Time May Be Running Out

During the Great Recession, some homeowners elected to rent their home rather than sell it for less than it was worth.

IRS tax code allows for a temporary rental of a principal residence without losing the exclusion of capital gain based on some specific time limits. During the five year period ending on the date of the sale, the taxpayer must have:14095450-250.jpg

  • Owned the home for at least two years
  • Lived in the home as their main home for at least two years
  • Ownership and use do not have to be continuous nor occur at the same time

If a home has been rented for more than three years, the owner will not have lived in it for two of the last five years. So the challenge for homeowners with gain in a rented principal residence that they don’t want to have to recognize is to sell and close the transaction prior to the crucial date.

Assume a person was selling a property which had been rented for 2 ½ years but had previously been their home for over two years. To qualify for the exclusion of capital gain, the home needs to be ready to sell, priced correctly, sold and closed within six months.

All of the gain may not qualify for the exclusion if depreciation has been taken for the period that it was rented. Depreciation is recaptured at a 25% tax rate.

A $200,000 gain in a home could have a $30,000 tax liability. Minimizing or eliminating unnecessary taxes is a legitimate concern and timing is important.

Selling a home for the most money is one thing; maximizing your proceeds is another. For more information, see IRS publication 523 and an example on the IRS website and consult a tax professional.

Raleigh and Durham Named Top Real Estate Markets for 2017

Raleigh and Durham Named Top Real Estate Markets for 2017

A prospering economy? Check. Vast career opportunities? Check. A low cost of living? Check. The Triangle area is an ideal place to call home and Realtor.com® agrees. The trusted real estate resource just announced its 2017 Housing Forecast spotlighting Raleigh-Cary and Durham-Chapel Hill among the nation’s hottest real estate markets for 2017.

Realtor.com analyzed the country’s 100 largest metros to determine future growth potential based on price and home sales gains—Raleigh ranked 8th on its list with Durham following closely behind in 11th position.

According to the research report:

“The top 10 markets all benefit from strong growth dynamics: population, jobs, and households,” says Jonathan Smoke, Realtor.com’s chief economist. … “They all have low unemployment that’s heading lower, which buoys consumer confidence.”

… But whatever their location, all the top markets have in common relatively affordable rental prices, low unemployment, large populations of millennials and baby boomers, as well as a high number of listing views on Realtor.com. The top 10 are forecast to see average price gains of 5.8% and sales growth of 6.3%, exceeding next year’s anticipated national growth of 3.9% and 1.9%, respectively.”

The national report indicates that Raleigh might see a 4.16% gain in average home price and a 7.55% increase in home sales in the New Year. Durham’s home prices are forecasted to grow by 2.55%, and home sales could see an 8.95% increase as well.

“The Triangle real estate market was very strong in 2016, and current indicators show a continuation of that trend into 2017,” said David Jones, Coldwell Banker Howard Perry and Walston President and COO. “Over the last decade, this area has become a prominent hub for global pharma and tech companies and budding start-ups that have elevated our workforce. We draw in and retain highly educated talent who appreciate the career advancement opportunities and vibrant culture the Triangle affords.”

Learn more about the real estate markets in our Triangle cities and towns by watching these insightful monthly market update videos.

How to Decorate for the Holidays, Hollywood Style

By Gabrielle van Welie

Now that December is here, the pressure over who’s going to have the best holiday decorations is on. I’m going to let you in on a little secret: everyone else knows about the existence of Pinterest. So if you really want to win this contest, take a look at the often overlooked (possibly because of its impracticality) Hollywood-style Christmas.

Here’s how some of your favorite films decorated their homes…I mean, sets. 
 
Just Friends
 

 
While you were distracted by Ryan Reynold’s fat suit, and later by Ryan Reynolds himself, Mr. Palomino was busy setting up those Christmas lights just right. While they definitely went down with a bang, his Hollywood-style home was definitely the best dressed in all of New Jersey.
 
How the Grinch Stole Christmas
 

 
In Whoville, Christmas decorating is an Olympic sport. They are so good at setting up shop that even after the Grinch went ahead and stole all their decorations, they were able to get it all back up and running the day of. It does help that they had that Christmas light power machine or whatever. Definitely worth it.
 
