Category: (2)

Thinking about a Second Home?

by char-maccallum-real-estate-group-inc

While a principal residence and a second home have some similar benefits, they have some major differences. A principal residence is the primary home where you live and a second home is used for personal enjoyment while limiting possible rental activity to a maximum of 14 days per year.

The Mortgage Interest Deduction allows a taxpayer to deduct the qualified interest and property taxes on a principal residence and a second home. The interest is limited to a maximum of $1,000,000 combined acquisition debt and a combined $100,000 home equity debt for both the first and second homes.

The gain on a principal residence has a significant exclusion for taxpayers meeting the requirements. The gains on second homes must be recognized when sold. Even if you sell a smaller second home and invest all of the proceeds into a larger second home, you’ll need to pay tax on the gain.

Tax-deferred exchanges are not allowed for properties having personal use including second homes.

If the home is owned for more than 12 months, the gain is taxed at the long-term capital gains rate. If the home is owned for less than 12 months, the gain is taxed as ordinary income which would be a considerably higher rate.

The article is intended for informational purposes. Advice from a tax professional for your specific situation should be obtained prior to making a decision that can have tax implications. 

Are you thinking about a second home?  Free search on www.findkansascityrealestate.com

If I only bought…

by char-maccallum-real-estate-group-inc

We’ve probably all said or at least thought “if I knew then, what I know now, I would have done things differently.” We should have stayed in school longer. We should have listened to our parents. We should have bought Apple stock in 2002 for $8.50 or gold in 2000 for $300.

Years from now, if we look back at 2012, it may be clear that this was the best buyer’s market ever. The prices are down nationwide 35-40% from four years ago, mortgage rates have never been this low and rents are rising. Few homes have been built in recent years to keep up with a growing population. There may never be a better time to buy homes than now.

The housing affordability index which is considered to be good at 100 has increased to over 200 for several months. Shrinking inventories and rising prices in some markets are causing the index to fall for the first time in years.

This ‘buying” opportunity applies equally to acquiring a home to live in or to rent as income property. It is estimated that about one-third of the homes purchased last year were done by investors. It is reasonable because the positive cash flows far exceed most other investment alternatives.

The question we’re all faced with this year is whether we’ll be saying we seized or missed an opportunity of a lifetime.  Are you looking for a home?  Make sure you check us out atwww.findkansascityrealestate.com