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Remax Real Estate Services 949-361-0357 Inside This Issue… Benefits of Home Ownership » Fanny Mae Updates Condo Guidlines » Investment Trusts Offer Lower Tax Rates » Homes For Sale In Talega » Many Home sellers Opting For Retirement » My New Book To Be Out Soon
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RISRISMEDIA, April 12 – As tax season comes to a close, the possibility of home ownership weighs heavily on the minds of renters and other prospective homebuyers. Owning a home is the American Dream, but renters are often apprehensive about taking on the financial responsibility of home ownership. Along with the pride, security and sense of community that come with owning a home, the professionals at Coldwell Banker remind taxpayers that owning a home rather than renting also offers financial benefits. Recent federal tax code changes are yielding greater financial gains for homeowners than ever before. For years, the U.S. Congress has rewarded homeowners with tax breaks, and in 2005 homeowners are expected to receive more than $116 billion in direct tax subsidies, according to the Joint Committee on Taxation. * Deductible Property Taxes and Interest: Most homeowners can deduct property taxes and interest paid on their mortgage every year of ownership. In fact, the tax code allows homeowners to write off interest on first and second mortgages -- including equity lines and loans -- up to $1.1 million worth of the overall mortgage debt. That is expected to amount to $72.6 billion in tax deductions this year alone. * Borrowing Against Equity: Homeowners can borrow against
the equity they have built up in their homes. Equity
from a home can be used to improve the property, buy
a car or pay for education. Homeowners may also have
the ability to deduct the interest from their federal
taxes. Renters * Real Estate Tax Exemption: Depending on the state, certain real estate tax exemptions apply for homeowners who meet specific criteria. Homeowners should check with local assessors and tax consultants to see if any exemptions apply to them. * Yearly Home Appreciation: Although it is not a tax advantage, homeowners build equity and realize yearly appreciation of their property over time. Renters receive no financial return on their monthly rental costs. * Recent Federal Government Changes: During the last few years, the federal government has made owning a home even more financially favorable. Recent improvements enacted include the following: * In 2005, the 15 percent tax bracket for married couples
will * The federal government has recently relaxed rules on IRA and 401(k) retirement accounts, permitting first-time homebuyers to tap into their retirement funds for their down payment without paying penalties on early withdrawal. * The federal government now offers exclusions of capital gains on sales of principal residences, which has resulted in $22.9 billion in tax benefits over the last several years. This category has ballooned since 1997, when Congress first sanctioned tax-free treatment of up to $250,000 (for single filers) or $500,000 (for married joint filers) on home-sale profits. The exclusions are available on homes owned for just 24 months, and can be used without limit every 24 months. |
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Fannie Mae Updates Condominium Guidelines
Fannie Mae recently announced plans to revise its condominium guidelines to help lenders originate more condominium loans, often an affordable alternative to a single-family detached home. The guideline changes include a more straightforward process for condominium project approval and broader eligibility criteria, including reduced pre-sale requirements. Expected to take effect in the second quarter of 2005, the modifications will make it faster and easier for mortgage lenders to obtain project approval for homebuyers purchasing condos as well as increase the availability of Fannie Mae-accepted condo projects in smaller markets. Investment Trusts Offer Lower Taxable Income Rates National Association of Real Estate Investment Trusts (NAREIT). More than 50 percent of that was taxable as capital gains, while the other portion mostly came from nontaxable distributions. While this will alleviate some investors' fears that any one REIT will pay out high-tax dividends, it remains difficult to forecast what category of income a REIT will pay out in a given year due to the fact that the numbers fluctuate significantly depending on such variables as asset sales. One example is Camden Property Trust, a Houston-based apartment REIT that last year distributed $1.905 a share to its stockholders. Of the total distributed, almost 50 percent was taxable at rates lower than ordinary-income rates. Source: The Wall Street Journal (04/19/05); Opdyke,
Jeff D.
Many Homeowners Head For Retirement The CALIFORNIA ASSOCIATION OF REALTORS® annual “Profile of Homebuyers and Sellers” reports that 18.4 percent of all sellers said they were retiring or moving to a retirement facility. In addition to retirees, the association says 15 percent of sellers sold because they wanted a larger home, while 13 percent desired a better location. Three out of every four sellers was a baby boomer—the huge generation of graying Americans who are approximately 40 to 60 years old—and the typical seller was 50 years old. Last year’s sellers fared well. The association profile says that sellers received record net gains of $204,386 last year, a 36.3 percent jump from $150,000 in 2003. Seventy-five percent of the state’s sellers planned to purchase another property, the profile indicates. Six out of 10 said they intend to buy a new home outside the county in which they previously lived, and an increasing number of baby boomers said they want to move to Arizona. The association says the typical seller earned $100,000
annually. More than half were married—54.7 percent—and
31.3 percent were singles. Another 8.9 percent of sellers
included two or more related or unrelated individuals
while “others” constituted the remainder
of sellers. |
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