MyHomeExperts.com

Do You Qualify for a Transfer of Property Tax Base to Your New Home?

admin — Mon, 22 Sep 2008 22:38:46 +0000

Propositions 60, 90, and 110 are constitutional amendments approved by the voters of California. They provide for the transfer of a property’s base year value from an existing residence to a replacement residence, under certain conditions, for qualified persons over the age of 55 or persons of any age who are severely and permanently disabled. What are the conditions that need to be met in order to qualify for the exclusion? Both properties must be located in the same county, unless the county in which the replacement residence is located has an ordinance that allows inter county base year value transfers. As of the date of transfer of the original property, the transferor (seller) or a spouse residing with the transferor must be at least 55 years of age, or be severely or permanently disabled. At the time of sale, the original property must have been eligible for the Homeowners Exemption, or entitled to the Disabled Veterans Exemption. Generally, the replacement dwelling must be of equal or lesser value than the original property. The replacement dwelling must have been acquired or newly constructed within two years of (before or after) the sale of the original property. The owner must file an application within three years following the purchase date or new construction completion date of the replacement property. The original property must be subject to reappraisal at its current fair market value. Therefore, transfers of the original property that are excluded from reappraisal (e.g., most transfers between parents and children) will not qualify. I think that the sale of my residence may qualify for this benefit. How do I apply? You must file a claim with the assessor, who will determine if the transaction qualifies. Claim forms should be obtained from the assessor’s office in the county where the replacement property is located. How do I determine if the replacement property is of “equal or lesser value” than the original? It depends upon the timing of the purchase or completion of construction of the replacement property. In general, “equal or lesser value” means the fair market value of the replacement property does not exceed one of the following: 100 percent of the market value of the original property, if the replacement property is purchased or newly constructed before the original property is sold. 105 percent of the market value of the original property, if the replacement property is purchased or newly constructed within the first year after the original property is sold. 110 percent of the market value of the original property, if the replacement property is purchased or newly constructed within the second year after the original property is sold. If the market value of my replacement dwelling slightly exceeds the “equal or lesser value” test compared to the market value of my original property, can I still receive partial benefit? No. Unless the replacement dwelling completely satisfies the “equal or lesser value” test, no benefit is available. Can a taxpayer apply for and receive the benefit of Propositions 60/90/110 numerous times during the course of his/her lifetime? Generally, no. With one exception, only claimants who have not previously been granted this benefit are eligible. I was previously granted this benefit but have since become severely and permanently disabled. Can I apply for and receive the benefit of Proposition 110? Proposition 110 creates an exception from the one-time-only limitation for any claimant who becomes severely and permanently disabled after having previously received a base year value transfer as a claimant over the age of 55 years. Thus, if a person over the age of 55 years transferred the base year value from an original property to a replacement dwelling and subsequently becomes disabled, then that person may now transfer his or her base year value a second time. I would like to transfer my base year value to a replacement property located in another county. Which counties have adopted an ordinance to allow such transfers? As of November 5, 2004, each of the following seven counties has an ordinance implementing the intercounty base year value transfer provisions of section 69.5 of the Revenue and Taxation Code (Proposition 90): Alameda, Orange, San Mateo, Ventura Los Angeles, San Diego, Santa Clara what is the deadline for filing a claim? Generally, you must file your claim with the county assessor within three years of the acquisition or completion of construction of the replacement property. I still have questions about Propositions 60, 90 and 110.

Where can I find more information? Call Larry Waelde @ 800 868-2070.

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Defer Taxes through 1031 Exchange

admin — Mon, 22 Sep 2008 22:36:05 +0000

We provide complete 1031 Exchange Services through our Qualified Intermediary. Call Larry Waelde 800 868-2070

Capital Gain Tax Information Under normal circumstances, when you sell a property you have to pay tax on the gain. Gain is caused by taking depreciation deductions for tax purposes or by the property appreciating in value during its ownership. A Section 1031 tax deferred exchange, named for the Internal Revenue Code Section it refers to (also known as a Starker Exchange, Tax Free Exchange, or Like-Kind exchange), allows an exception to the real estate capital gains tax. When you sell your business or investment real estate, replace it with a different business or investment property, and complete a 1031 exchange, you can defer payment of the capital gains tax normally required on these sales. You can also avoid capital gains tax on rental property capital gains tax. If your plans include using the money from the sale of a business or investment property to buy more of the same, a 1031 real estate exchange provides greater proceeds for your next investment-more than you could gain through the re-investment of after-tax proceeds. A 1031 and the Capital Gain tax rule is not a tax loophole. It is a section of the Internal Revenue Code, written by Congress, to allow anyone who meets all the requirements to sell their property and defer paying taxes on the gain. Understanding the Capital Gains Tax Rule and Avoiding the Capital Gains Tax All relinquished (old) and replacement (new) property must be vacant land, rental property or property used for trade, business or investment. The property must be held for at least a year and a day to qualify for a 1031 Exchange. If the properties meet these requirements, you may exchange any real estate for any other type of real estate. You cannot have actual or constructive control of any of the proceeds received from the sale of the old property. By law, all money is held by a Qualified Intermediary (also referred to as an Accommodator or Facilitator). You cannot have an associate or employee, your attorney, broker or CPA hold the proceeds, nor can you leave the proceeds in escrow until the second property is purchased. You have 45 days from the date of closing on the old property to identify a list of properties, from which you will purchase the new property. From the date of closing, you have 180 days to close on one or more of the properties from your 45-day list. The titleholder on the old property must be the same titleholder on the new property. You must reinvest all cash proceeds from the sale, and purchase a new property or properties of equal or greater value, in order to avoid taxation on the gains.

