10 Tax Tips For Individuals Selling Their Home from Muller Financial Solutions, LLC

The Internal Revenue Service has some important information to share with individuals who have sold or are about to sell their home. If you have a gain from the sale of your main home, you may qualify to exclude all or part of that gain from your income. Here are ten tips from the IRS to keep in mind when selling your home.

1. In general, you are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale.
2. If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).
3. You are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.
4. If you can exclude all of the gain, you do not need to report the sale on your tax return.
5. If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses.
6. You cannot deduct a loss from the sale of your main home.
7. Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude.
8. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.
9. If you received the first-time homebuyer credit and within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full credit is due with the income tax return for the year the home ceased to be your principal residence, using Form 5405, First-Time Homebuyer Credit and Repayment of the Credit. The full amount of the credit is reflected as additional tax on that year’s tax return.
10. When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change.

For more information or to reach Sara Muller directly please call (602) 320-0581 or on the web at http://www.mullerfinancial.com/

Fortune Magazine declares - It's Time To Buy!

Not a day goes by that I do not hear a question about when the right time to buy Real Estate will be back.  Well, according to Fortune Magazine....the time is now!   Here's a link to their full article.

http://finance.fortune.cnn.com/2011/03/28/real-estate-its-time-to-buy-again/

Whether you are looking for an investment property or your next family home please don't hesitate to contact me if I can be of any service.

Susan Nicolson
...all you need to know about Real Estate!

Bankruptcy - Know Your Options (part 7)

If you are considering bankruptcy as an option, consult with an attorney that specializes in bankruptcy cases:  www.azbar.org/LegalResources/findspecialist.cfm

Access the Arizona Bankruptcy Court self help information line by calling 1-866-553-0893 or visiting their website at www.azb.uscourts.gov/default.aspx?PID=78#866.

Susan

"...all you need to know about Real Estate"

Foreclosure - Know Your Options (part 6)

Foreclosure:  The legal process by which your lender obtains a termination of your ownership rights to a specific piece of real estate 

vAllowing the lender to foreclose is another option.  The counselors at the Arizona Foreclosure Help Line can explain the foreclosure process, call: 1-877-448-1211

Ultimately, only you and your attorney can determine if a foreclosure is the best option for you.  Attorneys who are State Bar certified specialists can be located at :  www.azbar.org/legalresources/findspecialist.cfm

vHow Does A Foreclosure Affect My Credit? 

§A Foreclosure Will Remain On Your Credit Report For 7 Years:

•Credit Scores typically drop 50-250 points

•If a tax lien is filed your credit score may drop an additional  100 points

vWaiting Period to Buy A New Home:

Fannie Mae & Freddie Mac guidelines state that the waiting period before you can buy another home is 5 years from the date the foreclosure is completed.  Some additional requirements after 5 years and up to 7 years from the completion date may apply including down payment requirements of 10% and

 credit scores of 680 or more.  Purchase of 2nd home or investment property not permitted.  If approved extenuating circumstances, such as loss of employment

, that caused the foreclosure shorten the waiting period to just 3 years.

Susan

"...all you need to know about Realt Estate"

Short Sale - Know Your Options (part 5)

Short Sale:  A Short Sale transaction occurs when your lender is willing to accept a payoff for less than the amount owed

vQualifications That Indicate A Short Sale May Be Right For You:

§Your home’s value has dropped below the amount that is still owed on it

§Your loan is near or already in default status

§Financially you have fallen on hard times ~ Unemployment, Death, Bankruptcy, Medical Emergency, Divorce or Lack of Assets can all constitute hardship

vHow Does A Short Sale Affect My Credit? 

§A Short Sale May Appear On Your Credit Report As:

•Paid Settlement ~ credit scores typically drop 50-150 points

•Paid In Full For Less Than Full Balance ~ credit scores typically drop 50 – 150 points

•Pre-Foreclosure Redemption ~ credit scores may drop as above or remain neutral

vWaiting Period to Buy A New Home:

Fannie Mae & Freddie Mac guidelines state that the waiting period before you can buy another home is 2 years  from the date the short sale transaction is completed.  There are not exceptions for extenuating circumstances.

Susan

"...all you need to know about Real Estate"

Deed In Lieu Of Foreclosure - Know Your Options (part 4)

Deed In-Lieu of Foreclosure:  This is a settlement which is made voluntarily between you and the bank  in which you “give back” your house to the lender and move on with nothing owed.  In most cases your bank will only accept a Deed In-Lieu if there are no other liens on the property or if these liens can be significantly reduced.

vReview the HUD Requirements for a Deed In-Lieu of Foreclosure at:

§www.hud.gov/offices/hsg/sfh/nsc/rep/dilfact.pdf

vHow Does A Deed In-Lieu of Foreclosure Affect My Credit? 

§Negotiate with your lender how they will report a Deed In-Lieu of Foreclosure.  Possibilities are:

•Foreclosure ~ credit scores typically drop 50-250 points

•Paid Settlement ~ credit scores typically drop 50-150 points

•Paid As Agreed ~ credit scores drop due to prior late payments but this option could allow the purchase of another home in a short period of time

vWaiting Period To Buy Another Home:

Fannie Mae & Freddie Mac guidelines state that the waiting period for a Deed In-Lieu of Foreclosure is 2 to 4 years from the date of completion.  Some additional requirements after 4 years and up to 7 years from the completion date may apply including down payment requirements of 10% or more.  Extenuating circumstances, such as loss of employment, that caused the need for you to complete a Deed In-Lieu shorten the waiting period to just 2 years.

Federal Help For Home Owners...Know Your Options (part 3)

If your lender will not agree to a loan workout or modification you may be able to refinance the loan with another lender.

The HOPE for Homeowners Program will refinance mortgages for homeowners that can afford a new loan insured by HUD’s Federal Housing Administration.

Learn more at: www.hud.gov/hopeforhomeowners/index.cfm

Susan

"...all you need to know about Real Estate"