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General
Check out the latest monthly statistics for home sales in the Santa Clara Area.
DATAQUICK NEWS REAL ESTATE NEWS
Bay Area Home Sale Activity
San Jose Chronicle Charts for the month of July 2006
Reporting resale single family residences and condos as well as new homes
* % Change is from the same month last year
http://www.dqnews.com/ZIPSFC.shtm
Checklist for Buying a House
One of the most important things you can do is to make yourself a checklist as you search for, find, and buy a home.
http://www.ourfamilyplace.com/homebuyer/checklist.html
Commonly Asked Questions about 1031 Exchanges
What does the term 1031 refer to?
1031 is the number assigned to the Internal Revenue Code Section that provides for the tax deferred exchange of real and personal property.
What does the term Starker refer to?
It refers to the landmark 1979 federal case entitled, Starker v. U.S. 602 F2d 1341 (9 th Cir 1979) wherein the court substantiated the validity of the delayed exchange process. Prior to the Starker case, the courts had never sanctioned an exchange whereby the relinquished property was sold and - at a later date - the replacement property was purchased.
What are “Safe Harbors”?
This term refers to the rules established by the 1994 Treasury Regulations for tax deferred exchanges which provide that - if followed - the IRS will allow the exchange to qualify.
Why is the tax deferred exchange a popular financial planning tool?
If done correctly, investors defer tax due in connection with the sale of real or personal property, enabling them to access their equity to consolidate, diversify, leverage or relocate their investments.
Why use a Qualified Intermediary?
Use of a Qualified Intermediary is sanctioned as a safe harbor by the IRS.
What is like kind?
Real or personal property of the same nature or quality is like kind. Generally, real property is like kind to all other real property, except foreign real property, as long as it is held for investment or the productive use in a trade or business. Personal Property must be either the same General Asset Class or Product Class.
How do I properly identify my replacement property?
Property is properly identified only if you unambiguously described it in a written document signed by you and hand delivered, mailed, telecopied, or otherwise sent to the person obligated to transfer the replacement property to you (i.e. the Qualified Intermediary or the seller of the replacement property) or to any other person “involved in the exchange” other than you or a person disqualified under Treas. Reg. Section 1.1031(k)-1(k). Real property generally is unambiguously described if it is described by a legal description, street address, or distinguishable name (e.g. the Mayfair Apartment Building). If at the end of the identification period - 45 days - you identified more properties than permitted by IRC Section 1031 (k)-1(b)(1) it is treated as if no replacement property has been identified and the exchange will be disallowed.
What are the 45 and 180 day deadlines?
Beginning with the close of the Relinquished Property, you have 45 days to identify the properties you intend to purchase and 180 days (or the due date for your tax return - whichever is earlier) to complete the acquisition of those properties. In addition, the 45 day identification period and the 180 day exchange period are calendar days. If the 45 th day or 180 th day falls on a weekend or holiday, the deadlines still apply. There are no extensions for Saturdays, Sundays, or legal holidays.
Is there any way to get an extension on the 45 day or 180 day deadlines?
No extensions are allowed on the 45 day deadline. Your identification must be received, signed, in writing, on or before midnight of the 45th day. With respect to the exchange period, it ends on the earlier of the 180th day or the due date (including extensions) of you tax return for the taxable year in which the transfer of the relinquished property occurs. Thus, if the exchange period is cut short by the earlier occurrence of your tax filing date, you may file for an extension in order to get the full 180 day exchange period.
What is Boot?
Broadly defined, boot is considered:
“Cash boot” - money received (or not reinvested) by you during an exchange. If you carry a note for your buyer, the note is also considered cash boot.
“Mortgage boot” occurs when you pay off a loan on the sale of the relinquished property but do not either get a loan for equal or greater value when you buy the replacement property or invest additional cash equal to your debt relief. In other words, if you choose not to get a loan on the replacement property, it is perfectly acceptable to simply come up with the additional cash required to purchase the replacement property.
Any type of replacement property received that is not like kind.
If I own a property with another investor, can I exchange my equity if he doesn't want to?
Yes. You would want to clearly allocate each investor's interest in the property before you sell. The investor who wishes to exchange may do so, and the other investor may receive cash (taxable). It is, however, very important that the investors be clear on their intentions before entering into an exchange agreement with a Qualified Intermediary. Once a Relinquished Property is closed where all investor parties are under one exchange agreement, they do not have an option of dividing proceeds and buying separate Replacement Properties.
What is a partial tax exchange?
If the equity in your investment property is $150,000 and you wanted to use only $100,000 to purchase your replacement property and take $50,000 out to buy a new car, you would have a partially tax deferred exchange. The $50,000 cash you took to purchase the car is considered taxable cash boot.
May I take out my basis and reinvest only the gains?
No. Both basis and gains must be reinvested to defer taxes. The IRS does not allow you to allocate a portion of the money as basis and a portion as gain. Any money received by you will be considered boot and taxed at a capital gain rate.
Can a carry-back note, drawn in the name of the Exchanger, be assigned to the Qualified Intermediary as part of an Exchange?
