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Archive for the ‘taxes’ Category

According to the NAR…

Real Estate Provisions in “Fiscal Cliff” Bill

NAR Issue Brief

On January 1 both the Senate and House passed H.R. 8, legislation to avert the “fiscal cliff.”  The bill was signed by President Barack Obama.

Below are a summary of real estate related provisions in the bill.

Real Estate Tax Extenders

·         Mortgage Cancellation Relief is extended for one year to January 1, 2014

·         Deduction for Mortgage Insurance Premiums for filers making below $110,000 is extended through 2013 and made retroactive to cover 2012

·         Leasehold Improvements: 15 year straight-line cost recovery for qualified leasehold improvements on commercial properties is extended through 2013 and made retroactive to cover 2012.

·         Energy Efficiency Tax Credit: The 10% tax credit (up to $500) for homeowners for energy improvements to existing homes is extended through 2013 and made retroactive to cover 2012.

Permanent Repeal of Pease Limitations for 99% of Taxpayers

Under the agreement so called “Pease Limitations” that reduce the value of itemized deductions are permanently repealed for most taxpayers but will be reinstituted for high income filers. These limitations will only apply to individuals earning more than $250,000 and joint filers earning above $300,000. These thresholds have been increased and are indexed for inflation and will rise over time. Under the formula, the amount of adjusted gross income above the threshold is multiplied by 3%. That amount is then used to reduce the total value of the filer’s itemized deductions. The total amount of reduction cannot exceed 80% of the filer’s itemized deductions.

These limits were first enacted in 1990 (named for the Ohio Congressman Don Pease who came up with the idea) and continued throughout the Clinton years. They were gradually phased out as a result of the 2001 tax cuts and were completely eliminated in 2010-2012. Had we gone over the fiscal cliff, Pease limitations would have been reinstituted on all filers starting at $174,450 of adjusted gross income.

Capital Gains

Capital Gains rate stays at 15% for those the top rate of $400,000 individual and $450,000 joint return. After that, any gains above those amounts will be taxed at 20%. The 250/500k exclusion for sale of principle residence remains in place.

Estate Tax The first $5 million dollars in individual estates and $10 million for family estates are now exempted from the estate tax. After that the rate will be 40 percent, up from 35 percent. The exemption amounts are indexed for inflation.

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I had my first conversation with a Vet who is coming home to Long Island after serving our country.  I was a little tongue-tied at first not quite sure how to express my gratitude to all that he has given.  I am sure I will find more words on Saturday when I meet him face to face!  He asked me about a program to help vets purchase a home and I thought I would share this information for anyone else who may know a returning veteran and how this can help them.

 

The Town of Babylon has grants available for Veterans seeking to purchase.  Grants of up to $10,000 can be used for down payment and/or closing costs.  Vets must have served on active duty since October 7, 2001.

http://www.lihp.org/downpayment.html  This is the link for more information and the contact number (631) 435-4710

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(Public Meeting)             Public Hearing on Tentative Budget

A Public Hearing will be held on Monday, March 26, 2012 to discuss the tentative 2012-2013 village budget.

8 pm

 Village Hall Courtroom

 3rd Floor

 21 Ireland Place

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There is an old saying that when purchasing your first home you should look for the “worst” home on the “best” block.  In today’s market this may involve a short sale, foreclosure, or straight up old-fashioned handy man special.  It may seem like a good idea but I urge you to be aware of the potential pitfalls of the situation.  When you are a looking for a home it is an emotional journey and can be exciting and stressful at the same time.  A few things to consider when making these decisions –

  1. Review your finances.  Are you at the maximum end of your budget when purchasing a home?  If it is a handy man special will you have the funds available to make the renovations you dream about.  Let’s just say for example that you are handy, possibly even a carpenter and plan to work on your home yourself.  Do you have the time now, and will you have the time in the future?  Will kids come into the picture?  What is the time frame for the renovation and will there be the funds available to complete the renovations in your allotted time frame.  I can say from personal experience that when you have a baby you will not want that baby exposed to harmful sheet rock dust or solvents and/or cleaners.    Layout your plans in writing, allow extra time and extra cash in your budget.  There will always be an unexpected surprise at some point in a remodel.
  2. What are your neighborhood schools like?  Again, are you planning on having children?  Will they attend the public schools or a private school? These are personal decisions but one that must be budgeted for, should you choose the latter.
  3. Are you adding square footage?  More than likely if you choose a renovation that adds square footage your taxes (Town & Village) will rise.  Plan accordingly and review similar homes taxes before adding on that 2nd floor or that dormered bathroom.
  4. Can you afford the neighborhood?  You may be just fine with all of your money tied up in your home and are proud and satisfied to come home.  Will you be okay with not driving a fancy car or belonging to the golf club like your neighbors?  Maybe you are in a waterfront community and everyone takes their boats to the local watering hole to socialize.  Will you feel accepted if you don’t own a boat yourself? 
  5. Did you choose a waterfront home?  Being able to afford the floor insurance premium on a waterfront home is wonderful.  Now, imagine the worst, if a flood occurs, will you be able to afford the deductible required by the flood insurance and the repair or replacement of items that may not be covered under your policy.

