Selling Your Summer Home? Don’t Forget…

If you are selling property on the Jersey Shore, here’s what you need to keep in mind this time of year.

 

 

 

 

 

 

 

 

 

Whether it’s for a primary residence or a summer home, most potential home buyers have already started their search. Don’t forget that contracts generally take two to three months to execute, if not longer. If a buyer is hoping to settle into their new property in time for the summer season, ideally, they will need to decide on a property within the next month or so.

With the holiday season coming to a close, now is the time to finish up any renovations and home projects. Prepare your property for the market now in order to take advantage of the coming influx of summer season buyers.

Feel free to give me a call, and we can lay out a timeline and discuss preparing your house to sell: 609-287-1795.

‘Tis the Season to Winterize Your Home

Winterizing your home is important. Here’s what to keep in mind:

No Frozen Pipes. Pipes are key and must be winterized. Many are aware of the disaster of frozen pipes. Worst case scenario, burst pipes could cause substantial water damage to your property. Insulating your pipes, or shutting off the water if it’s just a vacation property, is an easy proactive measure that could potentially save you thousands.

A quick way to check if your pipes need insulating is to see if they feel warm to the touch. If you can feel heat coming off the pipe, then it is certain that both heat (and money) is being lost and that your pipes are at risk of freezing.

Winterize Cooling Units. Make sure that all units are drained of water, including any hoses and pipes. Check to see if there’s a water shutoff valve, too. If your property has window units, the most energy efficient thing to do is to remove them and store them properly.

Don’t Forget Your Sprinkler System! Frozen water can damage sprinkler systems as well, and it’s something that can be easily overlooked. Make sure the system is free of any water.

Opt for Storm Doors and Windows. Installing storm doors and windows can significantly increase the energy efficiency of your home, by adding that extra layer of insulation. As an added bonus, it’ll give your home more curb appeal! They may also be easily replaced with screens come summer.

Drafty House? Does your house feel especially drafty in certain areas? Check for drafts where different home materials meet, inside and out, like along the edges of windows, doors, and chimneys. Caulk and weather-stripping are low cost, effective options.

Run Fans in Reverse. Switch your fans to run clockwise. Warm air rises, so use your ceiling fans to draw the warmer air back down.

Insulate, Insulate, Insulate. Don’t waste money by running your heating system nonstop. Make sure your house is properly insulated and effectively holding heat inside. Major areas of heat loss include the attic floor and basement ceiling, so check to see if those are well insulated.

Featured Jersey Shore Home of the Week

For more information on this and other homes for sale on the Jersey Shore, please visit my Featured Listings page.

Sherri Lilienfeld, Helping You Live Your Jersey Shore Dream

New Tax Bill is Bad News for Homeowners

On November 2, 2017, the H.R.1 – Tax Cuts and Jobs Act legislation was introduced to Congress. At present, the Senate and House have both passed versions of the law and are currently resolving the differences between the two. If passed, the bill would bring about massive changes to our tax code. Apart from the controversial (and hefty) tax cuts that corporations would receive, and the subsequent $1.5 trillion increase in the country’s deficit, there are substantial concerns regarding its effect on middle-class taxpayers. More specifically, the National Association of Realtors (NAR) has called to attention the negative impacts that the law would have on home-ownership and the housing market across the country .

While the bill does provide some tax relief to the middle-class, these individual provisions would disappear in 2025, causing most middle-class taxpayers to pay more in taxes than they do now. An immediate effect, however, would be the elimination of most itemized deductions. Although the standardized deduction would double, many rely on itemized deductions to get the greatest tax relief. In fact, most homeowners use itemized deductions instead of the standardized deduction.

Mortgage Interest and Property Tax Deductions

Herein lies the major fault of the bill concerning real estate and the housing market. The most popular deduction is the state and local tax deduction, which includes the property tax deduction. The third most popular deduction is the interest deduction, which includes the mortgage interest deduction (MID). The new law in its current form would retain both the MID and property tax deduction, but with major revisions. The MID would be limited to mortgages up to $500,000 for a married couple, and the property tax deduction would be limited to $10,000. Currently, the MID is capped at $1,000,000 for married couples, and there is no cap on property tax deduction. To put this into perspective locally, 15.3% of homeowners in New Jersey have mortgages greater than $500,000, and 30.5% paid over $10,000 in property taxes.

The supporters of the bill have severely downplayed the importance of itemized deductions, proclaiming that the increase in the standard deductions would more than make up for it. Statistics say otherwise. Last year in the state of New Jersey, 62.1% of homeowners claimed a mortgage interest deduction, and a whopping 77.6% of homeowners claimed a property tax deduction. The bill would also completely remove the deduction on home equity. Although these popular deductions would remain in some form, it’s still estimated that 94% of taxpayers would end up choosing the standard deduction in 2018 if the law is passed.

Capital Gains Exemption

The bill would also put greater restriction on the capital gains exemption. Currently, to qualify for the capital gains exemption, and not pay taxes on the sale of your house, a homeowner must have lived in their house for two out of five years. This stipulation would be changed to five out of eight years. You are also only allowed this exemption once every two years under current law. The new law would change this to once every five years. Current and older properties, however, would be grandfathered in, and the new law would only apply to properties purchased after it is enacted.

Better to rent or own, and better for who?

On the brighter side for real estate, landlords would receive greater tax relief. The rental income tax rate would be capped at 25% (under the House bill, 38.5% under the Senate bill for landlords making over $700,000 annually) instead of the current 39.6%, and landlords would continue to have no limit on their mortgage interest deduction. But by making it more profitable to own rental property and less profitable to own a home, more and more people would choose to rent instead of own. By removing any tax advantage of owning a home, researchers at NAR have estimated that home values would fall by over 10% on average.

Let that sink in—home values would fall by over 10%. Again, a great opportunity for landlords and investors, but no so much for the average person looking to own a home.

 

Sources:

https://www.nar.realtor/newsroom/realtors-senate-passed-tax-legislation-bad-news-for-homeowners

https://www.nar.realtor/tax-reform

https://www.congress.gov/bill/115th-congress/house-bill/1/text

http://fortune.com/2017/11/02/how-the-republican-tax-plan-could-change-mortgage-interest-and-property-tax-deductions/

https://taxfoundation.org/most-popular-itemized-deductions/

https://www.forbes.com/sites/anthonynitti/2017/12/02/winners-and-losers-of-the-senate-tax-bill/#6a2f367a254d

https://www.forbes.com/sites/kellyphillipserb/2017/11/02/from-mortgage-caps-to-tax-brackets-how-the-house-tax-bill-could-impact-your-taxes/#40869d62eb83