Residential Real Estate in SW Washington State

Residential Real Estate Services with Passion, Integrity, Knowledge

The rumor continues — 3.8% real estate tax

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Way back in September of 2010, I wrote a blog post about an email message that was circulating regarding an 3.8% real estate tax that was included as part of President Obama’s healthcare plan. At that time, the messages were aimed at overturning the Healthcare plan itself. Now that the Supreme Court has upheld the plan, it seems that the goal is to advise the general public that real estate agents won’t be voting for President Obama.

Just another political message designed as a scare tactic.

Because this message is so pervasive, I decided to address this subject again.  I’ve received a similarly worded message no less than eight times in the past three days. At the bottom of this post I’ve attached the message thread I received yesterday from a very savvy client.

Sigh … this is just another not true email circulation that’s gaining ground again because of the upcoming election.

The facts? — There is not a 3.8% real estate tax for ALL real estate transactions starting in 2013. But there IS a 3.8% investment tax on profits for people who meet a high capital gains threshold.

In a nutshell, the 3.8% tax (called the Medicare tax — it has nothing to do with real estate), will be imposed on investment income only for individuals with a net income above $200,000 or couples with a joint net income of more than $250,000. Further, it’s then imposed only for transactions with a taxable gain above $250,000 per individual or $500,000 per couple. And then there are yet further conditions that control the taxable amount.
 
Realistically, there are VERY few people that will be impacted by this amount because capital gains on real estate sales don’t take effect until after aprofit from sale of $500,000 is reached (for couples) or $250,000 (for single filers) on a their net real estate investment income.
 
For example, if a high income couple making $260,000 TAXABLE INCOME on their tax return should sell a property with a net capital gain of $600,000, then they would pay a 3.8% tax on the lesser of:
 
  • The amount of taxable income generated by the sale = $100,000. 3.8% of $100,000 is $3,800

or

  • The amount by which their taxable income exceeds the $250,000 taxable income level= $10,000. 3.8% of $10,000 is $380
 
It’s important to realize that the tax isn’t on real estate — it’s on investment income. And, frankly, although we all hope that our home is a fantastic investment and that we’re going to make oodles of money on it, if that does come true and we’re also a high income wage earner, then perhaps it’s only right that we share a small portion of our wealth in the form of taxes.
 
Refer anyone that sends this message to you back to Snopes.com at http://www.snopes.com/politics/taxes/realestate.asp
 
So … back to the subject of the message: “You should read this regardless of political leaning so that you are aware of it.” … Yep … they should read THIS message regardless of political leaning.
—– Original Message —–
Sent: 7/16/2012 2:27:00 PM
Subject: FW: Home Sales Tax-effective Jan. 1, 2013 You should read this regardless of political leaning so that you are aware of it.

This came from a friend in CA;  is this a true story?   I trust you and believe you will know.

Marilyn

 

____________________________________________

I’ve talked to realtor friends and this is true!  I’m not trying to bad mouth anyone, but it is something that will affect every single one of us who owns property.

 

Subject: Home Sales Tax-effective Jan. 1, 2013

Very important!!!!

———————————————————— When does your home become part of your health care? After 2012!
Your vote counts big time in 2012, make sure you and all your friends and family know about this !
HOME SALES TAX
I thought you might find this interesting, — maybe even SICKENING!
The National Association of Realtors is all over this and working to get it repealed, — before it takes effect. But, I am very pleased we aren’t the only ones who know about this ploy to steal billions from unsuspecting homeowners. How many realtors do you think will vote Democratic in 2012?
Did you know that if you sell your house after 2012 you will pay a 3.8% sales tax on it? That’s $3,800 on a $100,000 home, etc. When did this happen? It’s in the health care bill, — and it goes into effect in 2013. Why 2013? Could it be so that it doesn’t come to light until after the 2012 elections? So, this is ‘change you can believe in’?
Under the new health care bill all real estate transactions will be subject to a 3.8% sales tax.
If you sell a $400,000 home, there will be a $15,200 tax. This bill is set to screw the retiring generation, — who often downsize their homes. Does this make your November, 2012 vote more important?
Oh, you weren’t aware that this was in the ObamaCare bill? Guess what; you aren’t alone! There are more than a few members of Congress that weren’t aware of it either.
You can check this out for yourself at:
http://www.gop.gov/blog/10/04/08/obamacare-flatlines-obamacare-taxes-home
I hope you forward this to every single person in your address book.
VOTERS NEED TO KNOW.

