NOVEMBER 2012 NEWSLETTER

Posted November 16, 2012

Dear Friends,

Good News! The Santa Barbara Real Estate Market has been very robust in 2012. The number of sales have been up every month this year and are higher than sales for the last five years. This has caused our inventory of property listings to shrink which is pushing the demand for housing over the supply of available homes on the market. This lack of inventory has also started inching prices up slightly in certain areas of Santa Barbara.

Interest rates are at historical lows! Ihave included a chart showing the history of interest rates since the l980’s. I think you will appreciate just how fortunate we are to have rates starting under 4%. Now would be the perfect time to consider re-financing or purchasing. I have names of excellent lenders should you need help with this.

In addition, check out this informative article regarding the new “Medicare Tax” that will apply to real estate transactions starting in 2013. This 3.8% surtax was passed in 2010 to help fund the new health care mandates and kicks in next year on many fonns of investment income including some interest, dividends, rents and capital gains. Determining whether you will be subject to the tax is no easy matter. It is a confusing tax that has many tax attorneys and accountants scratching their heads. Hopefully, this article will give you useful information.

Some of you may be aware that my husband passed away in September. I am now back at work and it seems to be helping me regain my focus. As always, if you have any real estate needs I am here for you. This is a good time for me to thank you for your continued support and loyalty.

Wishing you and all your loved ones a Happy Thanksgiving,
Gail

THE NEW “MEDICARE TAX”

Posted November 16, 2012

The new “Medicare Tax” will apply to real estate transactions starting in 2013.  This 3.8% surtax was passed in 2010 to help fund the new health care mandates and kicks in next year on many forms of investment income including some interest, dividends, rents and capital gains.  Determining whether you will be subject to the tax is no easy matter.  It is a confusing tax that has many tax attorneys and accountants scratching their heads.  Hopefully, this article will give you useful information.

1) When you add up all of your income from every possible source, and that total is less than $200,000 ($250,000 on a joint tax return), you will NOT be subject to this tax. 

2) The 3.8% tax will NEVER be collected as a transfer tax on real estate of any type, so you’ll NEVER pay this tax at the time that you purchase a home or other investment property. 

3) You’ll NEVER pay this tax at settlement when you sell your home or investment property. Any capital gain you realize at settlement is just one component of that year’s gross income. 

4) If you sell your principal residence, you will still receive the full benefit of the $250,000 (single tax return) /$500,000 (married filing joint tax return) exclusion on the sale of that home. If your capital gain is greater than these amounts, then you will include any gain above these amounts as income on your Form 1040 tax return. Even then, if your total income (including this taxable portion of gain on your residence) is less than the $200,000/$250,000 amounts, you will NOT pay this tax. If your total income is more than these amounts, a formula will protect some portion ofyour investment. 

5) The tax applies to other types of investment income, not just real estate. If your income is more than the $200,000/$250,000 amount, then the tax formula will be applied to capital gains, interest income, dividend income and net rents (i.e., rents after expenses). 

6) The tax goes into effect in 2013. If you have investment income in 2013, you won’t pay the 3.8% tax until you file your 2013 Form 1040 tax return in 2014. The 3.8% tax for any later year will be paid in the following calendar year when the tax returns are filed. 

7) In any particular year, ifyou have NO income from capital gains, rents, interest or dividends, you’ll NEVER pay this tax, even if you have millions of dollars of other types of income. 

8) The formula that determines the amount of 3.8% tax due will ALWAYS protect $200,000 ($250,000 on a joint return) of your income from any burden of the 3.8% tax. For example, if you are single and have a total of $201,000 income, the 3.8% tax would NEVER be imposed on more than $1000. 

9) It’s true that investment income from rents on an investment property could be subject to the 3.8% tax, BUT: The only rental income that would be included in your gross income and therefore possibly subject to the tax is net rental income: gross rents minus expenses like depreciation, interest, property tax, maintenance and utilities. 

10) The tax was enacted along with the health care legislation in 2010. It was added to the package just hours before the final vote and without review. NAR strongly opposed the tax at the time, and remains hopeful that it will not go into effect. The tax will no doubt be debated during the upcoming tax reform debates in 2013.

Click here for a printable version from the National Association of Realtors.

Mortgage industry fares well in fiscal cliff deal, debt forgiveness law survives

Posted January 9, 2013

By Kerri Ann Panchuk
January 2, 2013

The mortgage industry can breath a sigh of relief with the final fiscal cliff deal bringing back a popular tax break on mortgage insurance premiums and debt forgiveness for borrowers who go through a short-sale or some other type of debt reduction.

