Thursday, November 21, 2013

Will you have to pay capital gains on the sale of your home?

Under the Taxpayer Relief Act of 1997 and effective for property sales after May 6, 1997, home sellers will not pay taxes on capital gains in excess of $250,000 ($500,000 for a married couple filing jointly) on the sale of their home. Generally, if you can exclude all the gain, you do not need to report the sale on your tax return.

You will pay taxes on a home sale on amounts of gain in excess of the excludable amount. This type of gain will be taxed at the capital gains tax rate.  If you have a loss on the sale, you cannot deduct it on your return. However, you may need to report it. 

To qualify for the tax exclusion on your home sale you must meet the following IRS requirements:

 

1.      Ownership Test - Owned the home for at least 2 years

 

2.      Use Test - Lived in the home as your primary residence for at least 24 months within a 5 year period prior to the sale, (not necessarily consecutive), and

 

3.      During the 2-year period ending on the date of sale, you did not exclude gain from the sale of another home.

 

Definitions

 

Capital Gains Tax - the tax you owed upon the sale of an investment.  The increase or decrease in the value of a Capital Asset is taxed when it is sold.  The capital gains tax rates are determined by the type of investment asset and the holdingperiod of the asset.

 

Capital Asset - investments such as stocks, mutual funds, bonds, real estate, precious metals, coins, fine art, and other collectibles.  Capital Assets may also produce income (interest, rents) and this income is taxed when it is generated. 

 

Capital Gain - a profit made from the sale of any capital asset where the sale price exceeds the purchase price of the investment.

 

Capital Loss - a loss made on an investment.

 

Holding Period - the length of time you have held an investment.  The IRS states, "To determine how long you held the investment property, begin counting on the date after the day you acquired the property. The day you disposed of the property is part of your holding period." (Publication 550; also refer to Revenue Ruling 70-598.)

The short-term holding period is one year or less. Short-term capital gains are taxed at ordinary income tax rates.  The long-term holding period is more than one year. Long-term capital gains are taxed at long-term capital gains rates, which is usually less than ordinary tax rates.

 

Exceptions to the 2 out of 5 Year Rule

You can use this 2-out-of-5 year rule to exclude your profits each time you sell or exchange your main home. Generally, you can claim the exclusion only once every two years. If you lived in your home less than 24 months, you may be able to exclude a portion of the gain. Exceptions are also allowed if you sold your house because the location of your job changed, because of health concerns, or for some other unforeseen circumstance.

Change in the Location of Your Job - If you lived in your house for less than two years, you can exclude a part of your gain on the sale of your house if your work location has changed. This exception would apply if you started a new job, or if you are moved to a new location with your employer.

Health Concerns - If you are selling your house for medical or health reasons, be ready to document those reasons with a letter from your physician. Such a letter does not need to be filed with your tax return. Instead, keep the documentation in your personal records just in case the IRS wants further information.

Unforeseen Circumstances - If you are selling your house because of unforeseen circumstances, be ready to document what those reasons are. IRS Publication 523 defines an unforeseen circumstance as "the occurrence of an event that you could not reasonably have anticipated before buying and occupying your main home." The IRS has given specific examples of unforeseen circumstances:


  • natural disasters,
  • acts of war,
  • acts of terrorism,
  • change in employment or unemployment that left you unable to meet basic living expenses,
  • death,
  • divorce,
  • separation, or
  • multiple births from the same pregnancy.

*In addition to the federal capital gains tax rates, your capital gains will also be subject to state income taxes. Many states do not have separate capital gains tax rates. Instead, most states will tax your capital gains as ordinary income subject to the state income taxes rates.

 

This brief guide has been prepared solely to help my clients familiarize themselves with Capital Gains relating the sale of their property.  Please consult a Tax Professional with specific questions about Capital Gains or call the IRS with further tax questions at 1-800-829-1040.


For all of your Real Estate needs... I am PghRealtorMom!

 

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Wednesday, November 13, 2013

Firewood Storage Tips

We've seen some record lows in Pittsburgh lately. Do you have a wood burning fireplace? Using your fireplace is a great idea to help keep heating costs down, but improperly storing firewood could invite some unwanted visitors...

Pests like carpenter ants and termites like to build homes in the wood you plan to burn.

Here are just a couple tips to avoid any potential issues: 

Store firewood at least 10' from your home and be sure keep it on a ring or lay plastic between the wood and the ground to prevent those little buggers from moving in.

Where to buy firewood near you??? Check out: http://www.angieslist.com/companylist/pittsburgh/firewood.htm

Stay warm Pittsburgh!!

For professional, courteous "concierge-style" service customized to fit your lifestyle and needs... please contact me with any questions or to schedule an appointment.


Lisa Rutkowski, Realtor
Howard Hanna Real Estate Services - Fox Chapel Office

Howard Hanna Homefinder Email Notification

Should our children spend more time at school?

