Clearing Up Rumors About the 3.8% Healthcare Reform Bill Real Estate Tax

 

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It’s easy to understand the immediate hype that came about once the new Healthcare Reform Bill of two years ago resulted in a new real estate tax to be imposed beginning January of 2013. But a lot of the hype has been misguided. In fact, today I’d like to clarify exactly how and when the tax applies.
 

New Real Estate Tax Applies To Transactions With Capital Gains

Keeping in line with capital gains tax laws, single persons are exempt from taxes on up to $250,000 of capital gains and married couples exempt up to $500,000 of capital gains.

In other words, considering a home that was bought for $300,000 and then sold for $400,000 – there is a no capital gains tax for either a single person or married couple since the profit is only $100,000 on this property. Assuming you fall into the category of applicable taxpayers, you only pay taxes if you sold it for over $500,000 of your purchase price. Consider a home owned by a married couple that sold for $900,000. The $600,000 profit will result in a capital gains tax on $100,000 of the profit – the amount that exceeds the $500,000 limit. In this scenario if it were an unmarried seller there would be a capital gains tax on $350,000 of the $600,000 profit.

Tax Applicable Only For Higher Income Individuals and Couples

Many people have been under the impression that all home sales will be taxed – for example according to common misinformation the sale of a $300,000 home would generate ten to twelve thousand dollars in tax. The tax is not on your entire sales price. The truth is the only scenario that would amount to the additional 3.8% tax is when a seller will be paying a capital gains tax and they fall within the income guidelines of the new law.

Looking again at our example above, assuming the home sold for $900,000 and the seller is a married couple, on a $600k profit the additional tax is $3800 – not $27,000 as the current rumor mill might calculate.

The most important thing to keep in mind about the new tax is that it is only imposed on individuals that earn $200,000 or more annually or married couples with a combined income of over $250,000. None of this applies to most people – in fact over 97% of the American public falls below the criteria for this additional tax.

The First Buyer to Make an Offer is Usually the Most Interested Buyer

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We’ve seen it time and again. A seller eagerly lists their home, finds a buyer with a serious offer but chooses to wait things out and see if other (better) offers come along. While it can happen and it does sometimes, the problem is that there is a process usually followed by buyers and along with it a pipeline. Here is a look at how they lead up to making an offer and how by the time the first buyer seriously considers your home they are likely the most viable one.

Buyers Are More Educated

With the advent of technology, the entire real estate industry has changed. Gone are the days when buyers would rely solely on their agent to find a home to suit their needs. Today, the Internet has taken over. In fact, studies show that over 90% of buyers spend weeks online searching for their perfect home before even talking to an agent.

So by the time a buyer is at your doorstep with an offer, there is a good chance they have thoroughly researched every aspect of the local market. They are fully aware of your competition, have weighed all pros and cons of your home and are seriously interested in your property. After countless open houses and obtaining plenty of education about the real estate market in their area, they know when they see a property that suits their needs. In many cases they are waiting for the perfect one to become available so the minute it does, they make an offer.

By the Time They Make an Offer, They Are Well Into the Process

Where sellers go wrong is to want to wait for more offers. In the process, those very serious buyers that have already made their interest in your home known will likely find another home to suit their needs. Buyers today are savvier than ever before – and with that education that they so readily find and absorb from various sources (the Internet, other publications, their peers, professionals) they have an acute knowledge of the market.

In the process of selling your home, it is critical to keep all factors in mind. Factors such as the condition of the market, your agent’s recommendations, current inventory levels, the number of days most properties remain on the market before being sold and of course prices. Putting all of that into play will change how you handle that first buyer but remember – the first buyer will almost always be your best buyer.

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For a consultation that is customized to your needs, contact us today. We look forward to serving you!

Selling During the Holidays Could Give You an Advantage

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Many sellers are unsure whether or not to wait until next spring before listing their home. The confusion comes with a combination of age-old schools of thought that predict the spring season as being almost the only season for homes to sell successfully. Not true.

A lot of homeowners are under the impression that homes are not selling at all, whereas in our own experience, time and again we continue to see complete opposite results. So much so, that we are defying the myths of never ending days on market statistics with many properties going under contract in approximately two weeks. Here’s why.

There are so many buyers in the marketplace right now that are eager to lock in the phenomenal interest rates and market conditions that continue to allow a very significant amount of buying power. The interesting thing is that while it is a strong buyers’ market in that sense, sellers are still enjoying an edge with the lower inventory that comes with it being this time of year.

Regardless of which side of the fence you are on, either way you look at it the market is strong. People are out there buying. If there are fewer homes available on the market, then that only means that there is less selling competition. This of course translates to top dollar and incredibly quick, hassle-free transactions in which everyone comes out a smiling winner.

So to answer one of the most frequently asked questions I am getting these days, it IS a great time to sell your home. Sure, you could wait till spring. But keep in mind that so will countless other sellers and by the time springtime blooms are back out, so will equally as many more “for sale” signs, competing with you.

