Three little letters that developers NEED to be acquainted with. With the credit crunch and tightening of lending standards I see more and more buyers moving to FHA and MAHA programs. This is making things a little trickier for sales of new construction condos and new conversions of condos. The guidelines require specific owner occupancy rates and a minimum time the association has needed to be in existence for standard underwriting. I am told that there can be "spot approvals" but nothing is guaranteed.
The issue is that developers tend to keep their projects as a single piece of land or as a multi-family until the first unit is sold. At that time, the condo docs are recorded and the condo association is created. This leaves a large portion of the buyer pool ineligible for these condos. In a moderate market, this pool is even larger. As those with available funds would rather live in higher priced areas that are now becoming more affordable and negelct to look in moderate areas.
Many agents do not understand FHA or MAHA programs and either refuse to deal with them or plod along without knowing that there will be surprises around the bend and neglect to advise their developer clients that they could open their buying pool up if they could get approved ahead of time.
Of course there are costs associated, but that has the possibility to be made up in the opportunity cost of having a larger buying pool and selling the units faster.
Now that we are back to a normal mortgage market FHA is going to be the standard for low-down-payment loans. We all better brush up on our knowledge...
Thursday, April 17, 2008
Tuesday, April 8, 2008
Fair Housing Laws
Every once in a while I come across a seller or landlord with an advertisement for their property that violates fair housing law. Sometimes it is a grey area and many do not realize that they are crossing the lines of creative marketing and violating fair housing laws. It is especially easy to do because Craigslist is monitored by other posters and there is no official oversight. Roommate.com was just found to be in violation of these laws.
From Inman News
"Roommate.com LLC, a company that operates a Web site that matches people with rooms to rent with tenants, may have violated fair housing laws by requiring users to disclose their sex, sexual orientation and whether they had children who would live with them, an appeals court has ruled."
This is a pretty obvious infraction, but it can get much subtler than this. If you are unsure, check with a professional.
From Inman News
"Roommate.com LLC, a company that operates a Web site that matches people with rooms to rent with tenants, may have violated fair housing laws by requiring users to disclose their sex, sexual orientation and whether they had children who would live with them, an appeals court has ruled."
This is a pretty obvious infraction, but it can get much subtler than this. If you are unsure, check with a professional.
Thursday, March 27, 2008
Dorchester Market Stats
I know I haven't posted many market stats recently, I hope this quick breakdown will tide you over.
2008 YTD sales for Dorchester- Single Families, Condos and Multi-families.
Price Range | # of Listings Sold | Ave. Days on Market | Ave. Sale Price | Ave. List Price | Sale Price, List Price Ratio | Orig. Price | Sale Price, Orig Price Ratio |
Single Families | 19 | 90 | $288,507 | $302,506 | 95 | $319,879 | 90 |
Condos | 57 | 120 | $239,784 | $251,362 | 96 | $268,110 | 89 |
Multi Families | 49 | 127 | $309,656 | $332,515 | 94 | $373,699 | 84 |
Monday, March 24, 2008
I told you so....
Ok,
I know it's obnoxious, but when I said "Rare Opportunity" I really meant it. Two of the three units at 175 Savin Hill Ave have gone under agreement and it is expected that the last one will go under today. As I have said before, yes the market is down, but when something comes along that is priced great, in a great location, it will sell quickly and buyers better be able to move that quick or lose out.
Congratulations to the future owners of one hot property and to the seller for doing a great job of renovating and pricing.
Cheers!
I know it's obnoxious, but when I said "Rare Opportunity" I really meant it. Two of the three units at 175 Savin Hill Ave have gone under agreement and it is expected that the last one will go under today. As I have said before, yes the market is down, but when something comes along that is priced great, in a great location, it will sell quickly and buyers better be able to move that quick or lose out.
Congratulations to the future owners of one hot property and to the seller for doing a great job of renovating and pricing.
Cheers!
Tuesday, March 18, 2008
Rare Opportunity! 3 Units Available
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Hardwood floor
Monday, March 17, 2008
Friday, March 14, 2008
The Greatest Party on Earth
This truly is one of the greatest parties on earth! It supports a great program and is more fun than a barrel of monkeys!Hope to see you there!
