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Real Estate Tax Breaks For Your Home

It is always beneficial during tax season to own real estate, which gives you many annual deductions. If you purchased residential real estate during this year, however, you can look forward to even more generous savings at tax time.

Mortgage Interest
Though there are several real estate deductions you will be able to take this tax year, the largest is the interest you paid on your mortgage. According to Kiplinger’s (August 31, 2006), you may write off up to $1 million in mortgage interest for your primary or secondary home (does not apply to third home real estate, unless it is a business or rental property). This can be an enormous tax savings, especially within the first years of ownership with most of your monthly payments going to interest.

Property Taxes
Each year, you may deduct the property taxes you paid. If you recently purchased your home real estate, you also may deduct any taxes the seller paid in advance that were applied to your property tax debt. This applies even if you did not reimburse the seller for these real estate taxes.

Points Paid for Mortgage
Even if the seller paid your points, you may deduct them on your tax return within the year of purchase of the real estate. Each point is worth one percent of the real estate mortgage. For a loan principal of $250,000, you may deduct $2,500 for each point. For a loan face value of $500,000, you may deduct $5,000 per point.

If you refinanced your real estate, you also may deduct these points paid. However, the deduction must be spread over the life of the loan. If you sell the real estate or pay off the loan early, then the remaining deduction may be taken within the year of sale or loan payoff.

Home Equity Debt
You are allowed to deduct up to $100,000 of home equity debt each year, regardless for what you used the money. This makes home equity loans low-interest alternatives for purchasing cars, paying student tuition, underwriting your dream vacation, and so on.

Home Business Use Deductions
If you run a business out of your home or use the real estate for business purposes, such as rental property, you have many deductions for the use of this space. For home offices, the percentage of space you actually use may incur the same percentage in deductions for mortgage payments, utilities and home insurance. Improvements made to accommodate the business, such as bringing the real estate up to standard as rental property or installing a private bathroom when renting out a room, may qualify for a deduction against your profits.

Property Damage
If you incurred uninsured real estate damage due to a qualifying disaster (especially within a presidential declared disaster area), you may qualify for a tax deduction. There are limitations, however, and the deduction generally must be taken within the year the disaster occurred.

What You Cannot Deduct
If you recently purchased or sold real estate, you incurred many costs but not all may be deducted from your taxes. Examples of nondeductible expenses are closing costs, major home improvements to attain a higher sales price, title insurance, appraisal and inspection fees, or attorney fees.

Don’t forget, deductions that lower your federal tax debt also decrease your state tax obligation! As with all financial advice, always check with a qualified accounting professional.

Article Source: http://www.articlesnatch.com

About the Author:John Harris is an expert researcher and writer on real estate topics such as economics, credit improvement tips, home selling advice and home buying preparations. For more on San Diego Homes for Sale visit http://www.twtrealestate.com

Read more: http://www.articlesnatch.com/Article/Real-Estate-Tax-Breaks-For-Your-Home/101807#ixzz10UDVIg6S
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Permanent Modifications on Fannie Mae and Freddie Mac Loans Reach 1.1 Million

Fannie Mae and Freddie Mac completed more than 2.1 million foreclosure prevention actions since the start of conservatorship including 1.1 million permanent loan modifications. These actions, designed to help borrowers stay in their homes, are detailed in the Federal Housing Finance Agency’s fourth quarter 2011 Foreclosure Prevention and Refinance Report. The report also shows that after nine months, fewer than 20 percent of Enterprise loans modified in the four quarters ended March 31, 2011, had missed two or more payments, an improvement over prior years.

With this report, FHFA releases new state data sets and launches an interactive Fannie Mae and Freddie Mac State Borrower Assistance Map, showing the number of loans owned or guaranteed by Fannie Mae and Freddie Mac, delinquencies, foreclosure prevention activities, Real Estate-Owned (REO) properties, and refinances in each state. In addition, the report now includes a graphic showing Delinquent Loans by State and Profiles of Key States, with detailed information about states with the biggest five-year decline in house prices and the highest number and rate of seriously delinquent loans.

Also in the report:

  • The Enterprises’ cumulative HARP refinancings increased 10 percent in the fourth quarter of 2011.
  • Half of all borrowers who received loan modifications in the fourth quarter had their monthly payments reduced by over 30 percent, and one-third included principal forbearance.
  • Serious delinquency rates for Fannie Mae and Freddie Mac loans remain below industry levels and continue to decline.
  • Florida had the highest number of serious delinquencies at the end of the fourth quarter.
  • California had the largest number of completed foreclosure prevention actions since the beginning of conservatorship in 2008.

