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!

Click Here to Search Bass Lake & Area Listings For Great Buys…

Click Here to Contact Your Bass Lake Realty Agent…

Incoming search terms:

• capital gains taxes on lake homes

Best regards,

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

Search Current Home Listings in the Bass Lake California Area…