Elf
 

 
Everyone thinks Buddy is crazy, but boy is that elf efficient. Look at how magical Gimbels looks. That’s just printer paper! His home decorations were top-notch, too. I guess they do teach a thing or two in the North Pole. Granted, dressing up as an elf might really help validate this whole setup.
 
Home Alone
 

The view at the McCallister residence is beautiful both inside and out. It balances perfectly between quaint and ready-to-invest-some-money. Of course, a house so elegant does land it on the burglary radar. That being said, as long as you don’t leave your kid home alone, it should all be fine.
 
Harry Potter
 

Now, if what you want is a magical Christmas, then Hogwarts should be your model. You won’t have spells to hold everything together, so some extra hands will be needed, but the outcome will be truly mesmerizing. Whether you just want to decorate your dining hall or host a ball for your guests, Hogwarts has just the thing for you.
 
Love Actually
 

All jokes aside, the best holiday decoration is the sight of your loved ones gathered around a Christmas tree. If you ignore how heartbreaking this scene actually is, and the fact that Alan Rickman…oh, man. I really set myself up for disaster here. Anyways, the point is: be inspired, but don’t sweat the holidays.
 
I’m going to go sob now. 

Gabrielle van Welie is RISMedia’s editorial intern. Email her your real estate news ideas at gvanwelie@rismedia.com.
 
This was originally published on RISMedia’s blog, Housecall. Visit the blog daily for housing and real estate tips and trends. Like Housecall on Facebook and follow @HousecallBlog on Twitter.

Thanks for visiting my Blog site. If you would like to discuss this topic with me or get more information please contact me by calling 919-247-4667 or emailing me at Tim@TheTrianglesBroker.com. And you can always visit my personal real estate website for lots of additional information and to search for homes at www.TheTrianglesBroker.com or www.BuyAndSelllingTriangleHomes.com  McBrayer – The Triangles Broker.

Reprinted with permission from RISMedia. ©2016. All rights reserved.

2017 Forecast: Housing to Downshift as Election Realities Set In

Housing is expected to downshift next year as the post-election economy sets in, driven by a deceleration in home price growth, according to realtor.com®’s recently released 2017 housing forecast. The forecast projects home prices nationally growing at a rate of 3.9 percent, down from 2016’s 4.9 percent estimate, and an appreciation slowdown of 1 percent or more in nearly half of the U.S.’ top 100 metropolitan areas.
 
“Multiple factors are coming together,” says realtor.com Chief Economist Jonathan Smoke. “One is a continued trend toward moderation—basically the effect of seeing all of the rebounds coming off of the distress, the foreclosure years finally well behind us, so there’s no longer that dead cat bounce that was occurring in some markets. Second…we’re now in record price territory in many places in the country, so that’s starting to have its own moderating effect. We’re seeing that evident in the fact that more markets in our forecast represent a deceleration in price trend as opposed to an acceleration in price trend.”
 
The Lakeland-Winter Haven, Fla. area tops the list of 46 markets projected to experience an appreciation slowdown in 2017, followed by Durham-Chapel Hill, N.C. and Jackson, Miss.
 
Mortgage rates, which last week treaded above 4 percent for the first time this year, are projected to reach 4.5 percent, according to the forecast. The Federal Reserve is widely expected to raise the key interest rate in December.
 
“A new wrinkle is the higher mortgage rates,” Smoke says. “They have an impact on the potential of the buying pool in high-cost areas in that they really start to challenge qualifications from an affordability perspective, so, as a result, they tend to have a dampening effect. Our forecast would imply that we’re expecting, in addition the December move, likely two to three more moves next year.”
 
Higher mortgage rates do, however, have the potential to result in less stringent enforcement action, which, coupled with changes per the Trump Administration, could open up credit opportunities closed off to otherwise qualified homebuyers.
 
“What I’m expecting is that those trends toward more conservatism will likely improve simply because mortgage rates are higher,” says Smoke. “An even more important factor is the fact that the refi market goes away when mortgage rates are above 4 percent; if [lenders] want to keep their lending operation performing similarly, then they have to turn to the purchase market more. I think the consumer’s going to win in that perspective.”
 
