Darla Does Real Estate: April 2009

Tuesday, April 21, 2009

Feng Shui & Selling!

Hello friends! I love combining two of my favorite subjects! Home selling and Feng Shui (the Chinese Art of Placesment) Hopefully some of these tips will help when thinking of selling or if you just want a comfortable, balanced home! Great beginner book: "Move Your Stuff, Change Your Life!" Enjoy & Happy Spring, Darla ;-)

Have a house to sell or looking to buy a new one? I hope you know feng shui can help you. Feng shui house sale tips can be used with much success to help you achieve your real estate goals. If you plan to sell your house, or have been trying to sell your house for a while now, here are some easy feng shui tips to get the energy moving.

FENG SHUI HOUSE SALE TIP # 1: Go Outside!

Of your home, duplex, your condo... whatever it is that you are selling, and look at it from a bit of a distance. Better yet, do this little feng shui exercise with a friend who has not seen your house for a while. Quickly jot down all the thoughts and first impressions about your house that come to mind in the first 2-3 minutes.

Do not censor the information or get defensive; the more open you are to criticism, the better off you will be when presenting your house. You might think the big purple frog looks cool by your front door and is even good feng shui (no, it is not!); potential buyers, however, might not appreciate it. As with every sale, selling your house is about selling a specific emotion, rather than the commodity itself. Be very mindful about the quality of energy at your main entrance; make it look fresh and inviting.

FENG SHUI HOUSE SALE TIP # 2: Go Fresh and Go Green!
If you own a house, definitely invest in some landscaping; this will increase the value of your property, as well as attract better quality energy to your home. If you live in a duplex or a condo and there is not much "outside" to work on, focus on the main entrance and bring vibrant Chi, or energy to you main entry. Invest in a tall lush plant or bring a vase with fresh cut flowers, have good lighting, beautiful art; create a feel of spaciousness and expansion with the strategic feng shui placement of mirrors, refresh the wall paint color, etc.

FENG SHUI HOUSE SALE TIP # 3: Less is More!

When you shop for anything, and I mean anything - clothes, appliances, food - it is often helpful to see the item in action. If you sample specific food, you are much more inclined to buy it, right? The same goes with clothing - that lovely sweater looks much better on a mannequin than stacked with all the other sweaters. You see it, you touch it, you experience it, you want to buy it. However, would you want to pay full price for a used item? Probably not. Think of this when you are preparing for your house sale - the less personal, or used you make your house look, the better. Show to the best of your ability how the space can be used, but do not overdo it with personal touches.

Create a spa feel in the bathroom, but do hide all your personal items (buyers do not need to know which toothpaste brand you prefer); make the kitchen smell and look good, but take it easy with displaying old recycled cans, etc. You get the idea.

FENG SHUI HOUSE SALE TIP # 4: Go for Good Energy!

Most importantly, be aware of the very important feng shui energy triangle when selling a home. The energy in the kitchen, the bathroom, and the bedroom is either making or breaking the house sale. Buyers need to know they will sleep well, eat well, and well, unwind well if they choose to buy your home. Treat the imagination of your potential buyers with respect: know how to ignite it, know how to sustain it throughout your home, and also know when to step back and let them take it from there.

QUICK HOUSE SALE WITH FENG SHUI!

Nancy was a business associate of mine who called to see if there is anything I can do to help sell her house. It has been on the market for over a year and had only two offers that didn't materialize.

Ready to move on and build a new house, both she and her husband could not understand why it takes so long to sell their present house.

Located in a very expensive neighborhood and priced accordingly, it should have been sold a long time ago. Nancy was frustrated and, although not a big believer in feng shui, she was ready to try anything to make this sale happen.

Here is what was happening with the house:

*Tucked away and not very easy to find, the house did not have the numbers easily visible from the street.

*The main door was actually composed of several glass doors with no clarity as to which one is actually opening.
*The center of the home had a very heavy stone coffee table that hasn't been moved since it had been brought in years ago.
*The Abundance area of the home had an expensive piece of art depicting a woman in sorrow and quite dark colors.
*There were many areas with either very restricting flow of energy or the energy rushing in and out without nourishing the space.
*Last but not least, Nancy's teenage daughter was completely opposed to the sale and openly declared that she will not be moving.