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Real Estate Market Update as of 8/16/07

admin — Thu, 16 Aug 2007 22:48:03 +0000

Bay Area median sales price edged up to a new peak of $660,000 recently according to DataQuick Information Systems. What we weren’t told is why median price is up in a predominantly buyer’s market? Therein lies the problem with a “median price” focus. It’s just not a good (accurate) measurement of short term price movement in housing. The median price is easily skewed up or down when a disproportionate volume of high end or low end homes sell in a given month. Currently, entry level housing is not moving well, largely because banks are tightening qualifying standards due to the sub-prime meltdown. So when the median price (middle point of reported sales) is reported it reflects the lack of lower end sales and skews the mid point higher. No, the average home is not appreciating, contrary to the median price advance. Bay area homes are selling at their slowest pace in 12 years and sales are down by about 18% from this time last year. However, not all sub-markets are behaving the same. In cities like Pleasanton and Fremont the ratio of available listings to pending sales is a relatively healthy ratio of 3.6 available to every 1 pending sale. A not so tight, but still healthy market exists in San Ramon where there is 3.9 available listings for every 1 sale. Livermore represents a market with more generous selection with a ratio of 5.2 available listings for every 1 sale. Notwithstanding, our most recent South Livermore sale attracted 2 offers within a few days of going on market. Our most recent buyer contract was the lowest of 3 submitted on the same property. And, yes the Peninsula continues to attract multiple offers. One home generated 26 offers in Palo Alto!

I have always been impressed (and relieved) to see how consistent many real estate investors deal with the changing real estate landscape. Even though it is fairly obvious that we are in the “bumpy bottom” in the Bay Area market,, the “old timers” continue to prudently acquire real estate and invest in real estate funds. Yes the current short term market is a bit nerve racking. HOWEVER, it is my continued belief that Bay Area real estate is a very solid long term bet. I’ve been in real estate my entire working like starting as an appraiser in the 70s and my only regret is that I hesitated to buy in uncertain markets. Please don’t hesitate to call anytime you have questions on the market, your property’s value or where’s the best place to invest. Larry 925 216-5869.

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Real Estate Market Update as of 7/1/07

admin — Sun, 01 Jul 2007 22:46:33 +0000

While the number of home listings in a given market is a strong indicator or the health of the market….the percentage of pending listings is even more significant. In the East Bay market we have a “Tale of Many Cities”. In cities like Pleasanton and Fremont the ratio of available listings to pending sales is a relatively tight ratio of 3.6 available to every 1 pending sale. A not so tight, but still healthy market exists in San Ramon where there is 3.8 available listings for every 1 sale. Livermore represents a market with more generous selections with a ratio of 5.4 available listings for every 1 sale. While general real conditions in the East Bay range from a relative sellers market to a clear buyers market, don’t loose site of the big picture…. the Bay Area market is and will continue to be a solid investment! For over 20 years I have been impressed by the resilience of Bay Area Real Estate. I have watched and weathered two major real estate storms in my tenure as a real estate professional. Media gloom and doom came with both, and we are currently in the “third occurrence”. It’s a Cycle!

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Update of 5/1/07

admin — Tue, 01 May 2007 22:45:27 +0000

We are seeing a seasonal increase in listing activity – up 29% in 30 days. Still, current listings are 26% less than December’s number. More significant though is the 48% increase in closed sales! Sales have accelerated while the number of new listings remains a seasonal factor. Some tighter sub-markets reflect a 1 to 1 ratio of homes available to homes sold while the wider market is closer to a 3.5 to 1 ratio. Most local indicators are pointing to an increasingly healthy real estate market although the days on market for the average listing is 39 days. The next two months will test market demand as listing activity continues to accelerate. East Bay sales activity is fairly consistent throughout the price spectrum and Alameda County home prices were up in March by 3.1% over March 06. Although inventories are increasing, demand continues to be healthy.

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Update of 4/3/07

admin — Tue, 03 Apr 2007 22:43:35 +0000

Even with increasing inventories, multiple offers occur on homes that are well-priced and desirably located – especially in the East & North Bay areas. One Berkeley property received 18 offers. One listed in the $800 thousand range, sold for $450 thousand over asking. Other markets experiencing steady demand are Walnut Creek , Orinda, Danville, Livermore , Pleasanton and Fremont.

San Francisco is also strong where one home had 114 groups through its open house. Some properties on the market for multiple months are receiving more than one offer. San Mateo reports that most transactions are attracting multiple offers. As buyers sweep in to buy realistically priced housing, momentum will build towards an improved buyer seller equilibrium. As always, this transition will not be telegraphed and the news media will be weeks or even months behind the curve in reporting the market shift!

It appears that we have hit the low of the market’s down cycle and are slowly recovering. “Sales activity is certainly better this quarter than last quarter,” a quote from new home builder Signature Homes’ CEO. Despite all the doom-and-gloom stories and dire predictions over the last year, 2006 was the third-strongest year on record for existing-home sales. The housing market already appears to be moving beyond last year’s low cycle, while buyers are being encouraged by relatively low interest rates and more competitive pricing. Additionally, the East Bay job market has recently advanced to its healthiest level on record. The Center for Continuing Study of the CA Economy has recently predicted the entire Bay Area is at the beginning of an economic surge that could persist for 5 to 10 years. Also, available housing inventory is substantially down from last year’s high by as much as 40% in our submarkets.

The West Coast outpaced the rest of the country with a residential construction gain of 26.4% in February. This represents the biggest increase since January 1997. Business 2.0 magazine publishes a list of the top five “bubble-proof” markets — areas where annual appreciation outpaces the national average by at least 30 percent. The San Francisco Bay Area market is one of only 5 markets that fit into this category!

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