Leading positive price movement—though lessened compared to 2016—will be the Phoenix-Mesa-Scottsdale, Ariz. area, ranked the No. 1 housing market of 2017 in the forecast. The area is projected to see prices grow 5.94 percent and sales grow 7.24 percent. Los Angeles-Long Beach-Anaheim, Calif., Boston-Cambridge-Newton, Mass.-N.H., Sacramento-Roseville-Arden-Arcade, Calif., and Riverside-San Bernardino-Ontario, Calif. round out the top five of the forecast’s ranking.
 
Realtor.com’s 2017 Housing Forecast – Top 100 Metros
 

 
Twenty-six of the top 100 metropolitan areas, as well, are projected to experience appreciation of 1 percent or more, including the Greensboro-High Point, N.C., Akron, Ohio, and Baltimore-Columbia-Townson, Md. areas.
 
The forecast projects the homeownership rate to stabilize at 63.5 percent after hitting a 50-year low point (62.9 percent) in the second quarter of 2016. The homeownership rate rallied to the 63.5 percent-mark in the third quarter.
 
Existing- and new-home sales, additionally, are projected to grow 1.9 percent (to 5.46 million) and 10 percent, respectively, while new-home construction starts are projected to grow 3 percent.
 
“We are forecasting marginally better inventory as a result of new construction continuing to expand,” Smoke says. “It’s not going to materially change the supply dynamic. New construction is ultimately the safety valve for pressure from a supply/demand standpoint, so continued growth there starts to alleviate price pressure—the release has to come from [that] market.”
 
Demographic activity overall will have a substantial impact on housing in 2017, as well. The forecast projects baby boomers and millennials will power demand over the next decade, with millennials comprising 33 percent of homebuyers and boomers, 30 percent next year. Concentrations of these groups are in many of the top markets ranked in the forecast; millennials, however, are also projected to make waves in Midwestern cities, including Madison, Wis., Columbus, Ohio, and Omaha, Neb., where they currently hold 42 percent marketshare.
 
For more information, please visit www.realtor.com.

Thanks for visiting my Blog site. If you would like to discuss this topic with me or get more information please contact me by calling 919-247-4667 or emailing me at Tim@TheTrianglesBroker.com. And you can always visit my personal real estate website for lots of additional information and to search for homes at www.TheTrianglesBroker.com or www.BuyAndSelllingTriangleHomes.com  McBrayer – The Triangles Broker.

Reprinted with permission from RISMedia. ©2016. All rights reserved.

Why You Should Sell Your Home during the Holidays

By Matt Parker

Despite the fact that most shy away from listing their home during the holidays, it’s actually a great time to sell your home. Below are reasons you should deck your halls—and then sell them.
 
Time Off – The holidays are a great time to sell! There can be people relocating before the New Year, or people who have time off to shop for a home.
 
Weather – It can be good for buyers, too, because in states with wet weather, buyers will see homes when it matters, not when the sun has dried everything out and made everything look pretty. After all, roofs never leak in August!
 
Blackout Dates – For sellers, avoid stress by advertising the days you don’t want to show your home so you are not bothered—maybe Christmas Eve/Day, New Year’s Eve/Day, and Thanksgiving weekend. It causes a lot of stress on whomever maintains the home to worry about providing a happy holiday and keeping the house clean!
 
Decorations – Decorate to the hilt! Have fun! It will exemplify the love you have for your home. Personal holiday photos are an exception; you still want to keep the house rather “mute” as far as truly personal innuendo. That is the only thing that might turn off a buyer.
 
Variables – Many sellers and their agents argue about the best time to sell. The reality is that if you want to sell, the best time is usually now. A day, a week, or a month can change interest rates, the economy, the political climate, and even your health. Selling a house is hard, and if you want to sell, why put it off if you can do it now?
 
This was originally published on RISMedia’s blog, Housecall. Visit the blog daily for housing and real estate tips and trends. Like Housecall on Facebook and follow @HousecallBlog on Twitter.

Thanks for visiting my Blog site. If you would like to discuss this topic with me or get more information please contact me by calling 919-247-4667 or emailing me at Tim@TheTrianglesBroker.com. And you can always visit my personal real estate website for lots of additional information and to search for homes at www.TheTrianglesBroker.com or www.BuyAndSelllingTriangleHomes.com  McBrayer – The Triangles Broker.

Reprinted with permission from RISMedia. ©2016. All rights reserved.