Why Mortgage Rates Matter This Weekend

Like most retailers, real estate agents and homebuilders are on a big sales push this Columbus Day weekend. For the housing market, it is something of a last hurrah before potential buyers head back inside for the winter. That is why even the small interest rate move higher this week is top of mind this weekend.

Mortgage application volume surged a week ago, when a disappointing employment report sent mortgage rates down to their lowest level in months. The stock market, however, bounced back this week, which turned interest rates around yet again. Mortgage rates are now slightly higher than a week ago.

"At this point, every single day this week has seen rates either fail to improve or simply move higher. By contrast, last week saw rates fall on five out of five days," wrote Matthew Graham, chief operating officer of Mortgage News Daily.

The rate moves on the popular 30-year fixed are barely within a quarter percentage point. They mean barely a few dollars on the average monthly payment. It's what they say about the future that is much more important.

In an interview Friday on CNBC, New York Federal Reserve President William Dudley said he still expects a rate increase this year, adding, "We're going to get a lot of data between now and December, so it's not a commitment."

Real estate agents say most of their clients do expect interest rates to rise. It's just a question of how urgent their expectations are.

"We are seeing an incredible increase in business. I'm exhausted!" said Laura Barnett, a real estate agent in the suburban Dallas area. "The interest rates are the most likely reason. I have had one client mention that he wanted tangible assets if there was going to be a global recession, and he was purchasing lease homes over the stocks that he was considering."

Several reports are showing improved consumer confidence in the housing market, with concern still remaining about mortgage availability and rising prices. That could bode well for this weekend. With rates just slightly higher than last week, that may be just the kick in the pants some buyers need to sign on the dotted line.

Article on CNBC.com
Courtesy of Lina Arbelaez Premier Homes.

When you are buying or selling property in today's market, it's important to have confidence in your Real Estate professional. Lina Arbealez Premier Homes commitment as your REALTOR® is to provide you with the specialized Real Estate service you deserve.

When you are an informed buyer or seller, you'll make the best decisions for the most important purchase or sale in your lifetime. That's why our group's goal is to keep you informed on trends in Miami Real Estate. With property values continuing to rise, Real Estate is a sound investment for now and for the future.

As local Broward & Miami-Dade area experts with knowledge of the communities, Premier Homes objective is to work diligently to assist you in meeting your real estate goals.

If you are considering buying or selling or would just like to have additional information about Real Estate in your area, please don't hesitate to call 954-600-8739, visit our website, or e-mail info.premiersouthfloridahomes@gmail.com

Prepare your House for Fall!

1. Change your linens and move your mattress. Strip and vacuum your mattress and machine wash all of your bed linens, including your comforters, duvets, bed skirts and pillows. Then, turn your mattress front-to-back and end-to-end – flipping your mattress prolongs its life by evenly distributing the wear. For more tips, read: Maintain Your Mattress.

2. Inspect your windows. Start by cleaning your windowpanes, then your drapes or blinds, and finish with the window tracks (a vacuum with a hose attachment works best for this last job). If your windows are older, you likely have weather stripping to help seal your windows and keep cold drafts and moisture at bay. Inspect this weather stripping to see if it’s torn, damaged or needs to be replaced. Proper weather stripping can reduce your energy bills by as much as 30 percent! For a step-by-step guide to cleaning your windows, read: Inspect and Maintain Your Windows.

3. Inspect your exterior doors. For each exterior door, check the weather stripping that runs along the bottom and side of it for any cracks, leaks or wear. Close the door and place your hand along the bottom and sides of it. If you feel a draft coming through, you should replace your weather stripping. For extra insulation, purchase a few draft stoppers, which cost about $5 at your local hardware store.

4. Check your gutters. During the fall and winter, your gutters are filled with leaves, rainfall and snowmelt, so the clearer they are now, the better you’ll fare come winter. Break out a ladder (always practice proper ladder safety) and remove all dirt and debris from your gutters by hand. For a step-by-step guide, read: Gutter Cleaning.

5. Clean and store patio furniture. It’s always a good idea to clean your patio furniture before you store it inside for the winter. Different types of patio furniture require different cleaning techniques, so to learn how to properly clean your type of patio furniture, read: Clean Your Deck / Patio. Tip: Remove any stains from your furniture cushions before putting the chairs into storage, because if a stain sits on the fabric all winter, it’ll be more difficult to get out.

6. Clean light fixtures and dust ceiling fans. It doesn’t take long for dirt to create a film on your light fixtures and a layer of dust to form on the blades of your ceiling fan. To clean your glass light fixtures, denture tablets are actually one of the most effective products. To remove dust and dirt from your ceiling fans you simply need a ladder, canned air and all-purpose cleaner.

Article on Brightnest.com

Courtesy of Lina Arbelaez.

When you are buying or selling property in today's market, it's important to have confidence in your Real Estate professional. Premier Homes as your REALTOR® is to provide you with the specialized Real Estate service you deserve.

When you are an informed buyer or seller, you'll make the best decisions for the most important purchase or sale in your lifetime. That's why our goal is to keep you informed on trends in Miami Real Estate. With property values continuing to rise, Real Estate is a sound investment for now and for the future.

