10+ Magazine Storage Solutions | Apartment Therapy Boston
I'm sure I've mentioned Apartment Therapy before. The design ideas are casual, funky, and global. Even though I help people buy/sell homes, I'm completely helpless when it comes to Interior Design. I'm wondering if maybe I should enroll in some classes. Maybe get another neato-looking degree to hang up next to the several that I already have.
Anyway, I think I will incorporate my latest Apartment Therapy findings into today's Happy List.
THINGS THAT MAKE ME HAPPY:
1. Damask patterns
2. Temporary wallpaper
3. Low maintenance plants
4. Portable heaters
5. Duvet covers
-
~Tina Jan~
DRE# 01505855
Coldwell Banker Kivett-Teeters
1655 E. Sixth St.
Beaumont, CA 92223
Work: 951-845-5520 Ext. 105
Fax: 951-845-4916
Cell: 909-446-2666
Toll-Free: 1-877-TINAJAN
tina.jan@coldwellbanker.com
www.tinajan.com
Monday, January 25, 2010
Monday, January 11, 2010
Chinese Buyers Looking in America
Kevin Brass from the New York Times writes about Chinese buyers looking in America for investments.
"When Angel Calzadilla, a Florida real estate agent, received an e-mail a few weeks ago from a man who said he was a Chinese executive and wanted to buy a house, he suspected a scam.
“I thought it was fishy,” said Mr. Calzadilla, who is based in Fort Lauderdale, where Chinese buyers are a rarity.
But the executive was real. He hired a lawyer, transferred $750,000 into a trust account for the purchase and is now searching, with Mr. Calzadilla’s help, for a four-bedroom house in the range of $500,000 to $1 million.
Agents and industry executives around the United States are reporting similar experiences. Chinese buyers, once a novelty in many areas, are growing increasingly common, heralding what some believe — and many hope — may be an important new buying group.
Early last year, in the depths of the financial downturn, several groups of investors from mainland China toured properties around the United States, setting off a wave of media coverage. The tours were organized by companies like SouFun, a Beijing-based real estate Web site owned by Telstra, the Australian telecommunications conglomerate.
Many in the U.S. real estate industry hoped that the trips were an early indication that a wave of Chinese buyers was on its way. But, so far at least, the Chinese have mostly been what the agents call Lookie Lous — checking out properties but not buying.
“A lot of these buyers are very cautious right now,” said Kelvin Wong, owner of Resource Real Estate Services in Temple City, California, outside Los Angeles. “They are coming over and taking a look at what is going on to be prepared for when opportunity comes.”
And that will be when market conditions stabilize, according to experts like Paul Brewbaker of TZ Economics, a research and consulting company based in Honolulu.
“Trust me, there are going to be a lot more Chinese investors over here,” he said. “We’re very much in the early stages of this.”
Several factors are fueling the optimism. Thanks to China’s fast-growing economy, its population of millionaires is now the fourth largest in the world, moving past Britain in 2008, according to the 2009 Merrill Lynch-CapGemini World Wealth Report.
Prices in many parts of the United States dropped 25 percent to 35 percent last year, but it is the secure, established nature of the U.S. residential sector — especially in comparison to the wild gyrations of many Asian property markets — that is particularly attractive to Chinese investors.
“They come to the U.S. not for the huge profit, it’s for the stabilized market,” said Kenneth Li, an agent with Century 21 in Houston who deals with many Chinese buyers.
In many ways, the interest in U.S. property is part of a general economic shift. Direct investment by Chinese companies in the United States grew to $1.2 billion in 2008 from $385 million in 2002, a 220 percent increase, government data shows.
Officially, China strictly limits its citizens on the amount of money they can invest overseas, usually the equivalent of about $50,000 a year. But industry executives say there are a variety of methods for wealthy Chinese to avoid the restrictions, including overseas bank accounts and trusts.
