The 2013 Real Estate Sales Tax Myth

February 2, 2011 Leave a Comment

Over the last two or three months, I have received a number of e-mails from consumers and REALTORS® alike that have forwarded the following to me seeking confirmation:

Did you know that if you sell your house after 2012 you will pay a 3.8% sales tax on it?  That’s $3,800 on a $100,000 home!  When did this happen?  It’s in the health care bill and it is scheduled to go into effect in 2013, right after the 2012 elections.  So, this is “change you can believe in” that Obama has been preaching?  Under the new health care bill – did you know that all real estate transactions will be subject to a 3.8% Sales Tax?  Since the bulk of these new taxes won’t kick in until 2013, most people won’t know what hit them until after the election.  This means if you sell your $400,000 home, you will have to pay a $15,200 real estate tax.  This bill is set to screw the retiring generation who often downsize their homes.  Does this stuff make your November and 2012 vote more important?  Oh, you weren’t aware this was in the Obamacare Bill?  Guess what, you aren’t alone.  There are more than a few members of Congress that aren’t aware of it either.  Why am I sending you this?  The same reason I hope you forward this to every single person in your address book.  VOTERS NEED TO KNOW!

To quote Sergeant Hulka (played by Warren Oates) from one of my favorite movies, Stripes, “Lighten up Francis!”.  Here’s the real story.

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A Primer for the Homebuyer Tax Credit Extension

November 6, 2009 2 Comments

The Lancaster County Association of REALTORS® Government Affairs Department, headed up by Frank Christoffel, IV, passed this Q&A along regarding the latest information on the potential extension of the homebuyer tax credit which includes an existing homebuyer credit that was not part of the first bill.

The House of Representatives passed the extension yesterday by a vote of 403-12 after passing the Senate the previous night 98-0.  The new provisions will take effect as soon as President Obama signs the bill.

Here are some of the specifics regarding eligibility requirements:

1.  Existing homeowner credit:  Must the new house cost more than the old house?   

No.  Thus, for example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6500 credit.  

2.  I am an existing homeowner.  On October 25, 2009, I signed a contract to purchase a new home.  I have lived in my current  home for more than 5 consecutive years and am within the new income limits.  I will go to settlement on November 20.  If President Obama has signed the bill by the time I go to settlement, will I qualify for the new $6500 tax credit? 

Yes.  The existing homeowner credit goes into effect for purchases after the date of enactment (when the bill is signed).   There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.

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Oops! I Made a Mistake

October 28, 2009 Leave a Comment

When it comes to selling your house, “oops” won’t cut it.  Recently, I read an article on HGTV’s FrontDoor.com about the most common mistakes when trying to sell a home.  I’m not sure what kind of research they did, if any, but I thought the list was worth sharing.

1.  Waiting Until Spring to Sell – For some reason, people have it in their heads that Spring is the best time to put their home on the market.  Here are the numbers for pending homes sales in Lancaster County as compiled from the Keystone MLS over the last six months:  April – 481, May – 469, June – 485, July – 461, August – 483, September – 464.  Not a lot of difference here - is there?  Here is a short, un-scientific list of reasons why people move: getting married, getting divorced, job transfer, new addition to the family, death.  You will notice that none of these happen exclusively in the Spring.

2.  Not Reading the Paperwork - When it comes to the largest amount of money that most people will spend on any one thing in their lives, don’t let anybody tell you that “you don’t have to read it because it’s a standard real estate form.”  Sure there’s a lot of paperwork to read and comprehend but don’t you think the time invested is worth it?  Go over the fine print of the agreement with your real estate agent or attorney before signing anything to make sure you understand your responsibilities

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Cash For “Clunkers” Isn’t Over Yet

August 26, 2009 Leave a Comment

Time to get rid of ol' reliable.

Thought the cash for clunkers program was over?  You’re only partially right.  While it’s no longer possible to get FREE money for your old piece of junk sitting in the driveway, you’ll soon be able to cash in on that twenty year old refrigerator that’s been making funny noises in your kitchen.

