Taxes and the Homeowner

25 Jun

Whether you’re an owner now or expect to be one in the future, it is important to be familiar with the federal tax laws that affect homeownership. Since personal income tax was enacted in 1913 with the 16th amendment, homes have had preferential treatment.

The mortgage interest deduction is based on up to $750,000 of acquisition debt used to buy, build or improve a principal residence. In addition to the interest, the property taxes are deductible, limited to the new $10,000 limit on the aggregate of state and local taxes (SALT). The taxpayer may also deduct interest and property taxes subject to limits on a second home.

Homeowners can decide each year whether to take itemized personal deductions or the allowable standard deduction which was significantly increased under the Tax Cuts and Jobs Act of 2017.

Single taxpayers may exclude up to $250,000 of capital gain on the sale of their home and up to $500,000 if married filing jointly. They must have owned and lived in the home for at least two of the last five years. For gains more than these amounts, a lower, long-term capital gains rate is paid rather than one’s ordinary income tax rate.

Capital improvements made to a home will increase the basis and lower the gain. Homeowners are probably familiar that large dollar expenses like roofs, appliances or major remodeling are capital improvements. However, many lower dollar items may also be considered improvements if they materially add value or extend the life of the property or adapts a portion of the home to a new use.

Homeowners are urged to keep records of money they spend on the home that they own over the years so that their tax professional can decide at the time of sale what they must report to IRS.

You can download a helpful Homeowners Tax Guide that explains in more detail and includes a worksheet to keep track of the basis of your home and capital improvements.

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Show Them You’re Serious

18 Jun

June and July are the busiest home sale months of the year. When inventory is in short supply and you may be competing with other offers, it is important to show the seller you’re serious. Make your offer look as good as possible because you may not get the chance to make or accept a counter-offer.

Put yourself in the seller’s shoes. Your home has just gone on the market. There is lots of activity and suddenly, there is more than one offer to purchase. The seller’s first consideration may be to accept the highest offer but there are many other things to consider like closing dates, closing costs, possible repairs, contingencies and of course, the ability of the borrower to get a loan.

Offer a fair price for the property in your initial purchase agreement. It shows sincerity and good faith that you’re actually trying to purchase the home and not trying to take advantage of the seller. The old adage that you can always go up later may never happen if there are multiple offers on the property in the beginning.

  1. Remove the uncertainty that you may not be approved for a mortgage by having a pre-approval letter from your mortgage company.
  2. Show your sincerity by increasing the normal amount of earnest money customary for the area and price of the home. The earnest money will be applied toward your down payment and closing costs. Consider placing even more money in escrow when the contingencies have been met.
  3. Specify a closing date in the contract but acknowledge that you can be flexible to accommodate the sellers’ moving date. If it becomes an issue, it still must be mutually agreed upon.
  4. Make the contingency periods shorter if possible to make the seller feel that they’ll know sooner that the offer is solid.
  5. If the contingency really isn’t important to you, leave it out of the offer. The more contingencies included in a contract, the more the seller will wonder what might happen to keep it from closing.
  6. Write a personal note to the seller explaining why you like and want their home. Consider including a picture of your family and pets.
  7. If you’re not using a digital contract, physically sign the offer with a felt tip pen of contrasting color. You’d be surprised how this adds a personal touch to the offer.

One way to eliminate the competition of multiple offers is by not procrastinating. When you have decided to write a contract, don’t wait; do it immediately and ask your agent to deliver it quickly. Your agent will be able to help you craft a solid offer that makes you look serious and can give you advice that may be unique to your situation.

Don’t Leave Home Without…

11 Jun

You’ve been planning this trip for some time and almost every detail has been considered…or has it? Have you thought about how to protect your home while you’re out of town? What’s going to make sure that everything you left is still there in you return?

Nothing could ruin a trip more than coming back to find out your home has been burglarized or worse. It makes sense to spend a little time before you leave on making sure your home is as safe and sound as it can be.

There are a host of devices to use across the Internet including camera door bells, video cameras, door locks, garage door openers, light and thermostat controls. You can monitor your home whenever you have an Internet connection. The question is whether you want the distraction from your trip.

Consider these low-tech suggestions along with your other normal efforts:

  • Tell your neighbors you’ll be out of town and to be aware of any unusual activity.
  • Notify your alarm company
  • Discontinue your postal delivery
  • Use timers on interior lights to make it appear you’re home as usual.
  • Don’t make it easy for burglars by leaving messages on voice mail or posting on social networks.
  • Post on social networks after you’ve returned about your vacation.
  • Remove the hidden spare keys and give it to a trusted neighbor or friend.
  • Lock everything, double-check and set the alarm.
  • Take pictures of your belongings in case you need them.
  • Disconnect TVs and other equipment in case of unexpected power surges.
  • Adjust your thermostat.
  • Arrange for lawn care.
  • Consider disconnecting the garage door opener.
  • Put irreplaceable valuables in a safety deposit box.