In 2007 Chinese buyers accounted for 7.5 percent of international buyers in the United States, according to a survey by the National Association of Realtors. Although that number dropped to 5.4 percent last year, agents in California and Texas report a sharp increase in contacts from China in the same period.
Forty-one percent of the Chinese purchases of residential property in the United States last year were in California, according to the national realtors group. In the past three years, the Chinese population in the state grew by more than 80,000 to about 1.2 million, according to the U.S. Census Bureau.
Many buyers have children studying in the United States or have relatives here, said John Wu, president of the Chinese American Real Estate Professionals Association, in San Gabriel, California.
Typically, he said, the buyers are not looking for ostentatious properties, but rather for houses that can be easily rented or resold. “They really buy houses with more flexibility,” Mr. Wu said. “They understand the market here.”
The West Coast is not the only area seeing activity. In New York, for example, interest from China is “infinitely stronger now,” said Chaim Katzap, chief executive of Lion’s Property Development Group, an investment advisory firm based in New York with offices in Beijing and Shanghai.
Mr. Katzap met with several investor groups from China last year. Like other executives, he reports the interest did not translate into big deals but, “they keep calling.”"
Click here to read more from the New York Times.
-
~Tina Jan~
DRE# 01505855
Coldwell Banker Kivett-Teeters
1655 E. Sixth St.
Beaumont, CA 92223
Work: 951-845-5520 Ext. 105
Fax: 951-845-4916
Cell: 909-446-2666
Toll-Free: 1-877-TINAJAN
tina.jan@coldwellbanker.com
www.tinajan.com
"When Angel Calzadilla, a Florida real estate agent, received an e-mail a few weeks ago from a man who said he was a Chinese executive and wanted to buy a house, he suspected a scam.
“I thought it was fishy,” said Mr. Calzadilla, who is based in Fort Lauderdale, where Chinese buyers are a rarity.
But the executive was real. He hired a lawyer, transferred $750,000 into a trust account for the purchase and is now searching, with Mr. Calzadilla’s help, for a four-bedroom house in the range of $500,000 to $1 million.
Agents and industry executives around the United States are reporting similar experiences. Chinese buyers, once a novelty in many areas, are growing increasingly common, heralding what some believe — and many hope — may be an important new buying group.
Early last year, in the depths of the financial downturn, several groups of investors from mainland China toured properties around the United States, setting off a wave of media coverage. The tours were organized by companies like SouFun, a Beijing-based real estate Web site owned by Telstra, the Australian telecommunications conglomerate.
Many in the U.S. real estate industry hoped that the trips were an early indication that a wave of Chinese buyers was on its way. But, so far at least, the Chinese have mostly been what the agents call Lookie Lous — checking out properties but not buying.
“A lot of these buyers are very cautious right now,” said Kelvin Wong, owner of Resource Real Estate Services in Temple City, California, outside Los Angeles. “They are coming over and taking a look at what is going on to be prepared for when opportunity comes.”
And that will be when market conditions stabilize, according to experts like Paul Brewbaker of TZ Economics, a research and consulting company based in Honolulu.
“Trust me, there are going to be a lot more Chinese investors over here,” he said. “We’re very much in the early stages of this.”
Several factors are fueling the optimism. Thanks to China’s fast-growing economy, its population of millionaires is now the fourth largest in the world, moving past Britain in 2008, according to the 2009 Merrill Lynch-CapGemini World Wealth Report.
Prices in many parts of the United States dropped 25 percent to 35 percent last year, but it is the secure, established nature of the U.S. residential sector — especially in comparison to the wild gyrations of many Asian property markets — that is particularly attractive to Chinese investors.
“They come to the U.S. not for the huge profit, it’s for the stabilized market,” said Kenneth Li, an agent with Century 21 in Houston who deals with many Chinese buyers.
In many ways, the interest in U.S. property is part of a general economic shift. Direct investment by Chinese companies in the United States grew to $1.2 billion in 2008 from $385 million in 2002, a 220 percent increase, government data shows.