Friday, March 7, 2008
New FHA loan limits
The FHA, as part of the economic stimulus package, has published their new loan limits. The limit is the highest mortgage amount that FHA will insure. FHA insured loans are easier to sell on the secondary mortgage market because they are thought to be a lower risk investment. This results in generally lower rates for these mortgages. There is quite a bit of speculation as to whether it will truly lower the rates or not. If you have some time to kill online, everyone and their brother has an opinion on what the impact will be and there is no shortage of discussion.
Click here to go to FHA website.
Oh, and these limits are set to expire by the end of the 2008 and revert back to the previous limits, unless congress makes it permanent.
Click here to go to FHA website.
Oh, and these limits are set to expire by the end of the 2008 and revert back to the previous limits, unless congress makes it permanent.
Thursday, March 6, 2008
Norfolk County Registry of Deeds
After some sleuthing I found it!!! The interface is not as nearly user-friendly as Suffolk County, but it works.
Enjoy!
Norfolk County Registry of Deeds Search, Click ME!
Enjoy!
Norfolk County Registry of Deeds Search, Click ME!
Mortgages
I get the feeling that banks are starting to look into their existing customers and appraisers a little bit more. I just completed a BPO (that's Broker Price Opinion) for a lender on a property that has not had any foreclosure orders filed on it, yet. Being the curious type I investigated. It looks like there are some hijinx involved with multiple mortgages and a sale price way above a reasonable market price. Leading one to beleive that the lender is on to them and formulating a plan.
I am hoping that banks look into these activities and press charges against those involved. These people have dessimated neighborhoods and have intensified the bubble bursting in these certain neighborhoods. There is enough blame to go around on the mortgage crisis and I hope those that were abusing the system are punished and others will be deterred from doing it in the future.
I am hoping that banks look into these activities and press charges against those involved. These people have dessimated neighborhoods and have intensified the bubble bursting in these certain neighborhoods. There is enough blame to go around on the mortgage crisis and I hope those that were abusing the system are punished and others will be deterred from doing it in the future.
Tuesday, March 4, 2008
Commissions, what, how, why....
This has the potential to be a very large post, I am going to give a condensed version and hope that if one has more questions that they will contact us.
In a nutshell, the commission structure is generally set by the listing agent and the seller, prior to the property being marketed. It is clearly spelled out in their contract who gets what and at what time. Usually, the commission is paid to the agents that procure a ready and willing buyer. It used to be that these agents both worked for the seller as an agent and sub-agent. Due to recent changes in the industry and consumers' demands, in Greater Boston, the commission is paid to the listing agent and a buyer's agent. MLS allows the listing agent to advertise to the buyer's agent how much commission has been allocated to their compensation.
A buyer agent working out of contract with a buyer is entitled to only the amount stated in MLS, and usually this works out OK.
A buyer's agent with the exclusive right to represent will have a commission structure spelled out in their respective contract between the agent and buyer. This is where I get the most questions; what happens if the amount offered in MLS is less than my contract amount? Well the answer can be simple or complicated depending on how savvy your buyer's agent is. Typically, we set our minimum commission below the average MLS compensation. In the case that a property is not offering the full contracted commission, we will negotiate it into the offer. This goes for off-market sales and for-sale-by-owners (FSBO's)too. Now, in certain seller's markets, this can be more difficult and the buyer may have to pay cash at closing. But in today's buyer's market this is a very rare occurrence.
By the way the average commission being offered to buyer's agents in Dorchester is 2.5%.
Please, please, please do not take this post as gospel, but as a tidbit of information that gives the buyer and seller some more insight to how it all works. And email or call us for more info!!!!
In a nutshell, the commission structure is generally set by the listing agent and the seller, prior to the property being marketed. It is clearly spelled out in their contract who gets what and at what time. Usually, the commission is paid to the agents that procure a ready and willing buyer. It used to be that these agents both worked for the seller as an agent and sub-agent. Due to recent changes in the industry and consumers' demands, in Greater Boston, the commission is paid to the listing agent and a buyer's agent. MLS allows the listing agent to advertise to the buyer's agent how much commission has been allocated to their compensation.
A buyer agent working out of contract with a buyer is entitled to only the amount stated in MLS, and usually this works out OK.
