Can You Believe It’s Time To Fix Up Your Home For Fall?

Here are some tips to get your house ready for the fall season.  I’m doing them at my house right now, so call me if you have any questions!

1.  TRIM DEAD TREE LIMBS.  A fall or winter storm may cause an already strained branch to give way.  Hire a professional to remove any large or high branches that pose a risk.

2.  MAKE OUTDOOR STRUCTURAL REPAIRS.  Faulty handrails, uneven steps and cracked walkways may lead to injury to you or visitors.  Inspect exterior fixtures for loose or missing pieces and repair as needed.

3.  FIX ROOF LEAKS.  Rotted or missing shingles or flashing are a top cause of interior ceiling and wall leaks.  If necessary, hire a professional to inspect the roof for you.  Replace broken or damaged roofing and touch up loose flashing.

4.  CLEAN YOUR DRYER VENT.  A buildup of lint equals blocked airflow and an increased fire risk for your clothes dryer.  Twice a year, unplug the dryer, vacuum out the duct and then reattach it securely.

5.  VACUUM REFRIGERATOR COILS.  Boost your fridge’s energy efficiency by scheduling this task both in fall and spring.  Unplug the fridge, locate the coils on the bottom or back of the refrigerator and use the long nozzle on a vacuum to do away with dirt and dust.

6.  CLEAR GUTTERS AND DOWNSPOUTS.  Debris-clogged gutters combined with water or ice can lead to foundation flooding, roof leaks and structural damage.  Use thick gloves and a trowel (if necessary) to thoroughly clean gutters.  Inspect for cracks or segments that have pulled away from your house.  Also ensure that downspouts direct water away from your foundation.

7.  INSPECT YOUR CHIMNEY.  Hire a professional to remove animal nests, debris and creosote buildup, all which can cause a home fire.

If you have any regular maintenance tips, please leave them here as a comment and I’ll add them to my next post!

If you’re sprucing up your home before you sell it, visit my website at http://www.SuperHooper.com for more free tips on low cost remodels that will get you top dollar.

Is There A New 3.8% Sales Tax On Real Estate Sales?

3.8% Real Estate Sales Tax – True or False?

You may have received an email or heard something on Twitter about the 3.8% real estate sales tax that has recently been brought up as an issue with the Health Care Bill (HR 3200).  In the emails, the tax is railed against and brought up as an absolute for all Americans selling their homes.

But wait…maybe we should dig further.  Is it true?  Is it kind of true?  Is it blatantly false?  Does it lie somewhere in between?  Seems this is just another case of email first, tell the truth later.

There is indeed a 3.8% tax in the Health Care Bill.  It, however, is incorrectly labeled as a sales tax.  It is called a Medicare tax in the legislation and I know we’re splitting hairs here, but I think it’s important to mention as the use of specific words like this are calculated and planned by people to manipulate people’s emotions.

This tax however, does not single out real estate, rather it is a tax on investment income.  The key to everything is how the numbers are calculated on whether or not the tax applies to you.  The 3.8% Medicare tax is designed to only affect so-called “high earners” and not everyone will pay the tax upon the sale of their home.

The Tax Facts

• There is a new 3.8% tax in the bill.
• It is not a “sales tax” on all real estate transactions.
• It is a Medicare tax.
• Many people will not have to pay this tax.
• It is going to affect so-called “high earners.”
• It is not going affect many people.
• The tax comes into effect in 2013.

“High Earners” – Who are they?

The income requirement for so-called “high earners” are spelled out in the new law: $250,000 for married couples filed jointly, $125,000 for couples filing separately, and $200,000 for all others.  If you earn more than these benchmarks, you are a “high earner” and therefor subject to the new 3.8% tax, but what you are taxed on helps further eliminate many people.

How is the tax calculated?

One of the emails I’ve seen states that on the sale of a $400,000 home, you would pay $15,200 as a real estate sales tax (3.8% x $400,000).  This is incorrect.  There are two incorrect assumptions by the authors of the email; a) that the Medicare tax is based off of sales price alone and b) it applies to everyone (which we know to be false based on the “high earner” income requirement).

The incorrect assumption that the real estate sales tax (aka the Medicare tax) is calculated based on the sales price of the home makes a huge difference.  Instead, the tax is calculated based on profit.  As investment income, the profit is the sale price minus the initial investment.  Going back to the $400,000 home mentioned earlier, let’s assume you paid $350,000 for it.  You profited $50,000.  Based on that, your tax would be $1,900 (3.8% x $50,000).  Much better than $15,200, right?

But wait, there’s one more piece of the puzzle.

Okay, so you owe $1,900, which isn’t that bad in the overall scheme of things.  But wait…do you owe $1,900?  The answer is a resounding no.  Why?  Because of the capital gains threshold that is included in the language.  You are only charged the 3.8% Medicare tax if your investment income passes the capital gains threshold.  How much is that?  The capital gains threshold is $250,000 for individuals and $500,000 for married couples filing jointly.

This means that profit over the $500,000 or $250,000 (depending on your marital status) would be taxed at the 3.8% rate (you would still need to be classified a “high earner”).  In our $400,000 example above, where you walked away with $50,000 in profit, you would not be taxed.  The $50,000 is below the capital gains threshold.

Thanks to Matt Stigliano for shedding some light on this subject!