Officially, China strictly limits its citizens on the amount of money they can invest overseas, usually the equivalent of about $50,000 a year. But industry executives say there are a variety of methods for wealthy Chinese to avoid the restrictions, including overseas bank accounts and trusts.
In 2007 Chinese buyers accounted for 7.5 percent of international buyers in the United States, according to a survey by the National Association of Realtors. Although that number dropped to 5.4 percent last year, agents in California and Texas report a sharp increase in contacts from China in the same period.
Forty-one percent of the Chinese purchases of residential property in the United States last year were in California, according to the national realtors group. In the past three years, the Chinese population in the state grew by more than 80,000 to about 1.2 million, according to the U.S. Census Bureau.
Many buyers have children studying in the United States or have relatives here, said John Wu, president of the Chinese American Real Estate Professionals Association, in San Gabriel, California.
Typically, he said, the buyers are not looking for ostentatious properties, but rather for houses that can be easily rented or resold. “They really buy houses with more flexibility,” Mr. Wu said. “They understand the market here.”
The West Coast is not the only area seeing activity. In New York, for example, interest from China is “infinitely stronger now,” said Chaim Katzap, chief executive of Lion’s Property Development Group, an investment advisory firm based in New York with offices in Beijing and Shanghai.
Mr. Katzap met with several investor groups from China last year. Like other executives, he reports the interest did not translate into big deals but, “they keep calling.”"
Click here to read more from the New York Times.
-
~Tina Jan~
DRE# 01505855
Coldwell Banker Kivett-Teeters
1655 E. Sixth St.
Beaumont, CA 92223
Work: 951-845-5520 Ext. 105
Fax: 951-845-4916
Cell: 909-446-2666
Toll-Free: 1-877-TINAJAN
tina.jan@coldwellbanker.com
www.tinajan.com
More State Funded Tax Credits on the Way
According to the Orange County Register, Gov. Arnold Schwarzenegger proposed the adoption of a new homebuyer tax credit for California taxpayers.
Unlike the previous tax credit, which was depleted eight months before the deadline, the latest proposal would apply to the purchase of existing as well as new homes.
While Congress extended the federal tax credit through next spring, the state tax credit was halted early after nearly 10,700 California homebuyers took advantage of it. The homebuilding and real estate industries have been clamoring for an extension of the state credit.
Schwarzenegger said in his final State of the State address in Sacramento this morning that his first priority for the coming year will be the state’s economy and “jobs, jobs, jobs.” He then outlined four proposals to boost the economy including:
“To stimulate other construction jobs, you will receive a proposal for homebuyer tax credits of up to $10,000 for the purchase of new or existing homes.”
In a press release issued as the governor began to speak, the executive’s press office said:
“To continue encouraging homeownership among Californians, the Governor will propose to extend and expand the $10,000 homebuyer tax credit to include the purchase of existing homes in addition to new residences for first-time homebuyers. The buyer must not be a dependent and must be purchasing a home that does not belong to a relative. Under the Governor’s proposal, the Franchise Tax Board will extend the credit to buyers who purchase homes until $200 million dollars in tax credits have been granted.”
Other details haven’t been released, such as whether there’s a deadline by which homes must be purchased.
But here are some comparisons and highlights of previous tax credits:
* The proposal is for the purchase of an existing home, as well as a newly built residence. The previous tax credit was for new homes only.
* The current prosposal is to allocate up to $200 million in tax credits. The ap on the previous tax credit was $100 million.
* The state ran out of money under the old tax credit eight months before the deadline. The Franchise Tax Board stopped accepting applications at the start of July, while the deadline to close escrow on a home was to be Feb. 28.
* Like the previous tax credit, the proposed new credit would be worth up to $10,000 to the qualifying buyers.
* Under the old plan, tax credits were offered for 5% of the purchase price up to a maximum of $10,000. Tax credits were allocated on a first-come, first-served basis.
