Gift Amount Increased for 2022
The limit for tax free gifts for 2022 is $16,000 and no tax is due to the donor or the donee. There are provisions that would allow gifts higher than this amount providing the total lifetime gifts above the annual exclusion of $12.06 million for 2022 has not been met. The donor and donee can be separate persons so that the aggregate tax-free gift for one-year amounts to more money. For instance, a father and mother can gift $16,000 each to their married son in 2022 and an additional $16,000 each to the daughter-in-law for a total $64,000. If the son and daughter-in-law used the money as a...
Read MoreHousing Affordability – Call to ARMs
Housing Affordability is negatively affected by both rising home prices and mortgage rates. A 20% increase in nominal home prices and a 2% increase in the 30-year fixed rate mortgage since January have contributed to a 46 point drop in the NAR Housing Affordability Index. The Index was 143 in June 2021 and is 98.5 in June of 2022. The Housing Affordability Index indicates whether a median income family can qualify for a mortgage loan with a 20% down payment and 25% qualifying ratio for monthly housing expenses to gross monthly income. 100 points is considered the tipping point. As the Index...
Read MoreSurviving Spouse Sale Period
Married couples who own a home as joint tenants with rights of survivorship, the surviving spouse inherits the home, along with their basis, and it does not trigger a taxable event. Unfortunately, the capital gain exclusion is reduced to a single person’s share unless the survivor disposes of the property in the granted time. Married couples, filing jointly, have up to $500,000 of capital gain exclusion on qualifying sales. As a single taxpayer, the survivor is only entitled up to $250,000 exclusion of capital gain. For instance, if the home at the time of death is worth $900,000 with...
Read MoreAre prices and rates going to continue to rise?
One of the most talked about questions in the real estate market has to do with "Will prices continue to rise now that interest rates have increased dramatically this year?" It is understandable to think that if the Federal Reserve is using interest rate increases to slow consumer demand, that it would also slow homebuyer demand to moderate prices. Unfortunately for would-be homebuyers, it isn’t the case. High inflation, strong economic growth, low unemployment, and increased wage growth have been associated with high home price appreciation. In a recent newsletter from First...
Read MoreMoving Down in an Up Market
Selling and buying a lower priced home in an "Up" market can be to your advantage. The advantage is to maximize the sales price on your existing home and replace it with a less expensive one. Moving down in an "up" market may be to your advantage in multiple ways. It is possible that your present home doesn’t meet your current needs like it once did. Making a move can allow you to "re-balance" the equity in your home to better reach your future goals. The "up" market maximizes the sales price you can expect to receive, and it will free the equity...
Read MoreShowing How Earnest You Are
The expression "putting your money where your mouth is" demonstrates a monetary sincerity to what could be empty words. In today’s competitive market where multiple offers are common, sellers want as much assurance as possible that the buyer is sincere and will close on the sale. The seller who accepts a contract expects the buyer to follow through but, in most cases, doesn’t know the buyer either personally or by reputation. The earnest money submitted by the buyer with the contract shows their commitment to the terms of the offer. If the amount is relatively small,...
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