Here's what we did:

*The numbers of the house were placed in a highly visible and balanced way.
*The actual main door was emphasized and strengthened with two big clay pots on either side of the door. Specific plants and specific colors were used according to the Ba-Gua and the direction of the main door.
*The very heavy stone table was completely removed from the house, thus allowing the energies to flow freely and regenerate themselves.
*The sad art in the Abundance area was replaced with a round mirror in a beautiful golden frame. (Water energy and Metal/Money shape.)
*The areas with too slow or too fast flow of chi were rebalanced with art, strategic placement of furniture and big plants.
*I strongly encouraged Nancy to reach an agreement with her daughter and find a way to make this move exciting and appealing to her. Having at least one involved party strongly opposing the sale brings the energy of resistance and prevents the sale from happening.

And the results:
I went for a trip to Europe shortly after working on Nancy's house and when I was back the house was sold. It took less than a month to "move the house" by skillfully applying a variety of feng shui tools.

Needless to say, Nancy is a big feng shui believer now!

(Articles available at FengShui.about.com)

Feng Shui & Selling!

QUICK HOUSE SALE WITH FENG SHUI!

*Tucked away and not very easy to find, the house did not have the numbers easily visible from the street.

Here's what we did:

(Articles available at FengShui.about.com)

Monday, April 13, 2009

Just The Facts From Darla

Want Just The Facts! Why You Should Buy A Home By December 1, 2009?

Recommended reading

Need further proof that now is a great time to buy? On top of the new $8,000 tax credit for first-time homebuyers, the following article illustrates the tax benefits buyers stand to gain if they take advantage of the current market opportunities.

The Tax Benefits of Homeownership

By Robert D. Dietz, Ph.D.

There are three major tax benefits for homeowners: deductibility of mortgage interest, deductibility of real estate taxes, and the capital gain tax exclusion for principal residences. Taken together, these benefits significantly reduce the cost of homeownership. Read the article below:

Read the article below or check out:

http://www.nahb.org/fileUpload_details.aspx?contentTypeID=3&contentID=113542&subContentID=199980&channelID=311

The Tax Benefits of Homeownership

Special Studies, March 27, 2009,

By Robert D. Dietz, Ph.D.

Report available to the public as a courtesy of HousingEconomics.com

Purchasing a home is typically the largest purchase and among the most important

financial decision a family makes. There are numerous factors that influence the home buying decision, and among the most important are the tax benefits that help offset some of the cost of homeownership1. Previous NAHB research has discussed the federal government’s (flawed) budget measurement and policy justifications for these housing tax law provisions. This article examines how these tax benefits reduce the cost of homeownership for individual homeowners and homebuyers for certain mortgage amounts and income levels.

Using the methods developed in the paper, a household, for example, with $80,000 in annual income who obtains a $200,000 mortgage will save on average $1,765 in the

first year of homeownership. By the end of the fifth year of homeownership, the household will save on average $8,607 on taxes, and this amount grows to $19,488 by the end of the average period ownership — twelve years. This stylized homeowner can expect to save $21,650 in capital gains taxation, yielding a total benefit of $41,138 over the expected period of homeownership. Further, the paper provides variants of these calculations if the analysis allows the homeowner’s income to increase with their age and labor market experience. For example, the five-year tax savings for this homeowner increases to $9,723.

The paper also considers how these numbers are increased by the existence of the temporary $8,000 first-time home buyer tax credit. In the case illustrated above, the five-year tax savings estimate increases 82% from $9,723 to $17,723.

Homeownership Tax Benefits

There are three major tax benefits for homeowners: deductibility of mortgage interest,

deductibility of real estate taxes, and the capital gain tax exclusion for principal residences.2 Taken together, these benefits significantly reduce the cost of homeownership. Each represents a significant provision of law. According to the Congressional Joint Committee on Taxation, for fiscal year 2008 the tax expenditure (approximately the size of the program in terms of tax savings) of the mortgage interest deduction totals $67.0 billion, the real estate tax deduction equals $24.6 billion, and the capital gain exclusion sums to $16.8 billion.3 As seen in these estimates, the largest benefit for most homebuyers is the ability to deduct home mortgage interest. The tax code permits homeowners who itemize their federal income tax deductions to reduce their taxable income by the annual amount of mortgage interest paid on a first (and second) home, up to $1 million in total home mortgage debt. Further, taxpayers may deduct interest allocable to up to $100,000 of home equity loans.4 For the purpose of the Alternative Minimum Tax [AMT], taxpayers may deduct non-home equity loan interest from AMT taxable income as well.5 Itemizing homeowners may also deduct state and local real estate taxes paid on an owner-occupied home.6

Finally, taxpayers may exclude from capital gains taxation the proceeds from the sale of

a principal residence. Taxpayers are limited in the amount of gains that may be excluded from tax: $500,000 of gain for married homeowners and $250,000 for single homeowners. Recent changes in tax law reduce these maximum exclusion amounts proportionally for the amount of time the home is actually used as a principal residence. Periods of ownership prior to January 1, 2009 are treated as periods of principal residence use under a grandfathering rule included in the law.