FHA Trims Waiting Period for Borrowers Who Experienced Foreclosure

The FHA is reducing the amount of time a borrower must wait in order to receive an FHA-insured mortgage, according to a new mortgagee letter from the Dept. of Housing and Urban Development. Currently set at three years, the FHA now allows eligible borrowers to receive an FHA-insured loan in as little as one year. Eligible borrowers include those who experienced unemployment or other severe reduction in income and were unable to make their monthly payments, and ultimately lost their homes to a pre-foreclosure sale, deed-in-lieu, or foreclosure.

FHA is allowing for the consideration of borrowers who have experienced an economic event and can document that:

  • Certain credit impairments were the result of a loss of employment or a significant loss of Household Income beyond the borrower’s control;
  • The borrower has demonstrated full recovery from the event; and,
  • The borrower has completed housing counseling.

The guidance in the mortgagee letter is applicable to purchase money mortgages in all FHA programs, with the exception of Home Equity Conversion Mortgages.

Borrowers who may be otherwise ineligible for an FHA-insured mortgage due to FHA’s waiting period for bankruptcies, foreclosures, deeds-in-lieu, and short sales, as well as delinquencies and/or indications of derogatory credit, including collections and judgments, may be eligible for an FHA-insured mortgage if the borrower:

  • Can document that the delinquencies and/or indications of derogatory credit are the result of an economic event as defined in the mortgagee letter,
  • Has completed satisfactory housing counseling, as described in this ML, and
  • Meets all other HUD requirements.

More info  (document number 13-26)

California Home Sales Higher in July

California’s housing market bounced back after a slight dip in June to reach the highest level since May 2012, as home prices continued to post strong annual gains and home sales recorded the first annual increase in six months, C.A.R. recently reported.

Sales of existing, single-family detached homes were up 7 percent in July compared with June and up 1.5 percent compared with a year ago. The year-to-year sales increase was the first since December 2012, following six consecutive months of declines.

The statewide median price of an existing, single-family detached home inched up 1.2 percent from June’s median price of $428,620 to $433,760 in July.  July’s price was 29.8 percent higher than the revised $334,220 recorded in July 2012, marking 17 straight months of annual price increases and the 13th consecutive month of double-digit annual gains.

The available supply of existing, single-family detached homes for sale held steady in July at 2.9 months, unchanged from June’s Unsold Inventory Index. The index was 3.5 months in July 2012.  The index indicates the number of months needed to sell the supply of homes on the market at the current sales rate.  A six- to seven-month supply is considered typical in a normal market.
More info

FHA Trims Waiting Period for Borrowers Who Experienced Foreclosure

Borrowers who went through a bankruptcy, foreclosure, deed-in-lieu, or short sale can now reenter the market in as little as 12 months under a new guideline established by the Federal Housing Administration. The more lenient approval process does have some eligibility requirements, such as documentation of “certain credit impairments” and economic hardship.
Source: DSNews.com

Our Most Popular Questions About Real Estate Syndication

· Should a syndicator invest money in his or her own deal?

Absolutely. It is imperative that the syndicator put some “skin in the game.” Some proponents indicate 10 percent is the right amount of the total capital; others go as high as 20 percent. I don’t believe that the amount is nearly as important as the demonstration of your good faith and your belief in the deal. You have to put in enough that if something goes wrong, it will be painful to you just like it is to the investors.

· Do you have to pick out the exact property that you want to syndicate before you syndicate it?

Specifically, you don’t have to pick the exact property that you plan to acquire before you begin the syndication process. In fact, sometimes it’s very difficult to pick out the exact property, because by the time you pick out the property you don’t have enough time to begin the syndication and securities process. If you do have the right property chosen beforehand, then you can describe that property in great detail in your private placement memorandum materials. However, you can also create a blind tool that helps you to retain flexibility, as long as you can describe the nature of the types of investments that you are looking to acquire. It’s a lot more complicated to create a blind tool because you are not given particulars, but a good attorney can help you to make that happen and allow you to provide the specific information to make your deal come to life.

· What qualifications do investors have to meet in order to participate in my syndication?

The goal is to create relationships with accredited investors. These are people who have a minimum net worth of $1M, or they have made a minimum of approximately $200,000 in annual salary for the last two years with the expectation that they will make a similar amount this year. If there is a spouse involved, the numbers are just a little big higher. If you take people who are not accredited, then the disclosure requirements are much more onerous. Accredited investors are people who are deemed by the government to be people who can protect themselves because they have the money to call an attorney and ask for help. Non-accredited investors, who have less money, are not considered people who can protect themselves and therefore you have to meet a much higher standard as prescribed by the Securities and Exchange Commission.

· How do I begin to use other people’s money?

