About Lori Paton
Published: November 12, 2012
Unless Congress extends the forgiven debt exemption, financially troubled home owners who short sell their homes to avoid foreclosure or otherwise have mortgages forgiven will get slammed with a huge tax bill in 2013.
The nation’s attorneys general worked hard to get the five biggest mortgage servicers to agree to a $25 billion settlement to help the nation’s financially troubled home owners avoid foreclosure.
The national mortgage settlement was intended to help stop the housing market spiral and hold the banks accountable for foreclosure abuses.
Now, a good portion of that money may end up in Uncle Sam’s bank account, wrenched from the depleted pocketbooks of those same troubled home owners in the form of income taxes.
The tax rub occurs because IRS rules say a debt you get to walk away from is really income, which as you know, is taxable.
Here’s an example of how you could get taxed on a short sale, where you sell your home for less than you owe on the mortgage:
Say you have a $100,000 mortgage on your house. You short sell your house and net $75,000 after sales expenses. You repay your lender that $75,000, creating $25,000 in forgiven debt.
The IRS will add that $25,000 to your taxable income. So if you have no deductions and you’re in a 28% tax bracket, you’d owe $7,000 ($25,000 x 0.28) in tax on that forgiven debt.
Up until the end of this year, you can escape that forgiven debt tax because Congress created an exemption for you back in 2009. Unfortunately, that exemption expires at the end of 2012.
If you qualify for a foreclosure avoidance program, like a short sale (or any of the other ways that reduce what you owe, below), but you can’t close your deal until 2013, you could face a huge tax bill. A tax bill large enough to put you right back into another financial tailspin.
Principal reduction: The lender shaves off a specific amount from what you owe on your mortgage.
Recasted mortgage: If the lender reduces what you owe overall to lower your monthly payment, that reduction would count as forgiven debt.
Second mortgage waivers: The bank says you no longer have to repay your second mortgage and just wipes out that loan.
Foreclosure: You’d be taxed on whatever is left on the mortgage that you didn’t pay.
Finally, any time you find yourself in a cash-out situation, such as a home equity line of credit, exercise care, because not all of it will be necessarily forgiven.
There’s not a soul in Congress who’s opposed to extending the forgiven debt exemption, but it still might not happen. With the federal budget in full-on crisis mode, any legislation that concerns a tax issue faces an uphill battle.
But wait. It gets worse. Traditionally, Congress lumps all the expiring tax provisions into a single bill. That bill is among the last things Congress passes before it goes home in December. That means the odds of Congress passing the forgiven debt extension by itself aren’t good. In the last 15 years, Congress has never passed a bill extending only one expiring tax provision.
Going through the foreclosure process is incredibly stressful, even if things work out OK in the end. Having to sell your home because you can’t afford it anymore is devastating. Having the IRS send you a tax bill for the forgiven debt? That’s just cruel.
Contact Linda Smith Here:
Fax: 419 352-2654
VM: 419-354-4871 ext.113
By: G. M. Filisko Published: October 15, 2010
Don’t let pet odors derail your home sale.
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.
G.M. Filisko is an attorney and award-winning writer whose former mutt Marley no doubt created a wet-dog aroma in her condo that still remains. A regular contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.
Contact Beth Ann here
Fax: 419 592-7021
Facebook’s IPO and subsequent stock value points up a simple truth: It’s easy to get caught up in the notion of getting rich quick. But there’s no surer way to wealth than home ownership.
As Facebook’s IPO (http://abcnews.go.com/Business/facebook-ipo-roadshow-poised-hit-road/story?id=16263419#.T6LGAZpYtXA) approached, it was easy to start traveling down the “what if” path:“What if I had equity in Facebook?!? How rich would I be?”
If my parents had only bought me Berkshire Hathaway stock for my first birthday in 1962, I’d have made some serious money in stock equities.
Alas, they didn’t recognize the hot stock of their era any more than I would recognize the hot stock of mine.
Like most Americans, it’s home equity (http://www.houselogic.com/home-advice/equity-loans/home-equity-line-tips/), not stock equity, that will pad my bank account when I hit the retirement finish line.
About two-thirds of Americans invest in home ownership (http://www.houselogic.com/home-topics/the-home-ownership-matters-blog/), but only half of us invest in stocks. (I suspect this is in no small part because we have to make our mortgage (http://www.houselogic.com/home-taxes-financing/home-loans-mortgages/) payments every month or the bank comes and takes our houses back.)
The fact is, more of us are getting rich by buying and paying off our homes than by picking the next Facebook.
Here are some interesting facts from the National Center for Real Estate Research:
•6 in 10 of us have more home equity than stock equity.
•One-fifth of Americans’ total net worth is home equity.
•Home owners accumulate, on average, $167,000 in their lifetimes, compared to $42,000 for renters.
•The median wealth for the poorest American home owners, those earning less than $20,000, is 81 times that of renters with similar income.
In a recent study that took into account falling home prices, buying was still more likely to generate wealth than renting, simply because renters are more inclined to spend instead of save and invest in stocks (http://kenhjohnson.com/tag/wealth-accumulation/#19_1).