Measuring the Tax Benefits of the Mortgage Interest and Real Estate Tax Deductions

Calculating the net benefits of the major homeownership benefits seems straightforward

but can lead to overestimation if not done in the context of other income tax rules. At first glance, the monetary value of the deductions is equal to the sum of the deductions times the marginal tax rate. For example, a homeowner who deducts $10,000 of mortgage interest and real estate tax deductions and who is in the 25% tax bracket would theoretically realize a tax savings of $2,500 on his/her income tax return.

However, this calculation overstates the benefit on average by failing to account for the fact that the taxpayer must itemize in order to receive a net benefit from these deductions. Unless the sum of the taxpayer’s itemized deductions exceeds the standard deduction (the deduction available in lieu of itemization), it is not to the taxpayer’s advantage to itemize.

This itemization decision implies that a certain amount of the summed itemized deductions yields no net benefit to the taxpayer because of the standard deduction. For example, if a taxpayer in the 25% tax bracket has a standard deduction of $5,700 and a set of itemized deductions totaling $6,000, the net value of the deductions is not equal to $1,500 (25% times $6,000). Even with no itemized deductions available, the standard deduction is available to reduce tax payment by $1,425 (25% times $5,700). So the true, incremental value of the itemized deductions in this example is equal to the differ

ence between $1,500 and $1,425 or $75. Of course, the marginal value — the value of the next dollar of deductions — is equal to 25 cents, but it is the average net value that is important in determining the realized value of the homeownership tax benefits.

Calculating an Example

We can now estimate the true tax benefits of homeownership for examples of various taxpayers. Consider a homebuyer with gross income of $60,000 who purchases a prin

cipal residence in tax year 2009 with a mortgage of $180,000. Assuming a mortgage interest rate of 5.86%, the first year mortgage interest payment is approximately equal to $10,580.7 Conservatively, assume that the buyer uses a downpayment of 20%, so the purchase price of the home is $225,000. Further assume that property taxes are equal to 1.2% of the market price.8 Thus, this taxpayer also pays $2,700 in potentially deductible state and local real estate taxes in the first year of ownership. Assuming the taxpayer is married and files a joint return, the household could claim a standard deduction of $11,400 in 2009. Clearly, with $13,280 in itemized deductions from mortgage interest and real estate taxes alone, the taxpayer will not claim the standard deduction, thus itemizing their deductions on Schedule A of their 1040 income tax return. However, to calculate the net benefit of the housing tax deductions, we need an estimate of all the other itemized deductions in order calculate the incremental value.

Using Internal Revenue Service Statistics of Income data for 2006, we estimate the average sum of all non-housing itemized deductions by income class. For this stylized taxpayer, the estimated total is equal to $6,936 in charitable, state and local income or sales taxes, personal property taxes, and all other itemized deductions. With this information, we can calculate the taxpayer’s taxable income (gross income minus itemized deductions) and marginal income tax rate of 15%.

Now we can estimate the net value of the housing benefits. The net value is equal to the sum of itemized deductions ($13,280) minus the difference of the standard deduction ($11,400) and sum of the non-housing itemized deductions ($6,936) times the marginal tax rate of 15%. This calculation yields a net benefit for the first year of homeownership equal to $1,322.

Using this approach and adjusting the declining annual mortgage interest payment con

sistent with a self-amortizing loan, we can calculate average tax savings for certain income classes and mortgage amounts.9 Table 1 provides these amounts for the first year of homeownership. (Table 1)

The example calculated above is found in the row for $180,000 in mortgage and $60,000 in borrower income. As can be seen in this table, the benefits of the tax pro

visions increase in terms of borrower income and mortgage amount. Nonetheless, as demonstrated in a previous article most of these benefits are claimed by middle-income homeowners ($40,000 to $200,000 AGI).

