acquires an investment property in 2007, rents it until 2010, and then occupies it for three years as his principal residence before selling it in 2013, realizing $400,000 of gain. The two years prior to January 1, 2009 are disregarded (but included for determining the five year period).
1 year non-qualified use (disregard 2007, 2008) =
1 (16.66%) x $400,000=$66,640
6 years of total ownership
6
Thus, $66,640 is not eligible for exclusion and is taxed at the applicable capital gains rate. $250,000 of the remaining gain may be excluded under §121, with the balance of the gain, $83,360 taxed at the applicable capital gains rate. In sum, $250,000 is not taxed and $150,000 is taxed.
Taxpayers selling a principal residence after January 1, 2009, which was formerly used as an investment/rental property should consult with their tax or legal advisors regarding the application of the amendment to §121 to their particular situation.
1
If property was originally acquired as part of a 1031 exchange, H.R. 4520 mandates that the property must be owned by the taxpayer for at least 5 years in order to get the §121 exclusion (note: this is in addition to having lived in the property for 2 of the preceding 5 years.)
SOURCE: From a Newsletter from Old Republic Exchange Company, Charlotte, North Carolina 28202
Friday, August 15, 2008
Updated INFO on FIRST-TIME Homebuyer Credit
2008 Housing Stimulus Legislation
First Time Home Buyer Tax Credit Fact Sheet
Who is Eligible
1. The $7,500 tax credit is available for first time home buyers only.
2. The law defines a first time home buyer as a buyer who has not owned a home during the past three years.
3. All US citizens who file taxes are eligible to participate in the program.
Types of Homes that Qualify for the Tax Credit
1. All homes, whether single family, town homes or condominiums will qualify.
2. However, there are several conditions:
a. The home must be used as a principal residence, and
b. The buyer has not owned a home in the prior three years.
3. The Tax Credit includes newly constructed home.
Income Limits
1. Home buyers who file as single or head of household taxpayers can claim the full $7,500 credit if their adjusted gross income (AGI) is less that $75,000 annually.
2. For married couples filing a joint return, the income limit doubles to $150,000 annually.
3. Single or head of household taxpayers who earn between $75,000 and $95,000 are eligible to receive a partial first time home buyer tax credit.
4. Married couples filing jointly who earn between $150,000 and $170,000 annually are eligible to receive a partial first time home buyer tax credit.
5. The credit is not available for single taxpayers whose AGI is greater that $95,000 and Married couples filing jointly with an AGI that exceeds $170,000 annually.
Effective Dates for the Tax Credit
1. First time home buyers would receive a $7,500 tax credit for the purchase of any home on or after April 9, 2008 and before July 1, 2009.
2. To qualify, you must actually close on the sale of the home during this period.
Tax Credit is Refundable
1. A refundable credit means that if you pay less than $7,500 in federal income tax, then the government will write you a check for the difference.
a. For example, if you owe $5,000 in federal income tax, you would pay nothing to the IRS and the will send you the difference of $2,500.
b. If you are due to receive a $1,000 tax refund then your refund will total $8,500. ($1,000 plus the $7,500 tax credit)
2. If you purchased the home in 2008, the tax credit is taken on your 2008 tax return. If you buy in 2009, you have the option of taking the credit on your 2008 or 2009 tax return.
Payback Provisions
1. The tax credit is an interest free loan that must be repaid over 15 years.
2. The minimum repayment amount must be 15 equal annual installments. For example, if the credit amount is $7,500, then the home buyer must repay a minimum of $500 each year for 15 years.
3. A home buyer must begin repaying the credit two tax years after claiming the credit. For example, if the credit is claimed on the 2008 tax return, repayment of $500 (or less, if the credit amount is less than $7,500) per year begins with the 2010 return.
4. If the home owner sells the home for a profit and there is a remaining credit, then the home owner is required to repay the remaining credit during the tax year of the home sale. The amount of the repayment will depend upon the amount of profit from the home sale:
a. If the profit on the sale is more than the remaining credit, then the home owner must repay the entire remaining credit.
b. If the profit on the sale is less than the remaining credit, then the home owner must repay an amount equal to the profit on the home sale. The remaining credit payback will be forgiven.
5. If the home owner sells the home but did not make any profit on the home sale, then the remaining credit payback would be forgiven.
Further information regarding the tax credit may be found at
www.federalhousingtaxcredit.com or www.irs.gov
This information is provided for general awareness only, and is not intended for the purpose of providing legal, accounting, tax advice or consulting of any kind. Please consult with your tax professional for complete details.