First, if you want to use other people’s money, you need to step up and own up to the dramatic responsibilities that using other people’s money demands. Using other people’s money creates a responsibility that very few people are aware of in advance. It also creates dramatic conflicts of interest because there will be many times that the promoter’s self-interest is at odds with the investors’ capital contributions. The syndicator must, at all times, balance his or her own greed and need against what’s in the best interest of the investors. Remember that if the goal is to build a pool of fans and to have a long-run success in the syndication business, then the syndicator must make decisions that are in the long-run best interest of the individual investors. Sometimes that means post poning or deferring confrontation that would otherwise be due. Raising money is clearly the hard part, not only because it’s difficult to get investors to say yes, but also because it’s difficult to manage the conflicts that are inherent in this relationship. If you want to succeed at this, there are several specific approaches that we teach all of the people that we show how to raise money.

· How do you find and get your deal in front of accredited investors, especially for your first deal?

The most important component for any investor is confidence in the syndicator that they are placing their capital with. Part of the reason that it’s important to have background in either real estate or capital, is because with that background comes experience, and you can leverage that experience into a confidence-building discussion with your prospective investors. There are billions of individuals who have capital and are looking to place that capital into deals if the deal is a good one. First, they have to have confidence in you, second, they have to have confidence in the deal, and that’s the reason that your real estate expertise is so critical in this formula. There’s no shortage of capital from individual accredited investors, as well as from the hedge funds on Wall Street that pool billions and billions of dollars and are ready to make investments in deals.

Joel began his career as a CPA with the prestigious firm of Price Waterhouse. During his time with the company’s Entrepreneurial Services Group, Joel immersed himself in the real estate syndication business. After reviewing hundreds of partnership agreements and preparing as many tax returns, he left Price Waterhouse in 1986 to start his own syndication firm, raising several million dollars in three short years. By 1990, Joel had built a property management firm of more than 40 employees with a portfolio exceeding $100 million. Joel continues to syndicate real estate and other assets, as well as counseling other promoters on successful syndication strategies. He is also involved in film financing and invests in early stage companies and other deals. For more information about Joel Block and his upcoming seminar, visit his site at http://syndicatefast.com/

Author: Joel G. Block
Article Source: EzineArticles.com
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Does Moving Up Make Sense ?

These questions will help you decide whether you re ready for a home that s larger or in a more desirable location. If you answer yes to most of the questions, it s a sign that you may be ready to move.

1. Have you built substantial equity in your current home Look at your annual mortgage statement or call your lender to find out. Usually, you don t build up much equity in the first few years of your mortgage, as monthly payments are mostly interest, but if you ve owned your home for five or more years, you may have significant, unrealized gains.

2. Has your income or financial situation improved If you re making more money, you may be able to afford higher mortgage payments and cover the costs of moving.

3. Have you outgrown your neighborhood The neighborhood you pick for your first home might not be the same neighborhood you want to settle down in for good. For example, you may have realized that you d like to be closer to your job or live in a better school district.

4. Are there reasons why you can t remodel or add on Sometimes you can create a bigger home by adding a new room or building up. But if your property isn t large enough, your municipality doesn t allow it, or you re simply not interested in remodeling, then moving to a bigger home may be your best option.

5. Are you comfortable moving in the current housing market If your market is hot, your home may sell quickly and for top dollar, but the home you buy also will be more expensive. If your market is slow, finding a buyer may take longer, but you ll have more selection and better pricing as you seek your new home.

6. Are interest rates attractive A low rate not only helps you buy a larger home, but also makes it easier to find a buyer.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

Fielding a Lowball Purchase Offer on Your Home

By: Marcie Geffner

Consider before you ignore or outright refuse a very low purchase offer for your home. A counteroffer and negotiation could turn that low purchase offer into a sale.

You just received a purchase offer from someone who wants to buy your home. You’re excited and relieved, until you realize the purchase offer is much lower than your asking price. How should you respond Set aside your emotions, focus on the facts, and prepare a counteroffer that keeps the buyers involved in the deal.

Check your emotions
A purchase offer, even a very low one, means someone wants to purchase your home. Unless the offer is laughably low, it deserves a cordial response, whether that’s a counteroffer or an outright rejection. Remain calm and discuss with your real estate agent the many ways you can respond to a lowball purchase offer.

Counter the purchase offer
Unless you’ve received multiple purchase offers, the best response is to counter the low offer with a price and terms you’re willing to accept. Some buyers make a low offer because they think that’s customary, they’re afraid they’ll overpay, or they want to test your limits.

A counteroffer signals that you’re willing to negotiate. One strategy for your counteroffer is to lower your price, but remove any concessions such as seller assistance with closing costs, or features such as kitchen appliances that you’d like to take with you.

Consider the terms
Price is paramount for most buyers and sellers, but it’s not the only deal point. A low purchase offer might make sense if the contingencies are reasonable, the closing date meets your needs, and the buyer is preapproved for a mortgage. Consider what terms you might change in a counteroffer to make the deal work.

