To Avoid Taxes, You Canít Sell Your Home For Five Years
Under current tax reform proposals making their way through Congress, one of the rule changes has the potential to change the way American homeowners behave.
Currently, up to $500,000 in capital gains from a home sale are tax exempt as long as the seller owns and occupies the residence for two of the five years before the sale. But under Congressional tax-reform proposals, taxpayers would have to own and occupy their homes more than twice as long – five of the past eight years – before they can qualify for the tax incentive.
That means first-time buyers looking at starter homes would have to consider "starting" to last a minimum of five years. Millennial families and first-time buyers would be hurt the most from this rule change, since these groups trade up more frequently than older, more established homeowners.
More than half of home sellers age 18 to 34 have owned their homes for five years or less, according to a 2017 survey by the National Association of Realtors® – and more than one in four sold their house within three years of buying it.
"This change will discourage homeowners from selling their homes in an already tight-inventory market," according to a letter from a number of large real estate brokers, including Coldwell Banker, Long & Foster and Berkshire Hathaway. They sent to letter to lawmakers Nov. 14. The Senate Finance Committee is expected to finish work on its plan this week.
Source: Politico Pro (11/14/17) Woellert, Lorraine
Atlantic Beach Chic
Atlantic Beach Chic
Welcome to paradise. Tucked away within a quiet beach neighborhood lined by large tropical palms and majestic southern oaks, fragrant sea breezes and steps to the pristine sands of the Atlantic Ocean sits this chic coastal home. A cedar shake exterior, beautifully landscaped paver drive, detached two-car garage, pool nearly the length of the house, brick-lined covered front porch and 8-foot Mahogany door set the stage for the relaxed luxury inside. This meticulously constructed seaside oasis is like walking into the pages of a designer magazine.
The attention to detail is at the forefront of this well-appointed custom home, from the coiffured ceilings and custom cabinetry on the first level to the dramatic 15-foot cathedral ceilings in three of the four en-suite bedrooms on the second level.
A white shiplap entry and wide planked oak flooring lead to an entertainment area designed for the relaxed elegance of the Atlantic Beach lifestyle. Grill at the gourmet summer kitchen while listening to music or watching TV. Hop out of the water to snack on blueberries from bushes that wrap the dazzling pool, or relax on the second story balcony with a good book and ocean breezes.
The bright kitchen (equipped with Thermador appliances), fully wired family room, spacious dining room, separate bedroom (or office), full bath and expansive covered outdoor living area, comprise the first level. A wood plank staircase equipped with built-in LED lights guides the way to second level landing, the master retreat, four en-suite bedrooms and a well-designed laundry room.
Just a short walk directly down the street to the beach or a leisurely stroll to the restaurants, boutiques and entertainment of the pedestrian-friendly Town Center. This property is best described as a peaceful sanctuary that perfectly blurs the lines between chic interior spaces and the refreshing outdoors in an idyllic location. Step inside your dream home - www.3605thstreet.com
Jacksonville - A Most Up and Coming City? Why Yes.
If you're a Jacksonvillian, then you already know that Jax is a great place to live, work and play. But the secret is out...Time Magazine is sharing it and Yelp just published a report on us.
"Imagine you're a developer looking to build a new condo somewhere in a major U.S. city. You want a location that is up-and-coming and will still be hot by the time you've cut the ribbon on your tower of luxury apartments. You have hundreds of economic indicators at your disposal, but they often lag by months or years. How do you see the future?
Yelp, the site where anyone can rate and review local businesses, thinks it has the answer. In anew report released Tuesday, the site is introducing a new way to measure the economic health of cities and even neighborhoods using millions of data points from its trove of information. And unlike traditional indicators of the economy, these measures can show both the current climate for business at a local level and predict what the outlook is going forward."
Ponte Vedra Beach is Florida's "Hidden Gem" Per Financial Times
Courtesy of Financial Times.
Florida’s ‘hidden gem’ for prime homes: Ponte Vedra Beach The area known as Jacksonville’s Malibu can offer country clubs, gated communities and golf courses. Forget Miami’s celebrity hotspots or the old money opulence of Palm Beach. The highest-income county in Florida is almost 300 miles further north, on the outskirts of Jacksonville, on the Atlantic coast. As you drive south-east from the seaport city, there does not seem much to Ponte Vedra Beach, a community in St John’s County about 30 minutes from downtown. Strip malls and gas stations line the highway, a scene typical of suburban America. But turn off the road and it becomes clear why some locals know the area as Jacksonville’s Malibu. On one side, oceanfront mansions overlook a sugar-white beach with 40ft sand dunes. On the other, country clubs and gated communities face a pretty stretch of the east coast’s Intracoastal Waterway.