* Under the original federal tax credit, buyers of new homes by Nov. 30 received up to $8,000 in tax credits. Congress extended that deadline until April 30 to sign a contract and until June 30 to close escrow.
* In addition, Congress expanded the program to include a $6,500 credit for existing homeowners who buy a new place after living in their current residence at least five years.
* Builders and Realtors praised the state and federal tax credits for stimulating home sales.
* Critics, however, disputed that contention, arguing that tax credits merely move demand forward by getting people who plan to by a home anyway to buy sooner.
Click here to read more from the OC Register.
-
~Tina Jan~
DRE# 01505855
Coldwell Banker Kivett-Teeters
1655 E. Sixth St.
Beaumont, CA 92223
Work: 951-845-5520 Ext. 105
Fax: 951-845-4916
Cell: 909-446-2666
Toll-Free: 1-877-TINAJAN
tina.jan@coldwellbanker.com
www.tinajan.com
Unlike the previous tax credit, which was depleted eight months before the deadline, the latest proposal would apply to the purchase of existing as well as new homes.
While Congress extended the federal tax credit through next spring, the state tax credit was halted early after nearly 10,700 California homebuyers took advantage of it. The homebuilding and real estate industries have been clamoring for an extension of the state credit.
Schwarzenegger said in his final State of the State address in Sacramento this morning that his first priority for the coming year will be the state’s economy and “jobs, jobs, jobs.” He then outlined four proposals to boost the economy including:
“To stimulate other construction jobs, you will receive a proposal for homebuyer tax credits of up to $10,000 for the purchase of new or existing homes.”
In a press release issued as the governor began to speak, the executive’s press office said:
“To continue encouraging homeownership among Californians, the Governor will propose to extend and expand the $10,000 homebuyer tax credit to include the purchase of existing homes in addition to new residences for first-time homebuyers. The buyer must not be a dependent and must be purchasing a home that does not belong to a relative. Under the Governor’s proposal, the Franchise Tax Board will extend the credit to buyers who purchase homes until $200 million dollars in tax credits have been granted.”
Other details haven’t been released, such as whether there’s a deadline by which homes must be purchased.
But here are some comparisons and highlights of previous tax credits:
* The proposal is for the purchase of an existing home, as well as a newly built residence. The previous tax credit was for new homes only.
* The current prosposal is to allocate up to $200 million in tax credits. The ap on the previous tax credit was $100 million.
* The state ran out of money under the old tax credit eight months before the deadline. The Franchise Tax Board stopped accepting applications at the start of July, while the deadline to close escrow on a home was to be Feb. 28.
* Like the previous tax credit, the proposed new credit would be worth up to $10,000 to the qualifying buyers.
* Under the old plan, tax credits were offered for 5% of the purchase price up to a maximum of $10,000. Tax credits were allocated on a first-come, first-served basis.
* Under the original federal tax credit, buyers of new homes by Nov. 30 received up to $8,000 in tax credits. Congress extended that deadline until April 30 to sign a contract and until June 30 to close escrow.
* In addition, Congress expanded the program to include a $6,500 credit for existing homeowners who buy a new place after living in their current residence at least five years.
* Builders and Realtors praised the state and federal tax credits for stimulating home sales.
* Critics, however, disputed that contention, arguing that tax credits merely move demand forward by getting people who plan to by a home anyway to buy sooner.
Click here to read more from the OC Register.
-
~Tina Jan~
DRE# 01505855
Coldwell Banker Kivett-Teeters
1655 E. Sixth St.
Beaumont, CA 92223
Work: 951-845-5520 Ext. 105
Fax: 951-845-4916
Cell: 909-446-2666
Toll-Free: 1-877-TINAJAN
tina.jan@coldwellbanker.com
www.tinajan.com
Saturday, January 09, 2010
Happy List #2
Five Things That Make Me Happy:
1. Redlands Stitch'n'Bitch - My knitting group that meets every Friday at 7pm in Redlands, California. I love knitting. No, I'm not an old lady!