As with anything in life, the future remains unknown.  Give yourself some room to breath and make sure you properly budget one of the largest financial decisions you will make, and make sure to talk to a trusted professional who will offer their opinions and knowledge to help you make the best possible decision for you and your family. 

~Jenn

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“We Can’t Afford It”

 I woke up this morning to a cold and blustery day here on the Bay.  I shuffled the kids off to school, retrieved my paper, sat down with my cup of coffee and opened up first my e-mail followed by Newsday.  It would seem like a peaceful scene…in reality I had a good friend dropping envelopes off to stuff for a Gala Event (which I was stuffing and checking email and drinking coffee, I really know how to multi task)  and a contractor on the other side of me spackling and creating a dusty disaster of a home all at 8 am but I digress…back to the subject…

 I received an email advising me that is a Village Public Meeting scheduled on two local laws one of the laws to be amended is a local law to override the 2% property tax cap.  I then opened up Newsday with the front cover exclaiming “We Can’t Afford It”.  In an effort to sum up what we all know and realize is that an analysis of 2010 census data, Long Island Assoc. chief economist Peral Kamer found that 4 in 10 homeowners with mortgages used more than 35 percent of their income for housing costs.  The Dept. of Housing and Urban Development recommend 30 percent of total income spent on housing.  So basically we are 5% over the suggested recommendations.  I would bet that if people were really honest the percentage would actually be higher than the 35% that most pay, once you add up the mortgage, home equity, gas, oil, electric, water and finally and most importantly taxes.  Which brings me back to the email that I received today.

As a professional in the real estate industry it will always come back to the inevitable taxes.  Take for example a 2 bedroom ranch in excellent condition, perfect for a young couple starting out or a retired couple looking for single level living, plenty of room for expansion whether you went up or out and an excellent floor plan and really nice rooms sizes.  Potential buyers would walk in the door and fall in love with the home for all of its characteristics.  Then they ask the question…”well, what are the taxes?” and so came the inevitable $16K plus BUT they are being grieved and we are well into the process.  The fact that a two bedroom ranch had the same taxes as a sprawling 4 bedroom colonial across the Bay is just a really tough situation for both the current homeowner and any potential buyers. 

 We run into this all the time in Long Island and it is not limited to our Village.  So, what I suggest, in this market, is that everyone become educated on this issues at hand.  This is affecting a lot more Villages than Amityville.  If you click on the picture it will take you to the Roslyn News Article also pertaining to this issue.  The article today explains the 2% cap and what the Villages are doing around Long Island.

 It is difficult enough for Long Islanders to afford housing, long gone are the single income families, more and more we see multiple incomes in order to afford the costs of homeownership. My advice is simple.  Educate yourself.  An educated client is the best client. 

As always, thanks for reading!

~Jenn

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The only day to grieve your VILLAGE taxes is FEBRUARY 21st, 2012!

You must go down to Village Hall located at 21 Ireland Place between 3 and 7 p.m.!

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Buying your first home is one of the landmarks that significantly mark becoming an adult.  If you have purchased your first home, be it a co-op, condo, PUD (Planned Urban Development) or house then congratulations, you are finally a grown up!  Part of being a grown up is getting your act together financially which, as today’s mortgage lenders are ultra conservative, you must have already done a pretty good job of it otherwise you would not qualify for home ownership.  There are many tax incentives that come with owning a home rather than renting.  I suggest you sit down with a professional in that field to go over specifically how much you can claim on your tax forms.  I know there are a lot of programs out that there that you can “do it yourself” but you should really consult with an expert to make sure all your ducks are in a row before filing with the IRS, especially if property has been purchased or sold within the year.  A professional will also advise you which home repairs or improvements are worthwhile or may be deducted and how long documents must be saved. The following are some key deductions that your professional should be able to deduct on your tax return – HINT – THESE ARE THE REASONS TO BUY vs. RENT!

1) Interest Deduction: 100 percent of your mortgage interest you owe and pay during the year is deductible.  Your mortgage company will send you a statement in January, some may send it via mail while others may make the statement available to you online for you to print.  This is true UNLESS this is a secondary home or vacation home.  Only the interest on your primary residence is deductible.

2) Property Taxes: If this is your primary residence you should also be able to deduct 100% of your property taxes for both State and Local agencies!

3) Closing Costs: Discount points and origination fees can also be deducted.  It is critical that you speak with a professional to review your closing documents before submitting your tax returns.

4) Home Improvements: There are tons of programs and rebates that you may be eligible to deduct while increasing your home’s energy efficiency.  I know that the Town of Babylon will come and inspect your energy rating and possibly insulate your entire home with no costs out-of-pocket!

There are so many different ways to count up the benefits of owning your home both financially and emotionally.  If you are looking to make a change in your home ownership please consider me for your real estate needs.

Thanks for reading!

~J

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