The 3.8% Tax Basics explained

Top Ten Things You Need to Know About the 3.8% Tax (From NAR - National Association of Realtors)

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 of your 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, if you 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.

1883 Silver City Street Map - Way Cool!

image courtesy "friends_of_silvercity"

January 2011 Real Estate Statistics - What they mean!

January 2011 Existing Home Sales

The Numbers and what they mean to you.

Existing Home Sales for January 2011 were modestly UP (+2.7%) vs. December 2010's substantial increase (from prior month at +12.5%).

Annually this works out to 5.36 million units based upon January SOLD stats vs. 5.22 million annually when based upon December's reported sales..

Existing Home Inventory (houses listed for sale) dropped by 5.1% to 3.38 million home units listed. With current sales and sales predictions, this equates to a monthly inventory reported to be 7.5 months. This follows the existing trend of improvement (reduction in total inventory) over prior periods. The trend is encouraging in many ways.

TWO VERY INTERESTING BITS OF DATA (IMO worth rereading and reposting):

1. CASH SALES accounted for 32% of all home sales reported. This is an ALL TIME HIGH and is more than 3 times the average. Investor mania in full bloom. Values in the market are the best I've seen.

2. FORECLOSURES and SHORT SALES accounted for 37% of all home sales reported. More to come I believe.

Some areas where foreclosures make a significant % of all homes sold:
Nevada - 57% of homes sold were Foreclosures or Short Sales
Arizona - 49%
California - 44%
Florida - 36%

We are still one of the areas little affected by distressed sales. We have foreclosures, but the numbers (at least to date) are relatively small when com pared to the really ugly markets like the big 4 above.

Speaking of foreclosures. The Silver City Foreclosed Home HOTSHEET is rocking and rolling, and the feedback has been great. Thanks for the kind words and input. My servers can handle a few more subscriptions to the free list, but YOU NEED TO ACT SOON. Getting notification by email when any new Foreclosed listings come on the market is what the Hotsheet is about.

There are a few free spaces left for the Silver City RESIDENTIAL HOTSHEET (my most popular email notification tool) and I've a bunch of free subscriptions left for the LAND and RANCH HOTSHEET. You may request any HOTSHEET subscription by clicking the appropriate link.

More Down Side perhaps.. The average price of the existing home sold was slightly lower than the prior months average. This negative trend in average sale price remains in tact. : (

Foreclosure Exposure - Robo Signing - Mubarak

Hi from Silver City New Mexico.. NOT NEW and NOT MEXICO

Gotta love this part of New Mexico. Photo taken near edge of town just west of water towers.

The gold nugget photo is public domain photo and is XXX large for here. We do have decent prospecting opportunities in this area. Relic hunters and Rock hounds will find themselves "at home" here too.

"On with the Show, Good health to you" do you remember the 60's song.................

The Bank Foreclosure numbers for January 2011 are out:

January Bank repos are up 12% month over month.
Lets look at how this breaks down in judicial vs non judicial states:

Non judicial states seem to be ramping up foreclosures, jumping a full 23% month over month. This is what I expected to see.

Judicial states report a decrease of foreclosed homes of 7% month over month. I find this interesting data and not what I expected.

Consider Florida, where there is an enormous backlog in the courts (due in part to the robo-signing scandal). Foreclosures are down a full 54% year over year. The market for foreclosed properties has not improved significantly in any way, much less improved by 54% .

It appears that banks have postponed or slowed down the foreclosure process significantly in states where the courts are involved - The numbers reduced significantly where there are robo-document signing issues. It would seem that for most distressed owners in most cases, it's more of a temporary pause before the eventual foreclosure.

Does this imply a longer recovery time as the abnormally high number of foreclosures wash through the system before we can dig ourselves out of the foreclosure mess?

Like many communities, Silver City has mostly dodged, to date anyway, a worst case foreclosure scenario.

We can look at metal detecting, rock hounding, and playing some music if you visit here too..

Please let me know how I can help you meet your real estate goals.

----archer--->

Mubarak speaking now and making threats. Please give it up buddy. You've had your run already... Take the money and run...

Silver City - Gold in Them Hills - New Photo Too

Preview photo from the Silver City Jamboree Jam*.

You are gonna love New Mexico. Come visit and play awhile.

Bring your musical talents and gear and get ready to rock.

I realize this doesn't look like traditional "rock and roll" garb.

Don't let the dome cover fool you. I've been helping some folks score a parcel of land this morning, and I'm still wearing my REALTOR work clothes.

