Larry & Virginia Federer's Blog

As you calculate your tax returns consider each home tax deduction and credit you are—and are not—entitled to. The last thing you want to do is to have the IRS show up at your doorstep.

Mistake #1: Deducting the wrong year for property taxes

You take a tax deduction for the property taxes in the year you actually paid the taxes.  In most cases, if you have a mortgage, the holder of your mortgage pays the property taxes and will provide you with a 1099 stating the amount paid, as well as the year paid.

Mistake #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, but the amount of property taxes actually paid.  Again, your lender will send you a 1099 listing the actual taxes paid. Don’t just add up the 12 months of escrow – your figure will be wrong.

Mistake #3: Deducting points paid to refinance

Deduct points you paid your lender to secure your mortgage in full for the year you bought your home. If you refinance your home, you may deduct the points you paid to refinance the home over the lifetime of the loan.  For example if you paid $2,000 in points to refinance into a 15-year mortgage, your tax deduction is $133 per year.

Mistake #4: Failing to deduct private mortgage insurance

Lenders require home buyers with a down payment of less than 20% to purchase private mortgage insurance (PMI). Avoid the common mistake of forgetting to deduct your PMI payments. Note, however, that the deduction will phase out once your adjusted gross income reaches $100,000.

Mistake #5: Misjudging the home office tax deduction

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.

Mistake #6: Missing the first-time home buyer tax credit

If you met the midyear 2010 deadline, 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.

Mistake #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. File away documents as you go.

Mistake #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.

Mistake #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.

Mistake #10: Claiming too much for the mortgage interest tax deduction

You can deduct mortgage interest only up to $1 million of mortgage debt. If you have $1.2 million in mortgage debt, for example, deduct only the mortgage interest attributable to the first $1 million.

Existing-Home Sales Up Again in January
The uptrend in existing-home sales continues, with January sales rising for the third consecutive month with a pace that is now above levels a year ago, according to the NATIONAL ASSOCIATION OF REALTORS®.

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 2.7 percent to a seasonally adjusted annual rate of 5.36 million in January from a downwardly revised 5.22 million in December, and are 5.3 percent above the 5.09 million level in January 2010. This is the first time in seven months that sales activity was higher than a year earlier.

Lawrence Yun, NAR chief economist, said the improvement is good but could be better. “The uptrend in home sales is consistent with improvements in the economy and jobs, which are helping boost consumer confidence,” Yun said. “The extremely favorable housing affordability conditions are a big factor, but buyers have been constrained by unnecessarily tight credit. As a result, there are abnormally high levels of all-cash purchases, along with rising investor activity.”

A parallel NAR practitioner survey shows first-time buyers purchased 29 percent of homes in January, down from 33 percent in December and 40 percent in January 2010 when an extended tax credit was in place.
Investors accounted for 23 percent of purchases in January, up from 20 percent in December and 17 percent in January 2010; the balance of sales were to repeat buyers. All-cash sales rose to 32 percent in January from 29 percent in December and 26 percent in January 2010.

“Increases in all-cash transactions, the investor market share and distressed home sales all go hand-in-hand. With tight credit standards, it’s not surprising to see so much activity where cash is king and investors are taking advantage of conditions to purchase undervalued homes,” Yun said.

All-cash purchases are at the highest level since NAR started measuring these purchases monthly in October 2008, when they accounted for 15 percent of the market. The average of all-cash deals was 20 percent in 2009, rising to 28 percent last year.

The national median existing-home price for all housing types was $158,800 in January, down 3.7 percent from January 2010. Distressed homes edged up to a 37 percent market share in January from 36 percent in December; it was 38 percent in January 2010.

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said the median price is being dampened by unusual market factors. “Unprecedented levels of all-cash purchases, primarily of distressed homes sold at deep discounts, undoubtedly pulls the median price downward,” Phipps said. “Given the levels of inventory we see today, we believe that traditional homes in good condition have held their value.”

Total housing inventory at the end of January fell 5.1 percent to 3.38 million existing homes available for sale, which represents a 7.6-month supply at the current sales pace, down from an 8.2-month supply in December. The inventory supply is at the lowest level since December 2009 when there was a 7.3-month supply.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.76 percent in January from 4.71 percent in December; the rate was 5.03 percent in January 2010.
Single-family home sales rose 2.4 percent to a seasonally adjusted annual rate of 4.69 million in January from 4.58 million in December, and are 4.9 percent higher than the 4.47 million level in January 2010. The median existing single-family home price was $159,400 in January, down 2.7 percent from a year ago.

Existing condominium and co-op sales increased 4.7 percent to a seasonally adjusted annual rate of 670,000 in January from 640,000 in December, and are 7.9 percent above the 621,000-unit pace one year ago. The median existing condo price was $154,900 in January, which is 10.2 percent below January 2010.

Regional Sales
Northeast: Regionally, existing-home sales in the Northeast fell 4.6 percent to an annual pace of 830,000 in January from a spike in December and are 1.2 percent below January 2010. The median price in the Northeast was $236,500, which is 4.0 percent below a year ago.