This year’s stimulus bill funded a little-known, $300 million program that will offer rebates of varying amounts to buyers of energy-efficient appliances and other products that carry the “Energy Star” label.  This would include freezers, refrigerators, water heaters, furnaces and central air conditioners.  But unlike ‘Cash for Clunkers’, you probably won’t have to drag your old appliance into the store to get money for a new one.

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Tryin’ to Understand the Economic Crisis

July 27, 2009 Leave a Comment

 

Everyone and their brother has an opinion or theory on how the country got into this economic situation.  Some people blame Wall Street, the financial institutions and banks; other people take direct aim at REALTORS®, builders and mortgage companies; still others impugn the American consumer and their fixation with obtaining easy money with no strings attached.

I found this short video enlightening, insightful and explains the economic predicament about as well as any that I have read, heard or seen.

Related articles of interest:
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New Home Valuation Code of Conduct (HVCC) is a Quagmire

July 12, 2009 Leave a Comment

What a mess!

Image courtesy of Flickr

The real estate industry has been operating under the new HVCC guidelines for a couple of weeks now and we are beginning to see the ugly results of this misguided set of government regulations.  In a preliminary report issued this past week by the National Association of REALTORS® (NAR), it finds that the HVCC is having an adverse impact on housing markets.

Before I get into the actual results, let me spend a minute and tell you about what this new set of guidelines was supposed to do.

The HVCC was intended to promote independence in the appraisal process and, thus, help ensure that appraisers and the appraisal process may be relied upon as part of sound underwriting for financial institutions.  What that actually means is that the loan officer who is working on your loan no longer orders the appraisal on your home.  It is done through the lender who either has an in-house process for appraisal management issues or, more often, it is done through something called an Appraisal Management Company (AMC).

While this may not seem like a big change to you if you are buying a home, it can possibly be a much bigger change than you might think.  Prior to May 1, loan officers, REALTORS® and appraisers all communicated as needed regarding your home and home financing and it wasn’t uncommon for everyone to be on the same conference call if needed.  But now that the HVCC rules are in place, the only way the loan officer or REALTOR® will know who the appraiser is is if by chance the appraiser calls them.  In other words, no one talks to anyone to clarify anything!

Now, on to the findings of NAR’s analysis:

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Why Doesn’t Our State Government Get It?

July 6, 2009 Leave a Comment

Who runs this place anyway?

Photo courtesy of Flickr

Picture if you will a typical business in Pennsylvania – it’s owner employs good people and sells a product or provides a quality service that people want.  There are thousands of these types of businesses across our state; and for that matter, across our great country.  These owners are constantly overseeing their revenue streams and expenses to make sure that at the end of the year they’re in the black.  It’s a tough, day-to-day struggle which requires diligent oversight.  In addition, in order to continue to make a profit (or at least break even), the owner needs to plan for the future.  I won’t continue to bore you with my basic outline of Business 101 because I think, like most people, you get it.  So if you can get it, why can’t our legislators and Governor Ed Rendell get it!

For some reason they seem to think that state government shouldn’t be run like a business.  Their retort, “That’s because it isn’t.”  My response, “Why not?  Why shouldn’t our state government operate under the same basic rules of business that I operate under?”

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Are You Kidding Me?

June 29, 2009 1 Comment

Image courtesy of Flickr

Our misguided representatives in government are at it again?  In their quest to make sure that everyone in this country leaves a zero carbon footprint, they’ve drafted a bill to help decimate the building industry.  Don’t believe me?  Try reading the latest energy bill (900+ pages long – ugh – who has time to read all these pieces of legislation?) sponsored by Representatives Henry A. Waxman (D-California) and Edward J. Markey (D-Massachusetts) which the House of Representatives have considered, debated and passed.  The bill contains regulations on everything from light bulb standards to the specs on hot tubs, and it will reshape America’s economy in dozens of ways that many don’t realize.  It’s bad enough that the building industry continues to struggle to regain a foothold in this economy, now Waxman and Markey want to throw a 100 pound weight on the shoulders of an industry trying to tread water.

Here’s an excerpt of an article from the Washington Post that provides a brief synopsis and commentary:

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