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  • A 3.8 Percent “Sales Tax” on Your Home? Q: Does the new health care law impose a 3.8 percent tax on profits from selling your home? A: No, with very few exceptions. The first $250,000 in profit from the sale of a personal residence won’t be taxed, or the first $500,000 in the case of a married couple. The tax falls on relatively few — those with high incomes from other sources. FULL QUESTION I received this e-mail: This should help stimulate the Real Estate market! UNDER THE NEW HEALTH CARE BILL – DID YOU KNOW THAT ALL REAL ESTATE TRANSACTIONS ARE SUBJECT TO A 3.8% “SALES TAX”? YOU CAN THANK NANCY, HARRY & BARACK (AND YOUR LOCAL CONGRESSMAN) FOR THIS ONE. IF YOU SELL YOUR $400,000 HOME, THIS WILL BE A $15,200 TAX. Higher taxes on real estate investments. The 3.8% Medicare surtax would hit average, middle-class investors in real estate. A middle-class taxpayer who happens to sell real estate for a gain in a particular year would be liable for this new tax, regardless of how low her income might be in other, more typical years. FULL ANSWER We’ve been flooded with queries about this one ever since the health care bill became law. At the last minute, Democratic lawmakers decided on a new 3.8 percent tax on the net investment income of high-income persons. But the claim that this would amount to a $15,200 tax on the sale of a typical $400,000 home is utterly false. The truth is that only a tiny percentage of home sellers will pay the tax. First of all, only those with incomes over $200,000 a year ($250,000 for married couples filing jointly) will be subject to it. And even for those who have such high incomes, the tax still won’t apply to the first $250,000 on profits from the sale of a personal residence — or to the first $500,000 in the case of a married couple selling their home. We can understand how this misconception got started. The law itself is couched in highly technical language that only a qualified tax expert can fully grasp. (This provision begins on page 33 of the reconciliation bill that was passed and signed into law.) And it does say the tax falls on "net gain … attributable to the disposition of property." That would include the sale of a home. But the bill also says the tax falls only on that portion of any gain that is "taken into account in computing taxable income" under the existing tax code. And the fact is, the first $250,000 in profit on the sale of a primary residence (or $500,000 in the case of a married couple) is excluded from taxable income already. (That exclusion doesn’t apply to vacation homes or rental properties.) The Joint Committee on Taxation, the group of nonpartisan tax experts that Congress relies on to analyze tax proposals, underscores this in a footnote on page 135 of its report on the bill. The note states: "Gross income does not include … excluded gain from the sale of a principal residence." And just to be sure, we checked with William Ahern, director of policy and communications for the nonprofit, pro-business Tax Foundation. "Some home sales would see a tax increase under this bill," Ahern told us, "but it would have to be a second home or a principal residence generating [a gain of] more than $250,000 ($500,000 for a couple)." So there you have it. The sort of people who would have to pay the tax might include, for example: A single executive making $210,000 a year who sells his $300,000 ski condo for a $50,000 profit. His tax on the sale of that vacation home would amount to $1,900, in addition to the capital gains tax he would have paid anyway. An "empty nester" couple with combined income of over $250,000 a year who sell their $1 million primary residence to move to smaller quarters. If they cleared $600,000 on the sale, they would be taxed on $100,000 of the profit (the amount over the half- million-dollar exclusion). Their health care tax on the sale would amount to $3,800 over and above the usual capital gains levy. However, a typical home sale would not incur any tax. In March, for example, half of all existing homes sold for $170,700 or less, according to the National Association of Realtors. Obviously, none of those sales could possibly generate a $250,000 profit, and so none would be subject to the tax. Thus, for the vast majority, the 3.8 percent tax won’t apply. The Tax Foundation, in a report released April 15. said the new tax on investment income (including real estate) "will hit approximately the top-earning two percent of families" when it takes effect in 2013. Footnote: Some of the chain e-mails that claim ordinary home sales will be taxed include a copy of an article written by Paul Guppy. a policy analyst with the conservative Washington Policy Institute (that’s Washington state, not Washington, D.C.). The article appeared March 28 as an op-ed in the Spokane, Wash. Spokesman-Review. and Guppy claimed that "[m]iddle-income people must pay the full tax even if they are ‘rich’ for only one day." That brought a quick rebuttal from Sara Orrange, the government affairs director of the local Realtors association. She wrote a letter to the newspaper calling Guppy’s article "inaccurate" and saying, "Most people who sell their homes will not be impacted by these new regulations. This is not a new tax on every seller, and that correction needs to be made." In a news article the next day, business reporter Bert Caldwell confirmed that only "a very few" home sellers would pay the 3.8 percent tax.
