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Category Archive: ‘Local Government’

Tax Changes and Move-Up Buyers

Here’s a good review of the recent Dave Camp tax proposal:

http://www.latimes.com/business/realestate/la-fi-harney-20140309,0,7914993.story#axzz2vWoDGLkZ

Under intense scrutiny will be the two-out-of-five-year rule – Congress will find it irresistible to tinker with so much tax-free money:

dave_campUnder Camp’s proposal, you’d need to own your house for five out of the preceding eight years to claim a tax-free exclusion and you could exercise this  privilege only once every five years. Capital gains exclusions for home sellers  with high incomes — $250,000 a year for singles and $500,000 a year for joint  filers — would be phased out altogether over a period of years.

If Camp’s idea of exercising this ‘privilege only once every five years’ does get approved, it should curtail the move-up market.

Here’s why:

1.  People get too comfortable.  After 2-3 years, it still feels like you just moved in and there isn’t as much attachment to the home.  After five years, real roots have been established.

2.  Kids have more friends in the neighborhood.  Kids grow up a lot in 5-6 years, and they don’t mind imposing their ideas upon you regarding a move.

3.  Remodeling will be a more-likely route.  If the two items above are bearing down on you, then just fixing the old house will be a happy compromise.

More of today’s homebuyers are already looking longer-term than any since the 2-out-of-5 rule was enacted in 1997 – let’s face it, the rah-rah days are over.  Changing the law will just be the final straw that will cause people to stay put.

Consider these changes when buying your next house – it may have to last you for a long time, and maybe forever!  Get good help!

Posted by on Mar 10, 2014 in Jim's Take on the Market, Local Government, The Future | 14 comments

Proposed Tax Changes

From Forbes:

In an effort to simplify the nation’s unwieldy tax code, Rep. Dave Camp (R-Mich.) is socking it to homeowners.

income taxes and housingHis proposal as chairman of the House Ways & Means Committee, The Tax Reform Act of 2014, hits first-time home buyers, jumbo mortgage seekers, homeowners who have ratcheted up big gains in their primary residence, and even homeowners who are aiming to green their homes by making them more energy efficient. Of course, the proposals aren’t law – yet— but here’s where his plan would hit home. The context is streamlined individual income tax rates and an outsized standard deduction. But if you’re a homebody, you’re likely going to be paying more in taxes.

Drastic limit to mortgage interest deduction. Today you can deduct mortgage interest on up to $1.1 million in debt ($1 million in acquisition indebtedness and $100,000 in home equity debt) on a principal and second residence, but under Camp’s tax reform proposal that is reined in big time.

The maximum amount of indebtedness on which you could take the mortgage interest deduction would be $875,000 in 2015, $750,000 in 2016, $625,000 in 2017 and $500,000 in 2018 and later. Interest paid on home equity indebtedness would not be deductible after 2014. Special rules apply in the case of refinancing as long as you aren’t taking out a bigger mortgage.

Tightening of exclusion of gain from sale of principal residence. Camp’s proposal tightens the rules for excluding gain from the sale of your home. Currently you can exclude $250,000 ($500,000 for a couple) of gain if you’ve owned and used the residence as your principal residence for at least two of the five years before you sell.

The proposal changes the rules so that it only applies if you’ve used the residence as your principal residence for at least five of the eight years prior to the sale. It also limits the exclusion so it only applies once during any 5-year-period (up from 2 years). And it phases out the exclusion by one dollar for every dollar a taxpayer’s adjusted gross income exceeds $250,000 ($500,000 for a couple).

Read full article here:

http://www.forbes.com/sites/ashleaebeling/2014/02/26/camp-tax-plan-hits-homeowners-real-estate-industry-hard/

Posted by on Feb 27, 2014 in Local Government, Market Conditions, Revolution | 7 comments

Bought And Paid For

realtorstuffingflyerboxThe California Association of Realtors’ political action committee  gave $500,000 to the state Democratic Party the day before the Democrat-dominated Franchise Tax Board effectively resolved a months-long legislative fight over the state’s tax treatment of short sales.