By listing your home now, you can harness the power of the buyers that are striving to find that perfect property before the holidays kick in.

Contact us today if you’d like a custom, home valuation report detailing exactly what we expect your home will sell for in today’s marketplace. Our team looks forward to hearing from you and helping your real estate goals come to fruition.

Check out some of our market stats to see how our Bucks County area has been doing lately.

Warren Buffett Just Made a Huge Bet on the US Housing Market

Perhaps the most bullish indicator for U.S. housing is Warren Buffett.

The legendary investor has been buying up real-estate brokerages around the country as he bets on a housing turnaround. Now, he is partnering with Brookfield Asset Management, a Canadian real-estate investor, to more than double the size of his brokerage business.

Bloomberg Businessweek's Noah Buhayar has the details:

Berkshire’s HomeServices of America Inc. unit will be the majority owner of the venture to manage a U.S. residential real-estate affiliate network, according to a statement on the new company’s website. The firms plan to offer a new franchise brand, Berkshire Hathaway Home Services, starting next year. Brookfield’s network has operated under the Prudential Real Estate and Real Living Real Estate brands.

Berkshire’s managers have been positioning the firm to benefit as the U.S. home market recovers from its worst slump in seven decades. The Omaha, Nebraska-based company has bought a brickmaker, won the loan portfolio of bankrupt mortgage lender Residential Capital LLC at auction and built its HomeServices unit by agreeing to acquire real-estate brokerages in states including Oregon and Connecticut.

The press release says the brokerages that will make up the new company did a combined $72 billion in sales in 2011. That's more than twice the $32 billion in sales that Berkshire did in 2011 without the new brokerages.

More from the release:

The combined networks of more than 53,000 Prudential Real Estate and Real Living Real Estate agents generated in excess of $72 billion in residential real estate sales volume in 2011, and operate across more than 1,700 U.S. locations.

“Berkshire Hathaway HomeServices is a new franchise brand built upon the financial strength and leadership of Brookfield and HomeServices,” said Warren Buffett, chairman and CEO of Berkshire Hathaway Inc. “I am confident that these partners will deliver value to the residential real estate industry, and I am pleased to have Berkshire Hathaway be a part of the new brand.”
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“The strength of the Berkshire Hathaway name, coupled with the operational excellence of HomeServices and the franchising experience of Brookfield, positions Berkshire Hathaway HomeServices^® as a leading real estate franchise in the U.S., building on our traditions of exceptional client service and innovation. Brookfield is excited to be a partner in creating a home for the best real estate brokers and agents in the country,” said Bruce Flatt, Brookfield Asset Management CEO.

Buffett has been public about his bullish housing call for a while as he's built his residential real-estate brokerage business, but this is a big addition.

Read more: http://www.businessinsider.com/warren-buffett-brookfield-asset-managment-housing-2012-10#ixzz2CggkFeYf

"Invest in Homes Today"- Warren Buffet

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The news spread like wildfire.  No, it’s not another politician’s sex scandal or the latest (definitely not greatest) gas prices.  It is the monumental statement made by Warren Buffett that he would buy up “a couple hundred thousand” single-family homes.  The catch is that he would do that if it were something he could practically manage. He may not be able to practically manage it but individuals certainly can.

Think about that.  For months, if not more than that, countless Realtors have been urging their clients and potential clients that now is the perfect time to buy.  Now that it comes from one of the biggest investors of our time, it brings new light to the subject for many investors and has generated widespread industry buzz from the moment the billionaire uttered those words.

In an interview where he discussed several topics, soon into the discussion with Becky Quick of CNBC’s Squawk Box, he said that in addition to equities, single-family homes are probably the most attractive investment there is out there right now.  With the low rates that seem to be heading further down still, he suggests buying at these low interest rates and then for homeowners to refinance if and when the rates dip even more. 

He cited that the only reason he has not purchased as many homes as he would have liked is because of the practicality of managing the transactions and properties.  Apartment units might have been more manageable and in his words, he said he would “load up on them” had that been the case. But for the everyday investor it makes perfect sense to seize this opportunity and Warren Buffett highlights this repeatedly in his most recent discussion on CNBC.

Mr. Buffett shared his perspective on the idea of buying homes at distressed prices, fixing them up and renting them out as an ideal way to get a solid return on investment.  Referring to the changing trends and attitudes within the housing market, he also said this is the perfect way to “short the dollar” because with a 30-year fixed rate mortgage it can go two ways; either the interest rate is too high down the line after which you can go and refinance or if it’s too low the other guy’s stuck with it for 30 years.  Could this be the return of the house-flipping craze that we saw boom in the mid 2000s?

Mr. Buffett’s statement brings new light to something that so many agents and mortgage consultants have been saying all along.  Buy now.  At a time when stocks are just now rebounding after four years of inching their way back up, he says that consumers should acquire 30-year fixed rate mortgages and then refinance when rates go down further. 

