As April 15^th quickly approaches, homeowners are cautioned to avoid tax mistakes involving ownership.  Noted tax attorney G.M. Filisko identified the Top-10 errors and how you can avoid making them. 

Error #1:  Deducting the wrong year for property taxes

You take a tax deduction for property taxes in the year you (or the holder of your escrow account) actually paid them.  Some taxing authorities work a year behind—that is, you’re not billed for 2010 property taxes until 2011.  But that’s irrelevant to the feds.  Enter on your federal forms whatever amount you actually paid in 2010, no matter what the date is on your tax bill.

Error #2:  Confusing escrow amount for actual taxes paid

If your lender escrows funds to pay your property taxes, don’t just deduct the amount escrowed.  The regular amount you pay into your escrow account each month to cover property taxes is probably a little more or a little less than your property tax bill.  Your lender will adjust the amount every year or so to realign the two.

Error #3:  Deducting points paid to refinance

Deduct points you paid your lender to secure your mortgage in full for the year you bought your home.  However, when you refinance, you must deduct points over the life of your new loan.  If you paid $2,000 in points to refinance into a 15-year mortgage, your tax deduction is $133 per year.

Error #4:  Failing to deduct private mortgage insurance

Lenders require home buyers with a down payment of less than 20% to purchase private mortgage insurance (PMI).  Avoid the common mistake of forgetting to deduct your PMI payments.  However, note the deduction begins to phase out once your adjusted gross income reaches $100,000 and disappears entirely when your AGI surpasses $109,000.

Error #5:  Misjudging the home office tax deduction

This deduction may not be as good as it seems.  It often doesn’t amount to much of a deduction, has to be recaptured if you turn a profit when you sell your home, and can pique the IRS’s interest in your return.

Error #6:  Missing the first-time home buyer tax credit

If you met the midyear 2010 deadlines, don’t forget to take this tax credit into account when filing.  Even if you missed the 2010 deadlines, you still might be in luck.  Congress extended the first-time home buyer credit for military families and other government workers on assignment outside the United States.  If you meet the criteria, you have until June 30, 2011, to close on your first home and qualify for the tax credit of up to $8,000.

Error #7:  Failing to track home-related expenses

If the IRS notifies you of an audit, don’t be scrambling to compile your records.  Many people forget to track home office and home maintenance and repair expenses.  File away documents as you go.  For example, save each manufacturer’s certification statement for energy tax credits, insurance company statements for PMI, and lender or government statements to confirm property taxes paid.

Error #8:  Forgetting to keep track of capital gains

If you sold your main home last year, don’t forget to pay capital gains taxes on any profit.  However, you can exclude $250,000 (or $500,000 if you’re a married couple) of any profits from taxes.  So if you bought a home for $100,000 and sold it for $400,000, your capital gains are $300,000.  If you’re single, you owe taxes on $50,000 of gains.  However, there are minimum time limits for holding property to take advantage of the exclusions, and other details.

Error #9:  Filing incorrectly for energy tax credits

If you made any eligible improvement, fill out Form 5695.  Part I, which covers the 30%/$1,500 credit for such items as insulation and windows, is fairly straightforward.  But Part II, which covers the 30%/no-limit items such as geothermal heat pumps, can be incredibly complex and involves crosschecking with half a dozen other IRS forms. Read the instructions carefully.

Error #10:  Claiming too much for the mortgage interest tax deduction

You can deduct mortgage interest only up to $1 million of mortgage debt.  If you have $1.2 million in mortgage debt, for example, deduct only the mortgage interest attributable to the first $1 million.

Scott T. Hunt
Owner/Broker
Scott T. Hunt Real Estate Group

States that once topped charts for new home sales gains are absent from this year’s list, according to new research from Housing Intelligence.  In an article published in the National Mortgage News, states such as California, Nevada, Arizona, and Florida are now handling a flood of distressed properties.  But states with strong employment growth are emerging as the strongest markets in new-home sales.

Here are the top five locations with the largest new home closings and the percentage of increase in volume compared from 2009 to 2010, according to Housing Intelligence:

1.  Hawaii: 26%
2.  North Dakota: 21%
3.  Wyoming: 11%
4.  Washington, D.C.: 10%
5.  Delaware: 2%

The key – for at least the top four states on the list – is they boast low unemployment rates compared to the national average.