Tuesday’s donation, reported Wednesday evening, matches the $500,000 the Realtors gave state Democrats in May. The group also gave the party $168,000 earlier in the year and more than $1 million in 2012.

The 2013 contributions, by far the largest to the party in the current election cycle, will help Democratic attempts to keep their two-thirds legislative supermajorities in 2014.

Realtors spokeswoman Lotus Lou denied any connection between the two events. Wednesday’s legal opinion from the Franchise Tax Board stemmed from a September clarification on the issue by the IRS, she said.

“The two did not have any relation to each other,” Lou said.

In her legal opinion, Franchise Tax Board chief counsel Jozel Brunett cited the clarification by the IRS that forgiven debt after a home is sold for less than the amount owed on it should not be treated as taxable income.

“This is welcome news for Californians who have had to short sell their homes this year,” Board of Equalization member George Runner said in a statement. “We learned last month they wouldn’t face a federal tax penalty. We now know they won’t face a state tax hit either.”

Read More

Posted by on Dec 6, 2013 in Local Government, Short Sales, Short Selling | 10 comments

SB 30 Fails

From the California Association of Realtors:

LOS ANGELES (Sept. 3) – Thanks to partisan political gamesmanship by the Assembly Appropriations Committee, struggling homeowners who sold their homes in a short sale in the past eight months will be further penalized by being forced to pay state income taxes on money they never received, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

Senate Bill 30 conforms California tax law to federal tax law, which already says sellers can’t be taxed on forgiven mortgage debt. SB 30 failed to pass out of the Assembly Appropriations committee last Friday.  The vote on the bill was along party lines with Democrats voting “no” and Republicans voting “yes.”

“We are disappointed that California Assemblyman Mike Gatto (D-Pasadena) failed to show the leadership necessary to provide relief to distressed homeowners who are already in dire financial trouble,” said C.A.R. President Don Faught.  “These are real families in real financial need who may well be forced into bankruptcy by an unresponsive legislature.  To heap an unfair tax bill on top of the pain and emotional duress of losing a home is unconscionable.”

Under current state law, when a lender forgives mortgage debt in a short sale, the seller must pay state income tax on the amount of forgiven debt.  The previous California exemption lapsed at the end of 2012, so forgiven mortgage debt on short sales occurring in 2013 is considered taxable state income.  The federal government does not charge federal income tax, and neither should the state.

Unfortunately, Senate leadership, in an act of political gamesmanship, linked the enactment of SB 30 to a new tax measure in an effort to extort C.A.R.’s support for that tax measure.

Posted by on Sep 4, 2013 in Foreclosures, Local Government, Short Sales, Short Selling | 12 comments

Romneys’ New La Jolla House Appealed

Reprinted with permission from the SD Daily Transcript:

The California Coastal Commission will consider an appeal of a permit granting Mitt and Ann Romney the right to demolish their existing 3,900sf La Jolla house and build a more-than 11,000sf mansion on Sept. 11.

The Romney plans at 311 Dunemere Drive call for a two-story over basement home with an attached four-car garage, hardscape, and retaining walls, with an existing pool, spa, and seawall to remain on a 17,860sf beachfront lot.  The Romneys acquired the existing home for $12 million in 2008.

The new plans would add an elevator for the Romneys’ automobiles and about 3,600sf of basement area, and would roughly double the main living area of the home.

Read the story of the former neighbor from across the street appealing the unanimously-approved permit even though he sold his 4,141sf house for $3,560,000 in 2012 and moved to Monterey (click on link below):

Romney’s La Jolla house draws appeal from former neighbor

https://maps.google.com/maps?hl=en&tab=wl

Posted by on Aug 28, 2013 in La Jolla, Local Flavor, Local Government | 2 comments

Eminent Domain – Mortgages

Hat tip to daytrip for sending this in from nytimes.coman excerpt:

Robert and Patricia Castillo paid $420,000 for a three-bedroom, one-bathroom home in Richmond, Calif., in 2005. It is now worth $125,000.