2. Soft down pillows - I have serious insomnia issues, so anything that helps me sleep is a blessing. For example, it's 5:46am and I haven't been able to fall asleep yet. I love sleep, but I never seem to be able to get it. My brain won't shut off, but at least I get to toss and turn on a comfy pillow.
3. Falling leaves - Autumn is my favorite season. There are so many things about it that I love, like the colors, weather, smells, sounds, and being able to bundle up in layers of clothes.
4. Big windows - Ever since I was a young girl, I have been fascinated with big windows. Maybe because I grew up in a house with big windows and the views are so much better!
5. Hello Kitty - I am such a sucker for Hello Kitty. I don't know if it's the Asian influence or what, but I love that darn cartoon cat. I'm almost (but not really) tempted to get a part-time job at Sanrio, just so that I can request to get paid in Hello Kitty products, rather than money.
-
~Tina Jan~
DRE# 01505855
Coldwell Banker Kivett-Teeters
1655 E. Sixth St.
Beaumont, CA 92223
Work: 951-845-5520 Ext. 105
Fax: 951-845-4916
Cell: 909-446-2666
Toll-Free: 1-877-TINAJAN
tina.jan@coldwellbanker.com
www.tinajan.com
1. Redlands Stitch'n'Bitch - My knitting group that meets every Friday at 7pm in Redlands, California. I love knitting. No, I'm not an old lady!
2. Soft down pillows - I have serious insomnia issues, so anything that helps me sleep is a blessing. For example, it's 5:46am and I haven't been able to fall asleep yet. I love sleep, but I never seem to be able to get it. My brain won't shut off, but at least I get to toss and turn on a comfy pillow.
3. Falling leaves - Autumn is my favorite season. There are so many things about it that I love, like the colors, weather, smells, sounds, and being able to bundle up in layers of clothes.
4. Big windows - Ever since I was a young girl, I have been fascinated with big windows. Maybe because I grew up in a house with big windows and the views are so much better!
5. Hello Kitty - I am such a sucker for Hello Kitty. I don't know if it's the Asian influence or what, but I love that darn cartoon cat. I'm almost (but not really) tempted to get a part-time job at Sanrio, just so that I can request to get paid in Hello Kitty products, rather than money.
-
~Tina Jan~
DRE# 01505855
Coldwell Banker Kivett-Teeters
1655 E. Sixth St.
Beaumont, CA 92223
Work: 951-845-5520 Ext. 105
Fax: 951-845-4916
Cell: 909-446-2666
Toll-Free: 1-877-TINAJAN
tina.jan@coldwellbanker.com
www.tinajan.com
Headaches and Another Sleepless Night
I have the worst headache right now. It is still raging even after taking two Excedrin. I can't rest, my mind keeps worrying...
Need to email Jimmy homes under 180k and possible showing on Sunday.
Need to email sellers for Sylvan.
Need to go to office at 1pm.
Property inspection at 9am for Stockton.
Yucaipa buyers Wednesday, Thursday - but need to find homes for them first.
Moving from Yucaipa to Beaumont next month.
Need to finish knitting the shawl that I was supposed to finish before Xmas.
Need to read go over some other work emails and study files.
Need to contact seller and fax over updated docs for Billings.
Seller disclosures for Stockton.
Already sent out seller disclosures for Sylvan.
Addendum for Jackson.
Check up on Potter Creek, did seller get check?
Need to email buyer that called on Underhill.
My car is a scary mess right now, the birds and I, both really did a number on it.
Check up on my students for this month and next month.
Storage issues?
-
~Tina Jan~
DRE# 01505855
Coldwell Banker Kivett-Teeters
1655 E. Sixth St.
Beaumont, CA 92223
Work: 951-845-5520 Ext. 105
Fax: 951-845-4916
Cell: 909-446-2666
Toll-Free: 1-877-TINAJAN
tina.jan@coldwellbanker.com
www.tinajan.com
Need to email Jimmy homes under 180k and possible showing on Sunday.
