A foreclosure is tough process on everyone involved.  Your legal right to a property is terminated, due usually to a default on payments.  It usually requires a forced sale of the property with the proceeds from the sale applied towards the mortgage debt.  With a foreclosure, there are consequences for years to come, including but not limited to issues involving credit reports, future buying, and black marks upon your records.  In terms of the credit report after a foreclosure, the default of your property will remain on your credit report in the tradelines section for 7 years.  A person’s credit score could fall from 105 points to 160 points based solely on this foreclosure.  In terms of buying a new home after the foreclosure process, with certain restrictions in place, a five year wait will be mandatory if your home was your primary residence – But that’s if you’re eligible.  If not, you will face a term of 7 years before you can look to buy a new home.  Added to … [Read more...]

Today’s tough economy has homeowners feeling the pinch and many are unable to make their mortgage payments.  Generally, this is due to layoffs and job losses, but unfortunately, although the home owner spends time looking for additional or new work with enough income to cover their bills, they are still living hand to hand and have generally fallen way behind in their bills before finding that new job.  Once they realize they cannot cope with the situations, or have not been able to find stable work, many of these homeowners call their real estate agent to list their homes for sale, so they can avoid the debt load that is building.  Once they have talked to the real estate agent, they often find the fair market value of their home has dropped with the times, and even if they sell their home at the today’s price, they may not make enough to cover their entire mortgage.  This leaves the homeowner in a situation where they are facing bankruptcy or foreclosure, although many of … [Read more...]

Are you a homeowner over the age of 55 looking for property tax relief as you look to sell your old home?  If so, Propositions 60 and 90 were passed to help lower the strain of high property taxes.  Both amendments passed by California voters are a way to incentivize persons 55 and older to move into less expensive homes without having to pay higher property taxes for it.  Propositions 60 and 90 allow for the transfer of a property’s factor base year value from your old residence to your new – replacement – home.  While both Propositions exist to provide property tax relief, they do so in slightly different ways.  Proposition 60 allows for intracounty transfers, or transfers of base year values within the same county.  Proposition 90, on the other hand, is intercounty, which allows those same transfers from one county to the next.  Depending on county laws and what you are looking for in your new property, either Prop 60 or 90 will allow for a break in high property taxes … [Read more...]

Capital gains are of utmost importance to the real estate investor. What is a capital gain? A capital gain is the profit or money received from an investment, which could be a stock, bond, or real estate.  These investments are called capital assets.  A capital gain occurs when the investor gets back more than the amount he or she has invested. For real estate investors, it is all about the selling price of their property.  If they sell at a price which is higher than what they paid out for the property, then they have made a capital gain. Investment income is another form of capital gains. Real-estate investment can also include leasing or renting out the property after it has been purchased. Residential real-estate Residential real-estate investment is the most common kind of investment as it is usually entails the purchase of a family home.  Most of the time, the home purchaser does not pay cash and must borrow from a third-party such as a bank to cover the mortgage … [Read more...]

1031 exchanges are simply the exchange of one property for another which meet IRS requirements. The selling of the first qualified property for the acquisition of the second qualified property must happen in a specified time period in order to qualify for a deferral on taxes.  Even though this type of transaction is practically identical to any selling and buying transaction, it is unique in the sense that it is considered simply and exchange of one property for another and not a sale.  Therefore, the benefit of this type of real-estate transacting is quite simple; simple sales of property are taxable, while exchanges of properties avoid the capital gain taxes from the sale of a property and therefore not taxable at the time of the exchange. When to consider a 1031 exchange If you are selling your home for a similar home or you are an investor who is selling one property for a similar property you would want to take advantage of this tax break.  This way you would avoid the … [Read more...]