Here’s how the tax works. For individuals earning $200,000 a year or more and married couples earning $250,000 a year or more, certain investment income above these income levels might be subject to the 3.8 percent tax on a portion of that income. I say “might” because whether the tax applies or not depends on many factors having to do with the kind and amount of the investment income the household receives.
The federal health care legislation to be enacted in 2013 included a new tax that was designed to affect upper income taxpayers. The 3.8% tax is imposed ONLY on those with more than $200,000 of Adjusted Gross Income (AGI) ($250,000 on a joint return). The tax applies to investment income, defined as interest, dividends, capital gains and net rents. These items are all included in an individual’s AGI. A formula will determine what portion, if any, of these types of investment income would be subject to the tax. The tax is NOT a transfer tax on real estate sales and similar transactions. Not long after the tax was enacted, erroneous and misleading documents went viral on the Internet and created a great deal of misunderstanding and made the tax into something far more draconian than the actual provisions.
The new tax does NOT eliminate the benefits of the $250,000/$500,000 exclusion on the sale of a principal residence. Thus, ONLY that portion of a gain above those thresholds is included in AGI and could be subject to the tax. REALTORS should familiarize themselves with the tax, but should not advise their clients about the application of the tax. The amount of tax will vary from individual to individual because the elements that comprise AGI differ from taxpayer to taxpayer.
5. Check the cost of financing: Be sure you have enough money for a downpayment, closing costs, and repairs without draining your savings. If you’re planning to fund the repairs with a home equity or home improvement loan: Get yourself pre-approved for both loans before you make an offer. Make the deal contingent on getting both the purchase money loan and the renovation money loan,
6. Calculate your fair purchase offer: Take the fair market value of the property (what it would be worth if it were in good condition and remodeled to current tastes) and subtract the upgrade and repair costs.
7. Include inspection contingencies in your offer: Don’t rely on your friends or your contractor to eyeball your fixer-upper house. Hire pros to do common inspections like: get a home inspection, Home inspection. This is key in a fixer-upper assessment.
During Black History Month, we pause to salute and reflect on the contributions African Americans have made to the rich fabric that makes up the United States. There are many untold stories that reveal the best of Americans who stepped up when duty called, broke color barriers, or quietly made their communities better one person at a time.
In tribute, President Obama recently invited six special senior citizens to visit the White House to honor as unsung heroes. These unsung heroes are individuals who strengthen their communities through extraordinary everyday acts of service done with reliability and commitment, but who seldom receive recognition. Among those who visited with President Obama were pioneers in the struggle for racial equality, educators who changed their communities through the classroom, and people who believe that a lifetime serving others is a life well spent. The honorees were:
Theodore Peters, Gladys Reid, Velma Lois Jones, Columbus Preston Holmes, James “Alley Pat” Patrick, and Marguirette Levere
Bank of America will no longer sell new loans to Fannie Mae due to disputes over repurchase claims. B of A lost billions due to having to buy back defaulted loans. In January 2011, the bank paid about $2.5 billion to Fannie Mae and Freddie Mac for loans that were allegedly originated with improper underwriting standards. The total amount for unresolved repurchase claims from all sources totaled approximately $14.3 billion as of December 31, 2011. The total amount of the bank’s recorded liability related to repurchase claims was $15.9 billion as of December 31, 2011, the bank stated in its SEC filing. Sounds like Bank of America may be getting out of the lending business. If you don’t sell to Fannie and Freddie, who are you going to sell to?
The mind is a powerful thing, it has two main functions: memory and imagination. One deals with the past, one with the future. The most dominant function will determine your destiny (CAG, Bhp. Brister)
People, we must continue to critically examine what we hear on the news… We are not in a season of comfort! “Without a doubt, the most urgent challenge that we face right now is getting our economy to grow faster and to create more jobs…. we can’t wait for an increasingly dysfunctional Congress to do its job. Where they won’t act, I will.”
Our lives begin to end the day we become silent about the things that matter (Dr. ML King). Please take the leadership in making sure your friends and family are registered to vote, and vote. I challenge you today to find one person who is not, and give them a card, share the website, and pass along the dates for absentee voting in your city.
1. Decide what you can do yourself: Do you really have the skills to do it? Some tasks, like stripping wallpaper and painting, are relatively easy. Others, like electrical work, can be dangerous when done by amateurs. Do you really have the time and desire to do it? Can you take time off work to renovate your fixer-upper house? If not, will you be stressed out by living in a work zone for months while you complete projects on the weekends?
2. Price the cost of repairs and remodeling before you make an offer. Get your contractor into the house to do a walk-through, so he can give you a written cost estimate on the tasks he’s going to do. If you’re doing the work yourself, price the supplies.
3. Check permit costs: Ask local officials if the work you’re going to do requires a permit and how much that permit costs. Doing work without a permit may save money, but it’ll cause problems when you resell your home. Factor the time and aggravation of permits into your plans.
4. Doublecheck pricing on structural work. If your fixer-upper home needs major structural work, hire a structural engineer for $500 to $700 to inspect the home before you put in an offer so you can be confident you’ve uncovered and conservatively budgeted for the full extent of the problems. Get written estimates for repairs before you commit to buying a home with structural issues. Don’t purchase a home that needs major structural work unless: You’re getting it at a steep discount, 2.) You’re sure you’ve uncovered the extent of the problem, 3.) You know the problem can be fixed, 4.) You have a binding written estimate for the repairs