Gene Riemenschneider East Contra Costa Home Sales 01492725

Tax Strategies – Real Estate Investing – Part 14B

This is Part 14 of my Real Estate Investing Series. You can view the first 13 Parts here:

Are you planning for your Future? Real Estate Investing – Part 1

Starting at Home! Real Estate Investing – Part 2

Maintain Your Leverage! Real Estate Investing – Part 3

Picking Your Investment Property – Real Estate Investing – Part 4

Location * Location * Location – Real Estate Investing – Part 5

Cash Flow Analysis – Real Estate Investing – Part 6 A

Cash Flow Analysis – Real Estate Investing – Part 6 B

Cash Flow Analysis – Real Estate Investing – Part 6 C

Cash Flow Analysis – Real Estate Investing – Part 6 D

Passive Losses – Real Estate Investing – Part 7

Gross Rent Multiplier – Real Estate Investing – Part 8

Capitalization Rate – Real Estate Investing – Part 9

Comparable Pricing – Real Estate Investing – Part 10

Rates of Return – Real Estate Investing – Part 11

Growth or Income – Real Estate Investing – Part 12

More on Rate of Return – Real Estate Investing – Part 13

Tax Strategies – Real Estate Investing – Part 14A

The main tax issue we are going to be concerned with is the most unpredictable - Capital Gains Taxes. As I mentioned in the last installment on Tax Strategies the tax situation is always changing. If you are just starting to invest, more than likely by the time you sell what I will tell you will have changed. Right now I think most people would expect taxes to go up. At some point Capital Gains Taxes may go up, but there are always trends in the other direction. Follow the trends with your current and future needs in mind and try and time your decisions with positive trends. Very few people time the trends perfect, so do not beat yourself up too much on this.

Here are some long term ideas about avoiding or reducing Capital Gains Tax:

1. If you have lived in a property for the last Two out of five years you can take an exemption and avoid the Capital Gains Tax. If you are currently have a rental that you have lived in and meets this requirement you may want to sell while you still have those two of five years left. Or if you want to sell something in the future you could move into it for two years and sell. I have seen people who owned a series of rentals that want to get the cash out move every two years or so and sell them one at a time.
   
   
2. Right now Capital Gains Taxes are indexed to charge higher earners a larger amount. Sell in in years your income is low.
   
   
3. Selling the home on an installment basis may help you keep your tax burden low from year to year as you are paid for the home over a negotiated period of time.
   
   
4. If you are selling a number of properties and wish to liquidate your Real Estate holdings you may want to do like stock investing and dollar average.  If you are unsure of price and tax trends sell them one at a time over a set periods of time.  This way you can help avoid the cost of market fluctuation; you know you will sell some at good times to sell and some at less opportune times, but over all you will do well.
   
   
5. The last option to sell one property and buy another is a 1031 Exchange. We will cover that in the next installment.

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Oakley Housing Market Report for September 2009.

This Oakley Housing Market Report focuses on Home Sales in Oakley California in September 2009 and compare them to sales in August 2009. It also provides information on Homes Currently for Sale in Oakley California. This Oakley Housing Market Report are based on Single Family Homes and taken from the Multiple Listing Service (MLS) on October 12, 2009.

Contrary to popular belief Prices in East Contra Costa County continue to head up in each and every community. If the number of sales is down it is because there are fewer homes on the market.

The Oakley Housing Market shows steady growth of over 2% per month in prices while the market availability is shrinking. In August there were 68 Homes Sold in the Oakley Housing Market the average price was $234,204.00 and the Median Price was $231,000.00. The average Listing Price Per SF on the homes sold in Oakley California was $103.00, but the average Sold Price was $106.00 per SF. The average days on market for sold homes was 32.

In September both the asking and selling price per SF increased, while average and median price went down. The Average Price went down to 213,333.00 and the Median price went to $191,000.00. But, there were only 62 Home sold. The average days on market was 58.

The trend in the Oakley Housing Market is more smaller homes sold at better prices. So the average price may be going down, but the cost per SF is going up.

Currently there are 102 Homes Availble in the Oakley Housing Market with an Average Asking Price of $299,373.00 and a Median Asking Price of $284,900.00. The average asking price per SF is $147.00 with Average Days on Market of 94.