Cooler in winter and less ritzy than comparable areas in south Florida, Ponte Vedra is known for its golf. The area is home to the famous island green at the TPC Sawgrass Stadium Course, which hosts the PGA Tour and each May attracts the world’s top golfers for the Players Championship. Golf enthusiasts are not the only prospective property buyers. Ponte Vedra is a prime location for the bankers, attorneys and other professionals who are flocking to Jacksonville, one of the fastest growing cities in the US.
In spite of Jacksonville’s blue-collar reputation, the city has become a top “near-shoring” location for financial services companies that want a lower-cost alternative to Manhattan while remaining in the US. Deutsche Bank is among the companies that have shifted some operations here, and the number of people working in Jacksonville’s financial services has risen about 7 per cent since 2013. The four biggest US banks — JPMorgan Chase, Bank of America, Citigroup and Wells Fargo — together employ 20,000 people locally. Healthcare and defence also support the local economy. Military facilities employ more than 50,000 people while Mayo Clinic has one of its major medical centres in Jacksonville. In stark contrast to the rundown neighbourhoods in the north-west of Jacksonville, Ponte Vedra is among the most expensive areas in north Florida.
Brokers say it recovered from the Florida foreclosure crisis more quickly than other areas in the state. By the start of 2017 the average home in Ponte Vedra went for more than $700,000, up from a little more than $600,000 just a year ago, according to Realty Web. Share this graphic Properties with views of the Atlantic tend to command a premium. One palatial six-bedroom retreat with a beach outlook is on the market with Ponte Vedra Club Realty for just under $6m. For some buyers — particularly boating types — inland properties with easy access to the waterway are just as desirable. Professional golfer Fred Funk has listed with Exit Real Estate Gallery his 9,600 sq ft home in Marsh Landing for $6.1m. The property includes a boat slip at the neighbourhood marina. Options for golfers include The Plantation, set among creeks and lagoons. Home ownership includes access to a 7,141-yard course. Sotheby’s International Realty is listing a four-bedroom villa here for just under $1.5m. Proximity to the water has some drawbacks and the low-lying geography inevitably makes some buyers jittery. Brokers, though, insist Ponte Vedra and its surrounds are less vulnerable to flooding than Florida’s danger zones, and it has escaped the worst of the damage from recent hurricanes.
Would-be residents should also do their homework on beach access, which is not always straightforward. The most stylish way is to join one of the local resorts. The stately Ponte Vedra Inn and Club carries an upfront fee of $25,000, as well as “social dues” of $3,150 a year. There are cheaper options, however. Those tired of the beach and club life will find plenty of other attractions nearby, including the cobblestone streets of St Augustine, a 40-minute drive south, which claims to be the oldest continuously occupied European settlement in the country. Ponte Vedra’s position away from the main coastal highway means it is unlikely to become as well known as other beachside areas.
Florida has no state income tax but the property tax picture is not quite as favourable. The owner of a $1m property could be expected to pay $15,000 to the county every year. Nonstop flights run between Jacksonville and New York, Chicago and Toronto, but there are no direct routes to the West Coast or outside North America. Ponte Vedra Beach is about a 40-minute drive from the airport. Winters are typically mild with average highs of between 18C and 20C. Summers are hot and humid with highs into the 30s.
What you can buy for . . . $250,000 A one-bed, beachfront condo
$1m A three-bedroom villa overlooking the golf course in The Plantation
$3m A six-bedroom, Mediterranean Revival-style property in [Marsh Landing's] Harbour Island.
Prices are still up, at 6.9% over last year which is almost double the normal historical rate of 3.6%. Inventory levels are still low—even scarce in some price ranges. Affordability is not a major issue because mortgage rates remain low and the economy is in good shape. The real challenge for many is locating property to buy! An influx of existing homes coming to market is needed combined with a recovery in new home construction. These will help the market achieve balance. Core Logic, a leading provider of real estate data and analytics, estimates a 5.1% increase in prices over the next 12 months.
The absorption rate of national home sales is reflected in the chart. Absorption rate is the amount of time it would take the current demand level to absorb the available supply. Six months equals a normal market. A number less than six months indicates a seller’s market and greater than six months indicates a buyer’s market. This number will fluctuate widely based on the market price segment that is being analyzed. Nationally, we are currently near a four month supply. This, again, is indicative of continued strength in demand and a reduction in available inventory.
IS SUPPLY ON THE WAY?
Good news for future inventory! More Americans believe it is a better time to sell and new construction will catch up. As these homes come to market, we will see some moderation in home price gains. This is an important step in sustainability of a healthy market.
