Facebook
X
Pinterest
Copy Link
Is there a 3.8% Real Estate Sales Tax Coming? Yes, But Mostly No
A 3.8% Sales Tax when selling a home? My client had heard about this from a friend last week. He emailed me the other to day ask if the health care bill included a 3.8% sales tax when selling a home. I was pretty sure this was not exactly right, but thought I should check this out and clear the air.
Apparently, it’s a common question or misconception. Courtney Cooper Jacobs had been asked the same thing by one of her clients. She did some research and linked to Matt Stigliano’s blog, which did a great explanation of the future tax with some real world examples.
Yes, Virginia there will be a new tax but only for a “chosen” few. But no, it’s not a sales tax on real estate. It’s a Medicare tax and only applies to certain people and homes. Most home sellers will not pay any additional tax. Those that pay are the fortunate people who are high earners and have also made a killing on the sale of their home. And, if there is a tax that applies, it will only be a small percentage of the sales price.
From Matt Stigliano’s blog:
The new Medicare tax on real estate sales is actually a tax on investment income for so-called “high earners.”
With that in mind, a 3.8% Medicare tax on the sales of a $400,000 home would be $15,200, which is a lot of money to pay in tax. This is where many people’s calculations have gone astray however, as the real estate “sales tax” is not on the entire amount of the sale. Instead it is on the amount of income that exceeds the capital gains threshold ($500,000 for married couples filing jointly, $250,000 for single filers).
The income requirements are clearly spelled out in order to define “high earners” – $250,000 for married couple filing jointly, $125,000 for couples filing separate returns, and $200,000 for everyone else. If your income is above these levels, you will be paying a new tax on investment income. If it falls below that, you will not be taxed.
This medicare tax does not go into effect until 2013. So I hope this clears the air for you. It’s really not as bad as may people have been lead to believe.
I'm Looking for a Tech Savvy Realtor in South Carolina
I’m looking for a Realtor in South Carolina, the Greer/Greenville area, to be exact. My mother-in-law is moving and I need a Realtor to sell her home.
Last week, I contacted a Realtor from a Realtor network I belong to, Certified Residential Specialists. When referrals are made through the CRS network, they are by phone or email, since the referral is to an area outside of Seattle. Rarely, do we meet the other agents. I’ve made many referrals over the years and had good luck as the agents with the CRS designation. They are long time agents who have had additional training and sell a certain numbers of homes each year, which means they’re experienced.
Since I was in South Carolina, I asked that this agent bring market statistics and her marketing plan to our meeting. The agent came armed with 3 pieces of paper, one was a chart showing me her company sold the most homes in the area, and the other two had brief, very brief, information about the sales activity of the homes in the area. Statistics? None. Marketing plan? Zip. Market analysis? Nada
I asked her about her marketing plan and heard newspaper and real estate magazine advertising. I told her to spend her money on the internet and professional marketing, including professional photos. No response to the professional photography. I did hear the usual, though, the listing would be on the company website, but I did not get much more.
I asked that she send me the complete listing information and photos of each of the homes included in her short list of homes. She assured me she would. Since it’s been two weeks since I met her, I doubt I will be getting that information. So she’s out.
We then contacted a personal referral who is a Realtor and also a CRS. However, she is having some surgery in the next few weeks so is not taking on any new business. We’re going to try another Realtor from a second personal referral next.
I turned to the internet. I’ve been online checking the local agents’ presence on the internet. I’m looking for how the agents market homes. I don’t bother to check the listings and agents who don’t use multiple photos when marketing a property. However, I’m finding that with multiple photos, most are just plain awful. Photos are dark, sometimes showing too much clutter, and don’t show the full room. Finding the agent who uses professional photos might be like finding that one in a million.
Since I belong to some real estate networks on LinkedIn.com, that’s my next stop.
Here’s what I’m looking for when I’m hiring a Realtor:
- Someone who knows the market and has statistics to back their information.
- Someone who completes a professional market analysis and gives me realistic information on pricing.
- A strong internet presence on multiple websites: A company website, Realtor.com, google, Zillow, Propsmart, Craig’s List, Oodle, etc. Dedicated website for the home.
- Video or tour of the home.
- Photos, video, or tours of the local sites and the town.
- Homes that are marketed when looking terrific, decluttered and staged
- Professional photography
- Nice property brochures with color photos
- Open houses, only if they work in the area
- Other creative marketing ideas
- Communicate with me on a weekly basis. I’d like an update on showings and the local real estate market. I’d like to know if the competition has changed. Has a competing home come on the market, reduced its price or sold?
This is the very level of service my mother-in-law should be getting.
Does anyone know a good Realtor in that area who can provide this service? Any ideas on how to find someone?
Interest Rates Are The Lowest in the Last 30 Years
Interest Rates 1980-2010
I remember when I bought my first home in the mid 1980’s. I was so excited, the interest rate was at the bottom of the double digits, considering what the early 80’s had to offer with rates in the high teens. I had friends who purchased in Brooklyn, NY in the early 80’s and were paying almost 17% for their mortgage. The interest rate for my first home was just above 10%. Granted the home prices were significantly less, but the monthly payments were high, considering the lower prices of the times.