A buyer's agent with the exclusive right to represent will have a commission structure spelled out in their respective contract between the agent and buyer. This is where I get the most questions; what happens if the amount offered in MLS is less than my contract amount? Well the answer can be simple or complicated depending on how savvy your buyer's agent is. Typically, we set our minimum commission below the average MLS compensation. In the case that a property is not offering the full contracted commission, we will negotiate it into the offer. This goes for off-market sales and for-sale-by-owners (FSBO's)too. Now, in certain seller's markets, this can be more difficult and the buyer may have to pay cash at closing. But in today's buyer's market this is a very rare occurrence.
By the way the average commission being offered to buyer's agents in Dorchester is 2.5%.
Please, please, please do not take this post as gospel, but as a tidbit of information that gives the buyer and seller some more insight to how it all works. And email or call us for more info!!!!
Monday, March 3, 2008
Dot Bike
Check it out, don't have time for a full posting, but I wanted to get this on the blog before I headed out. It's great to see that Dorchester has it's own Bicycling Advocacy group! Yay!
Visit Dot Bike Today!
Visit Dot Bike Today!
Friday, February 22, 2008
Procuring Cause
Oh boy! This is a fun one. I am writing about this because it has finally reared its ugly head in our office this week.
I'm not going to go into length about what procuring cause is or who is right or wrong, but I am going to give buyers out there some advice. If you want information about procuring cause, Google it, there are boat loads of information about it online.
Here are my tips:
1. Hire a buyer agent. And I mean hire them, not just sign the MA agency disclosure. This is done by signing a contract that outlines how the agent will be compensated, what their duties to the buyer are and how long the contract is good for. There may be some other stuff too that varies from brokerage to brokerage. The old adage 'you get what you pay for' holds true for agency.
Ethical buyer agents hired under contract are loyal to you, because you are loyal to them. Period!
2. If you don't want to hire an agent exclusively and want to make an offer on a property, do it with the agent that showed you the property and gave you the information. This would eliminate most procuring cause situations, and save everyone some heartache.
3. If you are using another agent, let any and all other agents you encounter know that you are using another agent and sign in with their name at open houses.
I give you this advice from the perspective of being a buyer's agent. I first cut my teeth in the real estate industry by working for the largest exclusive buyer agency in Massachusetts back in the early 2000's. Because buyer agency was pretty new at the time, most didn't understand it, and even now some still don't. I spent quite a bit of time explaining it to folks then and it seems there is still some education needed out there.
I'm not going to go into length about what procuring cause is or who is right or wrong, but I am going to give buyers out there some advice. If you want information about procuring cause, Google it, there are boat loads of information about it online.
Here are my tips:
1. Hire a buyer agent. And I mean hire them, not just sign the MA agency disclosure. This is done by signing a contract that outlines how the agent will be compensated, what their duties to the buyer are and how long the contract is good for. There may be some other stuff too that varies from brokerage to brokerage. The old adage 'you get what you pay for' holds true for agency.
Ethical buyer agents hired under contract are loyal to you, because you are loyal to them. Period!
2. If you don't want to hire an agent exclusively and want to make an offer on a property, do it with the agent that showed you the property and gave you the information. This would eliminate most procuring cause situations, and save everyone some heartache.
3. If you are using another agent, let any and all other agents you encounter know that you are using another agent and sign in with their name at open houses.
I give you this advice from the perspective of being a buyer's agent. I first cut my teeth in the real estate industry by working for the largest exclusive buyer agency in Massachusetts back in the early 2000's. Because buyer agency was pretty new at the time, most didn't understand it, and even now some still don't. I spent quite a bit of time explaining it to folks then and it seems there is still some education needed out there.
Wednesday, February 20, 2008
Q&A from IRS.gov -Foreclosures and Debt Forgiveness
Lots of questions from homeowners are pouring in about short sales and foreclosures. Here are some answers straight from the horses mouth, the IRS.
Questions and Answers on Home Foreclosure and Debt Cancellation
Update Feb. 4, 2008 — The Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualify for this relief.
This provision applies to debt forgiven in 2007, 2008 or 2009. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion doesn’t apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.
The amount excluded reduces the taxpayer’s cost basis in the home. More information on claiming this exclusion will be available soon.
The questions and answers, below, are based on the law prior to the passage of the Mortgage Forgiveness Debt Relief Act of 2007.
1. What is Cancellation of Debt?
If you borrow money from a commercial lender and the lender later cancels or forgives the debt, you may have to include the cancelled amount in income for tax purposes, depending on the circumstances. When you borrowed the money you were not required to include the loan proceeds in income because you had an obligation to repay the lender. When that obligation is subsequently forgiven, the amount you received as loan proceeds is reportable as income because you no longer have an obligation to repay the lender. The lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-C, Cancellation of Debt.
