2008 August « The Philly Pretzel

Archive for August, 2008

Capitol Gains Exclusion on Primary Residence is Gone

August 22, 2008 at 11:22 am · Filed under For Home Sellers, Investors

The Not So Good:

Going, Going, Gone

The Housing Stimulus Bill H.R. 3221 (pdf) isn’t all good news, buried deep on page 690 of the 694-page law is an important change to the Capital Gains Exclusion rule that could cost home sellers across the country.

• The $250,000/$500,000 exclusion of gain on the sale of a principal residence is modified beginning in 2009, the exclusion, as it applies to a second home (or rental property) that is converted to a principal residence will be allocated. When the second home is sold, any gain attributable to use as a second home (or rental property) will be taxed at capital gains rates. Any gain attributable to use as a principal residence will remain excludable, up to the $250,000 and $500,000 limits. View some examples that illustrate the application of this new rule.

The Good:

• $7500 home buyer tax credit that would be would be available for any qualified purchase between April 9, 2008 and June 30, 2009. The credit is repayable over 15 years (making it, in effect, an interest free loan).

• Conforming loan limits up to the greater of $417,000 or 115% local area median home price, capped at $625,500. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).

• Provides $4 billion in neighborhood revitalization funds for local communities to purchase foreclosed homes.

• Expansion of the FHA to develop a refinance program for home buyers with problematic sub-prime loans. Lenders would write down qualified mortgages to 85% of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90% of appraised value. Borrowers would have to share 50% of all future appreciation with FHA. The loan limit for this program is $550,440 nationwide. Program is effective on October 1, 2008.

This is a very readable summary: Housing and Economic Recovery Act of 2008 (pdf)

Usual disclaimer: I am not an accountant if you need advice speak to a tax professional.

Technorati: HR 3221, capitol gains exclusion, Phila real estate, rental property

posted by janice SEARCH the Philadelphia MLS. No Registration Required!

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Not Everyone Wants a Foreclosed Home

August 20, 2008 at 10:56 am · Filed under For Home Buyers, Investors, Philadelphia Market Conditions

map courtesy of HotPads (click on it to make larger)

The real estate search site Trulia has released a survey suggesting that most Americans are uncomfortable with the idea of buying a foreclosed home.The survey found that about half of buyers would consider looking at a foreclosed property but two-thirds conceded they felt there were “negative aspects” related to such a purchase, including hidden costs, the possibility its value would decline and other risks.

Other findings from the survey showed:

Single/never married adults (60%) are more likely to consider purchasing a foreclosure versus married (50%) or divorced/separated/widowed adults (50%).

Males are more likely to purchase a foreclosure compared to females (57% versus 51%).

Younger adults (18-34) are more than twice as likely to purchase a foreclosed home than adults 55 and older (69% versus 32%).

20% of adults said that having a personal connection with someone who lost their home to foreclosure is a negative aspect of purchasing a foreclosed home.

As experienced real estate agents we also know that the addenda required by lenders are often minefields and shift the burden of risk for buying a foreclosure to the buyer. Most addendums are all about the “As Is”, if a buyer is not interested in buying a property “As Is” they should not be looking at foreclosures. Banks rarely make repairs and buyers need to negotiate a price based on present condition and market values.

HAVE NEW LISTING DELIVERED TO YOUR INBOX

Technorati: Philadelphia foreclosures, Philadelphia housing market, Philadelphia housing statistics

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Philadelphia First Time Home Buyers: Federal Tax Credit

August 18, 2008 at 3:29 pm · Filed under First Time Home Buyers, For Home Buyers, Mortgage

Everything you always wanted to know but were afraid to ask:

Amount of Credit: 10% of cost of home, not to exceed $7500 (no credit if you purchase from a relative).

Eligible Property: Any single-family residence (including condos, co-ops) that will be used as a principal residence.

Income Limits: Single $75,000; married $150,000, based on adjusted gross income, phases out for higher income levels ($95,000 and $170,000, respectively).

First-Time Home Buyer: Purchaser may not have owned a principal residence in the prior 3 years.

Effective Date: Purchased on or after April 9, 2008.

Termination: July 1, 2009

Repayment: Or as the government likes to call it, recapture, $500 year maximum (or 6.67% of credit) when you file your taxes starting in 2010, interest free up to 15 years. If you sell your home before it’s repaid the full amount is due or if the property that received the tax credit for is no longer your primary residence (i.e. you convert your home to a rental).

How: Claim the credit on your tax returns no other forms required.

Should you take advantage of this opportunity?

Why wouldn’t you want a $7,500 interest free loan?

Uses for the money you should consider:

1. Invest in an interest bearing savings account to build your emergency fund (if you put it into a CD at 4% interest you would almost double your money in 15 years).