Housing Intelligence, an independent research company, says in its weekly Key Indicator Alert that “it’s certainly no surprise that states with healthier labor markets have healthier housing markets, but it underscores the vital need for better job growth elsewhere across the nation.”

http://www.nationalmortgagenews.com/dailybriefing/2010_272/only-five-states-1023167-1.html?ET=nationalmortgage:e825:89473a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=NMN_Daily_Briefing_013111

Scott T. Hunt
Owner/Broker
Scott T. Hunt Real Estate Group

California is probably best known for super cities like Los Angeles, San Francisco, and San Diego.  However, the Golden State is also now recognized as having 5 out of the top-10 Most Miserable Cities in America.

According to Forbes annual report, American cities are rated on things such as crime rates, unemployment, industry, rising/falling home prices, etc.  And after such factors were accounted for, here are the top-10 worst cities in which to live:

10   Cleveland, OH
9      Vallejo, CA
8      West Palm Beach, FL
7      Chicago, IL
6       Memphis, TN
5       Sacremento, CA
4      Modesto, CA
3      Merced, CA
2      Miami, FL
1      Stockton, CA

Here is the complete list as published by Forbes:
http://realestate.msn.com/article.aspx?cp-documentid=27551447

Scott T. Hunt
Owner/Broker
Scott T. Hunt Real Estate Group     

After the expenditure of $1,000,000,000 (that’s one Billion dollars) on a program that clearly is not working, the US House of Representatives introduced a bill Friday to end the Obama administration’s main foreclosure-prevention effort, calling the White House program a “colossal failure.”

According to an article by the Dow Jones Business News, the bill would immediately terminate the Treasury Department’s Home Affordable Modification Program (HAMP).  The move highlights a mounting political problem for the Obama administration’s’ troubled efforts to attack the foreclosure crisis.  The administration has been criticized from both sides of the political spectrum.

Republicans call the effort a waste of money. “It’s one more example of why government interference in the private sector doesn’t work and that’s why it should be repealed” said one Congressman from Ohio.

About 522,000 homeowners were enrolled in HAMP loan modifications and were making payments on time as of the end of last month, the Treasury Department said. That is far short of the original goal of helping up to four million homeowners.  Meanwhile, about 793,000 homeowners have dropped out of the program. That is about 54% of the nearly 1.5 million who have enrolled since spring 2009.

Scott T. Hunt
Owner/Broker
Scott T. Hunt Real Estate Group

In a recent blog I wrote that the vast majority of properties sold in Tallahassee during the past few years have been priced under $300,000.  This prompted several readers to ask us about the market for more expensive homes in our area.  After consulting MLS, here is what we found:

As of February 3, 2011, there were 109 single-family homes in Tallahassee listed in MLS as “Active” (for sale) and priced at $500,000 or higher.  Here is the price breakdown:

$500-$600k        38
$600-$700k       20
$700-$800k       16
$800+            35

Listing these high-priced properties are one thing, but selling them is another.  Since February 1st of last year (2010), here is a price breakdown of the 52 properties that sold in Tallahassee for more than $500,000:

$500-$600k         20
$600-$700k         12
$700-$800k         14
$800k +            6

There are a number of reasons (other than those that are obvious) as to why it is more difficult to sell these more expensive homes, and we’ll identify those reasons in a future blog.

Scott T. Hunt
Owner/Broker
Scott T. Hunt Real Estate Group

If you purchased a home in Tallahassee / Leon County in 2010, and it became your permanent primary residence by January 1, 2011, you must file an application for Homestead Exemption by Tuesday, March 1, 2011.  This exemption could save you as much as $800 on on your annual property taxes.