Here’s a very simplified example. You borrow $10,000 and default on the loan after paying back $2,000. If the lender is unable to collect the remaining debt from you, there is a cancellation of debt of $8,000, which generally is taxable income to you.
2. Is Cancellation of Debt income always taxable?
Not always. There are some exceptions. The most common situations when cancellation of debt income is not taxable involve:
Bankruptcy: Debts discharged through bankruptcy are not considered taxable income.
Insolvency: If you are insolvent when the debt is cancelled, some or all of the cancelled debt may not be taxable to you.You are insolvent when your total debts are more than the fair market value of your total assets.Insolvency can be fairly complex to determine and the assistance of a tax professional is recommended if you believe you qualify for this exception.
Certain farm debts:If you incurred the debt directly in operation of a farm, more than half your income from the prior three years was from farming, and the loan was owed to a person or agency regularly engaged in lending, your cancelled debt is generally not considered taxable income.The rules applicable to farmers are complex and the assistance of a tax professional is recommended if you believe you qualify for this exception.
Non-recourse loans:A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral.That is, the lender cannot pursue you personally in case of default.Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income.However, it may result in other tax consequences, as discussed in Question 3 below.
3. I lost my home through foreclosure. Are there tax consequences?
There are two possible consequences you must consider:
Taxable cancellation of debt income.(Note: As stated above, cancellation of debt income is not taxable in the case of non-recourse loans.)
A reportable gain from the disposition of the home (because foreclosures are treated like sales for tax purposes).(Note: Often some or all of the gain from the sale of a personal residence qualifies for exclusion from income.)
Use the following steps to compute the income to be reported from a foreclosure:
Step 1 - Figuring Cancellation of Debt Income (Note: For non-recourse loans, skip this section. You have no income from cancellation of debt.)
1. Enter the total amount of the debt immediately prior to the foreclosure.___________2. Enter the fair market value of the property from Form 1099-C, box 7. ___________3. Subtract line 2 from line 1.If less than zero, enter zero.___________
The amount on line 3 will generally equal the amount shown in box 2 of Form 1099-C. This amount is taxable unless you meet one of the exceptions in question 2. Enter it on line 21, Other Income, of your Form 1040.
Step 2 – Figuring Gain from Foreclosure4. Enter the fair market value of the property foreclosed.For non-recourse loans, enter the amount of the debt immediately prior to the foreclosure ________5. Enter your adjusted basis in the property.(Usually your purchase price plus the cost of any major improvements.) ____________6. Subtract line 5 from line 4. If less than zero, enter zero.
The amount on line 6 is your gain from the foreclosure of your home. If you have owned and used the home as your principal residence for periods totaling at least two years during the five year period ending on the date of the foreclosure, you may exclude up to $250,000 (up to $500,000 for married couples filing a joint return) from income. If you do not qualify for this exclusion, or your gain exceeds $250,000 ($500,000 for married couples filing a joint return), report the taxable amount on Schedule D, Capital Gains and Losses.
4. I lost money on the foreclosure of my home. Can I claim a loss on my tax return?
No. Losses from the sale or foreclosure of personal property are not deductible.
5. Can you provide examples?
A borrower bought a home in August 2005 and lived in it until it was taken through foreclosure in September 2007. The original purchase price was $170,000, the home is worth $200,000 at foreclosure, and the mortgage debt canceled at foreclosure is $220,000. At the time of the foreclosure, the borrower is insolvent, with liabilities (mortgage, credit cards, car loans and other debts) totaling $250,000 and assets totaling $230,000.
The borrower figures income from the foreclosure as follows:
Use the following steps to compute the income to be reported from a foreclosure:
Step 1 - Figuring Cancellation of Debt Income (Note: For non-recourse loans, skip this section. You have no income from cancellation of debt.)
1. Enter the total amount of the debt immediately prior to the foreclosure.___$220,000__2. Enter the fair market value of the property from Form 1099-C, box 7. ___$200,000__3. Subtract line 2 from line 1.If less than zero, enter zero.___$20,000__
The amount on line 3 will generally equal the amount shown in box 2 of Form 1099-C. This amount is taxable unless you meet one of the exceptions in question 2. Enter it on line 21, Other Income, of your Form 1040.
