Short sales have fallen sharply over the last few months after the expiration of a key tax break at the end of last year. Also, rising home prices have made lenders less likely to grant a short sale, The Wall Street Journal reports. Underwater Owners Refusing Short Sales
Tax Time Help for New Homeowners!
Don't-Miss Home Tax BreaksFrom the mortgage interest deduction to energy tax credits, here are the tax tips you need to get a jump on your returns. Read
Did You Sell Your Home After Making Improvements?Keeping track of the cost of capital improvements to your home can really pay off on your tax return when it comes time to sell. Read
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Copyright 2014 NATIONAL ASSOCIATION OF REALTORS®
Six Reasons Why You Should List Your Home for Sale During the Holidays
There are concrete reasons for – and advantages to -- selling your home during the holidays.
As a realtor, I get this question a lot this time of year: Is it better to list my home for sale now, or to wait until after the holidays? Similarly, should sellers who currently have their homes on the market temporarily withdraw them from the MLS and wait for the holidays to pass?
There are six good reasons for listing your home for sale now or leaving it on the market if you already have it for sale. Just think like that buyer you’re hoping to court.
1. People who look for homes during the holidays are more serious buyers. Think about it – with all the things you need to do during the holiday season, would you be out there looking through other peoples’ houses if you didn’t really need to? While it’s true there are fewer buyers as the year ends and winter sets in, the fewer buyers who are out there are out there for a reason. Most have to find a new place to live – and soon.
2. As a seller, you’ll have less competition. Fewer homes are on the market during the holiday season, and buyers have fewer houses to choose from. This helps you capture motivated buyers more easily, and less competition may very well help you garner you a higher price.
3. Buyers have more time to look for new homes. Yes, the holiday season is busy for everyone, with all the travelling, shopping, wrapping presents and sending greeting cards. But remember, more homebuyers are off work during the holidays, and buyers have more time to search for homes online and see homes between trips to the mall. Don’t be surprised if showing activity at your home spikes a bit during the holidays – if your home is in good condition and it’s competitively priced.
4. Some people want to buy a home before the end of the year for tax reasons. Every buyer’s financial situation is different. But there are tremendous tax advantages to buying a home, and these savings help offset taxable income earned in a particular year. These tax savings often give buyers extra motivation to get a deal done by Dec. 31.
5. January is traditionally a month for employees to start new jobs. Employees who are relocating this time of year to accommodate new jobs need a new place to live, and they usually cannot delay such moves. Sellers who keep their homes on the market through the holiday season are in prime position to appeal to these buyers.
6. Homes generally look more appealing during the holidays. The festive nature of the season helps homes show better, particularly on the inside. With all the decorating, entertaining and pleasing aromas, your home may never be more attractive to buyers. Take advantage of it.
It’s natural for sellers to have reservations about putting or keeping their home on the market through the holidays. Maintaining your home in showing condition and allowing buyers to walk through your home during this more private, family period is a bit off-putting.
But there are concrete reasons – and advantages – to selling your home during the holidays. Motivated buyers need houses to buy. Those buyers can’t choose your home if they don’t know it’s for sale.
Jerry Kline is a Realtor with the Odenton, Md., office of Keller Williams Flagship Realty (1216 Annapolis Rd., Odenton.) For more information on the local real estate market, contact him at (443) 924-7418.
Some Home Sales, Purchases Now Subject to New 3.8 Percent Federal Tax
Effective Jan. 1, a new federal levy on certain real estate transactions will cost some homeowners thousands
Area residents looking to buy or sell a home should note that beginning Jan. 1, 2013, a new 3.8 percent federal tax applies to certain real estate transactions.
Enacted by Congress in 2010 to help fund the Obamacare initiative, the tax is expected to generate $210 billion over the next 10 years and cost some home buyers and sellers thousands of dollars.
Struggling to find money to pay for President Obama’s massive health care legislation, Congress adopted the tax in eleventh-hour negotiations. The tax was quietly slipped into the bill, and not discussed or reviewed until hours before final debate on the health care legislation began.