2. Pay off high interest credit cards freeing up a monthly cash flow.

3. Fund your IRA.

Here’s a list of frequently asked questions: First-Time Home Buyer Tax Credit

FIND YOUR FIRST PHILLY HOME

Technorati: first time home buyer credit, Philadelphia real estate, home buying

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Newbold: A New/Old Neighborhood in South Philly

August 15, 2008 at 3:40 pm · Filed under For Home Buyers, For Home Sellers, Neighborhoods, YO Philly

New Bold_South Philadelphia
Washington Ave south side

Broad Street west side

W Passyunk Ave north side

18th Street west side

Of late there’s been much talk over this new investment opportunity called “Newbold“, down in the South Philly 19145-46 zip and “Newbold South” the area from Passyunk Avenue to Wolf Street. This area has historically been part of Point Breeze, however residents who have recently moved to the area have given it the name of Newbold as part of an ongoing revitalization effort. The neighborhood derived its name from the previous name for Hicks Street.

Unsexy a name as it is, it (finally) gave some ambiguously defined neighborhoods in the area a much needed identity other than just, uh, South Philly, which real estate philistines STILL insist on calling Center City South….yeah, and Kensington is north Northern Liberties!!

With luminary Stephen Starr having bought the Broad Street Diner, the gang at SPTR (that’s, uh, South Philly Tap Roomfor those of you just sinking your teeth in) putting a coffee shop at the corner of 15th and Mifflin, and Noah’s Ark bar at 16th and McKean undergoing an overhaul to a microbrew-and-burger taproom (Station Bar & Grill) in it’s own right, well, you can fill in the blanks. Add that the area is served by major SEPTA routes in either direction and that pretty much seals the deal.

Hope this shines a new light on a very desirable South Philly neighborhood and buyers out there will finally get what all the fuss is about. Me, I’m personally banking on ‘Bold to be the next big thing down under (Washington Ave. that is).

Great Examples of Homes for Sale in Newbold:

1834 Reed St: $159,000
1529 Manton St: $179,900 $169,900
1829 S 18th St $269,900 Under Contract in 17 days!

FIND YOUR NEWBOLD HOME OR INVESTMENT PROPERTY

Newbold Update:

One of our readers was kind enough to contribute to the topic. How great is that.

The area of Newbold to which you refer to in your Philly Pretzel piece was named by John Longacre, the owner of the Taproom. It is common knowledge he alone created the name and is the sole reason Newbold ever became a reality. He started a 501C3 nonprofit back in 2003 called the Newbold CDC way before anyone ever heard of the place. In addition, he purchased over 30 houses in the area, renovated them and sold them for dollar for dollar what he had in them. He also mandated that members of the Taproom Staff move to the area if possible. This guy paid people to sweep the streets of Newbold daily for over 2 years. He met with the police Captain constantly and begged for increased police presence in and around Newbold.

He works closely with Newbold South Civic, which falls under the parent Newbold CDC 501c3 and promotes the area tirelessly. He even hosted realtor information events at the SPTR in an attempt to show them his vision for the area. His defined perimeter only extended as far north as Taker because the entire vision for Newbold was to create a neighborhood out of a place that had no identity. He did not want to impede on PT Breeze or any other already existing neighborhood.

I know John very well and am amazed how quiet he has been regarding his creation blossoming into reality. This guy is a community leader like no other. I moved to Newbold as a direct result of his efforts.

B.M.

Technorati: South Philadelphia homes, Philadelphia home buyers, Newbold, South Philadelphia Neighborhoods

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Philadelphia: The Walkable City

August 13, 2008 at 8:36 pm · Filed under For Home Buyers, For Home Sellers, Neighborhoods, YO Philly

Philadelphia is the 5th most walkable city. Yo Philly!

Recently Walk Score named Philadelphia the 5th most walkable city in the country. (If you must know, only San Francisco, New York, Boston and Chicago scored higher.)

What does that mean exactly? Of course it means that businesses and amenities like parks and schools are easy to walk to. But there is more to it than just distance. A lot has to do with the ease of walking around. Philadelphia is built on a grid with shorter blocks (400 – 500 ft) than other cities. That gives you more choices on how to walk between two locations. Traffic lights are shorter in Philadelphia, too (30 seconds as apposed to 60 seconds) so you don’t have to wait too long to get to your destination. And once you walk there you don’t have to spend 20 minutes looking for a place to park.

Whether you live in Queen Village or Old City, Rittenhouse Square or the Italian Market, you can get to the best restaurants, shops, shows, whatever you like–on your own two feet.

Try it. You may like it.

Technorati: Philadelphia city life, walkable neighborhoods, Philadelphia home buying

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