Subject Home Sales Tax-effective Jan. 1, 2013

 

 

 

SOLD!! Riverwalk View Home in Auburn WA

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Beautiful resale opportunity in prized Riverwalk Community with territorial view and magnificent sunsets. Home is in wonderful shape & shows pride of ownership!

1999 Centex tri-level features 3 bedrooms, 2½ baths, with a wonderful open kitchen & family room concept, keeping the cook part of the action while nicely splitting the two rooms. For more formal occasions, you’ll also appreciate the separate living room and dining room.

Huge windows in kitchen plus vaulted ceilings in living & dining rooms add height and massive daylight. The private backyard is perfect for summer BBQ’s on the patio!

Central air & gas heat with heat pump & fireplace in family room make for year-round comfort. From the Berber carpeting inside–to the sprinkler system outside for easy yard upkeep–to the “just pressure wash me” vinyl siding, this home is easy-care from start to finish.

Don’t miss out. This may be a short sale, but everyone is on-board for a successful transaction!

  • MLS #362145
  • 1620 SqFt / 6,631 SqFt Lot
  • 3 Bedrooms, 2½ Baths
  • Vaulted Master Suite w/ Walk-In Closet & Full Bath
  • Front & Back Yard Sprinkler System
  • Dead End Street
  • HOA Dues just $75/year
  • Vaulted Formal Dining & Living Room w/Ceiling Fan
  • Lower Family Room w/Gas Fireplace
  • Gas Utilities & Central Air Conditioning

 

 

 

Another Maple Valley Closed Sale!

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With great thanks to everyone involved, I’m pleased to announce the closed sale of this absolutely wonderful home in Valley Meadows. With multiple offers, we were able to come to contract within about a week of listing.

SOLD-Front

 The honor roll includes:

  • Brandon – the Buyer
  • Dean & Debbie – the Sellers
  • Andy – the relocation rep
  • Sara and Rob from Stewart Title – the title and escrow folks
  • Josh Hall – the Buyer’s broker
  • Dave Jagosh of Pacific NW Home Inspections – the Seller’s inspector
  • and me of course – the Seller’s broker

So … how was it done?

My clients (the Sellers) were fantastic. They prepped the house exactly as suggested, including having the home pre-inspected, then completed everything on the inspection list. It helped that we used one of the very best inspectors in the area – in fact the seller’s inspector also turned out to be the preferred inspector for the Buyer.

We did some careful marketing, targeting the home in the MLS with a full-fledged suite of photos, along with adding another 30 or so photos on my Web site, along with being sure the listing appeared on several hundred other sites.

Did we have careful talks about price? You betcha! The right price brought the expected offers with fully preapproved Buyers. With a bit of negotiation, everyone was thrilled! 

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 So a HUGE thank you and Congratulations to everyone involved!

 

Whooo hooo!

SOLD! Rare Valley Meadows Resale

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www.gabriellenemes.com
Valley Meadows Resale in Maple Valley WA

Rare Valley Meadows resale! Sitting on a lovingly landscaped corner lot backing to neighborhood park path is this ‘like new’ home with gorgeous millwork, shiny hardwoods, gleaming tile work and fresh paint.

Gorgeous Chaffey Homes Resale
Too Cute!

Perfect both for entertaining and for quiet moments, the home’s open floor plan features formal living and dining rooms, formal den, family room with gas fireplace, island kitchen, and patio. Even a darling playhouse!

Grand Open Staircase

Throughout the home, every room is truly generous in size with large windows, which open the home to wonderful natural light. Just off the entry, the grand staircase leads up to the bonus/loft-perfect for play or maybe TV space?

 

Just off the loft are three bedrooms, and the compartmented main bath with double vanity, which is also open, Continental-style, to one of the bedrooms.

 

Just One Side of the Master Bedroom

 

 

Then, step through double doors to the master ensuite with its peaked ceiling. Large enough for a huge bed, plus sitting furniture, imagine bubble baths in the deep soaking tub … and all the clothes you can organize in the huge walk-in closet.

The owners have done everything possible to prepare this home for new owners. The pre-inspection report is available for your review during your personal tour.

Too many features to list–better come see!

 

Snow/Ice/Wind Storm of January 2012

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I was a bit (well, a lot) skeptical about whether we’d end up with a storm of the magnitude the weather folks were predicting early last week. We were to get 12-18” of snow. Uh huh … right!

