This 20 acre fenced parcel is adjacent to US Forest Service land and nearby horse trails.

This lovely acreage is priced to sell. Click the image below for details and give us a call today.

Just $299,500 for 20+ Acres

Rare 20+ Acre Horse Property in Bass Lake

Cowboys Trail, Bass Lake California 93669

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Capital Gain Taxes – The Same for Now

Toward the end of 2010, many people wondered what would happen to capital gain tax rates on January 1, 2011.  Some even scrambled to close the sale of property before the end of the year. As it turned out, Congress extended the capital gain rates in mid December; at least for two years.  The following is a brief summary of portions of the Tax Relief, Unemployment Insurance Re-authorization and Jobs Creation Act of 2010 (not surprisingly referred to as “the extension of the Bush Era Tax Cuts”) which are likely to impact real estate investors.

• Capital Gain and Dividend Rates – Current rates were extended for two-years for all taxpayers with a maximum rate of 15% for both.
• Personal Tax Rates – Current rates were extended for two-years for all taxpayers with the top rate remaining at 35%.
• Social Security Tax – The employee tax rate of 6.2% on the first $106,800 of wages drops to 4.2% in 2011.
• Alternative Minimum Tax – Current exemptions were extended for all taxpayers for two-years.
• Estate Tax – An exclusion amount of $5 million and a tax rate of 35% for amounts in excess of the exclusion was established for two-years; the exclusion will become indexed beginning in 2012.
• Gift Tax – Like the Estate Tax, a Gift Tax exclusion amount of $5 million and a tax rate of 35% for amounts in excess of the exclusion was established for two-years, with the exclusion being indexed beginning in 2012.
• Other Extensions – The $1000 child credit; an additional standard deduction for real-estate taxes; extension of 15-year cost recovery for certain leasehold improvements, restaurant buildings and qualified retail improvements (through 2011); and the extension of various energy credits (through 2011).

Although the legislation provides some certainty for two years, we may find ourselves questioning our future rates again in 2012.  Since that is also an election year, it may be interesting!

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• capital gains taxes on lake homes

Price: $135,000

35945 Highland Drive East North Fork, California 93669

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Determining Intent for a 1031 Exchange: How the IRS Reads Minds

Most owners of real estate will tell you that if they bought a property for $75,000 and sold it a month later for $100,000, that it was a great investment. If they deferred paying the capital gain tax on their sale by utilizing a 1031 exchange, well they are not just a great investor, but a genius to boot. Unfortunately, that is exactly what the IRS may determine: that the capital gain tax our investor tried to defer is just that, “boot”, and our investor will not just pay capital gain tax of 15%, our investor will pay short term capital gain tax, as the asset was held for less than a year.

So, what then should an investor do so that the sale of property qualifies for 1031 treatment?

The intent by the taxpayer to hold property “primarily for sale” and not “primarily for investment” will prevent the property from qualifying for IRC 1031 treatment. While in general, most properties owned by developers, builders and people looking to fix up and re-sell will probably be considered to be held primarily for sale and may not be allowed tax deferral treatment, the IRS looks to the intent of the taxpayer in determining whether the property qualifies for tax deferral treatment. In determining the Exchanger’s intent, the IRS will look at the intent at the time of the sale. At the time of disposition of the property, the Exchanger must be determined to have intended to hold the property for investment or use in the Exchanger’s trade or business. Three factors that the IRS will look at that can determine whether the taxpayer’s property was “held for sale” and does not qualify for tax deferral exchange treatment are:

1. The frequency and number of real estate transactions entered into by the taxpayer.

The more property sales by the Exchanger, the more likely IRS will find that the property is “held for sale” and does not qualify for exchange treatment. The best example of this is the Investor who buys foreclosed/distressed properties, fixes them up and then immediately attempts to “flip” for a quick profit.

2. The development activity of the taxpayer such as subdividing, grading and improving property.

This looks at the taxpayer’s development activities, such as subdividing the property, adding streets, roads, sewers, utility services, rezoning and renovating the property. In these situations, the IRS is looking at the extent that the gain on the sale of the property was attributable to the taxpayer’s own efforts to the property as opposed to a gain due to external factors. Note that simply subdividing a property will not necessarily prevent a taxpayer from receiving exchange treatment on the disposition of the property.