The supply of homes is less than 2 months. We are in a traditional slow season, but I suspect prices will hold steady if not continue up through the end of the year. It is hard to predict long term market trends with the flood of new initiatives to head of foreclosures.

Antioch Housing Market Report for September 2009.

This Antioch Housing Market Report focuses on Home Sales in Antioch California in September 2009 and compare them to sales in August 2009. It also provides information on Homes Currently for Sale in Antioch California. This Antioch Housing Market Report are based on Single Family Homes and taken from the Multiple Listing Service (MLS) on October 12, 2009 and October 17, 2009.

Contrary to popular belief Prices in East Contra Costa County continue to head up in each and every community. If the number of sales is down it is because there are fewer homes on the market.

The Antioch Housing Market is showing someminor declines, but the market availability is shrinking. In August there were 170 Homes Sold in the Antioch Housing Market the average price was $222,369.00 and the Median Price was $224,950.00. The average Listing Price Per SF on the homes sold in Antioch California was $106.00, but the average Sold Price was $109.00 per SF. The average days on market for sold homes was 31.

In September both the asking and selling price per SF declined. The Average Price went down to 201,140.00 and the Median price went to $197,500.00. But, there were only 149 Home sold. The average days on market was 27.

Currently there are 164 Homes Availble in the Antioch Housing Market with an Average Asking Price of $244,318.00 and a Median Asking Price of $224,950.00. The average asking price per SF is $122.00 with Average Days on Market of 55.

The supply of homes is less than 2 months. We are in a traditional slow season, but I suspect prices will hold steady if not continue up through the end of the year. It is hard to predict long term market trends with the flood of new initiatives to head of foreclosures.

Buyer's Choice Act hits California!

The Governor just signed emergency legislation that insures the Buyers the Right to Choose Title and Escrow on home purchases.

This applies to residential purchases of less than four units. If the seller fails to comply they can be held liable for up to three times the cost of Title and Escrow. Failure to comply does not invalidate the transaction.

The seller can still recommend Title and Escrow services, but they need to have the buyer sign a disclosure.

This of course is all directed at the banks dictating the services to buyers. Now will it really change anything?

I doubt it. Most banks pay Title & Escrow for the right to choose it. Most buyers are happy to let the bank pay for it in exchange for letting them choose it. Furthermore if I buyer gets it in their head that they should use a different Title & Escrow companies who is to say why the bank picks the other buyer instead. Finally when things get screwed up in Title & Escrow, as they frequently do, it is nice to be able to throw the blame at the banks Title and Escrow Company in order to avoid those nasty late fees.

The Biggest Threat to This Real Estate Market is Uncertainty!

Right now we have a Real Estate Market full of people that look like deer in the head lights. Some of us agents look the same way to. I am not criticizing anyone. Things are happening fast and the rules seem to change day by day. Many of the rule changes bring about unintended consequences which further complicate the issues.

In any market there is always and element of risk and uncertainty. Risk and a willingness to take risk are good things; it has what helped make this country great. Usually taking risk involves some knowledge or attempted discernment of markets and economic trends.

The problem is in this market no one can tell what will happen tomorrow. NO MATTER WHAT YOU THINK SHOULD HAPPEN OR BE DONE, you do not know what will happen or will be done. Once you know, agree or disagree you can begin to move on.

Much of these problems of course is rapid and not fully thought out decisions being made at the National Level and applied like a blanket across the nation.

The President was going to provide a plan to bailout nine million homeowners. Agree or disagree, if it was done we could know it and get on with life. Others say the we have millions of foreclosures coming; well if they are coming and we knew that we could plan and deal with it. Many would say it is best to let the market take it's course. But right now we have a big problem in the country and we are like the man with one foot on the dock on the other on the boat; we have got to go one way or another. Neither option is good, but trying to stradle the issue will only make it worse.

Right now everyone is waiting on Washington to do a number of things:

• Decide the future or the First Time Home Buyers Tax Credit, expand it, extend it, or let it go.
  
  
• Speed up and ease up Short Sales.
  
  
• What is the government going to do about the credit/money supply for home purchases?
  
  
• How long will they keep interest rates artificially low?

I am sure there are many other issues. We will never take the government out of the equation; but the more government there is involved on a regular basis the harder it will be to make informed decisions. There are some things I might not agree with but feel we are already on the path and turning back now would even be worse.

I do think those buying now and taking risk are wise and will win out in the long run.