In my area of south King County, we’d had a number of just wet little snow blizzards that melted about the time the flakes hit the ground. What I didn’t know, was that the worst of the storm was just laughing at me … waiting for me to go back into the house to finish my skeptical blog post.

For my area of the Auburn east hill, snow was late to arrive, but when it did, it was daggone serious. Now, remember you east coasters … we’re talking about the Seattle area here. We don’t get much in the way of snow. We may get a few inches here and there, close the schools for a day, and then melt off. There’s little snow equipment in the area, we live up/down on hills and the snow we do get is typically very very wet. None of that dry fluffy stuff that’s fun to ski … just Seattle “concrete.”

P1040017This time around was no exception. After fits and starts, snow really started to fall on Wednesday and it was wet wet wet sticky stuff. Great for making snow sculptures. That sort of thing.

Thursday morning around 7am, the power went out. A quick look outside said that it had snowed a bit more. With accumulations around 8 inches or so after it’d melted off a bit. Bummer—I wanted SNOW!—and an adventure! At my house, situated on a small community well, septic systems, electric heat, it was going to be a cold few hours – outside was around 28 degrees or so.

P1040023But, expecting the best and dressing in layers, we were prepared! Flashlights, generator, a full fridge and pantry full of food, bottles of drinking water and a bathtub full of water for the necessary stuff. Bring it on. We were ready.

HAHAHAHAHAAAA

Fast forward to late Thursday … it’s raining. That’s what was predicted. It was going to rain off all of our accumulations. No problem. What the weather folks didn’t know, is that the rain was freezing. Encapsulating everything and accumulating a deadly layer of ice on top of the snow. And it just kept on accumulating. By the time the rain stopped and turn back to snow on Friday, we’d gathered about an inch of solid ice on top of our snow layer. Stuff is falling off the trees everywhere. (Nothing like laying in bed listening … creeeekkkk, screee, schuuuuuckkkkk, CRASH!) Outside, it’s a winter wonderland with ice coating everything.

P1040025But then the snow kept on coming … again! Now there was about two inches of snow on top of the ice! Yikes! I had no idea. Friday morning I decided to let the dogs out front to avoid the broken tree mess in our back yard … and immediately after stepping off the porch all four legs splayed out on both dogs. Getting purchase and standing back up was a challenge for them.

By late Friday we were able to actually make it out of our driveway and back to the world and what a mess it was. Downed trees, downed wires, cars in ditches; it was total destruction. No wonder we had no power. Lines were down on both sides of our private road, huge trees laying everywhere.

P1040031But real estate calls just kept on coming. My cell phone kept ringing with people looking for houses. So on Saturday I decided to go ahead and make a showing appointment and give it a go. Yikes, what a further mess. Now our feeder road was totally blocked off, with power line trucks guarding the road so no one could get in or out. Lots of yellow caution tape. (Yay!! Maybe they were working on restoring power!) With lots of talking, we were allowed to carefully go around all of the barriers and trees and off to my showing. Only to be stood up by the Buyers. Sigh … but it was a fun adventure!

Here’s a shot of my favorite shade tree during the ice storm … and after. What you can’t see here is the line of tree trunks that are now just sticks. There’s gonna be a lot of tree removal again this year. I’m thinking that Mother Nature decided pruning was necessary so decided to help us get a start at it. We were very very fortunate – no real damage, but sure a lot of destruction. (And I was mighty glad to take a hot shower on Sunday when the power was restored!)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Winter Storm Watch Continues

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CIMG0018My husband, the amateur weatherman, has been obsessively following the build-up to the “Megastorm” of decades, currently predicted for our greater Seattle region. We’ve been watching for days, experiencing a bit of snow here, and a bit of snow there. At our home in east Auburn, so far we’ve accumulated a couple of inches, which largely went away today even through additional flurries of wet heavy snow.

I grew up in Seattle and remember a few good-sized snow storms from my childhood; even one or two while raising our own children. This storm, however, is expected to dump somewhere between 12- and 18-inches in our yard, according to the “Futurecast” radar displayed on one of our local news sites, KIRO7. That’s a significant amount of snow. Significant!