The power of eminent domain has traditionally worked against homeowners, who can be forced to sell their property to make way for a new highway or shopping mall. But now the working-class city of Richmond, Calif., hopes to use the same legal tool to help people stay right where they are.

Scarcely touched by the nation’s housing recovery and tired of waiting for federal help, Richmond is about to become the first city in the nation to try eminent domain as a way to stop foreclosures.

The results will be closely watched by both Wall Street banks, which have vigorously opposed the use of eminent domain to buy mortgages and reduce homeowner debt, and a host of cities across the country that are considering emulating Richmond.

The banks have warned that such a move will bring down a hail of lawsuits and all but halt mortgage lending in any city with the temerity to try it.

But local officials, frustrated at the lack of large-scale relief from the Obama administration, relatively free of the influence that Wall Street wields in Washington, and faced with fraying neighborhoods and a depleted middle class, are beginning to shrug off those threats.

“We’re not willing to back down on this,” said Gayle McLaughlin, the former schoolteacher who is serving her second term as Richmond’s mayor. “They can put forward as much pressure as they would like but I’m very committed to this program and I’m very committed to the well-being of our neighborhoods.”

The city is offering to buy the loans at what it considers the fair market value. In a hypothetical example, a home mortgaged for $400,000 is now worth $200,000. The city plans to buy the loan for $160,000, or about 80 percent of the value of the home, a discount that factors in the risk of default.

Then, the city would write down the debt to $190,000 and allow the homeowner to refinance at the new amount, probably through a government program. The $30,000 difference goes to the city, the investors who put up the money to buy the loan, closing costs and M.R.P. The homeowner would go from owing twice what the home is worth to having $10,000 in equity.

Read full article here:

http://www.nytimes.com/2013/07/30/business/in-a-shift-eminent-domain-saves-homes.html?pagewanted=1&_r=1&ref=business&

Posted by on Jul 30, 2013 in Loan Mods, Local Government, Mortgage News | 4 comments

PA Sale

The SD Public Administrator’s sale is scheduled for July 18th.

One of the properties being sold is near La Jolla, next to Kate Sessions Park – the opening bid is $585,000:

From their website:

http://www.sdcounty.ca.gov/hhsa/programs/papg/terms_and_conditions.html

The bidding will start with the minimum bid as indicated in the brochure. The Minimum bid may be less than 90% of the appraised value.  This is determined by reviewing the current appraisal and selecting the (NOPA) legal process.

The procedure to confirm a sale in court will ALWAYS be an option and at the discretion of the Public Administrator at anytime.

A 10% deposit will be required with the successful bid.  The 10% deposit required at the time of the auction must be in the form of cash, cashier’s check, or certified check payable to the “Public Administrator”.  Please be prepared to bring 10% of the appraised price listed in the brochure.  Should the property be sold for more than the appraisal price, then the difference will need to be made up in the form of a personal check at the time of the successful bid.  If a petition to the court is filed for a hearing to confirm sale (Court Confirmation), an overbid procedure will be followed as part of this legal process. Higher bids may be accepted by the court if they are made in court and they are in the amount of at least 10% more on the first $10,000.00 and 5% more on the amount of the bid in excess of $10,000.00 of the original bid submitted for confirmation.  Our acceptance of an offer is contingent on the estate’s being able to furnish the buyer a Policy of Title Insurance showing the property to be free of any encumbrances of record, subject to restrictions and easements of record.  No termite clearance is given.

Please be advised that you are basing your purchase of an offered property solely on your findings and research, that you have satisfied yourself as to the zoning, usage’s, physical condition inside and out, size and other information that might affect your decision to purchase this property.  You understand that you are buying this property in “AS IS” condition with no warranties, usage’s or conditions, (physical or otherwise), written, implied or expressed by the San Diego County Public Administrator’s Office and its agents or employees.