Step 2 – Figuring Gain from Foreclosure
4. Enter the fair market value of the property foreclosed.For non-recourse loans, enter the amount of the debt immediately prior to the foreclosure. __$200,000__5. Enter your adjusted basis in the property.(Usually your purchase price plus the cost of any major improvements.) ___$170,000__6. Subtract line 5 from line 4.If less than zero, enter zero.___$30,000__
The amount on line 6 is your gain from the foreclosure of your home. If you have owned and used the home as your principal residence for periods totaling at least two years during the five year period ending on the date of the foreclosure, you may exclude up to $250,000 (up to $500,000 for married couples filing a joint return) from income. If you do not qualify for this exclusion, or your gain exceeds $250,000 ($500,000 for married couples filing a joint return), report the taxable amount on Schedule D, Capital Gains and Losses.
In this situation, the borrower has a tax-free home-sale gain of $30,000 ($200,000 minus $170,000), because they owned and lived in their home as a principal residence for at least two years. Ordinarily, the borrower would also have taxable debt-forgiveness income of $20,000 ($220,000 minus $200,000). But since the borrower’s liabilities exceed assets by $20,000 ($250,000 minus $230,000) there is no tax on the canceled debt.
Other examples can be found in IRS Publication 544, Sales and Other Dispositions of Assets, under the section “Foreclosures and Repossessions”.
6. I don’t agree with the information on the Form 1099-C. What should I do?
Contact the lender. The lender should issue a corrected form if the information is determined to be incorrect. Retain all records related to the purchase of your home and all related debt.
7. I received a notice from the IRS on this. What should I do?
The IRS urges borrowers with questions to call the phone number shown on the notice. The IRS also urges borrowers who wind up owing additional tax and are unable to pay it in full to use the installment agreement form, normally included with the notice, to request a payment agreement with the agency.
8. Where else can I go to get tax help?
If you are having difficulty resolving a tax problem (such as one involving an IRS bill, letter or notice) through normal IRS channels, the Taxpayer Advocate Service may be able to help. For more information, you can also call the TAS toll-free case intake line at 1-877-777-4778, TTY/TDD 1-800-829-4059.
In some cases, you may qualify for free or low-cost assistance from a Low Income Taxpayer Clinic (LITC). LITCs are independent organizations that represent low income taxpayers in tax disputes with the IRS. Find information on an LITCs in your area.
Questions and Answers on Home Foreclosure and Debt Cancellation
Update Feb. 4, 2008 — The Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualify for this relief.
This provision applies to debt forgiven in 2007, 2008 or 2009. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion doesn’t apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.
The amount excluded reduces the taxpayer’s cost basis in the home. More information on claiming this exclusion will be available soon.
The questions and answers, below, are based on the law prior to the passage of the Mortgage Forgiveness Debt Relief Act of 2007.
1. What is Cancellation of Debt?
If you borrow money from a commercial lender and the lender later cancels or forgives the debt, you may have to include the cancelled amount in income for tax purposes, depending on the circumstances. When you borrowed the money you were not required to include the loan proceeds in income because you had an obligation to repay the lender. When that obligation is subsequently forgiven, the amount you received as loan proceeds is reportable as income because you no longer have an obligation to repay the lender. The lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-C, Cancellation of Debt.
Here’s a very simplified example. You borrow $10,000 and default on the loan after paying back $2,000. If the lender is unable to collect the remaining debt from you, there is a cancellation of debt of $8,000, which generally is taxable income to you.
2. Is Cancellation of Debt income always taxable?
Not always. There are some exceptions. The most common situations when cancellation of debt income is not taxable involve:
Bankruptcy: Debts discharged through bankruptcy are not considered taxable income.
Insolvency: If you are insolvent when the debt is cancelled, some or all of the cancelled debt may not be taxable to you.You are insolvent when your total debts are more than the fair market value of your total assets.Insolvency can be fairly complex to determine and the assistance of a tax professional is recommended if you believe you qualify for this exception.
Certain farm debts:If you incurred the debt directly in operation of a farm, more than half your income from the prior three years was from farming, and the loan was owed to a person or agency regularly engaged in lending, your cancelled debt is generally not considered taxable income.The rules applicable to farmers are complex and the assistance of a tax professional is recommended if you believe you qualify for this exception.
