January 10, 2012 / Avondale, Featured Properties, Murray Hill, Open Houses, Ortega, Real Estate News, Riverside, San Marco / Author: beth / Comments: (0)
Most don’t realize there was a surprise upside to real estate investment in 2011. Mutual funds which buy and sell shares of real estate investment trusts (REITs), out preformed the average stock mutual fund with a gain of an average 7.6 percent, vs. a 2.9 percent loss for the mutual fund. These funds don’t invest in the physical property. Instead they invest in malls, apartments, office buildings and hotels through investment trust that buy and sell shares. With low mortgage rates and all time low purchase prices, investing in apartment buildings may be the way to go for those wanting something more tangible. The rental market is up,up, up. Predictions are for a rise in rental rates for 2012 based on demand.
Call Traditions Realty for professional advise on all your investment needs. With tenant placement and a property management division, we offer you as much or as little control as is comfortable. All landlords know-a good tenant makes all the difference in the “bottom line” for your investment. Call us today to purchase or manage your investment. Traditions Realty can help take the fear out of being a landlord. Read more below.
Real estate investing lands gains
NEW YORK – Jan. 5, 2012 – Real estate had an excellent year last year. Assuming, of course, your mutual fund owned it.
In an otherwise awful year, real estate funds gained an average 7.6 percent, vs. a 2.9 percent loss for the average stock mutual fund, according to Lipper.
This may seem puzzling to homeowners: The Federal Reserve estimates that homeowners have watched $7 trillion evaporate since the housing bubble burst in 2006.
Real estate funds invest in commercial real estate and generally don’t invest in physical property. They buy and sell shares of real estate investment trusts (REITs), which invest in malls, apartments, office buildings and hotels.
By law, a REIT has to pass virtually all its earnings to shareholders in the form of dividends, one reason REITs did all right last year: The average REIT had a dividend yield of 4.83 percent in December, says the National Association of Real Estate Investment Trusts.
“Dividend yields had a big appeal in a low interest-rate environment, with 10-year Treasury yields at less than 2 percent,” says Jeffrey Kolitch, portfolio manager of Baron Real Estate fund.
Real estate aficionados like to say real estate has to go up because they’re not making any more. In today’s environment for commercial real estate, that’s fairly true. Since there’s so much supply, and lenders aren’t in a lending mood, relatively few new buildings are going up. That’s good for investors, Kolitch says, particularly those who invest in apartment buildings.
Even though house prices have fallen dramatically from their 2006 highs, and mortgage rates are low, many people are still renting – so much so that apartment owners have been able to raise rents. “People are concerned about their jobs, and don’t feel confident buying a new home,” says Steve Brown, senior portfolio manager at American Century.
Another type of REIT that’s benefiting from hard times: storage units. “REIT storage companies are benefiting as activity has picked up from foreclosures,” Baron’s Kolitch says. The storage-unit industry is changing, Kolitch says. Big companies such as Public Storage are edging out smaller mom-and-pop storage companies.
Office space REITs are still somewhat problematic, given the current high unemployment rate. Still, some REITs in areas where it’s tough to put up new buildings (New York, Boston) could fare well this year, Kolitch says. In the middle of the country (Cleveland, Chicago) job creation is modest, and there’s not much office space demand, Brown says. Nevertheless, given low interest rates and an improving economy, real estate funds may continue to give concrete returns.
© Copyright 2012 USA TODAY, a division of Gannett Co. Inc., John Waggoner.
September 01, 2011 / Avondale, Featured Properties, Murray Hill, Open Houses, Ortega, Press Releases, Real Estate News, Riverside, San Marco / Author: beth / Comments: (0)
Despite signs of a national economy that is not quite in the clear, Jacksonville’s rental housing market is going strong. Nationally, the rental vacancy rate has declined in the second half of this year. A lack of confidence in the housing market is causing those looking for homes to consider rental housing instead of buying homes. Whether you are currently a Jacksonville real estate owner or are looking to buy real estate in Jacksonville, Traditions Realty can help you to take advantage of this situation.
Traditions is your source for both homes for sale and homes for rent in Jacksonville. Interest rates are currently low, and it is a great time to buy a home.
If you are in the market, we will work with you to find your dream home. We can also help list your home for rent or find the rental housing property that is just right for you. Read more below.
Fannie: Dark clouds loom but no recession
WASHINGTON – Aug. 23, 2011 – The economy was hit by a barrage of disappointing news during the last month, which led to a downgrade in the overall macro economic forecast released today by Fannie Mae’s Economics & Mortgage Market Analysis Group.
While the August 2011 Economic Outlook does not forecast a double dip recession, it finds that the chance of a double-dip recession is roughly equivalent to a coin toss. For all of 2011, economic growth is expected to downshift to 1.4 percent from 3.1 percent in 2010. Growth is expected to pick up in 2012, but only to about 2.0 percent, compared to the 3.1 percent projected in the July forecast.
