Category Archives: News you can USE!

The Tax Difference in Second Homes

11 Monday Jun 2018

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A principal residence and a second home have some similar benefits, but they have some key tax differences. A principal residence is the primary home where you live and a second home is used mainly for personal enjoyment while limiting possible rental activity to a maximum of 14 days per year.

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Under the 2017 Tax Cuts and Jobs Act, the Mortgage Interest Deduction allows a taxpayer to deduct the qualified interest on a principal residence and a second home. The interest is reduced from a maximum of $1,000,000 combined acquisition debt to a maximum of $750,000 combined acquisition debt for both the first and second homes.

Property taxes on first and second homes are deductible but limited to a combined maximum of $10,000 together with other state and local taxes paid.

The gain on a principal residence retained the exclusion of $250,000/$500,000 for single/married taxpayers meeting the requirements. Unchanged by the new tax law, the gains on second homes must be recognized when sold or disposed.

Tax-deferred exchanges are not allowed for property used for personal purposes such as second homes. Gain on second homes owned for more than 12 months is taxed at the lower long-term capital gains rate.

This article is intended for informational purposes. Advice from a tax professional for your specific situation should be obtained prior to making a decision that can have tax implications.

 

When Neighbors Don’t Seem to Care

05 Tuesday Jun 2018

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A home that isn’t being maintained like others in the neighborhood can negatively affect your visual sense of appeal and in some extreme cases, even affect property values. It might be an overgrown yard, a fence in need of repair, excessive noise, unruly pets, paint peeling on the home or even a car or boat parked in front of the home that hasn’t moved in weeks.

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Most people want to be good neighbors and may be willing to correct an issue once it is brought to their attention. A practical but possibly, confrontational solution is to contact the responsible person and describe your perception of the issue. However, they may not always agree with the same urgency and it might be necessary to seek other remedies.

An owner-occupant may be more sympathetic to the neighbors and willing to correct the issue. If you think the home might a rental property, check with the county tax records to identify the owner. They may be unaware of the situation and welcome the notification to protect their investment.

Another alternative might be to notify the homeowner’s association, if there is one. One of the benefits of a HOA is to enforce community appearance standards as set in the covenants or bylaws that specify how properties must be maintained. This could be a less personal method of reaching a beneficial outcome.

If the source of the problem is a code or housing violation, the city may be the ultimate authority. Most cities have a separate code and neighborhood services division and some cities have 311 for non-emergency assistance.

Second Guessing Price

21 Monday May 2018

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Imagine a homeowner consulting with their agent about the price to place on their home. The agent suggests that the market data indicates that $200,000 to 210,000 would produce a quick sale by pricing it properly. The owner puts a $210,000 price on the home.

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The first person who looks at the home offers $205,000. When the seller receives the offer, he comments that he thinks he priced the home too low and counters for  full price. The counter-offer is rejected, the home stays on the market and at the end of the first month when based on market conditions, the home should be sold, no other offers have been made.

It may be human nature that when an offer is received so quickly, the first thought to come to mind is that it was priced too low. A more appropriate thought might be that it was priced correctly. In some cases, when a home comes on the market, there is increased competition (real or perceived) among the buyers waiting for the “right” home to come on the market. The home can sell for a higher price than if it sits on the market for several months.

There may be stories of sellers who turned down the first offer and ended up receiving a better offer that would net more money. However,  real estate professionals say the first scenario occurs frequently.

The wisdom of experience advises owners to find a real estate professional that they trust and have confidence. Allow that professional to become familiar with your home and compare it to similar homes in the market that have sold recently and ones currently on the market. Determine the demand for homes in the area compared to the inventory. Decide on a price that will allow the home to sell within a relatively short period of time. And lastly, be satisfied if your home sells quickly near the price you put on it.

A Home for Tomorrow

15 Tuesday May 2018

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As people near or enter retirement, one of the decisions that typically comes up is whether to sell their “big” home and buy a smaller one. If you know anyone who has been faced with that situation, selling one home and buying a smaller one may not save enough money to make it worthwhile.