No. Once the Note is received in your name, it will be taxable boot. Alternatively, to use the note as part of the 1031 exchange, the note and deed of trust must be drawn in the Qualified Intermediary's name.
What is the net value of the property?
Simply stated, the net value is your sales price less your closing costs. You are responsible for reinvesting both the cash and the loan amount when you purchase the replacement property. (See section on Boot.)
How does the note become part of the exchange?
The note must be drawn in the name of the Qualified Intermediary. During the 180 day exchange period, you have several options in using the note as part of the exchange:
Sell the note to a buyer and liquidate it to cash that is then added to the exchange proceeds and applied to the purchase price of the replacement property;
Obtain the agreement of the replacement property seller to accept the note as part of the purchase price to be paid for the replacement property;
Accept only a short-term note (i.e. due in less than 6 months) that will be paid off in full prior to the acquisition of the replacement property. Payments received are added to the exchange funds and used to purchase the replacement property.
I own a piece of property that has my own primary residence as well as a rental unit, would it still qualify for an exchange?
Yes, so long as you remain consistent with your past tax returns. Consult with your tax advisor to determine the percentage of the value of the property you have attributed to investment. You may exchange that portion of the value.
How long must I hold a property for investment before I can move into it for my own residence?
The IRS has never established any rule for a required holding period for investment property to qualify under IRC Section 1031. If you are considering converting investment property to a principal residence, we strongly recommend that you consult with your tax advisor.
What does the term “disqualified party” refer to?
The 1994 Treasury Regulations provide that certain persons/entities are disqualified from acting as a Qualified Intermediary. Disqualified persons include anyone who can be considered your agent, anyone who is a related person as defined in the Code, or anyone who bears a relationship as your agent as described in the Code. Your agents include anyone who has acted as your employee, attorney, accountant, investment banker, real estate agent or broker within the previous two years.
Can I exchange with a related party?
Yes, subject to certain restrictions - namely a two year holding requirement — you may sell property to or swap property with a related party. If you engage in an exchange with a related person, you are entitle to non-recognition of gain only if the replacement property is held by you for at least 2 years and the relinquished property is held by the related person for at least 2 years after the date of the last transfer in the exchange transaction. Related persons include members of your family and descendents, corporations, tax-exempt organizations and partnerships that are controlled or owned by you. The grantor, fiduciary and beneficiary of a trust are also considered related parties. It is not advisable to but property from a related party.
Do I have access to my money during the exchange?
During the exchange transaction your exchange proceeds are placed in an exchange trust account so that you do not have actual or constructive receipt of the funds. If you have not identified property, you may not receive the exchange funds until after the expiration of the 45 th day. If, however, you have identified property but you later decide not to exchange you may not have access to the funds until the expiration of the 180 day exchange period. (Some limited exceptions apply.)
What are exchange expenses?
Certain expenses incurred in selling the property, which include but are not limited to the real estate commission, exchange fees, legal fees and transfer taxes, may be paid with exchange proceeds thereby reducing the amount that must be reinvested in the replacement property.
http://www.orexco1031.com
How Investors Avoid Profit Tax
This article describes how real estate investors can make use of 1031 exchanges to "pyramid" their real estate holdings without paying capital gains. (02.17.2006)
'Up Trading' to Larger Fixer-Upper Invites Profit Potential
By Robert J. Bruss
Inman News
Suppose you own a rental house or condo, apartment building, commercial property, warehouse, office building or even vacant land, which is now worth much more than you paid for it years ago. You've also probably been enjoying non-cash depreciation tax deductions for estimated wear, tear and obsolescence, thus reducing your adjusted cost basis (and your annual income taxes). However, if you sell, you'll owe a large capital gain tax. Is there any way to avoid tax on the sale of an investment property? Thankfully, the answer is "yes."
TAX-DEFERRED EXCHANGES FOR 'MOM AND POP' AS WELL AS BIG CORPORATIONS. Millions of "mom and pop" U.S. realty investors have discovered Internal Revenue Code §1031 tax-deferred exchanges. This is the only tax-free way to pyramid your real estate wealth without owing taxes along the way. Many realty fortunes have been built using this technique. Even major corporations use tax-deferred real estate exchanges.
EXAMPLE: Several years ago I had lunch with a realty agent for what is now Texaco-Chevron. He explained that his company had received a very profitable offer to sell its gas station land across the street from Disneyland. Rather than pay tax on their huge profit, his employer was making a tax-deferred exchange of that gas station for several other properties.
WHAT IS A TAX-DEFERRED REALTY EXCHANGE? Summarized, a tax-deferred exchange means a realty investor trades "equal or up" in both price and equity for one or more qualifying properties without receiving any taxable "boot," such as cash or net mortgage relief. Virtually any investment or business real estate, except your personal residence or "dealer property," such as a homebuilder's inventory, can qualify.
I will always remember my first tax-deferred exchange. It was a trade of my three-unit apartment building for a nine-unit apartment building. However, the seller of the nine units didn't want to keep my little three units. He wanted cash! So the Realtor arranged for a "stand-by buyer" to purchase my three units the next minute after I completed my tax-deferred exchange up.