It’s nice to go out of town on a well-deserved trip and it’s always nice to get back home…especially when it is just the way you left it.

2208 Jonathan Creek Drive, Little Elm

10 Jun

MOVE-IN READY 3/2/2 HOME IN PALOMA CREEK SOUTH!

3 Bedroom / 2 Bath / Study / Covered Patio

CLICK HERE TO VIEW HD TOUR OF THIS HOME!

Amazing ONE STORY brick home, newer construction with 3 bedrooms, 2 baths in Paloma Creek South. Welcoming walk up, nice entry, neutral colors throughout, carpet and tile flooring. Eat-in kitchen, upgraded cabinets and lighting, stainless steel appliances (Refrigerator included!), granite-like counter tops, tile back splash, access to covered patio, separate laundry room. Great family room with cozy gas fireplace and open access to kitchen. The large master suite has lots of natural light, dual vanities, tile flooring, soaking tub, walk-in shower and huge walk-in closet. Lush landscaping, spacious back yard, covered patio.

Community pool, parks, walking and biking trails. Easy access to restaurants, shopping, Hwy 380, 423 and DNT! MOVE-IN READY and PRICED TO SELL!

Please contact Laurie Solomon at 469.307.7724 or more information or click HERE.

For more information and other homes for sale in this area, check out www.myrealtytown.com 

15724 Wyoming Drive, Frisco

10 Jun

BEAUTIFUL ONE STORY HOME IN FRISCO READY FOR YOU!

3 Bedroom / 2 Bath / Front Porch
1811 sq ft / Built 2003 / Frisco ISD

CLICK HERE TO VIEW HD TOUR OF THIS HOME!

This charming 3 bedroom, 2 bath, one-story home has an inviting front porch and a floor plan that can host a large get-together or a small dinner party; IT IS ADORABLE! The family room, with its gorgeous fireplace, looks out onto the private patio with plenty of green grass on both sides and an area already built for a small garden…just a few reasons this home could be the right fit for you.

Recent upgrades: laminate wood flooring (2018), carpet (2018), tile in master bathroom (2018), fresh paint (2019), dishwasher (2018) and roof (2018).

Convenient to shopping, restaurants and easy access to Hwy 121 and DNT! Not to mention fantastic Frisco ISD schools, community pool and park. Ready for you to move in this summer

Please contact Julee Williams at 972.567.2468 or more information or click HERE.

For more information and other homes for sale in this area, check out www.myrealtytown.com 

4281 Bellingrath Drive, Prosper

10 Jun

STUNNING UPGRADED HIGHLAND HOME WITH GAME & MEDIA!

5 Bedroom / 4.1 Bath / Media / Study
4252 sq ft / Prosper ISD / 4 Car Garage

CLICK HERE TO VIEW HD TOUR OF THIS HOME!

Stunning and spacious 5 BEDROOM, 4.1 BATH Highland Home in desirable Whitley Place, complete with 4 CAR GARAGE, workshop and much more!  Upgrades and features include Plantation shutters, Gourmet kitchen features stainless steel appliances, seated island for entertaining, granite countertops, gas cooktop, custom cabinetry with glass doors and WALK-IN pantry. Recently-installed distressed hardwoods and carpet, WALK-IN bonus room for storage (adds 275 SF), built-in desks with granite countertops in the breakfast and study hall areas.

Texas-sized Living, Game and Media rooms with projector-speakers-screen, large Library-Study with vaulted ceiling. Expansive Master suite with wall of windows spa-like retreat including split vanities, glass cabinets, jetted tub, over-sized shower and walk-in closet. Guest suite with private bath also down. Mudroom and large Utility room.

Brick and stone private courtyard in front for enjoying your morning coffee, oversized lot, 2 community pools, walking trails and coveted Prosper ISD! Amazing location-convenient to shopping, restaurants and access to Dallas N. Tollway and Hwy 380. And recently installed roof.

A Texas dream and ready for summertime!

Please contact Scott Blasingham at 469-475-2792  for more information or click HERE.

For more information and other homes for sale in this area, check out www.myrealtytown.com 

12641 Flanders Drive, Frisco

10 Jun

BEAUTIFUL HOME ON CORNER LOT WITH GAME ROOM!

4 Bedroom / 4.1 Bath / 3 Car / Media / Game
4645 sq ft / Built 2006 / Frisco ISD

CLICK HERE TO VIEW HD TOUR OF THIS HOME!