The National Association of Realtors (NAR), which unsuccessfully lobbied against the tax, calls it a “complicated” provision that will affect individual buyers and sellers in unpredictable ways. To help realtors and their clients understand the potential effects of the tax, the association has published a series of fact sheets and case studies on its website (www.REALTOR.org/healthreform).
Many people aware of the tax mistakenly believe it applies to all real estate transactions. In reality, the tax applies only to some income derived from interest, dividends, rental income (less expenses) and capital gains (less capital losses). Also, the tax falls only on individuals with an adjusted gross income above $200,000 and couples filing a joint return with more than $250,000 in adjusted gross income.
So what do these provisions mean in practice? Consider three common real estate scenarios provided by the NAR on its website.
Ex. 1: Capital Gains on the Sale of a Principal Residence
A married couple sells their principal residence and realizes a gain of $525,000. They have $325,000 adjusted gross income before adding the taxable gain.
AGI Before Taxable Gain
$325,000
Gain on Sale of Residence
$525,000
Taxable Gain
$25,000
($525,000 - $500,000)
New AGI
$350,000
($325,000 + $25,000)
Excess of AGI Over $250,000
$100,000
($350,000 - $250,000)
Lesser Amount (Taxable)
$25,000
(Taxable Gain)
TAX DUE
$950
($25,000 x 0.038)
Ex. 2: Sale of a Second Home With No More Than 14 Days Rental Use
A family owns a vacation home they bought for $275,000. They have never rented it to others. They sell it for $335,000. In the year they sell it, they also have earned income from other sources of $225,000.
Gain on Sale of Vacation Home
$60,000
($335,000 - $275,000)
Income from Other Sources
$225,000
New AGI
$285,000
($60,000 + $225,000)
Excess of AGI Over $250,000
$35,000
($285,000 - $250,000)
Capital Gain
$60,000
Lesser Amount (Taxable)
$35,000
(AGI Excess)
TAX DUE
$1,330
($35,000 x 0.038)
Ex. 3: Rental Income Sources Including Real Estate Investment Income
A man has a full-time job earning $85,000 per year. He also owns several rental units and receives gross rental income of $130,000 per year. He has $110,000 in expenses related to the rental income.
AGI Before Rents
$85,000
Gross Rents
$130,000
Rental Property Expenses
$110,000
Net Rents
$20,000
($130,000 - $110,000)
New AGI
$105,000
($85,000 + Net Rents)
Excess of AGI Over $200,000
$0
Lesser Amount (Taxable)
$0
TAX DUE
$0
The NAR on its website provides several more examples of how the new tax will apply to certain real estate transactions. For more guidance on how the tax might apply to your own situation, contact your accountant or certified tax professional.
Jerry Kline is a Realtor with the Odenton, Md., office of Keller Williams Flagship Realty (1216 Annapolis Rd., Odenton.) For more information on the local real estate market, contact him at (443) 924-7418.
Is Tax Relief for Short-Sale Debt at Risk?
Debt forgiveness relating to short sales is considered taxable income by the IRS. A federal law that temporarily relieves this tax burden by making the debt forgiveness from a short sale or a mortgage principal reduction not taxable is about to expire. If Congress doesn't renew the provision, many in the real estate industry speculate that short sales will drastically decrease. Short Sale Relief at Risk?
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6 Home Deduction Traps and How to Avoid Them
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Copyright 2012 NATIONAL ASSOCIATION OF REALTORS®
10 Common Errors Common Errors Home Owners Make When Filing Taxes
10 Common Error0 Common Errors Home Owners Make When Filing TaxesDon’t rouse the IRS or pay more taxes than necessary — know the score on each home tax deduction and credit. Read
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Copyright 2012 NATIONAL ASSOCIATION OF REALTORS®
Tax Rules Encourage Short Sales Sooner, Rather than Later
Tax Rules Encourage Short Sales Sooner, Rather than Later
Tax rules that let you escape paying federal income tax after a short sale expire this year. Read
A Tale of Two Types of Neighbors and One Messy Yard
A South Carolina woman with a messy yard learned how neighbors can ruin your day — or save it. What’s your take? Read
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Copyright 2012 NATIONAL ASSOCIATION OF REALTORS®