3. The nature and extent of efforts by the taxpayer to sell the property.

This is the sales efforts of the taxpayer. This includes advertising efforts, use of sales personnel, a sales office to sell individual lots in a subdivision, was the property multi listed with a broker. The IRS will look at the proportion of the Exchanger’s income that is derived from the sale of the property, and the extent of the taxpayer’s involvement, time effort and control over the sales activities regarding the property.

As you may have noticed, the time factor alone (how long the property was held by the taxpayer prior to sale) is not what determines intent. Exchangers are always advised to consult with their tax and legal advisors regarding the exchange status of a property prior to selling their property.

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Here’s a 10-step home buyer’s checklist to help you keep on track toward acquiring your new home:

• Select a REALTOR®: Choose a REALTOR® to assist you through the complex process of looking for the right home, conducting neighborhood research, analyzing home prices, negotiating with sellers, signing documents, and reviewing disclosure forms,among other things.
• Get an Education: You may want to find out what first-time buyer incentive programs are available through your city and county municipalities. Often these include financial assistance for those who complete home-buying educational courses, deferred loans, and other forms of support. Your REALTOR®can help you with this information.
• Paint Your Financial Picture: You may want to obtain a copy of your credit report and credit score and attempt to resolve any errors or other credit issues that might impact your ability to obtain the best loan and interest rate possible.
• Get Pre-approved: Make an appointment to meet with a qualified local mortgage lender to determine what price range you can afford and obtain a pre-approval letter, which demonstrates your buying power.
• Find a Home: Using the services, knowledge, and expertise of a REALTOR®, establish your priorities for size, location, and style, and start shopping for a home that fits your lifestyle, budget, and long-term goals.
• Make the Offer: When you find the home that’s right for you, work with your REALTOR® to write an offer and complete a purchase agreement, detailing all of the terms and conditions of the sale between you and the seller.
• Make a Deposit: When you write an offer, you will need to provide a “good-faith” deposit showing the seller your intent to buy the home.
• Get Financing: Once you’ve selected a home and you and the seller have agreed upon a price, choose a local lender who can help you obtain a loan that best suits your immediate and long-term needs. A local lender will be knowledgeable about the area where you intend to buy.
• Hire an Inspector: A home inspection is recommended in order to reveal potential safety or other issues with the home that you may want to address before completing your purchase transaction.
• Close the Deal: Wrapping up your purchase transaction may include meeting with your REALTOR® to conduct a final walk-through of the property, signing final documents, and getting the loan funded, among other things. Courtesy of California Association of Realtors

We hope you find this information useful!

Your Bass Lake Realty Team

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Here’s what you need to know about obtaining a mortgage in today’s market:

Understand Interest Rates

Fortunately, interest rates are at their lowest levels in many years, hovering around 6 percent for a traditional 30-year, fixed rate mortgage; and about 5.55 percent for a one-year adjustable rate mortgage, or ARM. To put the numbers into perspective, interest rates are relatively close to where they were when the latest housing boom began in 2000. By contrast, they climbed as high as 9 percent during the last housing slow-down in the 1990s, and hit 12 percent in the 1980s.

Understand Points

Points are a form of pre-paid interest that you may be required to pay your lender upon the closing of your loan transaction, above your other fees and interest. There are either origination points, which cover your lender’s fees, or discount points, known as “buyback” points, which are paid in exchange for lowering your monthly interest rate. With either option, one point is equal to 1 percent of your loan amount. For example, one point on a loan for a median-priced home in California at $500,000 would equal $5,000. Points may sometimes be charged based on your credit worthiness and your debt-to-income ratio.

