Posts Tagged ‘income’

Intero Insider: What We Need Are Jobs

By Gino Blefari | July 14th, 2010 0 Comments

We are now halfway through the year – a good time to reflect and to look ahead at what the rest of the year may bring.

For me, I’ve been focusing on market fundamentals and how they may guide real estate buyers over the summer and fall.

While many in our industry this past week focused on Congress’ decision to pass an extension for the Home Buyer Tax Credit – giving buyers under contract another 90 days to close and still qualify for the credit – I feel we should’ve been talking more about jobs.

Jobs should be the focus when looking at ways to fuel long-term housing demand. Jobs create incomes, which are essential to support mortgages on home sales. Without a positive job outlook, the other strong demand fundamentals already in place – rock-bottom interest rates, softened prices – can’t sustain the market alone.

Unfortunately, the news on that front has not been that great:

  • Private payroll gains weren’t as high as expected in June – meaning more small businesses cut jobs or refrained from hiring.
  • Unemployment rates eased in some cities, but increased in others. At the national level, unemployment inched up .2 percentage points to 9.3 percent from last year’s level.

I know it’s not easy to fill the employment gap as quickly as we’d like to see. But until we get positive news on jobs, the reality is that we’re looking at a long haul for housing. Sure, a new tax credit would help. And the historic low interest rates are definitely working in our favor. But those jobs really are key.

Jobs are what we need for a sustainable, healthy housing demand. Match this with record low interest rates – 4.67 percent last week on 30-year fixed-rate mortgages – and then we might have ourselves a good housing cocktail.

It’s not going to happen overnight. As with everything, we need to practice patience in this recovery and understand which market forces will really make a difference.

It may sound strange to anyone who is without a job or on shaky employment ground, but it really is a great time to be a home buyer – IF your situation is right. If you’re lucky enough to have job security and you also have the means, you are in the middle of some of the cheapest borrowing in history. And you have a lot of inventory to choose from in most markets.

So as we make our way through the second half of the year, let’s focus on the fundamentals that will not only give housing a quick lift, but more importantly sustain upward movement.

  • Get new posts via email
  • Subscribe

Intero Insider: To Forgive Or Not To Forgive? That Is The Question.

By Gino Blefari | March 10th, 2010 0 Comments

Even in a “normal” year (when someone actually finds one of those, please tell me), I am bombarded each spring with questions about real estate transactions and their implications on Federal and State income taxes.

In a year in which we’re experiencing continued economic hardships, and since many of those hardships relate directly to home sales and foreclosures, I’m getting far more than usual.

Right out of the blocks, I tell them that I’m not a tax professional and that any questions that they have ought to be directed to their accountants and financial advisors. That said, I like to do all I can to help folks out, so I answer questions where I am able.

One of the most frequent questions I hear — and the one whose answer seems somewhat out of reach — pertains to short sales.

“I sold my house this year, but it was a short sale. Can the IRS or my state tax the forgiven debt?”

The answer is, “Yes. Yes, they can.” A better question is, “Will they?”

With regard to the Federal Government, the answer is “no”. In a move meant to encourage homeowners to work out alternatives to foreclosure, the Federal Government has placed a moratorium on the taxation of forgiven mortgage debt through 2012.

Many states have followed suit, but there are a great many who have not. One of the states in which the question has yet to be answered is California, a state that has been hit harder than most in this period of crisis, and also one whose economic woes far exceed that of any other.

While it may sound unfair, forgiven debt has always been treated as income and, until the Mortgage Forgiveness Debt Relief Act of 2007 was enacted, that income could (and would) be taxable.

At the time of this writing, Governor Schwarzenegger had not made a decision with regard to the state collecting taxes on forgiven debts, but in a state that is as cash-starved as California, there is a strong possibility that he’ll have no choice but to do so.

If you sold your home last year and that sale was a short sale, there are heady tax implications attached to it. It is imperative that you consult with your accountant or financial advisor, so that you can adequately prepare to meet the tax man, should he come a’calling.

  • Get new posts via email
  • Subscribe