A topic that is still up for discussion and likely to surface later in the year is whether the popular mortgage interest tax deduction will be part of a long-term deficit reduction plan.

Still, the deal passed by the Senate and House on Jan. 1 is one that leaves room for hope in the housing market.

The American Taxpayer Relief Act of 2012 apparently extends a law that expired at the end of 2011, which allowed for the deductibility of mortgage insurance premiums, according to a research report from Isaac Boltansky with Compass Point Research & Trading. The law now applies to fiscal years 2012 and 2013.

“The law dictates that eligible borrowers who itemize their federal tax returns and have an adjusted gross income (AGI) of less than $100,000 per year can deduct 100% of their annual mortgage insurance premiums,” Compass Point said.

“Certain borrowers with AGIs above $100,000 may benefit from the deductibility as well but are subject to a sliding scale. The tax break covers private mortgage insurance as well as mortgage insurance provided by the FHA, the VA, and the Rural Housing Service. In 2009, about 3.6 million taxpayers claimed the mortgage insurance deduction,” the research firm added.

One of the more watched provisions of the fiscal cliff was the Mortgage Forgiveness Debt Relief Act of 2007, which was set to expire on Dec. 31.

The fiscal cliff deal extends it for another year, meaning homeowners who experience a debt reduction through mortgage principal forgiveness or a short sale are exempt from being taxed on the forgiven amount.

“The amount extends up to $2 million of debt forgiven on the homeowner’s principal residence,” Compass Point Research & Trading said. “For homeowner’s to qualify, their debt must have been used to ‘buy, build, or substantially improve’ their principal residence and be secured by that residence. The law, which was passed in 2007 with a 5-year sunset provision, will now be in effect until Jan. 1, 2014.”

Another minor win for housing is a provision tied to the government’s plan to increase the capital gains tax rate from 15% to 20% for individuals who earn more than $400,000. While in theory, this is harder on higher-income homeowners, Compass Point sees a silver lining through an exclusion.

Compass Point notes the law “states that only gains of more than $250,000 for individuals ($500k for households) are subject to taxes on the excess portion of capital gains. Point being, in order for an individual homeowner to be impacted by the increased capital gains tax rate they would need to have an adjusted gross income above $400,000 and gain more than $250,000 from the sale of the property. Since this exclusion threshold remained intact, the impact of the capital gains tax increase is limited.”

Source

MARKET UPDATE

Posted September 9, 2014

Good New for Sellers–property values are up!

Good News for Buyers–interest rates remain LOW!

 

The first 6 months of this year saw a slowdown in sales from 2013. This was largely due to the lack of inventory of homes for sale. This shortage of inventory has contributed to the rise in home prices. The information below will give you detailed information on the first 6 months of South Coast Real Estate.

 

 

 

What to do?

Posted October 22, 2014

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It is that time of year where spooky is in. Your kids want to dress up (maybe even you) and go trick or treating. But where is safe and fun?  It is not always easy knowing where to go. We have a few ideas where there will be loads of fun.

If you’re in the Montecito area, your kids will love Ghost Village Road !! Located at Coast Village Road on October 31st, Montecito transforms into a creepy, haunted village. There will be trick or treating from 3- 5:30PM. Dress your best for the costume contest. There will be fun houses to go through and many sweets from the cupcake store, even gelato.

If you are in the Goleta area on Friday stop by the Halloween Extravaganza Calle Real Center, October 31, from 3-6 pm there will be trick or treating with a Tunnel of Terror (Courtesy of the Pet House) a Train Ride. There will also be face painters, a creative balloon master, and three spooky bounce houses! To make it more exciting they will have the AMR ambulance, Sheriffs cruiser and Santa Barbara County fire truck.

If you cant make those there is also Trick or Treat on The Plaza October 31 from 4-PM. This is located at the 5 Points La Cumbre Plaza. Selected stores have fun filled trick or treating for the kids.

If you feel like extending the fun here are some freakishly fun treat ideas that you, your family and friends will love.

The Frankenstein Rice Krispies are easy and a crowd pleaser. You need: 1 box of rice krispies, 1 bag of large marshmallows, 1 bag of small marshmallows, green food coloring, 2 bags of chocolate chips, one bag of pretzel thins and a jar of peanut butter. It is easy, fun and tasty all at the same time.

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At the store you can find edible marker. This is very helpful when creating a scary healthy snack. You can use it to  draw your own ghosts face on your banana and anything else you want to make spooky. (Cookies, marshmallows, fruit, etc).

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For a Gross all time, the mad jackolantern with green goblin guacamole is always a delicious pleaser. It is fun for the crowd and easy for you. The kids will love it.halloween_presentation.jpg

Have a crazy safe time!!