“Key factors … have revealed that we have a bigger hole to dig out of, which explains the consumer angst over the lack of employment growth,” says Fannie Mae Chief Economist Doug Duncan. “Moreover, European financial market and fiscal policy turmoil, coupled with the U.S. debt ceiling debate, have hit on consumer confidence, which is at recessionary levels.”
Duncan says Americans are clearly worried about global, big-picture concerns.
“Housing has moved into second position behind general economic concerns among consumers, which is demonstrated in our National Housing Survey results,” Duncan says. “Our July data shows that 70 percent of Americans think the economy is on the wrong track, up from 60 percent a year ago. In turn, despite historically low interest rates, consumers are still saying they don’t see this as a good time to go out and borrow money to buy a house.”
Housing activity is expected to weaken along with the overall economy due to a renewed decline in business and consumer confidence, and a weaker jobs forecast.
One exception is the rental housing market. The rental vacancy rate (the share of rental housing that is vacant and for rent) plunged from 9.7 percent to 9.2 percent in the second quarter of 2011, and is now at its lowest rate in nine years. A lower rate of homeownership suggests that a rising share of households have gone from owning to renting.
© 2011 Florida Realtors®
February 14, 2011 / Avondale, Featured Properties, Murray Hill, Open Houses, Ortega, Real Estate News, Riverside, San Marco / Author: beth / Comments: (0)
With tax season upon us, the following are 10 common errors home owners make when filing taxes. Deductions can vary for buyer’s based on their income and down payment. In 2010, qualified buyer’s raced to meet the July 1st closing date for homes for sale in Jacksonville Florida and around the country. After qualifying for the tax credit, don’t forget to claim it when filing. If you did not make a 20% down payment when purchasing, you will be paying private mortgage insurance. Another common mistake is forgetting to deduct the payments. Your deduction begins to phase out if your adjusted gross income reaches $100,000. Read more below.
10 Common Errors Home Owners Make When Filing Taxes
By: G. M. Filisko
Published: January 25, 2011
Don’t rouse the IRS or pay more taxes than necessary—know the score on each home tax deduction and credit.
Sin #1: Deducting the wrong year for property taxes
You take a tax deduction for property taxes in the year you (or the holder of your escrow account) actually paid them. Some taxing authorities work a year behind—that is, you’re not billed for 2010 property taxes until 2011. But that’s irrelevant to the feds.
Enter on your federal forms whatever amount you actually paid in 2010, no matter what the date is on your tax bill. Dave Hampton, CPA, tax manager at the Cincinnati accounting firm of Burke & Schindler, has seen home owners confuse payments for different years and claim the incorrect amount.
Sin #2: Confusing escrow amount for actual taxes paid
If your lender escrows funds to pay your property taxes, don’t just deduct the amount escrowed, says Bob Meighan, CPA and vice president at TurboTax in San Diego. The regular amount you pay into your escrow account each month to cover property taxes is probably a little more or a little less than your property tax bill. Your lender will adjust the amount every year or so to realign the two.
For example, your tax bill might be $1,200, but your lender may have collected $1,100 or $1,300 in escrow over the year. Deduct only $1,200. Your lender will send you an official statement listing the actual taxes paid. Use that. Don’t just add up 12 months of escrow property tax payments.
Sin #3: Deducting points paid to refinance
Deduct points you paid your lender to secure your mortgagein full for the year you bought your home. However, when you refinance, says Meighan, you must deduct points over the life of your new loan. If you paid $2,000 in points to refinance into a 15-year mortgage, your tax deduction is $133 per year.
Sin #4: Failing to deduct private mortgage insurance
Lenders require home buyers with a downpayment of less than 20% to purchase private mortgage insurance (PMI). Avoid the common mistake of forgetting to deduct your PMI payments. However, note the deduction begins to phase out once your adjusted gross income reaches $100,000 and disappears entirely when your AGI surpasses $109,000.
This deduction may not be as good as it seems. It often doesn’t amount to much of a deduction, has to be recaptured if you turn a profit when you sell your home, and can pique the IRS’s interest in your return. Hampton’s advice: Claim it only if it’s worth those drawbacks.
Sin #6: Missing the first-time home buyer tax credit
If you met the midyear 2010 deadlines, don’t forget to take this tax credit into account when filing.
Even if you missed the 2010 deadlines, you still might be in luck: Congress extended the first-time home buyer credit for military families and other government workers on assignment outside the United States. If you meet the criteria, you have until June 30, 2011, to close on your first home and qualify for the tax credit of up to $8,000.
Sin #7: Failing to track home-related expenses
If the IRS comes a-knockin’, don’t be scrambling to compile your records. Many people forget to track home office and home maintenance and repair expenses, says Meighan. File away documents as you go. For example, save each manufacturer’s certification statement for energy tax credits, insurance company statements for PMI, and lender or government statements to confirm property taxes paid.
Sin #8: Forgetting to keep track of capital gains
If you sold your main home last year, don’t forget to pay capital gains taxes on any profit. However, you can exclude $250,000 (or $500,000 if you’re a married couple) of any profits from taxes. So if you bought a home for $100,000 and sold it for $400,000, your capital gains are $300,000. If you’re single, you owe taxes on $50,000 of gains. However, there are minimum time limits for holding property to take advantage of the exclusions, and other details. Consult IRS Publication 523.