  • The Internal Revenue Service says that to qualify for the $250,000/$500,000 exclusion, a seller must have owned the home and lived there as the seller’s "main home" for at least two years out of the five years prior to the sale. — Brooks Jackson Correction, Sept. 2: We originally said that the footnote of the JCT report appeared on page 139. It’s on page 135. Ahern, William. E-mail to, 22 Apr 2010. Lakewood 44107 Real Estate Lakewood is located in Ohio. Lakewood, Ohio 44107has a population of 52,101. Lakewood 44107 is less family-centric than the surrounding county with 27.49% of the households containing married families with children. The county average for households married with children is 27.49%. The median household income in Lakewood, Ohio 44107 is $44,030. The median household income for the surrounding county is $43,992 compared to the national median of $53,046. The median age of people living in Lakewood 44107 is 34.5 years. Lakewood Weather The average high temperature in July is 83 degrees, with an average low temperature in January of 19.4 degrees. The average rainfall is approximately 37.2 inches per year, with 57.7 inches of snow per year. View Homes for Sale in Lakewood Fort Collins Relocation Home Sales Remain on Record Setting Pace Residential real estate sales in the Larimer and Weld County areas remain at record setting levels with 1,072 closed sales in October representing a 1.2% decrease from last year but the median selling price is up 8% to $270,000. For the year to date, sales are up 9.1% to 10,820 homes and the median price is up 13.8% to $276,000. A breakdown by areas is in the accompanying chart. Last year was a new record for sales totaling 11,554 homes at a median price of $244,950 for a total volume of $3.172 billion. We are currently on a pace for 2015 total home sales of 12,600 with a median price of $280,000 and total volume of $3.7 billion, all new records! Last year the selling price averaged 99.05% of asking price. As indicative of the hot market we have been experiencing, this year that figure is up to 99.74%. Another marker is days to offer. Five years ago, this figure was 82 days. Last year it had dropped to 40 days and this year to date it is down to just 33 days. One trend worth noting is that over half of the sales in October occurred in Weld County and for the year to date 49% of all sales are in Weld County. Last year at this time 44.5% of the sales were in Weld and historically this figure has been around 40%. One reason for the increase in sales in Weld County is the lower selling price but also, well over 50% of all new home construction is taking place in Weld County whereas ten years ago the ratio was 45% Weld and 55% Larimer. Another item to note is the incredible shrinking market share for homes priced below $300,000. Five years ago over three quarters of all homes sold in Larimer County were priced under $300,000. Today the market has shrunk to just 51% of homes priced under $300,000. There is the same trend in Weld County, just not as severe. In 2010 88% of all the homes sold were priced under $300,000. Today that figure is down to 70%. It is amazing how the market has absorbed a substantial 14.8% increase in the median selling price and still produced an increase in sales of close to 10%. The demand is still outstripping the supply with a current active inventory of 1,903 homes for sale which is about a two month supply. New construction is still playing catch up with just 1,881 new homes sold for the year to date, just 17.4% of total sales when we should be closer to 25% of sales to keep up with demand. We don’t foresee a drop in demand and we don’t expect much of an increase in supply so it looks like buyers are going to have to continue to scramble to find the right home at an acceptable price. Good luck with that! RESIDENTIAL SALES CONTINUE ON RECORD BREAKING PACE. Local home sales were up very slightly in August with 1,220 closed sales compared to 1,214 in August last year. The average selling price for the two county area was $311,279 which is up 13.1% from August last year. For the year to date, sales are up 10.5% in Weld County, 8.2% in Loveland and south Larimer County and down 2.4% in the Fort Collins area. The average selling price is up 13.9% in Fort Collins and northern Larimer County, 13.3% in Weld County and 12.5% in the Loveland area. In total the home sales are up 5.6% with a total volume of $2.67 billion. This puts us on a pace to hit $4 billion in total sales which would be 19% over the previous record set last year.