Need to email sellers for Sylvan.
Need to go to office at 1pm.
Property inspection at 9am for Stockton.
Yucaipa buyers Wednesday, Thursday - but need to find homes for them first.
Moving from Yucaipa to Beaumont next month.
Need to finish knitting the shawl that I was supposed to finish before Xmas.
Need to read go over some other work emails and study files.
Need to contact seller and fax over updated docs for Billings.
Seller disclosures for Stockton.
Already sent out seller disclosures for Sylvan.
Addendum for Jackson.
Check up on Potter Creek, did seller get check?
Need to email buyer that called on Underhill.
My car is a scary mess right now, the birds and I, both really did a number on it.
Check up on my students for this month and next month.
Storage issues?
-
~Tina Jan~
DRE# 01505855
Coldwell Banker Kivett-Teeters
1655 E. Sixth St.
Beaumont, CA 92223
Work: 951-845-5520 Ext. 105
Fax: 951-845-4916
Cell: 909-446-2666
Toll-Free: 1-877-TINAJAN
tina.jan@coldwellbanker.com
www.tinajan.com
Thursday, January 07, 2010
Happy New Year + Happy List #1
I want to wish everyone a very Happy New Year! The beginning of a new year means new changes. This holds true in our lives, as well as in real estate. You'll be hearing about many new changes to the real estate market.
Below are a just a few of the changes to our real estate market:
Updated RESPA laws are changing the lending industry.
The Obama short sale changes will be happening in the beginning of April.
Minimum credit score to get a loan has changed from 620 to 640.
Look for more foreclosures and short sales to come onto the market.
$8000 Tax credit stimulus ends after April.
Despite all the changes, there are so many things to be grateful for! I want to encourage everyone to think happy thoughts and focus on the positive influences in your life. Many people are having a hard time right now. Money is very tight and our lifestyles are changing. But I want to believe that they are changing for the better. We're learning about ourselves through our limits, weaknesses, and strengths. Adapting to our new environment is something humans do pretty naturally, so I think we're all going to be OKAY!
On that note, I'd like to add a little segment to my post called my Happy List. Basically, instead of focusing on negative issues, I want to meditate on the things that make me happy. I'm easy to please, so there may be things on my Happy List that are totally ridiculous, but hey, it really is the small things that make me happy.
Happy List #1: Five things that make me happy.
1. My dog - She cracks me up and does the cutest tricks.
2. Being able to speak multiple languages - I never really thought this made me happy, because it's always been a part of me. But I'm really starting to appreciate it now.
3. My POS car - It is SO embarrassing to drive, but the gas mileage is amazing. An added bonus is that I don't care if anything happens to it because I've been trying to make it die for years now, and it WILL NOT DIE.
4. My new car - It sits in the garage, steadily depreciating in value, but it looks so pretty, I can't bring myself to drive it anywhere. I'm afraid I'll scratch the paint etc. It's just nice to know that it's sitting there waiting for me.
5. Chandeliers - They're just awesome.
-
~Tina Jan~
DRE# 01505855
Coldwell Banker Kivett-Teeters
1655 E. Sixth St.
Beaumont, CA 92223
Work: 951-845-5520 Ext. 105
Fax: 951-845-4916
Cell: 909-446-2666
Toll-Free: 1-877-TINAJAN
tina.jan@coldwellbanker.com
www.tinajan.com
Below are a just a few of the changes to our real estate market:
Updated RESPA laws are changing the lending industry.
The Obama short sale changes will be happening in the beginning of April.
Minimum credit score to get a loan has changed from 620 to 640.
Look for more foreclosures and short sales to come onto the market.
$8000 Tax credit stimulus ends after April.