Non-recourse loans:A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral.That is, the lender cannot pursue you personally in case of default.Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income.However, it may result in other tax consequences, as discussed in Question 3 below.
3. I lost my home through foreclosure. Are there tax consequences?
There are two possible consequences you must consider:
Taxable cancellation of debt income.(Note: As stated above, cancellation of debt income is not taxable in the case of non-recourse loans.)
A reportable gain from the disposition of the home (because foreclosures are treated like sales for tax purposes).(Note: Often some or all of the gain from the sale of a personal residence qualifies for exclusion from income.)
Use the following steps to compute the income to be reported from a foreclosure:
Step 1 - Figuring Cancellation of Debt Income (Note: For non-recourse loans, skip this section. You have no income from cancellation of debt.)
1. Enter the total amount of the debt immediately prior to the foreclosure.___________2. Enter the fair market value of the property from Form 1099-C, box 7. ___________3. Subtract line 2 from line 1.If less than zero, enter zero.___________
The amount on line 3 will generally equal the amount shown in box 2 of Form 1099-C. This amount is taxable unless you meet one of the exceptions in question 2. Enter it on line 21, Other Income, of your Form 1040.
Step 2 – Figuring Gain from Foreclosure4. Enter the fair market value of the property foreclosed.For non-recourse loans, enter the amount of the debt immediately prior to the foreclosure ________5. Enter your adjusted basis in the property.(Usually your purchase price plus the cost of any major improvements.) ____________6. Subtract line 5 from line 4. If less than zero, enter zero.
The amount on line 6 is your gain from the foreclosure of your home. If you have owned and used the home as your principal residence for periods totaling at least two years during the five year period ending on the date of the foreclosure, you may exclude up to $250,000 (up to $500,000 for married couples filing a joint return) from income. If you do not qualify for this exclusion, or your gain exceeds $250,000 ($500,000 for married couples filing a joint return), report the taxable amount on Schedule D, Capital Gains and Losses.
4. I lost money on the foreclosure of my home. Can I claim a loss on my tax return?
No. Losses from the sale or foreclosure of personal property are not deductible.
5. Can you provide examples?
A borrower bought a home in August 2005 and lived in it until it was taken through foreclosure in September 2007. The original purchase price was $170,000, the home is worth $200,000 at foreclosure, and the mortgage debt canceled at foreclosure is $220,000. At the time of the foreclosure, the borrower is insolvent, with liabilities (mortgage, credit cards, car loans and other debts) totaling $250,000 and assets totaling $230,000.
The borrower figures income from the foreclosure as follows:
Use the following steps to compute the income to be reported from a foreclosure:
Step 1 - Figuring Cancellation of Debt Income (Note: For non-recourse loans, skip this section. You have no income from cancellation of debt.)
1. Enter the total amount of the debt immediately prior to the foreclosure.___$220,000__2. Enter the fair market value of the property from Form 1099-C, box 7. ___$200,000__3. Subtract line 2 from line 1.If less than zero, enter zero.___$20,000__
The amount on line 3 will generally equal the amount shown in box 2 of Form 1099-C. This amount is taxable unless you meet one of the exceptions in question 2. Enter it on line 21, Other Income, of your Form 1040.
Step 2 – Figuring Gain from Foreclosure
4. Enter the fair market value of the property foreclosed.For non-recourse loans, enter the amount of the debt immediately prior to the foreclosure. __$200,000__5. Enter your adjusted basis in the property.(Usually your purchase price plus the cost of any major improvements.) ___$170,000__6. Subtract line 5 from line 4.If less than zero, enter zero.___$30,000__
The amount on line 6 is your gain from the foreclosure of your home. If you have owned and used the home as your principal residence for periods totaling at least two years during the five year period ending on the date of the foreclosure, you may exclude up to $250,000 (up to $500,000 for married couples filing a joint return) from income. If you do not qualify for this exclusion, or your gain exceeds $250,000 ($500,000 for married couples filing a joint return), report the taxable amount on Schedule D, Capital Gains and Losses.
In this situation, the borrower has a tax-free home-sale gain of $30,000 ($200,000 minus $170,000), because they owned and lived in their home as a principal residence for at least two years. Ordinarily, the borrower would also have taxable debt-forgiveness income of $20,000 ($220,000 minus $200,000). But since the borrower’s liabilities exceed assets by $20,000 ($250,000 minus $230,000) there is no tax on the canceled debt.