Principle Residence Gain Exclusion

The final major housing tax incentive is the exclusion of capital gains for the sale of a principal residence. To calculate the benefit of this tax provision, we must forecast the

average price appreciation over the average duration of homeownership. We use the average housing price appreciation rate over the prior 20 years, which includes the historic price declines of 2007 and 2008 as well as the period of unprecedented price appreciation that preceded it. This average is 4.23% according to the Case-Shiller National U.S. Home Price Index. We use a conservative estimate of the capital gains tax rate (15% under present law, despite the likelihood that it will increase to 20% in 2011) to calculate the tax benefit of the exclusion. With these parameters and assuming that the home is sold at the end of twelve years of homeownership, we can calculate the tax benefits realized by the capital gain exclusion. Summing the benefits of the mortgage interest and real estate tax deductions with the capital gain exclusion yields the twelve-year benefit estimates, which in most cases represent significant tax savings for the homeowner.

Lifetime Income Growth

One limitation of this approach for calculating the value of homeownership tax savings

is that it assumes the homebuyer has a fixed income for the period in which they own the home. Clearly, this is not a reasonable assumption. This is important because while a homebuyer may have a relatively low income — and thus a relatively low marginal income tax rate — when purchasing a home, his/her income and tax rate is likely to grow as the homeowner ages and gains experience in his/her career. Assume the average annual income increase (at the taxpayer/homeowner level due to aging, as opposed to per capita increases for all workers) is 4%.

Using this approach, re-estimating the five-year table estimated according to initial borrower income yields the larger values reported. For example, the tax savings are higher in the $80,000 column in Table 6 than they are in Table 2, reflecting homeowners who enter a higher tax bracket in the fifth year of homeownership. Consider

the graph in Figure 2 which reports the tax savings for a borrower with an initial income of $80,000 who obtains a home with a $250,000 mortgage. In year five, the cumulative savings from homeownership begin to diverge because the value of the homeownership tax incentives increases as the homeowner’s income increases, which is presumably correlated with the homeowner’s experience in the labor market. At the time of sale, the difference in this example is more than $11,000 in tax savings — all due to increases in the homeowner’s marginal tax rate. (Figure 2)

Conclusion

This article has presented estimates of the financial benefits of homeownership. These

savings total thousands of dollars for the period of ownership and are due to the deductibility of mortgage interest and real estate taxes, as well as the principal residence capital gain exclusion. The estimates in this paper account for the lost standard deduction that results when a taxpayer itemizes and thus reflect the incremental or true value of the housing tax incentives.

An additional tax incentive that became available in 2009 is $8,000

first-time home buyer tax credit. Including the effects of this refundable credit increases the estimates in each of these tables on average by $8,000, which represents a significant increase in the tax savings of the first five years of homeownership. For example, for a homebuyer with an income of $70,000 who obtains a mortgage $200,000 the tax savings increase from $7,718 to $15,718 — an increase of 104%. Or as another example, a homebuyer with $80,000 in income and a $200,000 mortgage can expect his/her five-year tax savings estimate to increase 82% from $9,723 to $17,723.

The combination of the standard tax benefits of homeownership combined with the temporary tax credit makes 2009 an attractive time period to purchase a home.

For more information about this item, please contact: Robert Dietz at 800-368-5242

x8285 (rdietz@nahb.com)

_________________

Footnotes:

It should be noted that in this article "benefit" does not equate with "subsidy." There are tax benefits for owners of rental housing as well, including interest and depreciation deductions, as well as the Low-Income Housing Tax Credit. Previous research on the home buying decision can be found here.

There are other benefits not considered in this article, including the tax exemption for imputed-owner’s rent, the deduction for mortgage insurance, and the tax treatment of reverse mortgage proceeds.

Joint Committee on Taxation. 2008. Estimates of Federal Tax Expenditures for Fiscal Years 2008-2012. JCS-2-08.

It is important to note that not all cash-out mortgage refinancing is classified as a home equity loan, in contrast to acquisition indebtedness that is subject to the larger $1 million cap. Provided the proceeds of a cash-out refinancing are used for home improvement or residential investment, such debt is not home equity debt but the more favorably treated acquisition indebtedness.

The calculations in this paper do not include interactions with the AMT. For more information on real estate tax statistics, consult the following article.

To the extent that these taxes are in fact fees assessed for a specific, targeted benefit to the home in question, such fees may not be deducted from taxable income.

5.86% is the 4th quarter average of 2008 from the Freddie Mac Primary Market Survey.

2004 American Housing Survey reported a 1.17% estimated average annual state and local rate residential property taxation.

This analysis assumes real estate tax payments and all other itemized deductions increase with the rate of inflation.

Friday, April 10, 2009

Another Stimulus Package Benefit!