Review your comps
Ask your REALTOR® whether any homes that are comparable to yours (known as “comps”) have been sold or put on the market since your home was listed for sale. If those new comps are at lower prices, you might have to lower your price to match them if you want to sell.

Consider the buyer’s comps
Buyers sometimes attach comps to a low offer to try to convince the seller to accept a lower purchase offer. Take a look at those comps. Are the homes similar to yours If so, your asking price might be unrealistic. If not, you might want to include in your counteroffer information about those homes and your own comps that justify your asking price.

If the buyers don’t include comps to justify their low purchase offer, have your real estate agent ask the buyers’ agent for those comps.

Get the agents together
If the purchase offer is too low to counter, but you don’t have a better option, ask your real estate agent to call the buyer’s agent and try to narrow the price gap so that a counteroffer would make sense. Also, ask your real estate agent whether the buyer (or buyer’s agent) has a reputation for lowball purchase offers. If that’s the case, you might feel freer to reject the offer.

Don’t signal desperation
Buyers are sensitive to signs that a seller may be receptive to a low purchase offer. If your home is vacant or your home’s listing describes you as a “motivated” seller, you’re signaling you’re open to a low offer.

If you can remedy the situation, maybe by renting furniture or asking your agent not to mention in your home listing that you’re motivated, the next purchase offer you get might be more to your liking.

More from HouseLogic
6 Tips for Choosing the Best Purchase Offer for Your Home (http://buyandsell.houselogic.com/articles/6-tips-choosing-best-offer-your-home/)

6 Reasons to Reduce Your Home Price (http://buyandsell.houselogic.com/articles/6-Reasons-To-Reduce-Your-Home-Price/)

Marcie Geffner is a freelance reporter who has been writing about real estate, homeownership and mortgages for 20 years. She owns a ranch-style house built in 1941 and updated in the 1990s, in Los Angeles.

Visit houselogic.com for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS
Copyright 2010. All rights reserved.

Dissimilarities Between A Short-sale And Foreclosure

If you find yourself in a short sale vs. foreclosure situation, you may feel like a lost soul and not be aware of opportunities you have that may help you out. The mortgage company has the advantage here because they have vast knowledge about the whole process the absence of which can make things really hard for you.

If you are actually way too far behind your monthly payments, it may be time to consider it. One thing you can do is get in touch with a preforeclosure expert who may assist you in this situation. The expert in question may know of options that could help you out. Listen to what the expert has to say, though in the end what you assume is really up to you.

So do learn this business because knowing the difference can let you make the correct decision for you. With a short sale in the process, you put your house out for sale and get everything ready for implementing the sale as quickly as possible. This means pricing your home in a way to make it attractive to buyers. In this situation it is important to have a realtor in your court.

And don’t wait for a long time, because if you do your choice of short sale vs. foreclosure may just disappear. So you can’t fritter away any time, because if you do, a foreclosure may simply descend on your unawares.

Time may not be on your side when it comes to a choice as regards short sale vs. foreclosure. So it is very essential to take action immediately because if a foreclosure becomes unavoidable there is nothing you can do about it. So keep in mind that the time to act is when you begin to have difficulties paying your mortgage. This is positively not the time to run and hide, because you don’t want to lose all control and be just put out of house and home.

It is not a simple matter, but there are people who can give you good guidance as to how to proceed. It is of paramount importance not to fritter away time, but to act swiftly. If you do, you will have more options available to you and this can be a good thing for you and for your family.


Article Source: http://www.articlesnatch.com

About the Author:
There is a whole collection of articles and resources on Short Sale Homes, and they can be found at http://www.foreclosureshortsale.co/featured/things-you-should-know-about-preforeclosure. If you want to learn more about foreclosure and short sale visit short sale vs. foreclosure.

California Probate Fees

California Probate Fees

Currently, California Probate Code 10800 sets the compensation for the Personal Representative and for the Attorney for the Personal Representative of an Estate that is subject to Probate as follows:

  • Four percent on the first one hundred thousand dollars ($100,000).
  • Three percent on the next one hundred thousand dollars ($100,000).
  • Two percent on the next eight hundred thousand dollars ($800,000).
  • One percent on the next nine million dollars ($9,000,000).
  • One-half of one percent on the next fifteen million dollars ($15,000,000).
  • Above twenty-five million dollars ($25,000,000), a reasonable amount to be determined by the Court.

According to this schedule, the Probate fee on an estate of $1,000,000 is equal to $23,000.

Please bear in mind, that this is the fee to be paid to both the attorney and the personal representative.

While many personal representatives forgo their share of the fee, not all will do so. Therefore, it is possible that the full probate fee on an estate of $1,000,000 is equal to $46,000! And that is not including court filing fees!

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