Give Your Kids A Chance
FACT 1 – “The Haves And The Have-Nots” The gap between the rich and poor is growing rapidly across the United States. The richest 20% of U.S. households receive a greater share of national income than the middle three-fifths combined. The bottom 40% are worse off in inflation-adjusted terms than similarly situated people two decades earlier. (Source: U.S. Department of Labor)
FACT 2 – “A College Education Is The Difference” Earnings of full-time workers who have a college degree continue to accelerate faster than those with just a high school diploma. The average college graduate earns 89% more a year on average than a worker with only a high school diploma. Each year of formal schooling after high school adds 5% to 15% to annual earnings later in life. (Source: U.S. Department of Labor)
FACT 3 – “College Costs are High and Rising” Today, the minimum per year cost for a student attending a 4-year, in-state university is about $20,000 per year. This cost includes in-state tuition, books, and room and board. It now takes an average of 5 years to graduate. Only about 40% graduate in 4 years. Here are the minimum costs of a college education based on 5 years to graduate and college costs rising at 5% per year. Now $ 100,000 Future 5 Years $127,628 Future 10 Years $ 162,889 Future 15 Years $207,892
FACT 4 – “You Have Four Choices”
1. Pay college costs out of ordinary income. Add 25% to 30% to cost for taxes.
2. Student works to pay part of costs. This could take longer to graduate with the higher possibility that the student will dropout.
3. Student loans. College graduate starts out in life deeply in debt.
4. Pay college costs out of assets. Buy a rental property that will be free and clear.
The easiest way to pay for a college education is to buy a rental property when your child is young, and put the property on a 15 year loan. Here’s the equity created in a $200,000 rental property with a 20% down payment and a 15 year amortized loan at 5.0%:
Equity Now Equity in 5 Years Equity in 10 Years Equity in 15 Years
$40,000* $ 80,708 $132,952 $200,000
$40,000** $135,964 $258,731 $415,786
* Assumes no increase in property value ** Assumes 5% per year appreciation
Source:Larry Kendall, Ninja LLC
Financial Advice - Don't Make These Three Mortgage Mistake
For most buyers, the mortgage is the largest monthly expense they will ever have. Yet many borrowers don’t know how to prepare, negotiate or shop for mortgage loans.
Compare lenders. A loan officer works for a bank or savings and loan and offers you proprietary loan packages. A mortgage broker shops your deal around to various lenders and gets quotes for you. You’ll have to share personal financial information to get a realistic rate, and then pick the lender’s offer you like best.
Pay attention to terms. All fees are negotiable. It’s all in your loan estimate and closing disclosure form when you’ve applied for the loan, so ask for a blank one up front so you can compare fees. Ask the reason for each fee if it’s not apparent.
Choose the right type of loan. Current market conditions favor fixed rates, because rates are rising from all-time lows. Yes, they cost more than hybrid loans or adjustable rate loans, but the base amount is fixed and doesn’t change. Only your taxes and hazard insurance will cost you more over the years.
If you get an adjustable rate mortgage, you are at the mercy of market conditions. While there’s a cap on how high your interest rate can go, it’s only a good risk if you plan to occupy your home less than five years.
Ask your lender to explain the risks and benefits of the types of loans available.
Home Emergency Preparedness
Many of us in the U.S. might be conscious of natural disasters happening, but we might not realize that they can happen to us. Depending on where you live in the U.S., the risk of a natural disaster occurring is fairly slim. Whether it's a flood, blizzard, wildfire, tornado, tsunami, hurricane or earthquake, owning a home or property (or even being a renter) should prompt you to have an emergency preparedness plan, first aid kit and survival kit readily available in your home or vehicle in case of a natural disaster or unforeseen emergency.
As a property owner or renter the first thing you should do is be informed about the type of disasters or emergencies that have occurred in your area. If you live on the west coast, there is an active threat of earthquake and perhaps a volcanic eruption if you're in the Pacific Northwest. If you live on the southern east coast, the threat of hurricanes or tropical storms is yearly. Certain parts of the Midwest and south are prone to tornadoes. Knowing the type of disaster that could strike your area is important as it can dictate how you and your family react.
Another important part of being informed is knowing how you'll be notified by local authorities if disaster hits. For your own benefit, having a radio (battery operated) on hand may be very useful. Many agencies will communicate via local radio, local television channels and NOAA Weather Radio stations. While many of us depend on our computers or mobile devices for our news and information, electricity cannot be guaranteed when disaster hits, so having battery operated electronics can help keep you and your family up to date on what's happening around you.
It's also important to be informed about your community - are there certain protocols in place in case of disasters? If you live in an area prone to tornadoes, does the community have an alert system for residents? If you live in a coastal town, are there evacuation routes in place in case of a tsunami? When you move to a new area, become acquainted with the community's disaster response protocols and inform anyone else in your household of what to do if disaster strikes.