Other examples can be found in IRS Publication 544, Sales and Other Dispositions of Assets, under the section “Foreclosures and Repossessions”.
6. I don’t agree with the information on the Form 1099-C. What should I do?
Contact the lender. The lender should issue a corrected form if the information is determined to be incorrect. Retain all records related to the purchase of your home and all related debt.
7. I received a notice from the IRS on this. What should I do?
The IRS urges borrowers with questions to call the phone number shown on the notice. The IRS also urges borrowers who wind up owing additional tax and are unable to pay it in full to use the installment agreement form, normally included with the notice, to request a payment agreement with the agency.
8. Where else can I go to get tax help?
If you are having difficulty resolving a tax problem (such as one involving an IRS bill, letter or notice) through normal IRS channels, the Taxpayer Advocate Service may be able to help. For more information, you can also call the TAS toll-free case intake line at 1-877-777-4778, TTY/TDD 1-800-829-4059.
In some cases, you may qualify for free or low-cost assistance from a Low Income Taxpayer Clinic (LITC). LITCs are independent organizations that represent low income taxpayers in tax disputes with the IRS. Find information on an LITCs in your area.
Tuesday, February 19, 2008
Busy, busy, busy
So I think the spring market is here. I was wondering when we would see it pick up and I think the past two weeks have been indicators for us that it is here. We have had two properties receive multiple offers and buyers are starting to come out of the woodwork. So much so, I think this might be the end of my mini ski-trips. Just when I bit the bullet and purchased new skis so I wouldn't have to deal with renting. There's always next winter.
We also have had several sellers come to us for market evaluations and listings, hoping to get their place sold during the peak of the market. I do think that this sping will be different than the previous 7 or 8 springs, in that there is much more inventory on the market and very little of it is inspiring. Developments have slowed way down and nicer units are being held onto by owners hoping to ride out this down cycle of the market. This is leaving less desirable units on the market with languishing market times and reducing prices. The one caveat to that is spectacular properties that are head and shoulders above their competition are selling. They are selling fast and usually with multiple offers. The point I guess I'm trying to make is, as a buyer, if you come across a property that is better than the others in the same price range, I would seriously consider an offer.
Again, as most who know me, my favortie saying is "It's all about price." Anything, given the right price will sell. That is a very large reason why I love real estate. It is one of the purest forms of market economics.
We also have had several sellers come to us for market evaluations and listings, hoping to get their place sold during the peak of the market. I do think that this sping will be different than the previous 7 or 8 springs, in that there is much more inventory on the market and very little of it is inspiring. Developments have slowed way down and nicer units are being held onto by owners hoping to ride out this down cycle of the market. This is leaving less desirable units on the market with languishing market times and reducing prices. The one caveat to that is spectacular properties that are head and shoulders above their competition are selling. They are selling fast and usually with multiple offers. The point I guess I'm trying to make is, as a buyer, if you come across a property that is better than the others in the same price range, I would seriously consider an offer.
Again, as most who know me, my favortie saying is "It's all about price." Anything, given the right price will sell. That is a very large reason why I love real estate. It is one of the purest forms of market economics.