I've heard for a while about extended school days and/or areas of the world sending their children to school year-round. In 2014–2015, classroom schedules for more than 13,000 students at select schools across five states will be extended as part of a collaborative program announced last December. The Time (Time for Innovation Matters in Education) Collaborative program was developed specifically for schools and communities of concentrated poverty.

The Connecticut, Colorado, Massachusetts, New York and Tennessee schools that participate have agreed to redesign their school days to add 300 hours of additional instruction and other enrichment activities in each school year. The Time Collaborative program not only allows for longer class periods so students can focus on core studies in greater depth, but entire classes have been added for small-group instruction for those who need it.

What about in Pennsylvania, specifically Pittsburgh area schools? According to the US Department of Education, the average school day in the U.S. is 6.7 hours. My own children are in school for 6 1/2 hours each day.

The students who will spend an extra 300 hours a year at school, learning technologies and studying world cultures, healthy living, foreign languages, fitness and healthy living as part of their core curriculum, will absolutely benefit from the TIME Collaborative program. Should I be concerned that MY kids will not able to compete in the real world simply because their classroom schedules are not as aggressive? Absolutely not! 

I believe that learning should begin as soon as a child walks into the classroom. Lessons should be engaging enough to keep students focused every minute of every single class. My children attend a school with certain sociological and economic challenges and I have seen firsthand the efficiency and compassion of our teachers. At this time, it is unnecessary to further strain the school board budget to support additional school hours. As with anything, there is room for continued growth and improvement, but I can say that when a specific need has been identified, the administration has addressed it. If the children in our area face the issues that the students in the other five states are facing, I am sure that this will become a priority.

The PTA organization at my children's school financially supports diverse programming to reinforce that every child has an opportunity to be well-rounded (without extending their school days). Advocacy through the PTA has helped me stay informed about the needs in our school community and across the country. Involvement also ensures the continued success of PTA supported enrichment programming like Multicultural Night, Run for Fun, Traveling Art Gallery (just to name a few).

Finally, we all want what is best for our children and are well aware of the importance of education. If you are moving in the Pittsburgh area and would like to compare PSSA test scores of the various school districts, check out the following

http://www.bizjournals.com/pittsburgh/promo/schoolguide?r=full&full=true

For more information on how to get involved in the national PTA Organization or to learn more about the TIME Collaborative Program, check out the following links:

http://www.pta.org/

http://www.timeandlearning.org/files/TIMECollabOverviewNov2013.pdf

Thank you!

Lisa Rutkowski, Realtor
Howard Hanna - Fox Chapel Office

For all of your real estate needs and on Facebook, Twitter, Pinterest, Instagram & Blog... I am Pghrealtormom!

Tuesday, November 12, 2013

Cold winter ahead - inexpensive ways to warm your home


In Pittsburgh, we woke up to a dusting of snow this morning.  All it did for me was remind me how much I want a fireplace! 

For those of you lucky ducks who already have one, I am jealous. For those of you who don't, you might want to consider some ways to warm up your home this winter without turning up the thermostat and paying sky-high utility bills just to stay comfortable in your own home.

Slippers always help me, but what if you are like my husband or my crazy kids and just don't want to wear big fuzzy slippers? Okay, so if you have hardwood or tile floors, how about throwing down a few area rugs? Your tootsies will stay warm and the room will look and feel warmer.

It will also help to pull your furniture into small groupings around the area rug. The further away from doors and windows you are the warmer you'll be. It's much easier to snuggle this way too.

Speaking of windows, open your drapes and blinds on a sunny day and before you go to bed, close them up tight.

The air in your house may be adding to your discomfort. Did you know that running a cool mist humidifier will add moisture to the air, which oddly enough makes it feel warmer? Your skin needs this extra moisture this time of year too.

Finally, you can switch the direction of your ceiling fans forcing warm air down into your cozy room.

However you decide to deal with the cold winter ahead, here Is some additional reading on the rising costs of heating your home:

Stay warm!

Lisa Rutkowski, Realtor
Howard Hanna - Fox Chapel Office

For all of your real estate needs and on Facebook, Twitter, Pinterest, Instagram & Blog... I am Pghrealtormom!

Sunday, November 10, 2013

Is Your Basement Damp?

How many times have I taken a buyer into a home, it fits them... Right price point, right location and it has all everything that want but we go into the basement and their noses start twitching? Dampness raises so many concerns for buyers, even on a home that they may otherwise love.  'If your basement has a damp, musty odor, it is probably a breeding ground for mold.'  Home buying is stressful and it is my job to educate my buyers & sellers so that the Right Home doesn't get away from them for the Wrong Reason.

"Mold spores are notorious for causing reactions such as wheezing, stuffy or runny noses, itchy and watery eyes, rashes or hives, and even asthma attacks. Because these invisible spores, or seeds, can catch convective drafts and begin new colonies elsewhere in the home, remediation and prevention should be your first order of business."