The bottom line is this: Even if renting appears cheaper on a spreadsheet, the forced savings of home ownership leads to wealth more reliably than renting. Many of us simply don’t have the willpower or motivation to save our discretionary income and invest it in stocks.
So unless you’ve got the inside track on the next hot future IPO, keep making your mortgage payments.
What’s worth more right now, your
IRA or your home?
Call Susan Langendorfer Today
Fax: 419 891-1092
VM: 419-897-2700 ext. 229
First Home Purchasing Tips/By Sam J Loeb
Purchasing a first home is to most a quite stressful and intimidating event, while also being one of the most significant decisions you are likely to make in your life. With all that is involved, from searching properties, mortgage application to negotiating a price, it is essential to take whole process of purchasing a property in a controlled and orderly manner. Here are some of the steps to following when purchasing any property -
Take along a Family Member or Relative – Buying a property is quite a confusing and drawn out process, even if you have already attempted to educate yourself as much as possible. If an appointment has been made to view a property, it often pays to have with you a trusted relative or friend who you can rely on to give you an objective opinion throughout the viewing process. It might also benefit if you can call on someone who has recently been through the process of purchasing a property or dealing with estate agents. At times our own opinion might be clouded by emotions, so it always helps to have a second, more rational opinion to guide you along. Also, someone else’s viewpoint might be able to highlight the negative points of a property, which you would’ve otherwise missed.
Use a Trusted Real Estate Agent – A well-qualified estate agent that you feel entirely comfortable with is an essential piece of purchasing a first property. It is always worthwhile visiting several different local agents to find someone you are happy to work with. Some of the main qualities to expect with an agent are honesty, experience, and a keen knowledge of the local housing market. The right agent should be able to advice you through each stage of purchasing a property, which will ensure you find the perfect house for you and your family.
Don’t Rush a House Purchase – Most first-time home buyers often require several month of searching different types of properties before deciding on the right home to live in for the long-term. Purchasing something as significant as a new home isn’t something that should be rushed, which in a worst case situation might leave you with a home that isn’t quite right for your circumstance or where you don’t quite feel as comfortable as you should. It always helps to have several properties lined up to view, which can give you a broader view of what is on offer. It might help to look at a range of properties, such as town houses, flats, condos, bungalows, etc. to see the different floor plans and layouts available and see what looks most promising for your needs. After viewing a varied mix of properties, you will be in a better place to make an informed and wise decision.
See more information on trusted and reliable Real estate Melbourne specialists to ensure you get the best outcome in your property search.
Article Source: http://EzineArticles.com/?expert=Sam_J_Loeb
Fax: 419 782-0989
VM: 419-782-0978 ext. 136
Bill had to sell his house quickly.
He was being transferred out of state, and the company wasn’t footing the bill. Instead, they offered him a higher salary. Now he had to sell quickly or risk paying two mortgages.
But Bill wasn’t sweating it. After all, his house was in a great neighborhood in a desirable part of town. He hired a real estate agent, confident that once the “for sale” sign went up, the buyers would come knocking. He’d get a quick sale at asking price, no problem.
Only a month went by, and there were zero offers. Bill had to move soon and was getting nervous about those double mortgage payments, but no one was interested. Then, to really rub salt in the wound, buyers were leavings tons of negative comments!
So what was the problem?
Moving into your first home is exciting! But it also means you’ve got work to do.
When I bought my first house in May, my timing couldn’t have been better: The house closing was two weeks before the lease was up on my apartment. That meant I could take my time packing and moving, and I could get to know the new place before moving in.
I recruited family and friends to help me move (in exchange for a beer-and-pizza picnic on the floor) and, as a bonus, I got to pick their brains about what first-time home owners should know.
Their help was one of the best housewarming presents I could have gotten. And thanks to their expertise and a little Googling, here’s what I learned about what to do before moving in.
1. Change the locks. You really don’t know who else has keys to your home, so change the locks. That ensures you’re the only person who has access. Install new deadbolts yourself for as little as $10 per lock, or call a locksmith – if you supply the new locks, they typically charge about $20-$30 per lock for labor.
2. Check for plumbing leaks (http://www.houselogic.com/home-advice/plumbing/plumbing-leaks-8-smart-tips-stop-them/). Your home inspector should do this for you before closing, but it never hurts to double-check. I didn’t have any leaks to fix, but when checking my kitchen sink, I did discover the sink sprayer was broken. I replaced it for under $20.
Keep an eye out for dripping faucets and running toilets, and check your water heater (http://www.houselogic.com/home-advice/water-heaters/water-heater-maintenance/) for signs of a leak (http://www.houselogic.com/blog/plumbing/fix-a-leak-week-2012/).
Here’s a neat trick: Check your water meter at the beginning and end of a 2-hour window in which no water is being used in your house. If the reading is different, you have a leak.
3. Steam clean carpets (http://www.houselogic.com/home-advice/home-improvement/carpet-or-hardwood/). Do this before you move your furniture in, and your new home life will be off to a fresh, clean start. You can pay a professional carpet cleaning service – you’ll pay about $50 per room; most services require a minimum of about $100 before they’ll come out – or you can rent a steam cleaner for about $30 per day and do the work yourself. I was able to save some money by borrowing a steam cleaner from a friend.
