10 Tax Tips for Home Sellers

The IRS has recently issued a helpful list of 10 tax tips all homeowners should keep in mind when selling a home:

1. You are usually eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale.

2. If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).

3. You are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.

4. If you can exclude all of the gain, you do not need to report the sale on your tax return.

5. If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses.

6. You cannot deduct a loss from the sale of your main home.

7. Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude.

8. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.

9. If you received the first-time homebuyer credit and within 36 months of the date of purchase the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full credit is due with the income tax return for the year the home ceased to be your principal residence, using Form 5405, First-Time Homebuyer Credit and Repayment of the Credit. The full amount of the credit is reflected as additional tax on that year’s tax return.

10. When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change.

What’s Up With the Housing Market?

PORT WASHINGTON, N.Y. (MarketWatch) — As the U.S. economy rounds the Labor Day turn, it appears that, after several false starts, the long-depressed housing market is finally climbing out of the basement.

It is nothing more mysterious than supply and demand. For the first time in a number of years, the supply of both new and used homes available for sale has dropped below demand.

No matter what the product or service, whenever demand exceeds supply, rising prices are sure to follow. Housing is no exception. Prices are rising both quarter-to-quarter and year-over-year for the first time in two years.

This turnaround in prices is apparently convincing would-be homebuyers that it does not pay to delay — especially since mortgage interest rates are at 60-year lows, and homes are the most affordable they have been in at least a quarter of a century.

As a result, buyers have begun to deal. Home sales are up more than 20% from a year ago, while pending sales are now at a 2-1/2-year high. This should kick home prices even higher, and thus spur even more buying.

In a market such as the one housing has just been through, rising prices are a good thing.

First of all, they will help those homeowners who are underwater — that is, those who owe more on their mortgage than their house would fetch were they to try to sell it.

Second, higher home prices make homeowners feel wealthier. When this happens, people are more willing to spend. As you can imagine, this gives a lift to a whole bunch of industries that depend on consumer spending.

Rising prices also encourage fence-sitters to bid on the house of their choice. Finally, seeing this action, potential sellers may well be tempted to put their homes on the market, thus making it more liquid and permitting easier comparisons with other homes.

As inventories of new homes begin to dwindle, construction will perk up. Already, builder confidence in August rose more than expected and now sits at a five-year high.

Naturally, this means more jobs for those in the construction trades, with the resulting ripple effect on materials and supplies.

And as people move into these homes, there is more demand for furniture, home appliances and motor vehicles, as well as other consumer goods and services.

This sequence of events has been part and parcel of every business-cycle recovery in the postwar period, and this one will be no exception — when it kicks in. For you see, politics is affecting the housing market, too.

Since there is a great deal of uncertainty over taxes and regulations post-Dec. 31, buyers, sellers and builders will want to be certain that mortgage interest and property taxes remain deductible so they can accurately determine affordability and thus how much to bid or ask.

Because of the elections and partisan politics, the fate of these items will not be known until well into next year — if then. Obviously, it all depends on who is elected president, which party controls Congress and how willing they are to work together.

Chalk up another speed bump that lies in the path of this fragile recovery.

Irwin Kellner is MarketWatch’s chief economist.

Click here for the complete article.

Rising Home Prices in the Valley

Metro Phoenix home prices continued to rapidly climb in May.

The median sales price of a home in the region is up 32 percent from May 2011, according to the latest report from the W. P. Carey School of Business at Arizona State University.

During last month alone, the cost to buy a Phoenix-area house climbed 7 percent to $147,000. The region’s home prices have rebounded back to early 2003 levels.

More regular buyers and investors coupled with a shrinking supply of homes for sale are propelling metro Phoenix home prices higher.

ASU housing analyst Mike Orr said in his report “high demand and low supply” remain the dominant factors in Phoenix’s housing market.

The number of homes for sale in the area is down 50 percent from May 2011. Currently, 8,550 homes are listed for sale and don’t have pending contracts from buyers.

Moderately-priced homes continue to draw the most buyers and bids.

“Most houses below $250,000 priced realistically are attracting large numbers of offers in a short time, and many exceed the asking price,” said Orr, director of the Center for Real Estate Theory and Practice at W. P. Carey School.

He said a Chandler owner recently received 84 offers, and a Glendale owner snared 95.

The Glendale house closed within four weeks for 17 percent above the original asking price.

“Needless to say, this is not something we would see in a normal market,” Orr said.

Metro Phoenix home prices can’t continue to climb at the “extremely fast rate” recorded in the past few months.

“The most likely time for prices to stabilize is during the hot summer months of June through September,” Orr said.


Want to have the leading edge in this competitive market?  Have questions about what your home might be worth?  Contact The Aladin Group!

The Aladin Group’s New Blog Series

The Aladin Group has come out with a new youtube blog series called “5 Things Your Realtor CAN’T Tell You!” Subscribe to their channel HERE! Check out Part 1 of 5 below! Enjoy!

This series will be very helpful for prospective buyers! There are some great questions that need to be asked but Realtors can’t legally or morally give the answers to.

Realty Executives files for Bankruptcy

Aladin Abdin discusses the effects of Realty Executives Bankruptcy on our clients. If you have any questions, comment below, comment on the youtube video , comment on Facebook or emailing Aladin@TheAladinGroup.com! Enjoy!