If you live in a household with other adults or children, an important part of being prepared for an emergency is having emergency contact cards available to those you live with. These cards have contact information for all members of the household (such as home, work, school and cell phone numbers) and they can list pertinent health information for certain people (such as drug or food allergies) that may be needed in an emergency situation. It is also important to make sure all occupants old enough know how to contact 911 as well as the Fire Department, the Police or Sheriff's Department, immediate utilities, and poison control. As a homeowner or renter, ensure everyone who is able knows how to turn on and off any gas lines, electricity, water, irrigation water and propane tanks in or outside the home/property.
Another important aspect of being prepared is having supplies on hand in the event of an emergency. An emergency preparedness kit can take many shapes, but the most important items are basic supplies: water: one gallon per person, per day (for a home it's suggested to have a 2-week supply on hand); food: non-perishable and easy-to-prepare (again, for a home a 2-week supply is suggested); a flashlight and battery-powered or hand-crank radio (with extra batteries); a first aid kit; a 7-day supply of any medications; and any other supplies that might be deemed essential to one's household. It's also a great idea to make sure all of your smoke alarms, carbon monoxide detectors and fire extinguishers are in good working order on a regular basis.
More often than not, disaster doesn't strike an entire community or city, and many times the threats are predictable (a home fire, gas leak, etc.). Because of this, being prepared for all emergencies might not be a top priority within a household. As homeowners, renters or property owners, the last thing we want to happen is to be caught off guard by something that could have been prepared for. In the case of natural disasters or home emergencies, this means being prepared in advance. Should disaster strike, it's very unlikely help will immediately appear. Do yourself a favor and have an emergency plan in place. Disaster may not strike, but if it does, you'll certainly be ready to react to whatever comes your way.
Why Wouldn't My Real Estate Agent Have My Best Interest In Mind?
When you're hiring a real estate agent, you're putting a lot of trust in someone who will be helping you with a tremendous financial investment. So, you should know exactly who you're hiring and exactly what they are required by law to do for you.
There are two primary agency relationships in the state of Florida. There is the "single agency" relationship and "transaction broker" relationship.
I chose to work with Berkshire Hathaway HomeServices Florida Network Realty ("BHHSFNR") because we primarily work as single agents. As a single agent, I have a fiduciary responsibility to my client that owes complete allegiance to that client. I work to achieve the best terms on their behalf and negotiate those terms. I am bound to be honest and tell you what I really think - full disclosure. I am obligated by our agreement to obey your requests, and I am bound by law to maintain full confidentiality and loyalty to you.
As a single agent, you can expect complete Loyalty, Confidentiality, Obedience and Full Disclosure.
As a transaction broker, which is the default agency agreement in the state of Florida, a real estate agent works as a neutral third party to complete the sale of a home. A transaction broker, by Florida law, is required to exercise limited confidentiality and be fair to BOTH parties. Think about that.
This is why I chose to be a single agent and work for Berkshire Hathaway HomeServices Florida Network Realty. I am bound by law to serve you with your best interest in mind - with complete Loyalty, full Confidentiality, total Obedience and Full Disclosure.
How Much Home Should You Buy?
To buy the home that’s right for your household, you have a lot of decisions to make including, location (Ponte Vedra Beach with St. Johns County schools, Jacksonville Beach in the Duval County school system, etc), size, bedrooms and baths, and features. That’s when you should ask yourself: How much home can you really afford?
Nearly every buyer compromises on something, like getting a fixer-upper house in Jacksonville Beach instead of a new home, or buying a smaller home in a more expensive neighborhood, like Ponte Vedra Beach. But you have to know how much you can spend before you make those decisions.
Lenders qualify you for a mortgage with a conforming loan standard that uses two ratios – income to mortgage debt, and income to total debt.
To qualify for a federally -insured 30-year fixed rate conforming loan, your income to mortgage debt can be no higher than 31% of your gross annual income, and your debts plus mortgage payment can be no higher than 43% of your gross monthly income, according to FHA.com.
If you make $5,000 gross income per month, under a conforming loan standard, your house payment (principal, interest, mortgage insurance, hazard insurance and taxes) should be no larger than $1,550.
If you’re carrying credit card debt, student loan debt, or paying child support, the monthly debt service must be factored in. To get the income- to-debt ratio, multiply your monthly income by 43%. With an income of $5,000, your total debt including your house payment can be no larger than $2,150.
Once you know how much home you can comfortably afford, it’s easier to choose the neighborhoods and homes that are within your range. But always remember, it's best to get pre-approved by a lender before looking at homes. Contact me, Ilona Fischer, licensed Realtor and I can help guide you through this process.