Midwest :"Existing-home sales in the Midwest rose 1.8 percent in January to a level of 1.14 million and are 3.6 percent above a year ago. The median price in the Midwest was $126,300, which is 3.2 percent below January 2010.

South: In the South, existing-home sales increased 3.6 percent to an annual pace of 2.02 million in January and are 8.0 percent higher than January 2010. The median price in the South was $136,600, down 2.1 percent from a year ago.

West: Existing-home sales in the West rose 7.9 percent to an annual level of 1.37 million in January and are 7.0 percent above January 2010. The median price in the West was $193,200, down 5.7 percent from a year ago.

— NAR

Don’t let pet odors derail your home sale.  Here are some tips on getting your house ready to show and be "buyer" friendly, not "pet" friendly.

Air your house out. While you’re cleaning, throw open all the windows in your home to allow fresh air to circulate and sweep out unpleasant scents.

Once your house is free of pet odors, do what you can to keep the smells from returning. Crate your dog when you're out or keep it outdoors. Limit the cat to one floor or room, if possible. Remove or replace pet bedding.

Scrub thoroughly. Scrub bare floors and walls soiled by pets with vinegar, wood floor cleaner, or an odor-neutralizing product, which you can purchase at a pet supply store for $10 to $25.

Try a 1:9 bleach-to-water solution on surfaces it won’t damage, like cement floors or walls.

Got a stubborn pet odors covering a large area? You may have to spend several hundred dollars to hire a service that specializes in hard-to-clean stains.

Wash your drapes and upholstery. Pet odors seep into fabrics. Launder, steam clean, or dry clean all your fabric window coverings. Steam clean upholstered furniture.

Either buy a steam cleaner designed to remove pet hair for around $200 and do the job yourself, or pay a pro. You'll spend about $40 for an upholstered chair, $100 for a sofa, and $7 for each dining room chair if a pro does your cleaning.

Clean your carpets. Shampoo your carpets and rugs, or have professionals do the job for $25 to $50 per room, depending on their size and the level of filth embedded in them. The cleaner will try to sell you deodorizing treatments. You'll know if you need to spend the extra money on those after the carpet dries and you have a friend perform a sniff test.

If deodorizing doesn't remove the pet odor from your home, the carpets and padding will have to go. Once you tear them out, scrub the subfloor with vinegar or an odor-removing product, and install new padding and carpeting. Unless the smell is in the subfloor, in which case that goes next.

Paint, replace, or seal walls. When heavy-duty cleaners haven’t eradicated smells in drywall, plaster, or woodwork, add a fresh coat of paint or stain, or replace the drywall or wood altogether.

On brick and cement, apply a sealant appropriate for the surface for $25 to $100. That may smother and seal in the odor, keeping it from reemerging.

Place potpourri or scented candles in strategic locations. Put a bow on your deep clean with potpourri and scented candles. Don’t go overboard and turn off buyers sensitive to perfumes. Simply place a bowl of mild potpourri in your foyer to create a warm first impression, and add other mild scents to the kitchen and bathrooms.

Control ongoing urine smells. If your dog uses indoor pee pads, put down a new pad each time the dog goes. Throw them away outside in a trash can with a tight lid. Remove even clean pads from view before each showing.

Replace kitty litter daily, rather than scooping used litter clumps, and sweep up around the litter box. Hide the litter box before each showing.

Relocate pets. If your dog or cat has a best friend it can stay with while you're selling your home (and you can stand to be separated from your pet), consider sending your pet on a temporary vacation. If pets have to stay, remove them from the house for showings and put away their dishes, towels, and toys.

More Tips for Removing Odors

Remember, you only have 10 seconds to make a first impression - why spoil it with pet odors.  Stay tuned for more staging tips.

In today's tough market, there are 6 main ingredients that make up the sale of your home. 

Location:  We usually cannot move a home. To quote the favorite phrase of appraisers, "Location, Location, Location!"  The pricing of your home must reflect it's location.

Condition:  The upkeep and good condition of your property is crucial to obtain the highest value for your home in any given market at any given time.  The pricing of your property must reflect it's condition.

Price:  Price is the number one factor in the sale of a home.  A property is really only worth what one person is willing to pay another to gain ownership of it.  Price must be in direct relationship to the other five ingredients, and is the most important of all.  The biggest mistake that home owners make is too price their home too high.

Terms:  The more terms available on your property the more potential buyers you will reach.  The pricing of your property must reflect the kinds of terms available to purchase it.  For example, offering closing costs, carpet allowance, etc. 

The Market:  For example: interest rates, competition, and the economy all make up and influence the state of the market when you sell your home.  The pricing of your property must reflect the current status of the market.

Staging®:  Homes that are prepared for sale sell quicker and/or for more money!  Staging will immediately give your property a marketing edge in any market.

When all of the above ingredients are in agreement....we serve up a sale!  If just one of them is out of line, it will take a longer time to cook and....the more ingredients that are out of line, the longer it will take before the sale of your home takes place.