If homeowners can hold on to their property for a long time after purchasing it at the lowest rates the industry has to offer they are sitting on the best investment possible of our time.  Of course equities are still very strong but they have come up quite a bit and Warren Buffett says owning a home is a “leveraged way of owning a very cheap asset”, making it quite possibly the most attractive investment that you can make.

Greater Pennsylvania Real Estate Market Update – October 2012

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Thank you for visiting my blog! Today, I want to share with you some important statistics that help to show the condition of our marketplace as we head into the cooler months of the year.

Right now we have 3,568 homes on the market for sale and in an average month the number of homes being sold is 411. That is a great number! Amounting to just under 14 homes sold each day on average, this is a good indicator of strengthened consumer confidence – particularly in the housing market.
For an in-depth look at these stats, Click Here >>

Now, these sales could be because of the Presidential election as many speculate, however in my experience I would say it has a lot more to do with the record setting low interest rates we are seeing in the industry these days. With the government not doing much to raise the base rate, we can expect for at least a little while longer, for these interest rates to hover at these amazing lows.

Inventory levels have come down from 10 months’ of supply last year at this time to 8 months this year. What this means is that if no new properties were to come on the market, it would take 8 months to sell all the homes that are currently available.

On a countywide scale, our average number of Days On Market is currently at 97 days. If you look at my listings alone, the average number of Days On Market is just 59 days – meaning that I am selling homes faster.
A more detailed explanation can be found by Clicking Here >>

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What does all this mean to you as a buyer or seller?

For sellers, clearly this is a great time to list your home. With inventory moving down and demand increasing sellers are enjoying much more success than they have had over the past several years.

Times are not tough for buyers either as they are still able to lock in amazing interest rates on 30-year fixed loans and even better on 15-year notes.

If you would like to explore your options, discuss your real estate needs or even just inquire about real estate in general – I invite you to contact me today.

Debbie@PaDreamHomes.com

215-757-6100

215-750-3036

 

5 Things You Should Do When You Move Into a New Home

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1. Change locks

Unfortunately, you can’t assume the keys you’re holding are the only keys to your home that could exist out there. Play it safe and have all the locks changed as soon as you can.

2. Re-program garage door opener

Again, it’s better to be safe than sorry when it comes to the security of your new home. Most garage door remotes have a reset button that you can hold down to reprogram the opener. If you want more concise instructions, note the make and model of the opener and contact the company to walk you through the steps.

3. Replace furnace filter

Most manufacturers recommend that a furnace filter be changed once a month during the heating season to ensure the most efficient performance. While there are higher-quality filters that may not require monthly replacement, it’s still a good idea to check the filter monthly and, of course, replace it when you move into a new place.

4. Install new batteries in smoke alarm and carbon dioxide detector

You have no way of knowing when the batteries were last changed and if the home has been unoccupied, it’s probably been awhile. Test the alarm and detector and put new batteries in each. This investment of time and a few dollars is well worth it, given the stakes.

5. Replace toilet seat covers

We probably don’t need to go into specific details, but most people insist on swapping out toilet seats.

Great Expectations – Real Estate Forecasts for 2012 and Beyond

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Now that everything’s back on track after a busy holiday season, we finally have a moment to step back and admire what a fantastic year 2011 happened to be. Wow – was it incredible! Despite reports of supposed “doom and gloom” and even though the economy was not doing very well, we had a great year and we have you, our valued clients and supporters, to thank for all that. With over 200 homes sold last year, we’re ready to begin 2012 with a bang.

What Makes a Good Market “Great”?

The main thing that we can attribute our selling success from 2011 to is having motivated sellers and serious buyers. It’s as simple as that. So, what exactly makes a good market “great”? We find that the perfect combination of the right price, excellent condition and accessibility, makes any home a strong contender in the crazy competitive property-selling world today. In fact, that’s exactly what we expect to see more of in 2012.

Low Interest Rates Continue and Inventory Moves 

Our prediction for 2012 is that as buyers continue to reap the benefits of our current market and unbelievable interest rates right now, inventory will begin to level off and we will start to see more stabilization in the market. 

Fewer, But More Serious Buyers Dominate the Season

Now that we are officially in our spring season (though it sure doesn’t feel that way from the looks of it outside) real estate is going to move at a really nice pace. And though there may be fewer buyers now than we might see a couple months from now, the ones that are out there are downright serious about purchasing a home. This is great news for sellers right now since there is less selling competition to have to worry about and at the same time a potential for more serious offers.
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As we move into what seems to be the hopeful next phase of our real estate journey beginning the past several years, it is with great confidence that we forecast an amazing year ahead. Please do not hesitate to contact us if you would like a custom consultation to learn how we can assist you with your real estate endeavors today or even if you just have some questions you would like answered about any of this. We look forward to hearing from you!

For 4th Quarter Market Statistics click here! >>