Beginning in 2013, California’s Franchise Tax Board will scrutinize real estate tax write offs filed by property owners as part of their 2012 tax returns. Their main focus is to ensure that deductible and non-deductible portions are appropriately designated. Unfortunately, this will likely reduce the allowed itemized deductions for property owners by thousands of dollars.
The change isn’t the result of new legislation, but rather a technology upgrade at FTB’s headquarters in Sacramento. Targeted to be installed and fully operational in 2012, the system will allow the FTB to properly differentiate between deductible and non-deductible portions of property tax payments. Since taxpayers typically deduct the total amount of their property tax bill – or the 1098 amount provided by their mortgage company – the state leaves billions in potential taxable revenue on the table every year. Mello-Roos fees in Orange County account for more than $200 million of non-deductible amounts expected to be written off for tax year 2011. The updated system could give Sacramento approximately $40 million of “found” income from Orange County alone.
The system upgrade was put into place after a review turned up the shortcoming in property tax deductions. While it will be completed this year, the FTB delayed enforcement until next year. That will allow property owners and tax preparers – as well as mortgage companies – time to correct shortcomings in their documentation, the FTB delayed implementation until next tax year.
The verdict is in… The economy is on the mend. While research indicates that as many as 20% households are still “underwater”, an economic recovery is welcome news across the real estate board. There are a slew of foreclosures still in inventory across the U.S., competing for owner-occupied sales, and fewer buyers are qualifying for a mortgage these days. That means sellers have to put their best step forward right of the gate. By following the following tips, sellers can ensure their home sells in 2012:
1) Make sure the price is right. The seller’s market is long gone. When you’re getting ready to list your home, double and triple check your sale price before putting it up. Make sure you’re not pricing yourself out of the current market before it even hits the MLS; review the latest comps and notice the spread between listing and sale price.
2) Spruce up your home – inside and out. Buyers drive neighborhoods. If your home is attractive on the outside, they’ll want to see what’s on the inside! Cut back overgrown shrubs, apply a fresh paint, and replace flowers that are out of season. Once the outside is beautiful, focus on interior appeal. Whether it’s by having the home staged or touching up plaster and caulk, the return on this small investment far outweighs the cost.
3) Be flexible. It’s a buyer’s market. Accept it. But make it work in your favor. Because nothing drives buyers away faster than a seller who rejects an offer without at least considering it. If you’re downsizing or have already decided that you’ll be selling the family room sofa set or the backyard shed, consider throwing it in to sweeten the pot. Closing costs always add up, so consider offering to help your buyer defray some of those fees as well.
4) Put your listing up EVERYWHERE. From Facebook to YouTube, savvy buyers and sellers are recognizing the opportunities the internet offers. Be sure you’re capitalizing on every possible venue you can.
In today’s housing market, a little forethought goes a long way. By following one (or several) of these suggestions, you’ll ensure your home sells in 2012!
As part of an ongoing effort to spur growth in real estate, the FHA recently announced they would again delay implementation of an anti-flipping rule. The rule prohibited buyers from obtaining FHA-insured financing for homes owned by the seller for less than 90 days, leaving “flippers” unable to move properties quickly. The waiver was placed in 2010 to allow additional financing options on what has become an eyesore of this recession: a glut of bank- and HUD-owned properties.
“We must make every effort to promote recovery in every responsible way we can,” stated FHA’s acting commissioner, Carol Galante. Speaking with DSNewa.com, she went on to say, ““This extension is intended to accelerate the resale of foreclosed properties in neighborhoods struggling to overcome the possible effects of abandonment and blight.”
In order to avoid potential for predatory activity, the waiver contains specific language and conditions to prevent over-inflated transactions. For one thing, FHA-backed financing must be conducted at arms-length, allows no link between buyers and sellers. Another aspect of the waiver requires documentation to justify sales prices 20% or more over the seller’s acquisition cost.
Most flipping activity occurs well within 90 days of purchase. Before allowing the waiver, FHA’s research concluded that by disallowing flipped properties – at least on a temporary basis – it would hamper an important part of the recovery. Since its implementation in February 2010, the waiver’s reach has been staggering: 42,000 mortgages worth in excess of $7 billion.
That’s over $7 billion of sales and 42,000 homes that might not have been…