Fast forward to 2010, with interest rates the lowest in 30 years and prices at 2005 levels.
What’s the difference in monthly payments with the more recent interest rates we’ve seen?
If you decide to purchase a $400,000 home, this is the difference in principle and interest payments over the last couple of years.
July 2008 – 5.75% – $2,334
July 2009 – 5.25% – $2,209
Jan 2010 – 5.125%- $2,178
May 2010 – 5.0% – $2,147
July 2010 – 4.50% – $2,027
Seattle-eastside home values have dropped significantly since the peak in the real estate market in the summer of 2007 and rates have also dropped as well. If you were to purchase a $400,000 home now, the payment would be approximately $300 less than two years ago, plus the home prices are also lower. In King County, WA, the choices are terrific because the number of homes for sale is just below the high so far for the year. Right now, in King County, there are 13,921 homes for sale.
So is it the right time to buy a home? You decide.
Got Lint? Clean Your Dryer Vent
Lint From A Dryer Vent
There were big gray clumps of lint and this is only 1/4 of what was removed from the clothes dryer vent! Ironic, since the dryer vent had recently been cleaned out in a do-it-yourself project, which apparently had not worked. The duct work is a fairly long line, which makes it even more difficult for a do-it-yourself job.
Bel-Red Energy Solutions* cleaned out my dryer vent which was loaded with lint, even though I thought it had been cleaned out weeks before. Dryers are among the major causes of house fires.
Check the vent on the outside your home to see if the air flow is moving well. Do this on a regular basis. You’ll know if the air flow becomes weak, which is a good indication of blockage in the vent line. Here are some other warning signs from About.com:
- Clothes take longer and longer to dry;
- Clothes don’t fully dry;
- Clothes are hotter than normal at the end of the drying cycle;
- The outside of dryer gets very hot;
- The outside exhaust vent flapper does not open very much indicating low exhaust velocity;
- Laundry room becomes more humid than it is usually;
- Burnt smell is evident in the laundry room.
So mark your calendar. Have your dryer vent cleaned regularly to eliminate a fire hazard. Do-it yourself systems may work for some duct lines, particularly if the dryer duct line is short. I was impressed, however, by the motor Bel-Red brought along to power the hose that cleaned out the vents. That puppy really sucked the lint out of the vent.
Here are some more tips on dryer vent cleaning, maintenance and safety.
And the silver lining in all this? A dryer vent that works more efficiently will save you money on your monthly utility bill.
*As always, choose your contractor wisely. Check out any contractor you hire. Make sure they are licensed, bonded, and insured. Obtain recommendations from other clients and check the Better Business Bureau, Angie’s List and other resources.
Are You Painting or Remodeling? New Lead Paint Laws For Homes Built Before 1978
Was your home built before 1978? If so, then if you do any painting or remodeling you or your contractor have to follow new federal guidelines for painting and renovating homes built before 1978. From The Wall Street Journal:
As of late last month, businesses that repair or renovate older buildings—specifically homes, schools and daycare centers built before the federal government banned the use of lead-based paint in housing in 1978—are required by the U.S. Environmental Protection Agency to adhere to strict lead-safe work practices. To comply with the new regulation, those working on older sites will need to invest in lead-testing kits, plastic sheeting, respirators, protective clothing and other lead-safety materials.
The First Big Decline in Homes for Sale in King County Washington
Twelve days ago I wrote a post that King County properties for sale was rapidly heading up to the 2009 high. Just last week we were within 300+ homes/condos of the 2009 peak, which stands at 13,861. There 13,515 homes/condos for sale in King County that week.
This week we see the first big decline, with a drop of 570 properties. The number is back below 13,000, at 12, 946.
Phew, I was just beginning to wonder if we were going to surpass 2009’s real estate totals in the Seattle area. We may, as 2010 is still young, but it’s a breath of fresh air in the real estate market to see a drop in inventory (the number of homes and condos for sale). Sales have been brisk as many buyers were anxious to buy a home in the Seattle area before the expiration of the 2010 tax credit, which could explain the decline in inventory.
The next few weeks will be interesting. Normally the number of homes for sale does increase in the summer months in Seattle, but I’m wondering if a lot of sellers put their home on the market earlier this year to capture the activity with the 2010 home buyers’ credit.
Do you think the numbers will increase as we head into the summer?
King County Washington Properties for Sale, 5-3-10
The Number of King County WA's Properties For Sale is Climbing
The number of properties for sale in King County Washington is climbing. The total took a big jump over the last few weeks when 783 properties came up for sale. Since January when the year started with 9726 King County properties for sale, the numbers have gone up by 28%. Right now, the total is just 452 shy of the highest number of properties on the market in 2009. The big difference in 2010 is sales activity is going strong and beating 2009 numbers by a huge margin in all areas. Some Seattle neighborhoods, like Queen Anne, are seeing multiple offers. In the area where I work, Seattle’s eastside, has had double and triple digit increases in home and condo sales.
The increasing number of listings may change that some in the coming months. I’ll be watching the real estate sales numbers and keep you posted.
King County Properties For Sale
You Should Buy This House!
Created by Redmond WA home sellers with a sense of humor and a great house for sale in the Seattle eastside city.)
The Scrabble Board Says: "You Should Buy This House"