  • New construction has accounted for 17.8% of total sales for the year to date, up from 16.8% last year but still a long way short of the 25% + required to keep up with demand. The net inventory of active listings was 2,068 at the end of August, up slightly from the 1,988 the previous month. With a demand of 1,000 homes per month for the next four months, we are still struggling with about a two month supply, well short of the 6,000 listings required for a balanced market. A good spot for sellers but a problem for buyers. Call us, we can help ! AVERAGE SELLING PRICE IN BOULDER APPROACHES $ONE MILLION! After several months of double digit increases in monthly residential sales, things slowed a bit in July with a total of 2,064 homes sold in the four county are including Boulder, Broomfield, Larimer and Weld. This represented a 3.6% drop in sales compared to a year earlier and is the first decrease this year. The median selling price is another story as it reached $302,675 in July, the highest monthly figure ever and a 12.6% increase from a year ago. We also recorded the first month when the median selling price was actually more than the median asking price for all the homes sold. For the year to date sales total 11,843 homes, up 6.8% from last year and the median price is a $299,900 up 14.9% from the $261,000 last year. The total volume of home sales is now at $4.273 billion which is a substantial 18.9% increase over the record pace of last year. By areas, Boulder County leads the way with a median price of $390,000, Larimer County has the highest price increase of 17.6% and Weld County has the largest increase in sales of 11.8% for the year to date. The average selling price in Boulder County is now close to $500,000 at $494,200 for the year to date. If we look at just the City of Boulder, the average selling price is $665,115 but if we just include single family detached homes the average selling price is now at $958,915. This is an 18.4% increase from last year and a 45.6% increase from just four years ago. The average selling price for single family detached homes in other areas are: Louisville $553,014; Lafayette $476,691; Longmont $333,936; Loveland $310,870; Fort Collins $373,242; Greeley $234,071 and Windsor $333,862. The biggest reason for the unprecedented increase in selling prices remains the low inventory of homes for sale. At the end of July there were 3,183 net active listings and with a demand over the next five months of 8,500 homes we have less than a two month supply, when six months of inventory is considered a balanced market for supply and demand. Typically sales in the first seven months of the year account for almost 60% of the year’s volume. This puts us on a pace for over 20,000 home sales and $7.4 billion of sales volume with a median price of $305,000. These will all be record breaking figures with the total volume representing an 18.5% increase over 2014. The only items than might hold it back are the continuing increase in selling prices, low inventory and an expected increase in mortgage interest rates all of which could cause a drop in demand. Stay tuned! BIZWEST REAL ESTATE COLUMN FOR JULY 23, 2015 There has been a lot of publicity given to the residential real estate market recently, headlined by rising prices, which in the Denver Metro area are at the top of the list nationwide. According to recent reports, Case Shiller says year over year prices are up 10%, REColorado reports 11.3% and CoreLogic comes in at 9.8%. We thought we would take a look at the price gains in the Bizwest four county area (Boulder, Broomfield, Larimer and Weld) by way of comparison. For single family detached homes, the median price the first six months of this year is $315,500 compared to $277,500 for the same period last year. This is an increase of 13.7% which puts this area ahead of the Metro Denver figures and perhaps at the top of the charts nationwide. This type of increase in selling prices is unprecedented as shown in the ten year graph. Going back to 2006 the median price was $243,000 and by 2011 it had actually dropped to $232,000. The biggest increase during this period was 4.5% from 2009 to 2010 and the largest drop was 5.9% from 2007 to 2008. Beginning in 2012 it has been a different story with annual increases from 2012 to 2014 averaging 6.9% and then this year happened. As mentioned, the year to date figure is up 13.7% and we are on a pace to hit $322,000 for the full year which would be a 13.8% increase…in one year. From the low of $232,000 in 2011 this would be a record breaking 38.8% increase in just four years. The demand for homes is also off the charts with a projected 46% increase in annual sales from 2011 to 2015. So the big question is, where to from here? Obviously the strong economy and low interest rates are fueling home ownership, helped by very high rental rates which makes owning a home more attractive. Mortgage interest rates are forecast to increase later this year which will take some people out of the market but bigger paychecks will help to offset this. At this point, we don’t think there is a danger of a housing bubble (oversupply) leading to a drastic drop or correction in selling prices. New construction is still lagging behind the demand and the only surplus might be in new apartment construction which will help to slow down the sharp increase in rental rates. The economy shows every sign of continuing to grow with the only negative being an inflationary trend. We do believe that the demand will slow which will help to modify price increases but if you are a prospective home buyer, sooner rather than later would be our call. Population of “Older Adults” Increasing
  • A few days ago The Coloradoan featured an article on Larimer County’s population of older adults and projected that this will more than double in the next 15 years; up 141% to 81,000 by 2030. This spurs concerns about transportation, accessible homes and other resources. Chief among the issues are creating housing options to accommodate older adults; more rental units, multi-family shared units, accessible homes without steps and housing within walking distance of amenities. She is one of just 13,000 professionals (less than 1% of all Realtors) who have earned this designation and she now has the knowledge and access to countless resources to go with her passion for assisting the ’50 and older’ market. Get now! GM533 13.8 THE REAL ESTATE SALES PRICE CASE A 3.8 Percent “Sales Tax” on Your Home? Lakewood 44107 Real Estate Lakewood Weather Fort Collins Relocation Home Sales Remain on Record Setting Pace RESIDENTIAL SALES CONTINUE ON RECORD BREAKING PACE. AVERAGE SELLING PRICE IN BOULDER APPROACHES $ONE MILLION! BIZWEST REAL ESTATE COLUMN FOR JULY 23, 2015 Population of “Older Adults” Increasing
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