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There are sales expenses on the property being sold and acquisition costs on the replacement home. Generally speaking, homeowners may not mind a home with less square footage, but they usually don’t want to give up amenities or locations that they’ve become accustomed.

After a little number crunching, the move may not make enough difference in savings and they end up staying in their current home even if it doesn’t fit their needs anymore.

What if while this couple were still in their peak earning years, they acquired a home in an area where they would consider retiring and rent it during the interim. They could put it on a 15-year mortgage and possibly, even accelerate the principal payments to have it paid off by their anticipated move.

In the meantime, they could continue living in the “big” home until it is time to make the transition. Sell the “big” home that may be paid for by then and avoid up to $500,000 of capital gain. Take part of the proceeds and remodel the rental/transitional home and invest the proceeds for retirement income.

Ideally, the former rental would be mortgage free by this point, so the retirees would not have a house payment. Even if at this point, they changed their mind about retiring to this particular home, they still have a property that acted as a hedge against rising prices and have sufficient equity to purchase something else without using the proceeds from the “big” home.

It is difficult to know what the situation will be years from now when a person retires. It is clearly advantageous to have a plan that allows for options and choices. To find out more about purchasing your retirement home today, give me a call at (225) 291-1234.

Live the Good Life on Happywoods Rd!

01 Tuesday May 2018

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Amazing, beautiful and the perfect place to build your dream home, family camp, or weekend get-away ..waiting for you!. This 10.45 acre tract is located off of Happywoods Rd. in Springfield. Some acreage is cleared and ready for more improvements. The cabin on the site has one bedroom and one full bath, and nice open den and dining area, the back walk way leads to the exterior Kitchen house where you can cook complete meals. Enjoy the solitude and complete quiet found only in this remote location.

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Amazing Listing in Springfield, La.

19 Thursday Apr 2018

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https://rem.ax/2Hf59yw CLICK THE LINK

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This home will not disappoint w/ its soaring 23′ ceiling, large beams, varied ceiling heights, & wall of windows that looks out over the massive deck & reinforced bulk heard pond. Amenities in this 4 bed, 4 bath home with SUN-ROOM, LOFT, and OFFICE are numerous.The kitchen features a 2 drawer Dishwasher, DOUBLE OVEN with warming tray, triple sink w/ disposable, ISLAND w/ hot water tap, sink, & disposable, you will love the POT filler over the gas 5 burner stove, wine cooler, ice maker, slab granite on the island, large snack bar that sits 6. You have more than enough storage with the large walk in pantry, upper and lower cabinets and pull out drawers, large closets everywhere to be found. In the master, you and yours will have additional privacy w/ separate baths & walk in closets. Over-sized laundry, separate cabinet areas & utility sink along with a garage sink gives you additional comfort & care with all your laundry & outside needs. EASY maintenance w/ ceramic tile throughout most of the home, & hardy plank siding on the exterior. Nice 8 FT. doors, upscale light fixtures, fans, and hardware finish off the details of this custom-built home WITH post tension slab. If you like to entertain, the complete open flow of the home with the massive deck allows for any type of occasion that you have in mind, and everyone will enjoy the built BOSE speaker system both inside and outside the home. This home has it ALL and completes its comforts w/2. 15K generators that will keep your home up and running. The two attic entrances are floored for ample storage, along with an outside storage and LARGE workshop area. One One more perk is the parking area for any travel trailer with full hook ups with a 30 /50 amp & dump station. Now all that sits on 3.727 acres in a non-flood and never flooded CUSTOM BUILT HOME! If you are looking for privacy & luxury in the country you you must Drive out and Take A TOUR today

 

Case Study – Housing Decision During Retirement

16 Monday Apr 2018

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A couple is planning to tour the United States in a travel trailer during their first few years of retirement. They are going to sell their current home now and purchase another home when they finish their travels.

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An interesting exercise is to determine the optimum time of selling the home: now or when they’re ready to buy their replacement home.