As local Broward & Miami-Dade area experts with knowledge of the communities, our objective is to work diligently to assist you in meeting your real estate goals.

If you are considering buying or selling or would just like to have additional information about Real Estate in your area, please don't hesitate to call 954-600-8739,visit our website, or e-mail linaarbelaez@kw.com

 

 

 

 

Home Repairs VS Improvements: No Clear Answer

Question: I am having trouble figuring out what constitutes an improvement and what is ordinary maintenance. Thinking ahead to selling my house in a few years when the market rebounds, I have been keeping accurate records so that I can deduct these costs to lower the capital gains. Recently, I remodeled a bathroom, replaced a deck, replaced and upgraded the spa filter and motor, replaced the front door with a fiberglass model guaranteed to last more than my lifetime, and replaced a roof and rain gutters. Which of these can I safely regard as improvements, and which are just maintenance?

Answer: The line between repairs and improvements is fuzzy. The Court cases that have analyzed this issue are all over the place, with Judges deciding the exact same work going in opposite directions.

If your property is a rental, then in most cases you want to call the work a repair. Repairs can be deducted as rental expenses in the year that you pay them, thereby reducing your rental income. But discuss this with your tax advisors or your accountant first.

If this is your principal residence, however, while you obviously want to keep your house in good repair, the moneys you spend on ordinary maintenance provide no taxable benefits for you.

Improvements, on the other hand, may be very valuable to you when you sell your house, since they increase the tax basis in your house. The higher the basis, the less tax you have to pay.

Let's look at this example. In 1985, you bought your first house for $100,000, and sold it for $200,000 in l990. That same year, you bought another house for $200,000. Prior to l997, an important tax break for homeowners was called the "roll-over". Although you made a profit of $100,000 when you sold your first house, you did not have to pay any capital gains tax. Instead, the profit was "rolled-over" into the new house. The basis for tax purposes of the second property became $100,000.

You now want to sell, and have listed your house for $700,000. You know that under the current law, since you are married and have lived in the house for two out of the five years before sale, you can exclude up to $500,000 of your gain. You do the numbers and think that because you bought the house for $200,000, and will sell it for $700,000, you are home free on any capital gains tax.

Wrong: since you took advantage of the old "roll-over", your basis was $100,000, and when you sell it for $700,000, you will have made a profit of $600,000. While you can exclude up to $500,000 of this gain, you will have to pay capital gains tax on the $100,000 difference. Currently, the tax rate can be as high as 20 percent, so you will have to send a check to the IRS in the amount of $20,000. You may also have to pay the applicable state tax.

For purposes of this discussion, I am not taking into consideration other expenses which you have paid, such as closing costs, real estate commissions, or legal fees. These expenses will, of course, reduce your overall tax obligation.

How can you increase your tax basis? Here is where improvements play a vital role. Any work which you do to your house that adds to its value, prolongs its useful life or adapts it to new uses (such as "going green") will be considered an improvement and can be added to the tax basis of your property.

Let's take your examples: 

remodeled your bathroom: since this clearly prolongs the useful life, it is an improvement; 

replaced a deck: this is a grey area. According to the IRS, "a repair keeps your property in good operating condition. It does not materially add to the value of your property or substantially prolong its life." (IRS Publication 527, "Residential Rental Property" (available free from www. IRS.gov/publications). Since you can claim that the new deck will increase your property's value, I would consider it an improvement.

replaced and upgraded spa filter motor: although it sounds like a repair, since you upgraded the motor, I would consider this an improvement.

replaced the front door: clearly an improvement, since the new door has a very long useful life.

replaced roof and rain gutters: the IRS publication specifically addresses rain gutters, and states "fixing gutters" is a repair. But since you replaced your gutters, once again you are in a grey area. However, since you replaced the roof (which clearly is an improvement), and had to remove the gutters during this process, I would call the entire job an improvement.

The IRS publication contains a list of "examples of improvements" but cautions: "Work you do (or have done) on your home that does not add much to either the value of the life of the property, but rather keeps the property in good condition, is considered a repair, not an improvement."

If your profit will be less than the exclusion of gain ($500,000 for married couples; $225,000 for taxpayers filing a separate tax return), then it probably does not make a difference whether your work is a repair or an improvement.

However, for those who bought and sold homes before l997, and used the "roll-over", and for those whose property values increased dramatically in the early part of this century, improvements will assist you in reducing your capital gains tax obligations to the IRS.

By Benny L. Kass, Realtytimes.com Courtesy of Premier Homes. When you are buying or selling property in today's market, it's important to have confidence in your Real Estate professional. Our commitment as your REALTOR® is to provide you with the specialized Real Estate service you deserve. When you are an informed buyer or seller, you'll make the best decisions for the most important purchase or sale in your lifetime. That's why our goal is to keep you informed on trends in Miami Real Estate. With property values continuing to rise, Real Estate is a sound investment for now and for the future. As local Broward & Miami-Dade area experts with knowledge of the communities, Premier Homes objective is to work diligently to assist you in meeting your real estate goals. If you are considering buying or selling or would just like to have additional information about Real Estate in your area, please don't hesitate to call 954-600-8739,visit our website, or e-mail info.premiersouthfloridahomes@gmail.com