Thursday, 19 February 2015
Know Your HOA-Part 1
If you're looking for a home in the Brentwood, Tennessee, area, odds are you're going to become interested in homes that are situated in neighborhoods governed by an HOA, or Homeowners Association. According to Community Associations Institute, one in six Americans live in an HOA neighborhood, and since the 1990s, four out of five homes have been built in an HOA neighborhood.
The initial documentation of a Homeowners Association begins with the developer of each individual neighborhood. According to Hoa-usa.com, "The restrictive covenants prepared by the developer are filed on the deed records and are legally binding. The restrictive covenants are intended to define the standards of the community for the purpose of protecting property values."
Once a neighborhood is near completion, administration of these codes and guidelines is then shifted to an elected board of property owners in the neighborhood. They will be the ones to collect voted-upon dues, or they will choose a professional management company to handle some of those details. Either way, be sure you keep a record of where to make your payments so you don't get behind and start receiving notices. Because of a new law in Tennessee, HOA transfer fees are built into a real estate contract as a fee for the buyer, which means they are no longer negotiable. This also means that you need to make sure you're clear about when you'll need to take over payments once the home is yours.
Homeowner fees mainly go to cover maintenance of common areas, and it is important for them to also collect enough for a reserve fund to handle bigger problems when they arise without having to borrow money to make repairs. Some property owners pay as little as $10 a month if they are simply helping maintain a front entry or a walking path, but neighborhoods with amenities such as a pool or clubhouse will raise that monthly or quarterly fee significantly, so be sure to know what fees you are responsible for so you can factor that into your budgeted living costs.
In Part 2 of my post on HOA's, I'll explain how you can be involved with decisions and the legal rights they have to your property.
Posted on 02/19/2015 11:08 PM by Jarod
Wednesday, 11 February 2015
Can You Trust Zillow "Zestimates" of Your Home?
A few months ago I posted a blog about the inaccuracies in housing values with certain online real estate web sites. This week the LA Times published similar sentiment and even interviewed the CEO of Zillow, the most popular online source for real estate information.
Here is my original post about Zillow with some extra information at the end:
I hear it all the time: "But Zillow (or Trulia, etc.) says my home is worth $ (fill in the blank), but you're telling me it's worth this?" These nationwide real estate databases are a great starting point, but you need to know the facts before you put all your stock in a "zestimate."
Web sites like these have grown over the years to include millions of listings in thousands of towns. The value that you see listed with any given home is an estimate found from using public data that is only updated every few years. The estimate might also be based on comparing the price of a home with others in the same city, but it basically just offers an average based on those other homes and does not take into account neighborhood, schools, upgrades, lots or any other changes to the home. There is no appraised value (what the bank would actually allow financing for in the purchase of the home), and no one is held accountable for false or misleading information.
According to Fortune, "Zillow has Zestimated the value of 57 percent of U.S. housing stock, but only 65 percent of that could be considered 'accurate'-by its definition, within 10 percent of the actual selling price. And even that accuracy isn't equally distributed."
The best way for you to know the true value of a home is to enlist a real estate agent who is able to pull up comps from homes that are most like the one you're curious about based on size, location, and features. They can also work with other agents to find out what upgrades and other considerations have gone into the price of the home beyond square footage and location.
For instance, a tax record (what Zillow/Trulia uses) might show that the house next door to you sold for $250,000, but it would not show what was included in that price such as closing costs, a washer/dryer, or anything else that the sellers covered. Your agent can ask these questions and help you find homes and prices that are more comparable to the home you're inquiring about.
These sites do have many great uses, though, so I'm not saying you should completely dismiss their many other helpful features such as real estate articles, aerial views of homes and neighborhoods, and local information about schools, etc. If you are searching for the most up-to-date pricing information about homes for sale in the Middle Tennessee area, realtracs.com is very reliable and many agents use it every day.
In response to the accuracy of "zestimates," Zillow's own CEO Spencer Rascoff was quoted in the above-referenced LA Times article as saying, "Look at them as no more than starting points in pricing discussions with the real authorities on local real estate values - experienced agents and appraisers. Zestimates are hardly gospel - often far from it." (To read the entire article, click here.)
That's advice that I can recommend! Give me a call and we'll find the best price for the home you're wanting to buy and/or sell.
Posted on 02/11/2015 11:01 PM by Jarod
Monday, 2 February 2015
Tax Breaks for Homeowners
Taxes are one of those inevitable things in life, but if you're a homeowner there are some basic tax breaks that you need to be aware of. You can take the standard deduction each year for your home, or you can venture into the world of itemization to see if you fare better that way. If you choose to itemize, you'll have to use Form 1040 Schedule A.
Three things you CAN itemize and deduct directly from your mortgage payment are real estate taxes, mortgage interest, and mortgage insurance premiums. You can also deduct home equity debts up to $100,000.
You CANNOT itemize and deduct any homeowner's insurance or extra money paid toward your principal, so you'll need to look at how your monthly mortgage payment is broken down each month to make sure you are deducting correctly.
You should receive an official letter from your mortgage company this week, if you haven't already, detailing the interest paid in 2014. Keep this for your tax records and use it when you file.
For more information about what you can and cannot deduct, visit the IRS here.
The following are 10 tax tips from the IRS that all homeowners should keep in mind when selling a home:
- 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.
- If you have 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).
- 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.
- If you can exclude all of the gain, you do not need to report the sale on your tax return.
- If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schdedule D, Capital Gains and Loses.
- You cannot deduct a loss from the sale of your main home.
- 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.
- 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.
- 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.
- 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.
If all of this makes your head spin, it's totally understandable. I'll be happy to help as much as I can, but you might need to reach out to a Certified Public Accountant (CPA), because they are trained in tax codes. If you need a recommendation, I'd be happy to help!
Photo credit: freedigitalphotos.net
Posted on 02/02/2015 4:19 PM by Jarod