If you're selling your home, check out these tips for removing any possible buyer objection about dampness in your basement...


Saturday, November 9, 2013

Home Maintenance & Organization

Sellers know that a tidy, organized and fresh smelling home always makes a great first impression to potential buyers. Those same buyers will review the disclosure that you completed when you listed your home to see if there have been problems with the mechanics or any other issues. Why not make a great next impression by providing buyers with a binder that tracks all of your home maintenance and projects? 

http://www.pinterest.com/pin/353110427003437478/

Sell Your Home in Winter Charm

If you will list your home over the next 2 months, take advantage of the beauty of your decorations. Holiday adornments should accent—not dominate—the house. You want to convey the love, comfort, and joy your family has shared in the house. If conveyed successfully, a new family will be anxious to move in and carve out their own holiday memories.

(Read more)

http://www.realtor.com/home-finance/real-estate/sellers/selling-home-in-winter.aspx

Monday, October 28, 2013

Popular Types of Home Heating Systems

If you toured a vacant home over these last couple of chilly days in Pittsburgh, you may have asked your agent specifically about the Heating System.  While gas and wood burning fireplaces are great for setting a mood and warming smaller spaces, you'll want to be knowledgeable about the advantages and disadvantages of the most popular types of home heating systems you may find in your new home.

  • Radiant Heat
  • Forced Air
  • Hydronic (Hot Water Baseboard)
  • Steam Radiant
  • Geothermal
  •  

    http://homerepair.about.com/od/heatingcoolingrepair/ss/heating_types_2.htm



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    For all of your real estate needs...

    I am @Pghrealtormom!


    Lisa Rutkowski

    (412) 491-2453, Cell

    Lisarutkowski@howardhanna.com

    5 Reasons: To Hire a Realtor

    1 - Paperwork
    Currently in PA there are over 11 pages in a standard sales contract. The state law requires much of this paperwork regardless or whether or not you hire a REALTOR. REALTORS are trained and educated on the contracts, which are constantly changing, so they can advise you during the process. They can also refer you to a real estate attorney to represent you on all legal matters involved in the process.

    2 - Process
    There are about 180 typical actions, research steps, procedures, processes and review stages in a successful residential real estate transaction that are normally provided by full service real estate brokerages in return for their sales commission. (Based on a report prepared by the Orlando Regional REALTORS Association). So this means that if you choose to go it on your own, you are going to have to do all 180 things yourself… or they don’t get done… which probably means your transaction doesn’t end in a successful purchase/sale.

    3 - Negotiation
    While there will always be that one guy (or gal) who thinks he (she) is the all-time greatest negotiator, the vast majority of folks do not like confrontational interactions. A negotiation for the purchase/sale of an asset as large as a piece of real estate can be a very confrontational interaction. The role of the REALTOR is to act as a buffer between the two parties who are in the midst of a very emotional and high-level financial transaction, both wanting to get the best they can get often at the detriment of the other party. A real estate professional is experienced in all aspects of the negotiation and is bound legally to do only what is in the best interest of his/her client.

    4 - Values
    Perhaps the single most important aspect of the transaction is the value of the piece of property.

    If you are a seller you want to know how much you can expect to get for the sales price and how much of that you will walk away with in your pocket. You want to advertise the property for sale at the right price so you sell for as much as possible but you don’t want to price it so high that no buyers make you an offer (and YES if you price it too high MOST buyers will not want to offend you by making a low offer…thus you don’t get any offers).

    If you are the buyer, you want to know how much to offer. Now multiple offer situations are happening more frequently and if a buyer offers too low, they can either be rejected completely by the seller or they can cause the negotiation to take too long thus allowing time for a competing bid to come in… allowing the seller to be in the driver’s seat.

    5 - Teacher
    Any good professional, whether a real estate professional, doctor, lawyer, CPA, etc., will have the heart of a teacher. Real estate brokerage is a service business. The professional REALTOR is there to educate you about the conditions impacting today’s real estate market. It is as easy as picking up the newspaper or searching the Internet for real estate news to see conflicting headline after conflicting headline. “Prices are up 20%”, “Among worst markets in nation”, “Best year since the crash”…well which is it? All real estate is local and your real estate professional will know the local market conditions and will lead you through the process, like any good teacher would, making sure you understand all that is going on around you.

    A real estate professional is a crucial member of your team when buying or selling real estate.You could be buying your first home or your tenth home, an investment property or a vacation home, commercial or residential…whichever it is you are best served in the care of a full time, well educated, ethical, trustworthy real estate professional.

    Thank you to KCM for "Keeping Current Matters" easy to share:
    http://www.keepingcurrentmatters.com/2013/10/02/5-reasons-to-hire-a-real-estate-professional/