Despite all the changes, there are so many things to be grateful for! I want to encourage everyone to think happy thoughts and focus on the positive influences in your life. Many people are having a hard time right now. Money is very tight and our lifestyles are changing. But I want to believe that they are changing for the better. We're learning about ourselves through our limits, weaknesses, and strengths. Adapting to our new environment is something humans do pretty naturally, so I think we're all going to be OKAY!
On that note, I'd like to add a little segment to my post called my Happy List. Basically, instead of focusing on negative issues, I want to meditate on the things that make me happy. I'm easy to please, so there may be things on my Happy List that are totally ridiculous, but hey, it really is the small things that make me happy.
Happy List #1: Five things that make me happy.
1. My dog - She cracks me up and does the cutest tricks.
2. Being able to speak multiple languages - I never really thought this made me happy, because it's always been a part of me. But I'm really starting to appreciate it now.
3. My POS car - It is SO embarrassing to drive, but the gas mileage is amazing. An added bonus is that I don't care if anything happens to it because I've been trying to make it die for years now, and it WILL NOT DIE.
4. My new car - It sits in the garage, steadily depreciating in value, but it looks so pretty, I can't bring myself to drive it anywhere. I'm afraid I'll scratch the paint etc. It's just nice to know that it's sitting there waiting for me.
5. Chandeliers - They're just awesome.
-
~Tina Jan~
DRE# 01505855
Coldwell Banker Kivett-Teeters
1655 E. Sixth St.
Beaumont, CA 92223
Work: 951-845-5520 Ext. 105
Fax: 951-845-4916
Cell: 909-446-2666
Toll-Free: 1-877-TINAJAN
tina.jan@coldwellbanker.com
www.tinajan.com
Sunday, January 03, 2010
Tax Effects of a Short Sale
Many of my short sale sellers have wondered about the tax effects of a short sale. I always recommend that they talk to a tax professional, such as a certified public accountant or tax attorney. Every situation is different, so it is best to talk to your tax professional about your tax situation. Below is just a little bit of information from the California Association of Realtors.
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
TAXATION OF SHORT SALES
Question: What are the tax implications of a short sale?
Answer: A short sale, where the lender agrees to reduce some or all of the outstanding debt, may give rise to forgiveness of debt income (also called "cancellation of debt" income). The amount of the debt that the lender agrees to write off is treated as "ordinary income" (as opposed to capital gains
income which is taxed at a lower rate). Even though the lender may be taking this action to facilitate the sale by the owner who is under a notice of default and facing a foreclosure, the agreement between the owner and the lender is considered voluntary and the amount of the loan written off by the lender is treated as forgiveness of debt (cancellation of debt).
The taxpayer will generally receive a 1099 tax form from the lender in the amount of the cancellation of debt. This forgiveness or cancellation of debt which is treated as "ordinary income" under certain circumstances may or may not be subject to taxation. Under the Mortgage Forgiveness Debt Relief Act of 2007 (H.R. 3648) signed by the President on December 20, 2007, Internal Revenue Code §108(a)(1)(E) was added and provides that a taxpayer will not be taxed upon cancellation of debt income if the following conditions are met:
. The property sold in the short sale is the taxpayer's principal residence, as that term is used in IRC §121.
. The cancellation of debt is Qualified Principal Residence Indebtedness** under IRC
Section 163(h)(3)(B).
. The indebtedness is discharged after January 1, 2007 and before January 1, 2013. (The end date was increased by three years from 2010 to 2013 pursuant to H.R. 1424, the Emergency Economic Stabilization Act of 2008).