First Time Home Buyer Tax Credit Fact Sheet
Who is Eligible
1. The $7,500 tax credit is available for first time home buyers only.
2. The law defines a first time home buyer as a buyer who has not owned a home during the past three years.
3. All US citizens who file taxes are eligible to participate in the program.
Types of Homes that Qualify for the Tax Credit
1. All homes, whether single family, town homes or condominiums will qualify.
2. However, there are several conditions:
a. The home must be used as a principal residence, and
b. The buyer has not owned a home in the prior three years.
3. The Tax Credit includes newly constructed home.
Income Limits
1. Home buyers who file as single or head of household taxpayers can claim the full $7,500 credit if their adjusted gross income (AGI) is less that $75,000 annually.
2. For married couples filing a joint return, the income limit doubles to $150,000 annually.
3. Single or head of household taxpayers who earn between $75,000 and $95,000 are eligible to receive a partial first time home buyer tax credit.
4. Married couples filing jointly who earn between $150,000 and $170,000 annually are eligible to receive a partial first time home buyer tax credit.
5. The credit is not available for single taxpayers whose AGI is greater that $95,000 and Married couples filing jointly with an AGI that exceeds $170,000 annually.
Effective Dates for the Tax Credit
1. First time home buyers would receive a $7,500 tax credit for the purchase of any home on or after April 9, 2008 and before July 1, 2009.
2. To qualify, you must actually close on the sale of the home during this period.
Tax Credit is Refundable
1. A refundable credit means that if you pay less than $7,500 in federal income tax, then the government will write you a check for the difference.
a. For example, if you owe $5,000 in federal income tax, you would pay nothing to the IRS and the will send you the difference of $2,500.
b. If you are due to receive a $1,000 tax refund then your refund will total $8,500. ($1,000 plus the $7,500 tax credit)
2. If you purchased the home in 2008, the tax credit is taken on your 2008 tax return. If you buy in 2009, you have the option of taking the credit on your 2008 or 2009 tax return.
Payback Provisions
1. The tax credit is an interest free loan that must be repaid over 15 years.
2. The minimum repayment amount must be 15 equal annual installments. For example, if the credit amount is $7,500, then the home buyer must repay a minimum of $500 each year for 15 years.
3. A home buyer must begin repaying the credit two tax years after claiming the credit. For example, if the credit is claimed on the 2008 tax return, repayment of $500 (or less, if the credit amount is less than $7,500) per year begins with the 2010 return.
4. If the home owner sells the home for a profit and there is a remaining credit, then the home owner is required to repay the remaining credit during the tax year of the home sale. The amount of the repayment will depend upon the amount of profit from the home sale:
a. If the profit on the sale is more than the remaining credit, then the home owner must repay the entire remaining credit.
b. If the profit on the sale is less than the remaining credit, then the home owner must repay an amount equal to the profit on the home sale. The remaining credit payback will be forgiven.
5. If the home owner sells the home but did not make any profit on the home sale, then the remaining credit payback would be forgiven.
Further information regarding the tax credit may be found at
www.federalhousingtaxcredit.com or www.irs.gov
This information is provided for general awareness only, and is not intended for the purpose of providing legal, accounting, tax advice or consulting of any kind. Please consult with your tax professional for complete details.
Friday, August 1, 2008
Capital Gains on the sale of your home
Many people are familiar with IRS rules concerning capital gains on real estate but if not here is a brief refresher:
When you sell your primary residence, you are not taxed on any profits if;
- You have have actually lived in the home for two out of the last five years.
- Your gain on the sale does not exceed $250,000 as a single taxpayer or $500,000 as a married couple filing jointly.
Gains above these limits are taxed at the current rate of 15% for higher income tax payers and 5% for lower income tax payers.
In 2008 the rate will continue for higher income taxpayers; while the 5% lower income rate will drop to 0% for the 2008 tax year only. Then on January 1, 2009, the long term capital gains tax will once again be 15% and 5% through 2010.
Homeowners can use this tax free provision every two years. As set forth in the American Job Creation Act of 2004, properties converted from a 1031 exchange property into a primary residence must be held and used as a primary residence for at least five years to qualify for the tax exemption.
To determine what, if any "gain" you have you need to consult a tax specialist or go to the IRS website for publications on the subject.
First Time Homebuyer Tax Credits
The Housing and Economic Recovery Act of 2008 authorizes a $7,500 tax credit for qualified first-time home buyers purchasing homes on or after April 9, 2008 and before July 1, 2009.
Basic features:
photo is of 3521 Crystal View Court, Coconut Grove...$645,000.
- The tax credit is available for first-time home buyers only.
- The maximum credit amount is $7,500.
- The credit is available for homes purchased on or after April 9, 2008 and beforeJuly 1, 2009.
- Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.
FAQ's
1.Who is eligible to claim the $7,500 tax credit?First time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after April 9, 2008 and before July 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs.