Your real estate agent or title company cannot file this application!  You must do it yourself.  There are three (3) different ways in which to apply:

1.  Go to www.LeonPA.org and follow the instructions for applying by mail.
2.  Visit the Property Appraiser’s office in the Bank of America building, 315 S. Calhoun Street, between 8:00am-5:00pm (weekdays).  They are located on the 3rd floor of this building.
3.  During February the LCPA will be holding five (5) mobile community filing centers on Saturdays.  Vist their website or call (850) 488-6102 for the locations of these mobile centers.

www.LeonPa.org

Scott T. Hunt
Owner/Broker
Scott T. Hunt Real Estate Group

January, 2011 saw 128 sales of single-family homes, townhomes and condos in Tallahassee / Leon County.  That is a 45% increase from the same time period in 2010.  But the statistics also show what we already knew – that 80% of the single-family home sales last month were sale prices under $300,000.  A more complete statistical break-out for January, 2011 is listed below:

92   Single-Family Homes
25   Townhomes
11   Condos

Price Range (Single-Family Home Sales)

22   Under $100,000
27   $100-200k
25   $200-300k
14   $300-$400k
4      Over $400,000 

*  16 of the 92 single-family home sales were either foreclosures or short-sales. 

*  The median sales price for single-family homes in January, 2011 was $187,385.

*  As of this writing there are 1,426 single-family homes for sale in Tallahassee / Leon County.  Based on the 92 sales of single-family homes in January, 2011, this means there is a 15.5 month supply of homes in Tallahassee.

Scott T. Hunt
Owner/Broker
Scott T. Hunt Real Estate Group

An improving economy and rising interest rates are just two reasons why the total number of properties for sale in Tallahassee continue to decrease. 

As of February 1, 2011, there were 2,261 single-family homes, townhomes and condos (including “contingent” listings) for sale in Tallahassee / Leon County.  This is down almost 9% from the 2,482 listings that were available as of November 1, 2010.

We’re also beginning to see some price stabilization in many areas of Tallahassee – especially those with the quality school zones.  As more and more buyers enter the marketplace, sellers are not having to make the deep price concessions as they were during 2008-2009.  However, there are still some excellent bargains to be had; but the quantity is decreasing as buyers rush to lock in low interest rates.

Tomorrow we’ll publish the sales figures for January, 2011.

Scott T. Hunt
Owner/Broker
Scott T. Hunt Real Estate Group

The best and worst real estate market forecasts for 2011 have been issued by Housing Predictor, which selects the 25 best and 25 worst markets annually.  Markets selected have the highest probability of reaching their forecasts, and are updated over the entire year as housing market conditions change.

Despite the fall-out of the troubled economy, more than 15 states are projected to experience housing inflation or appreciation during the year.  Eleven are represented on the best 25 housing market list, indicating that stabilizing factors are projected to impact much of the country in the New Year.

However, there’s no shortage of markets that will experience housing deflation as the U.S. struggles to recover from the worst downturn in real estate in decades.  The foreclosure crisis has topped 5 million homes and is forecast to gain momentum as more and more homeowners, who have lost equity in their homes walk away from properties.

Consumers, bankers, mortgage companies, retail outlets and real estate firms consult Housing Predictor forecasts.  Housing Predictor forecasts more than 230 housing markets in all 50 states and offers real estate news, foreclosure listings and analysis on the housing market.

http://www.housingpredictor.com

Scott T. Hunt
Owner/Broker
Scott T. Hunt Real Estate Group

According to a recent article in the Wall Street Journal, home buyers who purchased a house last year were largely motivated by affordability—low interest rates and lower house prices—and the desire for more living space.  But virtually no one bought a home because they had a desire to own rather than to rent, a sharp decline from five years earlier, according to a customer survey by Weichert Realtors, Inc.

The survey of 1,261 home buyers who bought a house between July 1 and Dec. 31 found that 28% said “favorable financing” motivated them to buy a home in 2010, which was less than the 31% a year earlier, but more than twice as high a share as in 2008, when 14% said that “favorable financing” had moved them to buy a house.

In 2010, almost none of the respondents said they bought because they wanted to own instead of rent.  In 2005, the tail end of the housing boom, 26% of survey respondents said they were motivated by the desire to own their home and stop paying rent.

“The takeaway is that homebuyers who still see long-term potential financial growth in housing are more motivated today by the value presented by very low interest rates and discounted prices than they were five years ago,” says Dominick Prevete, regional vice president for Weichert Realtors Inc., headquartered in Morris Plains, N.J.  “I think we are back in a period of a more realistic view of homeownership.”

Scott T. Hunt
Owner/Broker
Scott T. Hunt Real Estate Group