Get Pre-Approved

Getting pre-approved for a home loan will allow you to take a written letter of pre-approval from a lender as you shop around for your new home. The pre-approval letter may indicate to a seller that you are a serious buyer. When you go to a lender for pre-approval, you may be asked to produce income statements, and have your credit and debt information carefully scrutinized — be prepared, and collect all documents ahead of time to facilitate the process. When you are attempting to get pre-approved or apply for a mortgage, lenders will review your credit report, which provides a snapshot of your borrowing and repayment history, as well as any outstanding debt. A common credit score is also called a FICO score. (FICO stands for Fair Isaac Corp., the company that developed the scoring method.) FICO scores range from 300 to 850 points, (and are rated poor, to fair, to good, to excellent),depending on your debt load and repayment history A score closer to 850 or excellent will not only help you qualify for a loan more easily, but may lower your points and fees.
Understand Different Loans

FIXED-RATE LOAN: These loans are designed for those with solid credit histories, relatively low debt, and who plan to remain in their homes for several years. Fixed-rate loan payments are predictable and stable since the interest rate is set for the full length, or term, of the loan. Using an average fixed interest rate of 6 percent in November, a 30-year loan of $400,000, on a median-priced home at $500,000, with a down payment of 20 percent, will produce a monthly payment of $2,400.

ADJUSTABLE-RATE LOAN: Also known as an ARM loan, these are typically offered at a lower initial interest rate than traditional fixed-rate loans, and can lower your monthly payments for a specified time, which can range from a few months to a few years. Your interest rate, however, will adjust at the end of the specified time period and will readjust periodically thereafter. Depending on market conditions, the rate could be higher or lower than your initial rate. A 30-year loan of $400,000 on a median-priced home at $500,000, with a down payment of 20 percent, at an adjustable rate of 5.5 percent for the first 12 months, will produce an initial monthly payment of $2,270.

JUMBO LOAN: These loans are for buyers who need to borrow amounts greater than $417,000 for a single family home. Jumbo loans carry more risk and, in turn, often come with higher interest rates. A 30-year loan of $420,000 for a home priced at $525,000, with a down payment of 20 percent at a fixed interest rate of 6.7 percent, would produce a monthly payment of $2,710.00.

LOANS FOR FIRST-TIME BUYERS: There are several programs available that offer loan assistance options for first-time-home buyers. FHA-Insured Loans, for example, are insured by the federal government against default, and are designed to help qualified borrowers who can’t afford the down payment required by certain lenders. FHA loans provide up to approximately 97 percent financing,( meaning the buyer puts down 3 percent,) but you may be required to cover other costs, such as mortgage insurance premiums, and you’ll need to meet certain credit qualifications. VA Loans are guaranteed by the U.S. Dept. of Veterans Affairs, and offer low- to no-down payment options for qualified first-time buyers who can provide proof of military service. The minimum amount granted for a VA loan is $36,000, but this amount may be increased, depending on the borrower’s credit history. You may also want to check with your city government for referrals to local, state and federal programs that offer home buyers’ assistance for qualified buyers.

Courtesy of California Association of Realtors

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1. Interest rates on long-term, fixed, and adjustable mortgages are at historically low levels. The rate on a 30-year, fixed mortgage is hovering just below 6 percent, while, by comparison, interest rates were hitting 8 percent and higher during the last market downturn in the late 1990s, and were between 10 and 12 percent at the height of the last housing boom in the 1980s. Lower interest rates make it easier to qualify for a loan, and your monthly payments are more affordable.
2. No one can put a price on the intrinsic value of home ownership. Home prices also reflect financial worth and, the good news is, across California the median sales price for a single-family home has been consistently rising for several decades. In short, housing remains a solid, long-term financial investment. While the pace of home appreciation has slowed over the last year, historical data suggest home prices will continue to appreciate over time. The projected median home price for a single-family home in California in 2008, for example, is $553,000. By comparison, the median price in 2000 was $241,350; $193,770 in 1990, and $99,550 in 1980. (source: C.A.R.)
3. The length of time a home remains on the market before it is sold has increased from roughly two weeks in 2004 to between eight and nine weeks in 2007. According to the unsold inventory index provided by the CALIFORNIA ASSOCIATION OF REALTORS®, it would take 16.3 months to sell all the homes on the market at the current sales pace, compared with 6.4 months in 2006. With more homes on the market for longer periods of time, you have more choices when it comes to selecting a home today.
4. The multiple-offer frenzy that dominated the latest housing boom has subsided, and there is less pressure on today’s home buyers to outbid one another. REALTORS® in California reported that in 2007 only 28 percent of homes sold had multiple offers, compared with 57 percent in 2004. (source: C.A.R.)
5. The credit industry crisis that has made securing a home loan difficult for many has led to heightened scrutiny of mortgage lenders. As a result, state and federal agencies have created protections for home buyers that were not in place a year ago. The U.S. Federal Reserve, for example, has proposed a plan to require lenders to confirm a borrower’s ability to afford a mortgage before making a loan and establishing guidelines for explaining sub prime loan terms in order to better educate buyers. Many new public education and awareness campaigns, such as Freddie Mac’s “Don’t Borrow Trouble®” campaign, have been developed to help you achieve the dream of home ownership without the financial risks that led so many borrowers into trouble in recent years.