WOW …gorgeous Christie Ranch home in a perfect West Frisco location close to neighborhood pool, park and Frisco schools.

Breathtaking entry, soaring ceiling, hardwood floors & dramatic winding staircase. Kitchen is a chef’s dream with 8-burner gas stove, copper farmhouse sink, all stainless steel appliances. Oversized formal dining with custom lighting and abundance of entertaining space. Master retreat with spa-like bath boasts oversized walk-thru shower, his & her vanities with hammered copper sinks.

All bedrooms have en-suite bath and walk-in closets. Large game room with wet bar and media up with media equipment to remain. Backyard has electric sliding gate and covered porch.

Convenient to shopping, restaurants, entertainment venues & easy access to the Dallas North Tollway!

It’s ready for you to move in this summer!

Please contact Elyse Guthrie at  (512) 217-1412 for more information or click HERE.

For more information and other homes for sale in this area, check out www.myrealtytown.com 

1308 Jasmine Drive, Lewisville

10 Jun

UPDATED HOME IN GARDEN RIDGE WITH VERSATILE FLOORPLAN!

3 Bedroom / 2 Bath / Study / Large Yard
1673 square feet / Built 1987 / Lewisville Schools

Click here to view an HD video of this property

This stunning home in Garden Ridge offers an outstanding and versatile floorplan, extensive updating and enjoys an impeccable location just minutes from Lake Lewisville & I-35.  Lush landscaping  and a cozy covered front porch enhance the curb appeal of this home and upon entry, your guests will be greeted by rich hardwoods, warm & neutral tones throughout, updated ceiling fans and vaulted ceilings.  The kitchen would delight any chef with its upgraded granite counter tops, undermount sink & faucet, stainless steel dishwasher and range & opens to a spacious dining area. The expansive family room features a custom Austin Stone fireplace, vaulted ceilings and has an abundance of natural light.  The master retreat is split from the other bedrooms, has a walk-in closet and a nice bath with double vanities with updated faucets and fixtures and a garden tub.

Downstairs enjoys a convenient study area and two bedrooms served by a full bath and a large utility room with abundant under the stair storage for additional items.  Outdoors is perfect for relaxing and entertaining friends with a nice & private patio area, room for a pool, a custom-built chicken
coop, beautiful landscaping and storage building. This home has been well-cared for, is move-in ready and offers tremendous value for the price.

Please contact Jeff Jacobs at  (972) 978-6539 for more information or click HERE.

For more information and other homes for sale in this area, check out www.myrealtytown.com 

Temporarily Renting a Home

4 Jun

IRS has provisions for homeowners regarding the sale of a principal residence that allows for temporarily renting the home without losing the ability to exclude the gain if the home is sold under the correct conditions.

The rules for the exclusion of gain on the sale of a principal residence are:

  • Up to $250,000 of gain may be excluded for single taxpayers and up to $500,000 for married taxpayers filing jointly.
  • Ownership and Use must have been a principal residence for two of the five years preceding the date of sale (closing date). This allows for a temporary rental for up to three years maximum.
  • Either spouse may meet the ownership test.
  • Both spouses must meet the use test.
  • No exclusion has been used in the previous 24-month period.

Let’s pretend that a person had owned a home from more than two years. This person married and moved into their new spouse’s home two years, six months ago. That person decided to sell the home and would have approximately $200,000 of gain in the sale.

If the property is put on the market, sold and closed prior to the three-years that they moved out, the home would still be eligible for the section 121 exclusion on the sale of a principal residence. If the sales closes after that three-year period, the owner would owe tax on the gain. If the long-term capital gains rate for the owner was 15%, they would owe approximately $30,000 in taxes.

If you or a person you know is in a situation like this, they should certainly seek professional tax advice as well as discussing the marketing and value of the property with their real estate professional. This is something that I have experience with; call me at (972) 978-6539. The timing is very important and critical to a favorable outcome.

Time to Buy Again

28 May

For people who have experienced a distressed sale of a home and gotten their finances and credit back in shape, there can still be an unanswered question of “How long do we have to wait to qualify for another mortgage.” The loan types for the new loan will differ in amounts of time based on the event.

The different lending authorities, VA, FHA, Fannie Mae (FNMA) and Freddie Mac (FHLMC), establish their own waiting periods. A borrower may be eligible to qualify for one type of mortgage before another type, even though during this waiting period, that the person was current on all payments and maintained a history of good credit.

The following chart indicates how long a person might have to wait.

waiting period for distressed sales.png

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.

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 (972) 978-6539 for lender recommendations.

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