Happy Halloween!!!!

SANTA BARBARA’S MARKET TREND FROM 3RD QUARTER INTO 4TH QUARTER

Posted November 18, 2014

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Santa Barbara’s beauty keeps the market trending!

At the end of 3rd quarter we had an INCREASE in Inventory, a HIGHER median price and a DECLINE in closed escrows. The median price was $909,000 in September of 2013. It was $1,199,000 in September of 2014. That is a 32% increase. There are more higher priced homes going under contract this year than last. With more people pricing their homes higher due to the median price increasing and inventory decresing, Buyers may hold out on Buying and wait for that perfect home. This will be interesting to see. Here is a picture of South County Sales for the month of October for the past 12 years. For October 2014 the median price is lower, but the average price is higher with a higher number of sales. The total number of sales over $1,000,000 is greater as well. This can only mean the market is strong and people are willing to spend money on that perfect home. Lets hope it continues through the new year and Sellers don’t get too greedy with pricing their home. 

 

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The Market Trends for the Santa Barbara South County from 2006- 2014.

Lets try and beat last years numbers!

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Non-Profit Organization

Posted December 15, 2014

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#LiveBeyond

We are all so lucky to be living here in Santa Barbara, let alone the United States. One of my passions is to help others in other countries that are less fortunate than us. One organization in particular I was taught about at my church is called LiveBeyond.

In 2010 there was a 7.0 earthquake that hit Haiti. It killed 300,000 people in 6 seconds. 1,000,000 locals were injured and 30,000 children orphaned. 45,000 ended up dying from cholera and 500,000 people lost their home. Haiti is the poorest country in the Western hemisphere. And with this catastrophe it only made matters worse.

The non-profit humanitarian organization brings help to those in third world countries. They brought medical and maternal healthcare, clean water, orphanage support and community development. They have established a long term presence in the community and created an operative hospital with a medical clinic, surgical suites, an OB/GYN clinic and an inpatient hospital.  LiveBeyond hosts monthly medical missions where American doctors and nurses can help treat the people.

Knowing the facts can make a difference. Donations are always helpful. You can also volunteer your time or sign up for a mission. To find out more information on this matter and how to help, you can go to their website at  www.livebeyond.org/Get-involved.html

A Real Estate Agents Christmas Carol

Posted December 22, 2014

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Nick Churton from Mayfair International Realty tells a heart-warming
Christmas story.

Scrooge had been trying to sell his home all year – but to no effect. He was fed up with cold winters
where he lived and longed to move to Florida where he had found a large condo at a very
reasonable price. Now it was Christmas again and there was still no sign of a buyer for his own
property. Scrooge hated Christmas.
Bob, at the local real estate broker, Cratchit and Company, had almost given up on ever selling the
house. Scrooge was far too mean to put the lights on inside or light the fire to make the house look
cosy and inviting. Instead it was unwelcoming and cold. A better word would be frigid. He refused
to let people see his house when they wanted to and only allowed showings when it was very
convenient for him. The few offers he had received he had treated with contempt – even though
the asking price was really far too high – which put everyone off taking it any further. Scrooge was
even insisting that any buyer would have to purchase, at extra cost, the threadbare carpets and
filthy drapes.
That night Scrooge had three disturbing dreams. The first vividly reminded him of what life had
been like before he had become so mean and his wife had left him. The second dream showed
Christmas dinner at his real estate agent’s home. It was a jovial family affair with Bob, his wife and
their small son, Tim, all enjoying themselves. But slowly the scene changed. It showed what life
would be like if Bob couldn’t sell any real estate and had no money. The third dream showed
Scrooge’s grave. He had died an embittered old man who had never sold his mausoleum of a house
or moved to sunny Florida.
Waking up in his bed Scrooge realised that wasn’t too late. He raced round the house putting lights
on and setting the fire ablaze in the living room. He then rushed down to see Bob at Cratchit &
Company, and told him to reduce the price immediately and to tell everyone that he would heartily
entertain any reasonable offers. Scrooge even told Bob that he would increase the commission if
the house sold quickly.
So Scrooge did sell his house and moved to Florida where he enjoyed many long years in the sun.
He even met an attractive widow in the local waterside restaurant that he liked to go to often.
Scrooge never forgot to send Bob a Christmas card, as without all Bob’s hard work he would never
have had his new life.
The moral of this story is to be as accommodating with potential buyers as possible, make your
home as inviting as you can, be reasonable and always try and find a real estate agent like Bob.
Happy Christmas everyone – with apologies to Charles Dickens.

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