Crystal Coast Home Realty, LLC offers Home Staging Consultations to all our sellers when they list with us. - we have an Accredited Staging Professional® Real Estate Agent on board to help with all your staging questions and needs.  You only have 10 seconds to make that first impression!  Invite the Home Team In! You'll Like the Results!
 

There is still time to take advantage of the First Time Home Buyer Tax Credit for our Nations Armed Forces.  The deadline is fast approaching.

Members of the military and certain other federal employees serving outside the U.S. have had an extra year to buy a principal residence in the U.S. and qualify for the credit.  The eligible taxpayer must buy, or enter into a binding contract to buy a principal residence on or before April 30, 2011.  If a binding contract is entered into by that date, the taxpayer has until June 30, 2011, to close on the purchase.  Members of the uniformed services, members of the Foreign Service and employess of the intelligence community are eligible for this special rule.  It applies to any individual (and, if married, the individuals spouse) who serves on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008 and ending before May 1, 2010.

In may cases, the credit repayment requirement is waived for members of the uniformed services, members of the Foreign Service and employees of the intelligence community.  This relief applies where a home is sold or stops being the taxpayers primary residence after Dec. 31, 2008, in connection with government orders received by the indivdual (or the individuals spouse) for qualified offical extended duty service.  The credit is still allowable even if this happens during the year of purchase.  Qualified official extended duty is any period of extended duty while serving as a place of duty at least 50 miles away form the taxpayer's principal residence (whether inside or outside the U.S.) or while residing under government orders in government quarters.  Extended duty is defined as any period of duty pursuant to a call or order to such duty for a period in excess of 90 days or for an indefinite period.

For additional information, or any questions regarding how you can still qualify for the First Time Home Buyer Tax Credit for Military Personel, contact a member of The Crystal Coast Home Team today.

Thanks to all our Service Men & Women who have answered the call and continue to keep our Nation and our Families free!

In North Carolina, it appears that in 2010 -  1 in 63 properties ended up in foreclosure.  While Carteret, Onslow and Craven counties did not make the Top 10 lists in the state, there are still foreclosure deals to be had on the Crystal Coast of North Carolina.

Here are 5 tips to consider when thinking about buying a foreclosure:

1. Work with an agent who has access to foreclosure information.
Many home buyers assume that all agents have access to foreclosure listings. It's important to ask.

2. Bank-owned properties generally close faster than short sales.
While short sales can be bargains, they also can take a lot longer. Some banks will negotiate in a timely manner on short sales, but most will prioritize properties they have already repossessed.

3. Always offer less than the asking price.
Don't assume that banks are firm on their price. For example, asset managers responsible for liquidating bank-owned Marco Island, Florida condos are often willing to consider a lower offer. However, when there are multiple offers on the table - make sure that you do consider going in with a offer you are comfortable with and do not have regrets when the bank turns it down.

4. Ask the bank to pay your closing costs.
The worst that can happen is that they say no. Sometimes buyers are surprised to find that banks can be quite accommodating when they want to. 

5. Get pre-approved from the right bank.
When making an offer on a short sale, it's often strategically helpful to be pre-approved by the same bank. During negotiations, this may tip the scales in your favor.


Most important - make sure your agent is a strong negotiator and has worked with other buyers who have bought foreclosed properties.  We have several seasoned agents to help you with your purchase. Looking for a current list of short sales and foreclosures on the Crystal Coast of North Carolina?  Visit our website to find out how to get the most current lists: http://www.CrystalCoastHomeRealty.com

The Crystal Coast of North Carolina has just gone through a tax re-evaluation.  The news is mixed for those homeowners on the beaches of the Crystal Coast.  Those who bought at the high end of the market, will see a drop in their home values and probably owe more than the home is worth.  Those who bought at the right time, will see their investment decrease - but will be at a more realistic value.  There are currently 462 resale and new homes in Emerald Isle on Trulia, including 5 homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process. The average listing price for homes for sale in Emerald Isle NC was $630,818 for the week ending Jan 12, which represents a decrease of 0.5%, or $3,300, compared to the prior week.  Interest rates are still low, prices seem to be leveling out - so now is definitely a good time to buy.

This spring will see some updates to the Emerald Isle area - Highway 58 will be repaved through-out the town.  Town Manager, Frank Rush hopes to have the project done by late Spring.  The current freezing temps have kept the road crews froms being able to start.

The bike path in Emerald Isle will also be expanded this Spring.  On HWY 58 the bike path will expand down to the Public Eastern Beach Access and on Coast Guard Road, the bike path will expand from the Deer Horn Subdivision to the Emerald Isle Park.  All good news for homeowners and visitors alike.

The new Town Pier (located on the Sound side of Emerald Isle) is on schedule even with the type of weather we have been having.

Those of us who live in Emerald Isle, enjoy the amenities that the town has to offer.  We love calling Emerald Isle Home.  If you are looking to find a home on the Crystal Coast of North Carolina, let the Crystal Coast Home Team help you on your way....we are the neighborhood experts.