Tuesday, May 20, 2008

Property 8 Lower your taxes!

If you want to lower you property taxes, please click on the link below and fill out the form. You don't have much time left. If you need comps, please e-mail me your address and I will send them to you.



Friday, January 25, 2008


After much anticipation and a full year of home owners facing foreclosure sweating it out, H.R. 3648 - Public Law 110-142 was finally signed into law December 20, 2007.
One of the pitfalls of a short sale or foreclosure is that any debt amount forgiven or discharged by the lender is recognized as taxable income by the IRS, and then taxed at ordinary income rates for the home owner, even though no actual cash changes hands. The taxation of "fake" money was just another kick in the pants to homeowners who just lost their home to foreclosure, only to find a huge tax bill in the mail that most could not afford to pay. The Act was given a boost of support with the number of foreclosures and the mortgage/financial crisis, not to mention the decreasing home values happening across the country.
So now, with the passage of the H.R. 3648, individuals who are relieved of their obligation to pay some portion of a mortgage debt on a principal residence between January 1, 2007 and December 31, 2009 will not be required to pay income tax on any amount that is forgiven.
Here are some details that might apply to you:
1. No Income Limitation: All borrowers receive the relief, no matter what their income.

2. Dollar Limitation: No more than $2 million of mortgage debt is eligible for the exclusion ($1 million of debt for a married filing separately return).
Relief applies only to an individuals principal residence and the forgiven mortgage debt must have been secured by that residence.

3. No relief is available for cash-outs, whether the cash-out takes the form of a refinanced first mortgage, a second mortgage, home equity line of credit or similar arrangement.

4. Eligible debt is what is called "acquisition indebtedness." This is debt used to acquire, construct or rehabilitate a residence.
1) Refinanced debt qualifies, so long as the debt does not exceed the original amount of the debt. (Same rule as Mortgage Interest Deduction)
2) Home equity debt (or second mortgages) qualifies if the funds were used to improve the home. (Borrower must have adequate records, as under current law.)
3) See cash-outs, above. No amount of a cash-out may be treated as acquisition debt.

If you have any further questions, please give me a call and I will be more than happy to help!

Wednesday, December 5, 2007

Mortgage Forgiveness Debt Relief Act.

A large number of homeowners who purchased homes in the past 3 years using zero down 100% financing, now might find themselves with mortgage debts more then their home is currently worth. This example is called an "upside down mortgage". Many of these homeowners who experienced a job lose, medical emergency or other financial hardship are unable to re-finance and are now finding themselves in Foreclosure. Foreclosure is a terrible experience that ruins ones credit for up to 7 years. To make things worse, if a person purchased a home with zero down payment, and lost their home to Foreclosure, and the home sold at the Foreclosure sale for $50,000 less then the original sales price 2 years ago, the homeowner might possibly be subject to an additional $50,000 of taxable income.
However, there is some good news. The recent Mortgage Forgiveness Debt Relief Act of 2007' (HR 3648), enables the homeowner in the above example to not be subject to this extra income Tax. This bill was recently passed by Congress (House Bill 3648) by a wide margin on October 4th, 2007'. It is now awaiting Senate approval and rumor has it that it should pass easily and signed off by the President. This Tax provision will only apply to taxpayers' principal residences and not investment property. Once passed, this House Bill will be retroactive to apply to anyone who has had purchase money debt discharged or forgiven on or after January 1, 2007'. This Debt Relief Act, if passed, will apply to Foreclosures as well as Short Sales.
For those not familiar with the term Short Sale - a Short Sale is a pre-foreclosure sale in which the the mortgage lenders agree to accept less then what they are owed on the property, to a dollar figure which equals the sales price minus all cost of sales. The homeowner does not receive any cash from the sale (just as in a Foreclosure). Compared to Foreclosure, a Short Sale is becoming a preferred solution for "upside down properties" for both homeowners and mortgage bankers alike. A Short Sale is less damaging to ones credit as compared to a Foreclosure. A Short Sale does not stay on ones credit report as long as a Foreclosure.
There are couple of items to note regarding Tax consequences that apply both equally to a Short Sale and Foreclosure. The Mortgage Cancellation Tax Relief if passed, will only apply to purchase money mortgages, and not re-finance cash out mortgages. The other item, is according to many accountants, if one can prove financial insolvency, then the income Tax liability discussed above can be avoided.
If you are a home owner who may be upside down in your mortgage, or if you are delinquent in your mortgage payments, I can help! Give me a call and I will talk to you about the different options that you have. I am neither an Attorney nor an Accountant and this article is not to be construed as Legal nor Financial Tax advice. Please seek Tax advice from a Tax accountant before making a decision in these matters.

Sunday, November 11, 2007

Good news

The real estate market has continued to fall. There are a lot of people that are nervous about what is going to happen in the near future. Although no one has a crystal ball that I know to give us the answers, my best guess is that it will start to pick back up sometime in 09. Some good news for people in Orange and LA counties is that the demand for homes is still decent. Although the inventory levels have climbed, home prices have not come down as drastically as they have the San Bernardino and Riverside counties. What this means is that there is some amazing deals to be had in the IE. First time home buyers are finally starting to come back out of their shell and start purchasing. Even though 100% financing is still around, it is a bit more challenging to get these types of loans. You need to have at least a 680 fico score and be able to document your income to qualify.

The best news of all is that there are still more people moving into California each year than moving out. This means that even though we are in a bit of a fall, the long term projection for continual growth is undeniable. So whether you purchase property for your family or a rental unit to capitalize on the strong rental market right now, you can never go wrong buying a piece of heaven in California!

Friday, November 9, 2007

3 weeks left!

Wow I can't believe that there is only three weeks left til’ Mr. Chase Mathew Kalayji makes his debut into the world(give or take a week)! Life as we know it will no longer be the same. Sleeping more than three hours consecutively will only be a mere distant memory that we hold on to for dear life. Trying to get ready to go out of the house with the three boys and into the car will be a great accomplishment all on its own.

Why do we lds people do such crazy things as having so many kids back to back is clearly insane to the outside world. I guess the reason we keep on doing it(DeAnne might disagree) is because it truly brings us the most amazing sprit(sometimes the bad kind) to our home:) Might be a tad cliché, but I can't think of anything else in this world that is more gratifying than seeing the boys grow.