Who Are the People in Your Neighborhood

FORECLOSURE PREVENTIONS TOP 3.9 MILLION 

An interesting article about foreclosure prevention provided by C.A.R. (California Association of Realtors)

The Federal Housing Finance Agency (FHFA) released its third quarter Foreclosure Prevention Report, which shows that Fannie Mae and Freddie Mac (the Enterprises) completed 41,465 foreclosure prevention actions in the third quarter of 2017, bringing the total number of troubled homeowners helped to 3,972,689 since the start of the conservatorships in September 2008.  The number of early stage (30-59 days) delinquent loans rose 25 percent in the third quarter driven primarily by the impact of Hurricanes Harvey, Irma and Maria in Texas, Florida, and Puerto Rico.  A variety of mortgage relief options are available for those affected by natural disasters, including these hurricanes.

FHFA’s report includes data on the Enterprises’ home retention actions, delinquency data and real estate owned (REO) inventory.  FHFA publishes the report data in an online, interactive Borrower Assistance Map on FHFA.gov. 

Tax Reform Bill

PRESIDENT SIGNS TAX REFORM BILL
A few weeks ago, President Trump signed the Tax Cuts and Jobs Act tax reform bill. All individual provisions of the measure are generally effective after December 31, 2017 for the 2018 tax filing year and expire on December 31, 2025 unless otherwise noted. The provisions do not affect tax filings for 2017 unless noted.

Under this bill:

Mortgage Interest Deduction

  • The final bill reduces the limit on deductible mortgage debt to $750,000 for new loans taken out after 12/14/17. Current loans of up to $1 million are grandfathered and are not subject to the new $750,000 cap. Neither limit is indexed for inflation.
  • Homeowners may refinance mortgage debts existing on 12/14/17 up to $1 million and still deduct the interest, so long as the new loan does not exceed the amount of the mortgage being refinanced.
  • The final bill repeals the deduction for interest paid on home equity debt through 12/31/25. Interest is still deductible on home equity loans (or second mortgages) if the proceeds are used to substantially improve the residence.
  • Interest remains deductible on second homes, but subject to the $1 million / $750,000 limits.

Deduction for State and Local Taxes

  • The final bill allows an itemized deduction of up to $10,000 for the total of state and local property taxes and income or sales taxes. This $10,000 limit applies for both single and married filers and is not indexed for inflation.
  • The final bill also specifically precludes the deduction of 2018 state and local income taxes prepaid in 2017.

Information provided by C.A.R. (California Association of Realtors)

Happy New Year!

It doesn’t seem possible that it is 2018!  I like many others have made a few resolutions. I saw this chart about less and more and I thought it was a good one to share. Here’s hoping you have a prosperous New Year!

 

 

 

The Tax Reform Bill… What it could mean for Second Home Ownership

 

If you have been thinking of buying South Lake Tahoe real estate as a second home, you may be wondering how the new tax reform bill could impact your ability to deduct the mortgage interest. The deductions are changing this year. This tax bill will cap interest deductions at $750,000. What does this mean? If you already have a $750,000 mortgage and plan to buy, you will not be able to deduct the interest on that loan. If your loan is less, you would have whatever additional debt that is left over that would be fully deductible. For example, if you have a $450,000 mortgage, you would have another $300,000 that would be deductible. Under the current tax rules, about 44% of homes are worth enough for homeowners to take advantage of the mortgage interest deduction when expenses are itemized. Experts forecast that the portion of eligible homes would decrease by 14.4% under the new proposed tax law. Especially since the standard deduction is nearly doubled from existing amounts.

South Lake Tahoe real estate buyers should also keep in mind that a result of this legislation may drive down the prices on South Lake Tahoe homes for sale. In fact, some expect the second home markets to be impacted quite a bit. Additionally, the coastal markets that are known for being expensive are expected to see these impacts whereas other markets could remain stable. Markets that are expected to have the most change in value are the ones where residents are likely to use the mortgage interest deduction.

Of course, buyers should not base their decision for purchasing additional homes for sale in South Lake Tahoe solely the taxes. The real criteria you should pay attention to is outlined below.

Can you afford it?

Owning homes for sale in South Lake Tahoe goes beyond just paying a mortgage. There are other costs associated with owning more than one home.  There are maintenance costs, insurance, utilites and  furnishing. Owning South Lake Tahoe real estate is a great investment, but you aren’t financially done once you get the loan under wraps. It isn’t just the house itself, it is the stuff that goes into the house and the needs that keep it functional that also cost. You also have to be aware that some neighborhoods have HOA’s or community fees for certain amenities. Second homes are generally located in a vacation/resort area atmosphere. These usually tend to cost a little more depending on where your main residence is located and what areas you look in. If you are coming from the Bay area where the average sold price is over 1 million, homes for sale in South Lake Tahoe probably seem like a great deal. With an average sold price of just under $520,000, you are able to purchase a very nice property. If you live in a small town where the average sold price is in the $200,000’s then South Lake Tahoe real estate will obviously seem expensive.

Understand the rules for how you use the property

The IRS defines the type of second property. Currently, if you use a second property for more than 14 days out of the year, it is considered a personal residence and not a rental property. If you mix it up, you could be violating the IRS regulations.  Also, the local changes to the vacation home ordinance has greatly impacted buying a home and using it as a vacation rental in South Lake Tahoe specifically. With the city and county capping the number of properties that can be used as vacation rentals, you may need to put a long term renter in a home before getting it on a vacation rental program.  Feel free to give me a call if you are in the market for a South Lake Tahoe home. As a long time resident and broker/associate licensed in both California and Nevada I am eager to assist you with your South Lake Tahoe real estate needs.

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