4. Wipe out your cabinets. Another no-brainer before you move in your dishes and bathroom supplies. Make sure to wipe inside and out, preferably with a non-toxic cleaner (http://www.houselogic.com/green-living/green-cleaning/), and replace contact paper if necessary.
When I cleaned my kitchen cabinets (http://www.houselogic.com/home-topics/cabinets/), I found an unpleasant surprise: Mouse poop. Which leads me to my next tip …
5. Give critters the heave-ho. That includes mice, rats (http://www.houselogic.com/home-advice/pest-control/Need-to-Get-Rid-of-Rats-Its-a-Community-Effort/), bats (http://www.houselogic.com/home-advice/pest-control/attic-pest-removal/), termites (http://www.houselogic.com/home-advice/pest-control/detect-termites-other-wood-destroying-insects/), roaches (http://www.houselogic.com/home-advice/pest-control/roach-home-removal-tips/), and any other uninvited guests. There are any number of DIY ways to get rid of pests, but if you need to bring out the big guns, an initial visit from a pest removal service will run you $100-$300, followed by monthly or quarterly visits at about $50 each time.
For my mousy enemies, I strategically placed poison packets around the kitchen, and I haven’t found any carcasses or any more poop, so the droppings I found must have been old. I might owe a debt of gratitude to the snake (http://www.houselogic.com/blog/pest-control/how-help-snake-slither-out-your-house/) that lives under my back deck, but I prefer not to think about him.
6. Introduce yourself to your circuit breaker box and main water valve. My first experience with electrical wiring (http://www.houselogic.com/home-advice/electrical/when-time-for-electrical-wiring-upgrade/) was replacing a broken light fixture in a bathroom. After locating the breaker box, which is in my garage, I turned off the power to that bathroom so I wouldn’t electrocute myself.
It’s a good idea to figure out which fuses control what parts of your house and label them accordingly. This will take two people: One to stand in the room where the power is supposed to go off, the other to trip the fuses and yell, “Did that work? How about now?”
You’ll want to know how to turn off your main water valve if you have a plumbing emergency, if a hurricane (http://www.houselogic.com/protect-your-home/hurricanes/) or tornado (http://www.houselogic.com/protect-your-home/tornadoes-severe-storms/) is headed your way, or if you’re going out of town. Just locate the valve – it could be inside or outside your house – and turn the knob until it’s off. Test it by turning on any faucet in the house; no water should come out.
What were the first maintenance projects you did when you moved into your first home?
By: G. M. Filisko Published: March 30, 2010
You’ve found your dream home. Make sure missteps don’t prevent a successful closing.
You may think fudging your income a little or omitting debts when applying for a mortgage will go unnoticed. Not true. Lenders have become more diligent in verifying information on mortgage applications. If you fib, expect to be found out and denied the loan you need to fund your home purchase. Plus, intentionally lying on a mortgage application is a crime.
Lenders double-check buyers’ credit right before the closing to be sure their financial condition hasn’t weakened. If you’ve opened new credit cards, significantly increased the balance on existing cards, taken out new loans, or depleted your savings, your credit score may have dropped enough to make your lender change its mind on funding your home loan.
Although it’s tempting to purchase new furniture and other items for your new home, or even a new car, wait until after the closing.
The lender may refuse to fund your loan if you quit or change jobs before you close the purchase. The time to take either step is after a home closing, not before.
If your contract requires you to do something before the sale, do it. If you’re required to secure financing, promptly provide all the information the lender requires. If you must deposit additional funds into escrow, don’t stall. If you have 10 days to get a home inspection, call the inspector immediately.
Get your funds together a week or so before the closing, so you don’t have to ask for a delay. If you’ll need to bring a certified check to closing, get it from the bank the day before, not the day of, your closing. Treat deadlines as sacrosanct.
How maintenance adds to home values
Reducing closing stress
More on calculating closing costs
More on the closing process
G.M. Filisko is an attorney and award-winning writer who wanted a successful closing on a Wisconsin property so bad that she probably made her agent rethink going into real estate. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.
VM: 419-539-2700 ext. 139
Visit Sue’s website HERE
WASHINGTON — Americans are buying more homes in every region of the country, the latest indication that the housing market could be on the mend.
An increasing portion of those sales are from first-time buyers, who are critical to a housing recovery.
Sales of previously occupied homes rose 3.4% in April from March to a seasonally adjusted annual rate of 4.62 million, the National Association of Realtors said Tuesday.
That nearly matches January’s pace of 4.63 million — the best in two years. It is still well below the nearly 6 million that most economists equate with healthy markets.
A pickup in hiring and cheaper mortgages, combined with lower home prices in most markets, has made home buying more attractive.
While many economists acknowledged that the market has a long way to go, most said the April sales report was encouraging.
“The trend in sales is upward, and we think it has a good deal further to go over the next few months as payrolls pick up further and mortgage availability improves,” said Ian Shepherdson, chief U.S. economist for High Frequency Economics.
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