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Tax Advantages to Homeownership

There are distinct tax advantages to owning a home in Wichita Kansas or anywhere else. These, combined with the pride of ownership and having a great investment, are just a few of the reasons people want to buy and sell  real estate.

Congress allows a homeowner to deduct the qualified interest and property taxes from their income on a first and second home. In most cases, this will far exceed the standard deduction and provide the homeowner with significant tax savings.

The second major tax advantage to home ownership is that the owner can avoid paying capital gains tax when selling their principal residence. A single person is able to make up to $250,000 profit without paying a gains tax, while a married couple can earn $500,000 without paying any taxes. You must have lived in the property at least two out of the last five years to qualify.

And you can take that to the bank!

Thanks to Greg Fox for contributing to this post.

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September 25, 2010 Posted by | Uncategorized | , , , , , , , , , | Leave a comment

Ethics?, or mind your own business.

Lately I’ve been hearing a lot of mis-information about the Governments tax incentives to buy a home here in Wichita Kansas. Everything from “how long will it take to the check to get here” to “I heard I don’t really have to live there”.

I was showing a home to a woman and her son when she posed this question to me, “if we write a contract on this house, how long will it take the check to arrive.”  Of course I asked what check, and she said the government check.  I explained to her the reality and sent her to the official website. (I don’t think she believed me.)

Apparantly she had been talking to a real estate agent who let her know that if she bought a house from him the Government was going to send her a check. A check she could cash, deposit in an account or whatever she wanted. A check for $8000.

She was shocked when I told her that wasn’t the case and looked at me like I didn’t know what I was talking about. True story. She ended up not buying as she was counting on that money to help. Or maybe she just was upset with me and went somewhere else. I’ll never know.

Another one was an honest mistake that could have been a disaster.

Sitting in a seminar  not purposely eavesdropping  I overheard someone tell someone else that you had to live in the home when you buy it to get the tax credit.  True enough. What followed was you can move out right away and turn it into a rental as long  as you own it for three years.  Not true.

The someone doing the telling was a Realtor. Maybe it wasn’t my business. Maybe it was, being a Realtor myself. I interjected and set the facts out. No, you have to live there for three years and if you move out before then the money has to be paid back.

Imagine if this person had gone through with a deal thinking that the case. That he could move out right away and make the home a rental.

Whether  by purposeful dishonesty or honest mistake either situation could have had grave consequences for the buyer. It is imperative that a professional, in whatever field, know the facts.

Another misconception I run into all the time is that people are being told that there is an $8000 tax credit for first time home buyers. While this is true somewhat, the other factor is “or 10% of the purchase price up to $8000″” which often gets left out. Several times I’ve been approached by first time buyers wanting to buy a fixer upper for, say $30,000, figuring on an extra $8000 around tax time to help in the restoration.

What do suppose happens when these types of deals go through and the client finds out after the fact. The Realtor is long gone, he doesn’t care. There’s generally nothing in writing saying the realtor made these statements. There’s  no one to sue. The buyer is just left with a bad taste in the mouth and a bad attitude towards real estate people.

What it does is give us a bad name, a bad reputation. So yes, it is my business, and I will continue to make it my business to set the record straight when ever I get the chance. Our reputation, our ethics and morality and our sense of right  is the most important thing we have.

January 24, 2010 Posted by | buy, house, kansas, KS, real estate, Realtor, Wichita | , , , , , , , , , , | 3 Comments

Time to Buy Real Estate in Wichita Kansas

If ever there was a good time to invest in real estate, it’s now. Seriously. I happen to believe the bottom is in, or at least close in the residential market. Regardless of whether it is or isn’t there are several factors that weigh in to make one think this is a buyers market.

The first is that the banks need money. The way banks make money is by charging interest rates for money they lend. OK, simple enough. This contraction the economy is in has put most of these big banks in the red. Some are recovering and even paying us back but still need more money. The best and easiest way for them to become and/or remain profitable (and pay back all that money they owe us, the taxpayer) is to make more money, and they do this by raising interest rates. Credit card companies are already doing it.

The Wichita Real Estate market faired better than most during the latest housing bubble. It slowed, like the rest of the country, but in comparison actually did very well. This shows how well this particular market holds it’s value. Housing prices are on the rise though. On the sales front, People are buying, just not in droves yet. When the flood of buyers start, prices will react quickly. Builders and homeowners alike have been taking much lower prices than their homes warrant. Whether buying a home for the first time, buying a second or vacation home or just investing in Real Estate you want to buy while prices are low.

There’s always the chance, as many think, that prices will fall even further. That’s a gamble you’d have to be willing to take. Stack that up against the time left for the tax credits and it just doesn’t make much sense to wait.

The Government has extended an $8000 dollar tax credit to first home buyers and added a $6500 credit for homeowners who want to “move up”. It all ends at the end of June. This does not have to be repayed. It is a big incentive to get people to buy. There are many economists that believe the health of the recovery we are beginning to feel depends on the housing market. The Government is doing everything it can to promote this. Extraordinary measures are being taken. When the recovery comes, and it will, home prices and interest rates will rise quickly. The Government will not be so generous as the next task will be to repay all the money that was borrowed and printed.

The last really bad inflation we had was in the 1970s and 80s. I remember my family paying 17% interest on the home we lived in. Back then it certainly didn’t bother me, that was my Dads problem. Now it will be mine. When the economy becomes inflated the Federal reserve is inclined to raise interest rates to try and tame it. Just as the Feds started to drastically reduced rates around 1999-2000 to stimulate the economy they will easily go the other way to slow it down. Inflation is coming. With all the money the Government and Fed have had to print and borrow in 2009, inflation will surely come around. Inflation happens when there is to much money supply. It reduces demand making money not so valuable, causing the price of goods and services go up.

Now is the time to buy and this is the perfect market. A perfect storm of good news for investors and potential homeowners alike.

December 10, 2009 Posted by | house, Realtor, recovery | , , , , , , , , , , , | 1 Comment

   

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