Personal Property Exchanges
Personal Property Exchanges – The Other Side of Section 1031
Many Taxpayers are familiar with §1031 exchanges of real estate. What many people do not know is that section 1031 applies equally to the exchange of personal property. Taxpayers that sell personal property used in a trade or business or held for investment may miss a valuable opportunity to defer the tax gain on the sale if they do not consider like kind exchange treatment for their transaction. Read more
Say NO to Extension of the Federal Tax Credit for First Time Home Buyers!!! (???)
The deadline for the federal tax credit of up to $8000 for first-time home buyers is fast approaching. In order to take advantage of this credit, escrow must be closed by November 30, 2009. If one were to count backwards from this, allowing for a 45 day close of escrow (not uncommon these days), this means that buyers will need to be in contract, at the very latest, by mid-October which means NOW. Read more
Up, Down, or Sideways?
We are speaking of mortgage rates, which continue to move down. Bankrate’s latest survey had them averaging their lowest levels in over four months last week, with the 30-year fixed-rate mortgage averaging 5.25% and the 15-year fixed-rate mortgage averaging 4.64%. Given the recent qualms over unemployment, rates would seem likely to move down further.
And they could, but they could also move up. Last week, Dallas Federal Reserve President Richard Fisher said that the winding down of the Fed’s stimulative monetary policies needed to start as soon as the economy shows signs of sustained improvement. “When it comes time to tighten monetary policy, my colleagues and I will move with an alacrity that, if needed, will be equal in speed and intensity to that with which we pursued monetary accommodation,” Fisher said in a speech to the Texas Christian University Business Network of Dallas. Read more
Bank or Mortgage Broker? Who to Use?
Where is the best place to get your home loan….a bank or a mortgage broker? Over the course of my many years in real estate, I have waffled back and forth over this question. Many times my decision on whom to refer would be based on the credit of my buyers. If they were self employed, had a small down payment or not-so-good credit, I would usually suggest that they talk to a mortgage broker. If they had excellent credit scores and a good down payment, I would usually suggest that they might be better off going directly to one of the major banks.
Now, after an incredibly negative experience with one of the largest banks operating here in California, I am leaning much more towards referring all clients to mortgage brokers, because I know that they will do the job and, most importantly, will actually care about my clients. Read more
Buyer (Still) Beware
We warn once again that it will not be a buyer’s market into perpetuity, though others have a different opinion. Some forecasters – Goldman Sachs being the most prominent – project the Federal Reserve will hold the fed funds rate low for “many years” in order to help U.S. consumers and companies pull out of their funk. If that were the case, then it would appear that mortgages rates ranging between 4.5% and 5.5% could be the norm deep into 2011.
Meanwhile, Reuters reports that homebuyers are still negotiating good discounts based on data released in July’s Zillow Real Estate Market Report. Zillow notes that buyers paid 3.3%, or nearly $7,039, less than the last listing price on homes for sale during July. What’s more, 22.8% of all homes listed for sale on Zillow during August were listed for a median 96 days, up from 91 in July.
It sounds like the trend will remain the buyer’s friend through 2011 – until you dig a little deeper. Zillow also noted that the 3.3% discount is down from June’s 3.5% discount and substantially down from January’s 4.6% discount. It is also worth noting, yet again, that the usual hard-hit burgs in Nevada , Florida and California skew the data.
“Even if prices stabilize and rise, we can still finance at cheaper rates,” so the counter argument goes. Yes, that is the case today, but we think Goldman and others are underestimating how quickly an economy can turn and how quickly inflation can conflate. It is a buyers’ market today, so buyers should take advantage of it today. As for tomorrow? We are much less sure.
Turn that movie in on time!
When working with Buyers I always get asked about how they can boost their credit scores especially when trying to qualify to purchase their first time home. My 13 years experience in the finance industry spanning from retail banking, credit, to mortgage brokering has taught me to not to take your credit history for granted. A lot of folks don’t understand that something miniscule as not paying your movie rental collection can come back to truly haunt you on your credit report; and thus prevent you from buying a home sooner than later.
For instance, just recently I had a new buyer pre-approved for a loan, and we discovered that he actually can not start looking for a home until early next Summer. He had to correct a major derogatory item on his credit report beforehand. I told him to please not feel defeated! Read more
Converting your Primary Residence into Rental Property
The tax code allows you to keep some or all of the gain on the sale of a primary residence if you meet certain conditions. IRC §121 permits the exclusion of realized capital gain of $250,000 for a single person and $500,000 for a married couple upon the sale of a home that was their primary residence for any two years during the five years preceding the sale. If your gain is in excess of this exclusion, you may have to pay capital gain tax on the amount over the exemption. This exemption cannot be used more than once every two years.
Let’s assume you have lived in your home as a primary residence more than two years, but decide to move out and turn the property into rental housing. If you sell the property less than three years after you move out, you still qualify for that primary residence exemption of $250,000 or $500,000. So if your gain (profit) is less than those thresholds, you will have no tax to pay on your gain, though you will have to pay depreciation recapture tax on the amount that you depreciated the property while it was a rental. Read more
We’re Getting the Job Done
Conservatives will say government has done too much, while liberals will say government has done too little. No sense in debating the argument; the differences are irreconcilable. But what isn’t debatable is the recovery, which will fully bloom because of the efforts of the private section.
Former junk-bond king Michael Milken noted as much in the Wall Street Journal. One of the more pervasive myths is that money is in short supply, but it’s really not. Milken noted that corporations worldwide have raised nearly $2 trillion in public and private markets this year, a clear sign the economy is improving. The fact that non-investment-grade companies, such as Harrah’s Entertainment, Warner Music Group, MGM Mirage, and Rite Aid, are now paying down bank debt with newly raised funds shows the capacity of our financial markets to re-capitalize, thanks mostly to the efforts of private financiers. Read more
-
Our RSS Feed
PruCalVoices RSS Feed
Get Email Updates
-
Join us on Facebook
-
Join us on Twitter
-
Recent Posts
-
Categories
-
Archives