TNeck, button down dress shirt, and Cowboy hat (or occasional ball cap)... Aaaah... I still like to dress at work like the old days when I was living and playin tunes in Texas and Colorado public "establishments". "Those were the days, yes they were" hmm hmm hmm

Don't fear the hat. Rest Assured. Most NM players "don't know country" in this country...

South? Yes. And Yes, we are in New Mexico. Remember:

NOT NEW and NOT MEXICO

Everyone that reads this (all 3 of you heh heh) will in the next three weeks speak to someone they know that is wanting to buy or sell real estate either in New Mexico or in the USA somewhere. I can help them out, and you can help me too.

Please call me with their contact information so I can help them reach their real estate goals too . As a member Realtor I am able to refer customers to any USA markets, and I promise to take as good care of your friends as I do for you..

Referrals are how I get most of my business, and they are the highest form of compliment that I receive from past customers and friends. Thanks in advance for your referral.

EMail Alan today... silver_blogger@dreamhomenewmexico.com
Call Alan today1 575 388 2875

* also known as Friedegg Fiesta De Musica con Box-O Grande..

Foreclosure Data for 2010 - Half Full Half Empty

Breaking news on the foreclosure front!

The number of foreclosures reported (according to Realty Trac) in 2010 improved for the nation's hardest hit real estate markets.
: )

However, increased foreclosure activity was reported in 72% of our most important markets.
: (

Is this half full or half empty?



*****Image: Blog Meister's gear set up for jam in local swill tavern 2011. 65 Super Reverb -all original. Purchased used around 1969, this has been the number one amp since acquired. 1976 American Strat - original and the newest of 3 in the arsenal. Acquired new in 1977.
Not pictured are Boss "Talent Boost" effects pedal and a Sans Talenti's digital "Third Hand" for those tough chords. Hear Sans warm up backstage (grab your ear protection first) before last year's Bridge People Street Urchin festival in Silver City.

What Do the Home Sales Numbers Mean - Trend is Your Friend

Hi. Contact me today me for your real estate (and basic mortgage) questions.

Remember, Ill help you get it done...

First Off. I want to lead out with some significant market news:
DOW breaks above 12K mark briefly on two consecutive days. Stocks flirted yesterday with a close above 12000.

We are now flirting with the 12000 mark again today. Many of us believe it's only a matter of time before we put this mark in the rear view mirror as we move inevitably towards a much bigger number.

Could yesterday's New Home Sales report have something to do with the day's overall upbeat feel in the market?

REPORT DATA: The status for December 2010 New Home Sales was UP at 329000 units - a +17.5% improvement vs. November's UNCHANGED status at 280000 units.

It's important to remember that New Home Sales numbers are based upon contracts signed and not on actual closed sales.

Existing homes sales numbers are based upon actual closed transactions, and since Existing Home Sales account for almost all of the home sales reported in the Silver City New
Mexico area, they are more important statistics for us to pay attention to.

Still this equates to a 6.9 months supply of New Home Inventory, a surprising improvement over November's almost 9 months supply of new homes. Nice number there for certain. Players like D.R. Horton (DHI), Lennar (LEN), and Pulte (PHM) all got a boost in the market on the positive news.

Homebuilders have made a fantastic recovery. from being off 50% (based upon stock and index price) as a group, the group now trades off by less than 2% from 2008

December Pending Home Sales (Existing) was reported a few minutes back and is a mixed bag from this perspective. Pending Home Sales for December 2010 were UP 2% over November's numbers. This equates to a 4.2% DECLINE year over year.

It's possible that interest rates which threatened a break out in December got a few fence sitters "Off" their seats. IMO, rising rates (at least the fear of) added momentum to the number of accepted signed contracts during the month.

Contracts signed for Pending Home Sales were expected to be up 1% so the 2% spin seems an improvement. Unfortunately these numbers always seem to be adjusted down the road and it is hard to know how accurate any "first published" numbers really are.

The NE showed an average increase at 1.8%, BUT the WEST was very weak with the number of contracts signed for existing homes DOWN 13.2% in the same period.

******** IMAGE ABOVE: You "don't need no stinking" hot tub when you can walk to the Hot Springs on the Gila River below the house. Small parcel of Land (.6 acre+/-) with unfinished cabin near Gila Cliff Dwellings. Has electric, phone available, more... Gila Hot Springs New Mexico. Broker owned. Needs well and septic. As is-where is. General Warranty Deed. No other warranties or guarantees made.

In case you forgot... Please Contact me today me for your real estate questions and needs.