Friday, February 15, 2008
Market Snapshot - Dorchester Condos
Here are some telling market statistics in the condo market. I compared what many consider the height of the market with today. I'll let you make your own conclusion regarding where the market is going. One thing to note is that if you are selling, you best be sure your condo is the best condo in its price range. There is a lot of competition out there…
2/15/2005 | 2/15/2008 | ||||
Price Range | Number of listings | Avg. Days | vs. today | Number of listings | Avg. Days |
Under $50,000 | - | - | - | - | |
$50,000 - $99,999 | - | - | 9 | 208 | |
$100,000 - $149,999 | 4 | 121 | 22 | 102 | |
$150,000 - $199,999 | 21 | 76 | 78 | 139 | |
$200,000 - $249,999 | 31 | 70 | 71 | 98 | |
$250,000 - $299,999 | 59 | 107 | 69 | 124 | |
$300,000 - $349,999 | 30 | 86 | 44 | 145 | |
$350,000 - $399,999 | 19 | 89 | 21 | 152 | |
$400,000 - $449,999 | 5 | 61 | 8 | 226 | |
$450,000 - $499,999 | - | - | 8 | 136 | |
$500,000 - $599,999 | - | - | 2 | 68 | |
$600,000 - $699,999 | - | - | 3 | 95 | |
$700,000 - $799,999 | - | - | 1 | 135 | |
$800,000 - $899,999 | - | - | - | - | |
$900,000 - $999,999 | - | - | - | - | |
$1,000,000 - $1,499,999 | - | - | - | - | |
$1,500,000 - $1,999,999 | - | - | - | - | |
$2,000,000 - $2,499,999 | - | - | - | - | |
$2,500,000 - $2,999,999 | - | - | - | - | |
$3,000,000 - $3,999,999 | - | - | - | - | |
$4,000,000 - $4,999,999 | - | - | - | - | |
$5,000,000 - $9,999,999 | - | - | - | - | |
Over $10,000,000 | - | - | - | - | |
Total Properties | 169 | Avg. 90 | 336 | Avg. 129 | |
Lowest Price: | $130,000 | Lowest Price: | $57,500 | ||
Median Price: | $269,995 | Median Price: | $239,900 | ||
Highest Price: | $449,000 | Highest Price: | $739,000 | ||
Average Price: | $277,755 | Average Price: | $256,041 | ||
Total Market Volume: | $46,940,695 | Total Market Volume: | $86,286,004 | ||
Tuesday, February 5, 2008
Thank you
Just a quick thanks to those at the polling stations today. I voted at Dorchester House this afternoon and I just wanted to say thank you to the election volunteers and workers that spent the day doing a pretty mindless task with enthusiasm.
Thanks!
Thanks!
The Monday after...
Ok, our Pats didn't do so well on Sunday and the mood in Boston pretty much matches our weather; cold, grey and rainy. What I also noticed is that we hit a new low on our website. We had the fewest amount of hits to our site since we started tracking. I am guessing that most were nursing hangovers and trying to forget the loss.
And now that it is Tuesday, there is a new 'Super' event to watch. I will be voting later on today at Dorcheser House and I'm sure I won't be able to escape the punditry on TV tonight. Hopefully, this will take the sting away from Sunday.
Go Vote!!!!!
And now that it is Tuesday, there is a new 'Super' event to watch. I will be voting later on today at Dorcheser House and I'm sure I won't be able to escape the punditry on TV tonight. Hopefully, this will take the sting away from Sunday.
Go Vote!!!!!
Sunday, February 3, 2008
Tuesday, January 29, 2008
Stuff on the internet
Our world is becoming smaller via the internet. There are so many resources out there to help us get through our daily lives that I have a hard time remembering what it was like 15-20 years ago. The transparancy of information is certainly staggering. For example we have been interviewing several candidates to join us as new agents and one of the first thing we do is visit their Facebook.com page. It can be revealing... And there are some other sites that can be useful to you as home hunters.
This week I have spent some time on Apartmentratings.com. This website, if it catches on could serve as a background check on landlords. Personally, I think it is great. Tenants go through a vigorous screening process and it seems silly that they do not get the same opportunity to screen their future landlords. Afterall, this is someone that has a key to your home.
In the past I have also visited Rottenneighbor.com. This site isn't quite up and running yet (I had some issues loading pages) but it promises to provide information that isn't public record and an ethical real estate agent wouldn't touch with a 30 foot pole. I'm not saying that the information is illegal or anything, just that it gets us agents/brokers into a grey area that laywers and lawmakers would rather have us avoid.
Of course, I am sure there will be lawsuits regarding how this information is used and probably a few libel/slander suits. But I think if people are responsible and ethical, it can be a tremendous resource.
This week I have spent some time on Apartmentratings.com. This website, if it catches on could serve as a background check on landlords. Personally, I think it is great. Tenants go through a vigorous screening process and it seems silly that they do not get the same opportunity to screen their future landlords. Afterall, this is someone that has a key to your home.
In the past I have also visited Rottenneighbor.com. This site isn't quite up and running yet (I had some issues loading pages) but it promises to provide information that isn't public record and an ethical real estate agent wouldn't touch with a 30 foot pole. I'm not saying that the information is illegal or anything, just that it gets us agents/brokers into a grey area that laywers and lawmakers would rather have us avoid.
Of course, I am sure there will be lawsuits regarding how this information is used and probably a few libel/slander suits. But I think if people are responsible and ethical, it can be a tremendous resource.
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