If they intend on traveling for more than three years, then, it may be a good decision to sell prior to the sojourn to avoid paying taxes on the gain in their home. IRS allows for a temporary rental of a principal residence while still keeping the $250,000/$500,000 capital gains exclusion intact. A homeowner must own and use a home for three out of the previous five years which means that it could be rented for up to three years, but it would need to be sold and closed before that three-year window expires.

If the travel will be less than three years, there is an option of selling now or later. Using the example below, the homeowner sold the home, paid their expenses and invested the proceeds in a three-year certificate of deposit until the replacement home was purchased.

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As an alternative, if the homeowner rented the home, not only would they have income, the home would continue to appreciate and the unpaid balance would go down resulting in larger net proceeds. Based on a 5% appreciation and continued amortization of the mortgage, the net proceeds could easily be $40,000 more.

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Obviously, there are a lot of considerations that affect the decision to sell now or later but in an appreciating real estate environment, being without a home for several years could affect the financial position of the owner in the replacement property. It is certainly reasonable to look at various alternatives before making a decision. Call me at (225) 291-1234 to help you look at the different possibilities and talk to your tax professional.

New Listing near the town of Livingston!

14 Saturday Apr 2018

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Exceptional SPACIOUS home offering 3 bed/ 2 bath with office, plus an outside ALL PURPOSE room with kitchenette and bath along with a built in salt water POOL and large two CAR garage with amazing storage. All NEW PAINT, NEW wood Laminate flooring, new pool liner …updates inside and out, all this along with large kitchen that has an ISLAND and snack bar with lots of windows in dining area and living area, large great room for family to enjoy along with a SPLIT floor plan for a private master suite. You will love the large master and private master bath along with your own private patio/deck. There is plenty of storage room with two walk in closets along with a separate tub and shower. Lots of privacy on .761 of an acre including a completely fenced in in-ground salt water POOL where you can sit outside under the patio and enjoy the summer season at your own little oasis. The two Car 24 x 28 garage has plenty of room for additional storage along with a side entrance door and two roll up doors. The All purpose room has been nicely updated with a kitchenette, and bathroom. This would make a great Mother-in-law suite, Game ROOM for the kids, office, man’s cave, or she shed, you name it. All updated and ready for you. There is so much to admire and love about this unique and special home. Make sure to schedule your private showing today. http://www.tourfactory.com/1971347

 

Waiting Period After Distressed Sale

09 Monday Apr 2018

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“How long do we have to wait to qualify for another mortgage” is the question concerning people who’ve had a foreclosure, short sale or bankruptcy. The loan types for the new loan will differ in amounts of time to heal credit scores based on the event.

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The following chart is meant to be a general guide for how long a person might have to wait. During this waiting period, it’s important that the person be current on all payments and maintains a history of good credit.

A recommended lender can give you specific information regarding your individual situation and can make suggestions that will improve your ability to qualify for a mortgage. This process should be started before looking at homes because of the time constraints listed here can vary based on current requirements and possible extenuating circumstances of your case.

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We want to be your personal source of real estate information and we’re committed to helping from purchase to sale and all the years in between. Call us at (225) 291-1234 for lender recommendations.

Waiting Will Cost More

02 Monday Apr 2018

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With the first quarter of 2018 in the books, the 30-year fixed rate mortgage is nearing what Freddie Mac predicted it would be in the second quarter. If this pace continues, rates will exceed the five percent mark expected by the end of the year.

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The Fed has had its first of an expected three raises for this year and two more are expected in 2019. While these rates are not directly related to mortgages, they certainly have an effect.

Delaying the decision to purchase or refinance could be an expensive missed opportunity. A $270,000 mortgage at 4.44% has a principal and interest payment of $1,358.44 per month. If the rate were to rise one-percent in the next twelve months, the payment would be $1,522.88.

The $164.44 increase would cost a homeowner an additional $13,812.97 in seven years and close to $60,000 over the full term of the loan.

The question facing people is “what would you spend $164.44 each month if you had acted sooner to get the lower rate?”

If you’re curious to know what your “missed opportunity” could be costing you, try this Cost of Waiting to Buy calculator . Use 0% increase on price change if you are refinancing a home you already own.