Upside-Down Refi's:

If you are "upside down" on your mortgage, you could NOT take advantage of the great rates to refi. Now there is hope! Starting this week Countrywide Home Loans is implementing the President's Homeowners Affordability and Stability Plan (HASP), enabling you to refinance if your home is "upside down" up to 105% loan to value. There are a few basic rules for eligibility:

ONE: (Temporary rule.) Your loan must be with Countrywide. (But in the near future, they will be opening this up to outside loans as well!)

TWO: No 30-day lates on your mortgage in the past 12 months.

THREE: Your loan must be invested in by Fannie Mae or Freddie Mac. Here are two web sites where you can check: FANNIE MAE http://loanlookup.fanniemae.com/loanlookup/ or

FREDDIE MAC https://ww3.freddiemac.com/corporate/

FOUR: (Temporary rule.) You are not paying PMI. In other words, your original loan-to-value was 80% or less. What if you ARE paying PMI? There is another refinancing program in the works for you, in the near future.

FIVE: Your current loan-to-value must be 105% or less. How to see your current LTV? I can run it through our special tool to find out. If you want to find out for yourself:

1. Look up how much you still owe on principle.

2. Then look up your home on Zillow to see an estimate for much it is worth. (http://www.zillow.com/ ) (Keep in mind this is an estimate--not an appraisal or market value!
3. Then divide what you owe by Zillow's guess. Then multiply by 100.
Example: You owe $155K. Zillow says your home is worth $150K. 155/150= 1.03 1.03X100=103% LTV (Loan To Value.)

Just call me if I can help you contact the right folks at Countrywide to see if this program might work for you!

My new phrase: WWSD? What Would Suzie Do? That's Suzie Orman, the financial guru, who predicted our nation's current condition, almost two years before. She has her own show & she's on Oprah almost weekly lately! I use WWSD as a gentle reminder when I'm shopping or buying on the internet... as I and most American's have started questioning every purchase! We are more than the things we accumulate! Happy living!! Warmest, Darla ;-)

Wednesday, April 1, 2009

Darla - April Real Estate Buzz

Darla's Real Estate Buzz...

1. MARKET SNAP SHOT - Want to know what your neighbor's house REALLY sold for? Want to know the asking prices verses the selling prices? What homes are currently on the market or in-contract within a five mile radius of you? Go to my website: http://www.darladoesrealestate.com/ click on the right lower button marked Market Snapshot and with no obligation you'll have a wealth of knowledge right in front of your eyes within seconds... values that affect you and your financial interest! Let me know what you think!!

2.$8000 TAX CREDIT for buyers who have not owned or bought a home in the last three years if you close before December 1st of this year! I have a detailed, easy to read flyer that answers ALL your questions! It's in pdf form so shot me an email at RealtorDarla@aol.com and I'll send it right along or it'll be saved as a note on my Facebook (FB) profile! Whatever's easier for you!

3. INSPIRATION & PERSPERATION: Do It Now -- Get It Gone... Just How Long Are You Willing To Live With This? The more unpleasant the task, the greater your urge should be to tackle it head on and get it over with. If you don't want to do the next item on your To Do List, make a game of it. Be creative. Build in a big reward for doing it. It's there for a reason. Get it done or mark it off the list!!

Today's Quest... Answer Honestly ;-)

a. Name three unpleasant tasks that you have hanging over your head right now!

b. Will each task get easier if you wait or will it get worse?

c. When, exactly are you going to tackle the three tasks that you have been avoiding lately? My coach calls these, "Psychic Vampires". Do the hardest one FIRST!! It's agony but heavenly once you get it done!! I have to mentally psyc myself up to do them, too!! Call me if you need a friendly push!! ;-)

That's it for today! I want you to think of me whenever you think of real estate! Who do you know that needs to buy or sell a home? Dial Darla today!! Have a super week!!

Darla Luebbe, CRS/GRI/ABR
It's A Great Market With The Right Agent! Dial Darla!
Keller Williams Capital Partners Realty
614-431-1003
Check me out on www.Facebook.com
RealtorDarla@aol.com
www.RealEstateAces.com or www.DarlaDoesRealEstate.com

Pages

Tuesday, April 21, 2009

Feng Shui & Selling!

Feng Shui & Selling!

Monday, April 13, 2009

Just The Facts From Darla

Friday, April 10, 2009

Another Stimulus Package Benefit!

Wednesday, April 1, 2009

Darla - April Real Estate Buzz