**Qualified Principal Residence Indebtedness is a loan secured by the
residence used to acquire, construct or substantially improve the residence. The income relief provided is capped at $1,000,000 in the case of a married
person filing a separate return and $2,000,000 for all others. Any reduction of indebtedness excluded by IRC §108(a)(1)(E) will be applied to reduce the basis of the taxpayer's principal residence, but not below zero. This could result in a higher amount of capital gains tax owed by the taxpayer. Recently passed California law, SB 1055, conforms California Revenue and Tax Code Section 17144.5 to federal law with the following exceptions:
(1) The maximum amount of acquisition indebtedness is reduced to $800,000 for couples filing jointly and $400,000 for individual filers;
(2) The maximum amount of debt relief income that can be forgiven is $250,000 for couples filing jointly and $125,000 for individual filers; and
(3) California’s debt relief statute applies to property sold on or after January 1, 2007 and before January 1, 2009.
Finally, if the owner has owned the property for some time and has refinanced to take out some of the equity, the owner could be subject to capital gains taxation when selling the property as well.
-
~Tina Jan~
DRE# 01505855
Coldwell Banker Kivett-Teeters
1655 E. Sixth St.
Beaumont, CA 92223
Work: 951-845-5520 Ext. 105
Fax: 951-845-4916
Cell: 909-446-2666
Toll-Free: 1-877-TINAJAN
tina.jan@coldwellbanker.com
www.tinajan.com
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
TAXATION OF SHORT SALES
Question: What are the tax implications of a short sale?
Answer: A short sale, where the lender agrees to reduce some or all of the outstanding debt, may give rise to forgiveness of debt income (also called "cancellation of debt" income). The amount of the debt that the lender agrees to write off is treated as "ordinary income" (as opposed to capital gains
income which is taxed at a lower rate). Even though the lender may be taking this action to facilitate the sale by the owner who is under a notice of default and facing a foreclosure, the agreement between the owner and the lender is considered voluntary and the amount of the loan written off by the lender is treated as forgiveness of debt (cancellation of debt).
The taxpayer will generally receive a 1099 tax form from the lender in the amount of the cancellation of debt. This forgiveness or cancellation of debt which is treated as "ordinary income" under certain circumstances may or may not be subject to taxation. Under the Mortgage Forgiveness Debt Relief Act of 2007 (H.R. 3648) signed by the President on December 20, 2007, Internal Revenue Code §108(a)(1)(E) was added and provides that a taxpayer will not be taxed upon cancellation of debt income if the following conditions are met:
. The property sold in the short sale is the taxpayer's principal residence, as that term is used in IRC §121.
. The cancellation of debt is Qualified Principal Residence Indebtedness** under IRC
Section 163(h)(3)(B).
. The indebtedness is discharged after January 1, 2007 and before January 1, 2013. (The end date was increased by three years from 2010 to 2013 pursuant to H.R. 1424, the Emergency Economic Stabilization Act of 2008).
**Qualified Principal Residence Indebtedness is a loan secured by the
residence used to acquire, construct or substantially improve the residence. The income relief provided is capped at $1,000,000 in the case of a married
person filing a separate return and $2,000,000 for all others. Any reduction of indebtedness excluded by IRC §108(a)(1)(E) will be applied to reduce the basis of the taxpayer's principal residence, but not below zero. This could result in a higher amount of capital gains tax owed by the taxpayer. Recently passed California law, SB 1055, conforms California Revenue and Tax Code Section 17144.5 to federal law with the following exceptions:
(1) The maximum amount of acquisition indebtedness is reduced to $800,000 for couples filing jointly and $400,000 for individual filers;
(2) The maximum amount of debt relief income that can be forgiven is $250,000 for couples filing jointly and $125,000 for individual filers; and
(3) California’s debt relief statute applies to property sold on or after January 1, 2007 and before January 1, 2009.
Finally, if the owner has owned the property for some time and has refinanced to take out some of the equity, the owner could be subject to capital gains taxation when selling the property as well.
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~Tina Jan~
DRE# 01505855
Coldwell Banker Kivett-Teeters
1655 E. Sixth St.
Beaumont, CA 92223
Work: 951-845-5520 Ext. 105
Fax: 951-845-4916
Cell: 909-446-2666
Toll-Free: 1-877-TINAJAN
tina.jan@coldwellbanker.com
www.tinajan.com
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