2. What is the definition of a first-time home buyer?The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests homeownership history of both the home buyer and his/her spouse. For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit.
3. What types of homes will qualify for the tax credit?Any home purchased by an eligible first-time home buyer will qualify for the credit, provided that the home will be used as a principal residence and the buyer has not owned a home in the previous three years. This includes single-family detached homes, attached homes like townhouses, and condominiums.
4. Instead of buying a new home from a home builder, I have hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been "purchased" on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after April 9, 2008 and before July 1, 2009.In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.
5. What is "modified adjusted gross income"?Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine "adjusted gross income" or AGI. AGI is total income for a year minus certain deductions (known as "adjustments" or "above-the-line deductions"), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.To determine modified adjusted gross income (MAGI), add to AGI certain amounts such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for higher-education costs.
6. If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?Possibly. It depends on your income. Partial credits of less than $7,500 are available for some taxpayers whose MAGI exceeds the phaseout limits. The credit becomes totally unavailable for individual taxpayers with a modified adjusted gross income of more than $95,000 and for married taxpayers filing joint returns with an AGI of more than $170,000.
7. Can you give me an example of how the partial tax credit is determined?Just as an example, assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $7,500 by 0.5. The result is $3,750.Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $7,500 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,625. Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.
8. Does the credit amount differ based on tax filing status?No. The credit is in general equal to $7,500 for a qualified home purchase, whether the home buyer files taxes as a single or married taxpayer. However, if a household files their taxes as "married filing separately" (in effect, filing two returns), then the credit of $7,500 is claimed as a $3,750 credit on each of the two returns.
9. Are there any circumstances for which buyers whose incomes are at or below the $75,000 limit for singles or the $150,000 limit for married taxpayers might not be able to claim the full $7,500 tax credit?In general, the tax credit is equal to 10% of the qualified home purchase price, but the credit amount is capped or limited at $7,500. For most first-time home buyers, this means the credit will equal $7,500. For home buyers purchasing a home priced less than $75,000, the credit will equal 10% of the purchase price.
10. I heard that the tax credit is refundable. What does that mean?The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that taxpayer qualified for the $7,500 home buyer tax credit. As a result, the taxpayer would receive a check for $6,500 ($7,500 minus the $1,000 owed).
11. What is the difference between a tax credit and a tax deduction?A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $7,500 in income taxes and who receives a $7,500 tax credit would owe nothing to the IRS.A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $7,500 in income taxes. If the taxpayer receives a $7,500 deduction, the taxpayer’s tax liability would be reduced by $1,125 (15 percent of $7,500), or lowered from $7,500 to $6,375.
12. Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?No. The tax credit cannot be combined with the MRB home buyer program.
13. I live in the District of Columbia. Can I claim both the DC first-time home buyer credit and this new credit?No. You can claim only one.
14. I am not a U.S. citizen. Can I claim the tax credit?Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of "nonresident alien" in IRS Publication 519.
15. Does the credit have to be paid back to the government? If so, what are the payback provisions?Yes, the tax credit must be repaid. Home buyers will be required to repay the credit to the government, without interest, over 15 years or when they sell the house, if there is sufficient capital gain from the sale. For example, a home buyer claiming a $7,500 credit would repay the credit at $500 per year. The home owner does not have to begin making repayments on the credit until two years after the credit is claimed. So if the tax credit is claimed on the 2008 tax return, a $500 payment is not due until the 2010 tax return is filed. If the home owner sold the home, then the remaining credit amount would be due from the profit on the home sale. If there was insufficient profit, then the remaining credit payback would be forgiven.
16. Why must the money be repaid?Congress’s intent was to provide as large a financial resource as possible for home buyers in the year that they purchase a home. In addition to helping first-time home buyers, this will maximize the stimulus for the housing market and the economy, will help stabilize home prices, and will increase home sales. The repayment requirement reduces the effect on the Federal Treasury and assumes that home buyers will benefit from stabilized and, eventually, increasing future housing prices.
17. Because the money must be repaid, isn’t the first-time home buyer program really a zero-interest loan rather than a traditional tax credit?Yes. Because the tax credit must be repaid, it operates like a zero-interest loan. Assuming an interest rate of 7%, that means the home owner saves up to $4,200 in interest payments over the 15-year repayment period. Compared to $7,500 financed through a 30-year mortgage with a 7% interest rate, the home buyer tax credit saves home buyers over $8,100 in interest payments. The program is called a tax credit because it operates through the tax code and is administered by the IRS. Also like a tax credit, it provides a reduction in tax liability in the year it is claimed.
18. If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?Yes. The law allows taxpayers to choose ("elect") to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.
19. For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount. 's
SOURCE OF DATE = COLDWELL BANKER MORTGAGE COMPANY
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