Courtesy of California Association of Realtors

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Bass Lake Realty

FOR RELEASE: Wednesday, Oct. 7, 2009

C.A.R. releases California Housing Market Forecast for 2010

Multimedia: Click here to view California’s median price from 1970 to 2009. Click here to view the C.A.R. 2010 California Housing Market Forecast PowerPoint Presentation.

LOS ANGELES (Oct. 7) –”California’s housing market continued its strong sales rebound this year, resulting from the continued pace of distressed properties coming to market,” said C.A.R. President James Liptak. “This follows two years of double-digit sales declines in 2006 and 2007. Looking ahead, we expect sales to moderate to a more sustainable pace.”

The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) “2010 California Housing Market Forecast” will be presented this afternoon during CALIFORNIA REALTOR® EXPO 2009 (www.realtorexpo.org), running from Oct. 6-8 at the San Jose Convention Center in San Jose, Calif. The trade show is expected to attract more than 7,000 attendees and is the largest state real estate trade show in the nation.

“After experiencing its sharpest decline in history, we expect the median price to rise modestly next year,” Liptak added. “2010 will mark the beginning of the ‘new normal’ for California’s housing market. This ‘new normal’ likely will feature a steady stream of sales driven by distressed properties in the low end of the market, coupled with moderate home-price appreciation.”

The median home price in California will rise 3.3 percent to $280,000 in 2010 compared with a projected median of $271,000 this year, according to the forecast. Sales for 2010 are projected to decrease 2.3 percent to 527,500 units, compared with 540,000 units (projected) in 2009.

“Housing in California has become a tale of two markets,” Liptak said. “The low end continues to attract first-time buyers and investors, with a resulting shortage in the number of homes for sale. Sellers at the high end, however, continue to be challenged by the ability of home buyers to secure financing as well as their concerns about where prices are headed. While demand from first-time buyers for low-end properties will continue throughout next year, sales could be impacted if discretionary sellers do not return to the market by the second half of 2010.

“2009 marked a unique opportunity for first-time home buyers,” Liptak said. “Homes were more affordable than they have been in years, interest rates hovered near historic lows, and the federal tax credit helped more than 1 million people become homeowners nationwide. Now is the time for Congress to extend the federal tax credit and to expand it to all buyers, not just first-timers.”

“With distressed properties accounting for nearly one-third of the sales in 2010, inventory will be relatively lean, under six months during the off-season months, and a roughly four-month supply during the peak season,” said C.A.R. and Vice President Leslie Appleton-Young. “We expect the median price to decrease slightly through the remainder of 2009 and into next year, then rise before leveling off next summer. For the year as a whole, home prices are forecast to reach $280,000.”

“Although it appears at this time that lenders are closely monitoring the flow of distressed properties onto the market, there could be an exertion of downward pressure on home prices should a heavier than expected wave of foreclosures come to market next year,” she said.

“The wild cards for 2010 include foreclosures, loan resets, the labor market, and the California budget crisis, as well as the actions of the federal government,” Appleton-Young said.

Don’t miss “The ‘New Normal’: What Recovery Means in 2010″ at the San Jose Convention Center in San Jose, Calif. on Thursday, Oct. 8, from 2:30 p.m. to 4p.m. Panelists include Richard Green, director of the Lusk Center for Real Estate at the University of Southern California; Glenn E. Crellin, director of the Washington Center for Real Estate Research at Washington State University; and Jack Kyser, chief economist for the Los Angeles Economic Development Corporation. C.A.R. Vice President and Chief Economist Leslie Appleton-Young will serve as moderator.

2010 Forecast Fact Sheet

Courtesy of California Association of Realtors

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