All properties have access through the use of Multiple Listing Service (MLS) lock boxes.  Please contact a broker of your choice to view each property.

A real estate broker who registers a client with the Public Administrator and who attends and remains with his client during the auction, will generally receive a commission of 2.5% of the purchase price, awarded by the court.  In the event this client becomes the successful bidder, the commission will be paid at the close of escrow.  A real estate licensee who buys as a principal will not be entitled to share in the commission if he or she is buying as a principal or intends to share the commission with the principal.

The San Diego County Probate Referees appraise all properties at this auction.  Referees are assigned to each estate by the Superior Court of California, and are not affiliated with the Public Administrators office.

All descriptions and information are derived from reliable sources, but no guarantee is expressed or implied.  Announcements made on the day of sale will take precedence.

Posted by on Jun 23, 2013 in Auctions, Local Government | 3 comments

Density and Growth

paseoBuild up or increase density — those are the options for San Diego real estate professionals who are trying to figure out how to accommodate a growing population with land that’s about 95 percent built.

One of the biggest challenges is the community’s perception that more traffic is instantly bad, regardless of how it flows, said Robert Little, vice president of development at Kilroy Realty.

Kilroy Realty is seeking approval for its One Paseo project in Carmel Valley, a mixed-use, vertically integrated project with office, hotel, retail and residential uses.

One Paseo decision postponed – see VOSD article here.

Little and other local professionals participated in a panel on building vertical at the ULI Spring Meeting last week.

“It is a challenge. Any sort of change in a small community is a challenge,” said Kathleen Garcia, planning and community development director in the city of Del Mar.

Garcia faces restrictions in Del Mar that limit buildings to 14 feet in height downtown and 16 feet in residential areas. The density in Del Mar is created by building basements, she said.

“The right amount of density is very different for every single community,” Garcia said.

Read More

Posted by on Jun 6, 2013 in Builders, Local Flavor, Local Government, The Future | 0 comments

20-Year Cap for Sea-Wall Permits

The cliff behind a house on Pacific Avenue in Solana Beach collapsed several years ago, dropping the patio and backyard to the beach 40 feet below. (photo taken by Don Bartletti on May 10, 2013)

SOLANA BEACH Atop the ocean bluff are the homes of those fortunate to own a piece of land overlooking the dramatic California coastline.

Down on the beach are the surfers, swimmers and beachcombers lucky for a sliver of sand that skirts caves and coves in this paradise north of San Diego.

Dividing the two is a crumbling 80-foot cliff that forms a battle line between homeowners who built concrete walls to prevent their houses from sliding into the sea and those who want to put limits on how long they can fend off the waters.

The powerful California Coastal Commission is imposing 20-year caps on permits to build sea walls, setting up a classic debate over public beach access and property rights as sea levels continue to rise and relentless surf threatens to erode a way of life along 1,100 miles of shore.

Since 2010, the agency has set 20-year expiration dates on a private tennis club in Pebble Beach, a 13-unit apartment building in San Diego, two houses in Santa Cruz, a 19-unit apartment building in nearby Capitola, a 260-unit apartment complex in the San Francisco-area town of Pacifica and several homes in Solana Beach and neighboring Encinitas.

While the limits aren’t edicts to tear down walls in two decades and wouldn’t necessarily prevent shoring up fortifications later, they have alarmed homeowners who see a threat to their property.

“There’s going to be a huge dark cloud whether the home can still exist when the period is over,” said Jon Corn, an attorney for homeowners who sued Solana Beach after the city adopted a similar 20-year limit for all new walls on its 1.7 miles of coast.

Three lawsuits are pending in state court to overturn the city’s policy.

Solana Beach could become a model for 75 other cities or counties required to run plans by the Coastal Commission.

Read More

Posted by on May 29, 2013 in Local Flavor, Local Government | 0 comments