Our Southern California Chapter of CRS (Council of Residential Specialists) educational and networking meeting was held last Friday in the desert community of La Quinta. Our speaker was Gov Hutchinson, an attorney, who is a member of the California Association of REALTORS (C.A.R.) Legal hotline; he is also Staff Vice President and Assistant General Counsel for C.A.R.
Hutchison shared his thoughts on how the government bailout is affecting our real estate business; he also provided some specific updates relative to California laws and changes in some of our real estate forms (I'll share these later). Here are some learnings from his talk:
TAXES:
As everyone knows, there is the new Federal tax credit for First time buyers [parents cannot be on title], where first time buyers can also be folks who have not owned a home in the 3 years prior to the purchase in 2009; income limit is $150K for couple, $75K for single. You must live in the home for 3 years and close on or before November 30. Here is a good overview of the tax credit details. California also has a state tax credit for new construction home buyers of up to $10K to encourage new construction (principal home, live there 2 yrs, 5% of sales price up to $10K, paid in thirds over each of the subsequent 3 yrs). Read more about the California tax credit.
SHORT SALES:
The federal exemption from paying tax on the debt forgiveness when short sales occurs on your primary residence has been extended until 2013 (will get 1099 from lender). But in California you must pay income tax on the debt relief. This may be true in other states as well.
CAPITAL GAINS:
The exemption (up to $500K if married, $250K if single). This exemption for a vacation home sold that you use as a primary residence for 2 years is now gone. Obviously consult your tax accountant to determine if and how this may impact you and what the requirements are.
FANNIE MAE:
- Fannie Mae will no longer tell REALTORS to cut their commission on a short sale transaction per policy. Thus it is important to check if it is a Fannie Mae loan, which you can do on the website, loanlookup.FannieMae, or by calling 1-800-7FANNIE. This policy is not for Freddie Mac yet.
- Guidelines have changed so that investors can now have up to 10 loan
- For a condo purchase you traditionally needed the complex to be 51% owner occupied. Now they will not count the REO properties in this calculation.
SOME OTHER THINGS TO BE AWARE OF:
1. There are a number of new energy efficiency tax credits - check with your accountant to see what changes you can make to have an impact on your 2009 taxes.
2. The government is trying to limit the mortgage interest deductibility. Many groups are actively working to oppose this proposed legislation
3. Now qualified homeowners can refinance up to 105% of the value of the property
RESPA:
HUD is becoming more active in enforcing the referral fee issue (Section 8). They are going after agents who are paying referral fees as an incentive for business. You can give a client a gift for providing a referral but you cannot solicit people to give you a referral in exchange for money or gifts.
All in all a most informative session.
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Hi there, great information for your clients! I'm working on my new Domus Breaking News sites. Really exciting.
Jeff, looks like you picked up a lot of valuable information at the meeting, and ActiveRain is a good place to share it.
I think we are a long way from seeing just how true this is. Good Luck and God Bless.
Thanks Susie - look forward to seeing your site. I plan to do something similar.
George - indeed. OUr meetings are usually very useful.
Charles - definitely. Should be an interesting year.
Jeff
Thanks for the concise and understandable brekdown of all the new changes. Sounds like the meeting was worthwhile for both you and the activerainers that you shared the info with.
Leah - it was a terrific meeting AND I learned alot. Thaat, for me, makes it all worthwhile.
Jeff
Hi Jeff - Thanks for sharing your information on Active Rain. It sounds like your in-house training program is making valuable information available to you.
Great informaion Jeff. this is probably why a lot more buyers are coming out to ook and make ofers n homes.
Jeff - the government is trying to limit the mortgage deduction for all housing or just for certain loan types??
This has been talked about for years - the history of this is it can't pass because too many legislatures have two houses??
That will be devastating to housing and to the economy if that happens - although I am in favor of the Fair Tax.
Sure would change this industry.