Sin #9: Filing incorrectly for energy tax credits
If you made any eligible improvement, fill out Form 5695. Part I, which covers the 30%/$1,500 credit for such items as insulation and windows, is fairly straightforward. But Part II, which covers the 30%/no-limit items such as geothermal heat pumps, can be incredibly complex and involves crosschecking with half a dozen other IRS forms. Read the instructions carefully.
Sin #10: Claiming too much for the mortgage interest tax deduction
You can deduct mortgage interestonly up to $1 million of mortgage debt, says Meighan. If you have $1.2 million in mortgage debt, for example, deduct only the mortgage interest attributable to the first $1 million.
This article provides general information about tax laws and consequences, but is not intended to be relied upon by readers as tax or legal advice applicable to particular transactions or circumstances. Readers should consult a tax professional for such advice, and are reminded that tax laws may vary by jurisdiction.
G.M. Filisko is an attorney and award-winning writer who was once mortified to receive a letter from the IRS—but relieved to learn the IRS had simply found a math error in her favor. A frequent contributor to many national publications including AARP.org, Bankrate.com, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.
December 08, 2010 / Avondale, Featured Properties, Murray Hill, Open Houses, Ortega, Real Estate News, Riverside, San Marco, Uncategorized / Author: beth / Comments: (0)
The wide reaching effects of a decrease in mortgage interest deductions could be hard on Florida. The tax benefit of home ownership has long been an advantage to buying property. Without that benefit, the value of home ownership declines. The governments recent reduction report recommended that second homes and equity be removed from the program. Opponents fear that any reduction will result in a struggle for our already gasping economy. Read more below.
Mortgage tax changes would impact Floridians
ORLANDO, Fla. – Dec. 7, 2010 – Losing the mortgage interest deduction as proposed recently by the National Commission on Fiscal Responsibility and Reform would do more than hurt taxpayers – it would also devalue homes and could even impact Florida home sales. The tax benefit of homeownership has long been touted as an advantage to buying property. Without that benefit, the value of homeownership declines.
“It’s quite clear: We can’t afford to lose the mortgage interest deduction,” says Florida Realtors 2010 President Wendell Davis. “The real estate industry – still struggling to get on its feet – would take yet another hit if some homebuyers decide it makes more sense to rent rather than buy. The loss would also hurt small businesses as homeowners cut back on spending; and it would hurt the state when sales tax revenue drops.”
In 2008, about 2.2 million Florida taxpayers claimed a mortgage interest deduction on their federal taxes, representing a total tax deduction of about $29.5 billion statewide, or roughly $13,375 for the average taxpayer who had a mortgage. Assuming a marginal tax rate of 25 percent (tax bracket), that mortgage interest deduction translates into an actual tax savings of $3,344 for the average taxpayer.
While it’s unlikely that the federal government would get rid of the mortgage interest deduction for all homeowners, the commission’s recent deficit reduction report recommended that second homes and equity be removed from the program.
“Any decrease in the mortgage interest deduction would result in slowing our already struggling economy,” says Davis. “Go to the Realtor Action Center and follow the instructions to call your representative’s office and let them know that Realtors in Florida are opposed to reducing the mortgage interest deduction!”
Property tax deduction
Another proposal to cut the federal deficit would change the way the IRS allows individuals to deduct real estate taxes from their federal taxes. Currently, real estate taxes can be deducted from income; but under the recent deficit-reduction proposal, they would not. This, too, would impact Floridians.
According to NAR research, about 2.4 million Floridians claimed the real estate tax deduction in 2008 totaling about $10.7 billion. To the average taxpayer, that represents a tax deduction of $4,506. In real dollars – and again assuming a marginal tax rate of 25 percent – that translates into a savings of $1,127 per taxpayer.
Effect on home prices
Proposed changes to the mortgage interest deduction and real estate tax deductions are not one-year events, however. While NAR looked at 2008 data, Americans pay taxes every year, and the deductions could be lost forever. As an ongoing expense imposed only on homeowners, it would raise the cost of homeownership and even tip the scales toward renting in some cases.
With that in mind, NAR extended the numbers and determined that the average Florida home would lose 17 percent in value. It based that estimate on a median home price of $130,800 in the third quarter of 2010. At 17 percent, that comes out to a $22,645 loss on the average home.
Proposed changes
It’s unclear how the U.S. Congress will move forward to cut the deficit. The bipartisan commission established by President Obama voted 11-7 in support of its final report; however, that number falls short of the super majority (14 out of 18 votes) needed to automatically send the recommendations to Congress. Still, the recommendations are considered a blueprint for possible action.
In its report, the commission recommended turning the mortgage interest deduction into a tax credit, capping eligible mortgages at $500,000 and completely eliminating tax benefits for second homes and home equity loans.
© 2010 Florida Realtors®