Everyone (except perhaps Uncle Sam) was happy. I got my tax-deferred "up-trade" of three units for nine rental units. The seller of the nine apartments got the cash he wanted (on which he paid capital gains tax because he made a taxable trade down). Equally important to me, I acquired a "fixer-upper" nine-unit apartment building with profit potential after I fixed it up.
WHY EXCHANGE INSTEAD OF SELL? Since 1921, Internal Revenue Code §1031 has encouraged investment and business property owners to exchange their properties without owing any capital gain tax. The IRS views an IRC §1031 trade as one continuous investment even though two or more properties are involved.
The basic idea is to dispose of a qualified property (such as my three units) and acquire a "like kind" replacement of equal or greater cost (such as the nine apartments) without receiving any taxable "boot." But "like kind" real estate doesn't mean "same kind." To illustrate, you can trade your rental house for an office building. Or you can swap vacant land for a warehouse. You might even exchange your three rental cottages for a mobile home park. The number of properties on each side of the trade doesn't matter. Just remember to trade equal or up in both price and equities without taking anything out of the swap, such as cash or mortgage relief.
http://www.inman.com
New Homes DR Horton
Brand new homes please visit the website see wich floor plant that you like to view.. Please call me to take you or meet you on the first visit .. For credit of 1% credit back
http://www.drhorton.com/corp/RealtorInfo.do
Real Estate News
publication for consumers on mortgage financing strategies and real estate investing. Keep informed about the hottest real estate opportunitie
http://www.insiderealtytoday.com
U.S. Census Bureau Web Site
The Census Bureau Web Site provides on-line access to data, publications, products, and programs.
http://www.census.gov/
Local Directory
City Comparisons
First, select the states for your two cities, and click on the button.
On the next page, choose from the list of cities for those states
http://www.bestplaces.net/
Mortgage Loan
Bishop Banking Corporation
EVERY FINANCIAL MOVE COUNTS
Apply for mortgages online in all 50 states as either a broker, lender or both.
* Residential Lending and Banking
* Commercial Lending
* Government Lending (FHA/VA)
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http://www.bisoplendingcorp.com
Mortgage Shopping.com
Our sole purpose is to offer the well-qualified borrower the lowest rates and best service when shopping for a refinance or purchase loan.
http://www.mortgageshopping.com/
MortgageQuotes.com
An independent source of mortgage information on the Internet.
http://www.mortgagequotes.com/
National Listings
CyberHomes MLS Listings
Homes for sale with a difference. Why? Because the web sites on this list are from the same MLS organizations that maintain the complete professional list of homes for sale in each metropolitan market.
http://www.cyberhomes.com/
Relocation
Relocation Central
A comprehensive, nationwide resource for the latest relocation/moving information organized by city and categories of interest from apartments to zoos.
http://www.relocationcentral.com/
Salary.com
Free salary information, salary and benefits advice, career and job search help. Hundreds of salary surveys, compensation reports, and useful links.
http://www.salary.com/
The Financials.com
Manage the compelling content for investor
http://www.thefinancials.com/
School
Buying vs. Renting
Calculator to compare the advantages and considerations of owning vs renting a home.
Need to know what is point:
What Are Points?
A point is 1% of the amount of the loan. Two points is (are) 2% of the amount of the loan. A quarter point is 0.25% of the amount of the loan. Points are paid up front, to the lender, at the time the loan closes. In exchange for receiving some of his profit up front, the lender lowers the interest rate. Different lenders and different loan products have different formulas (formulae) for how much the rate is lowered by paying points.
As a general rule of thumb, it will take approximately five years to get back the dollars you have paid in points on a 30- year fixed rate loan. For example, a $400,000 fixed rate loan at 6.500% calls for a payment of $2,528.27. One point costs $4,000.00 and lowers the rate to 6.250%, and a monthly payment of $2,462.99. $4,000.00 divided by the difference in monthly payment ($65.28) equals 61.27 months. That's how long it takes to get your money back.
Any circumstance which necessitates paying off the loan during this time means that you leave money in the lender's hands. You have made an "investment" in the loan that takes over five years to get back. Paying points is always an option, but it is not necessary to pay any points to get a loan. There are plenty of loans and loan products available at zero points.
We always advise our clients to consult with a tax attorney, accountant, or CPA regarding any tax questions. As we understand the rules however, points paid for loans when purchasing a home are deductible in the year they are paid. Points paid in connection with a refinance must be spread over the term of the loan. (For example, 1/30th per year.) However, assume you have paid points to refinance two years ago and have therefore deducted only 2/30ths of the amount points you paid. If you now refinance, you can now deduct any amount you have not already deducted. Again, we emphasize that you should consult your tax advisor about these and any other tax questions
http://www.ginniemae.gov/rent_vs_buy/rent_vs_buy_calc.asp?Section=YPTH
GradSchools.com
Source of graduate school programs information. Find thousands of graduate programs by curriculum or by school.
http://www.gradschools.com/
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