According to AccuWeather, the history of great Seattle snowstorms is as follows:

    1. Jan. 5-9, 1880: Est. 36.0″ with 6-foot drifts
    2. Jan. 31-Feb. 3, 1916: 33.4″
    3. Jan. 26-31, 1969: 30.7″
    4. Jan. 12-15, 1950: 26.8″
    5. Dec. 23-27, 1965: 14.9″
    6. Dec. 30-31, 1968: 13.0″
    7. Jan. 23-26, 1972: 12.6″
    8. Jan. 25-26, 1950: 12.4″
    9. Dec. 26-27, 1974: 9.8″
    10. Nov. 20-22, 1985: 9.4″
    11. Nov. 27, 1985: 7.6″

    Twelve-to-eighteen inches. I’m expecting the roof to be fine, but I’m thinking the tarp-type carport under which we park our riding lawnmower and various “stuffs” to probably take a hit. We’ve brought pellets for the stove into the garage. The chickens are safely ensconced in their coop with plenty of food and water. The dogs are oblivious, but will love it. The cat? Well, we may have to hand-carry him out now and then to visit the kitty potty.

    Twelve-to-eighteen inches, followed by rain. It should be exciting!

     

    Real Estate is About to Come to a Screeching Halt in Auburn, WA!!!

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    scraping snow off carTruly! Snow is coming! The world will come to an end in Auburn in three days!

    At least so say the weather stations.

    The greater Puget Sound metropolitan area is a unique place when it snows. We’re hilly around here and our typical warm ocean breezes prevent us from getting much in the way of significant snowfall, which means most of the cities and towns in our area have a minimal amount of snow equipment to deal with the mess. We don’t dump a lot of sand or salt on the roads. Some … but not a lot.

    Oh sure, once a year or so we get dumped on with a couple or three inches, but then it rains away within the next day or so. I know, I know – you Seattle’ites remember the recent great snowfall of ‘ought eight’ when we had 6+ inches on the ground for a week or so.

    It was darned cold out there and the stuff was packed hard on our road. (We happen to live almost at the bottom and no way were we getting out of here.) It was exhilarating! Snowball fights. The dogs romped through the yard like puppies. BIIIGGG snow creatures adorned the yard.

    I remember that the Mayor of Seattle got into all sorts of trouble for not arranging to have side streets and a few major hills plowed (as if he could do much about it with the few plows available), and so on. It was chaos out there.

    But I love the snow. Snuggling inside with hot cocoa and a good book.

    So … just a word to the wise: Beware!! Real estate .. and everything else involving cars … is coming to a screeching halt if we get 1/2” of snow on Sunday. …….

    ……

    ……

    … of course, then it’ll all start back up again in a day or two and we’ll be raring to go back to work.

    Enjoy!

    It’s Under Contract! — And Now it’s SOLD!

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    Congratulations to the new owners of this lovely home in Puyallup. February will always be a special month for you!

    I’m so pleased that you found the home of your dreams! May you have many many years of happiness and satisfaction in your new home!

    (post updated 3/5/2012)

    —————-

    And the Sellers are so excited! I’m always excited as well when a good offer comes in on a listing and we’re able to negotiate the finer points resulting in an accepted contract.

    front2

    The Sellers will be ticking off the very short list of requested repairs in the next few days … seems like there’s always stuff in the gutters in our area, no matter when they were last cleaned … and then this beautiful home will go to some also very excited Buyers.

    Congratulations to everyone involved! Your home sale is Pending! Now let’s get this one Closed!!

    Okay, Should You Sell … and Buy in 2012?

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    sitting on fence-flicker by michaelkuhn_picsLike many, you may have been sitting impatiently on the fence for the last three years hoping for a miracle that would allow you to sell your existing home without sacrificing too much more equity … and buy at today’s price and interest rate.

    At least once a week I get a call from a previous client or someone “just checking out the market,” wanting to do exactly that. And, who absolutely wouldn’t want to buy a house with the bargains out there??!!

    Let me try to help you make a bit of sense out of this type of scenario.

    The latest statistics from the Office of Federal Housing Economic Oversight (OFHEO) and Federal Housing Finance Agency (FHFA) indicate that home prices in Washington State, overall, lost approximately 8.67% from the end of 3rd quarter 2010 through 3rd quarter 2011, but gained 111.07% for the 20 year period ending 3rd quarter 2011. Okay .. math … 111.07% divided by 20 years = 5.55% a year appreciation!

    Now, assuming that housing prices are getting to the bottom end of their free-fall, let’s also assume that housing prices will continue to appreciate overall at a safe rate of about 5% a year for the next 20 years. There’s still going to be some skidding when reviewed on the short term, but remember that real estate is a long term investment — 10-20 years.

    Continuing with assumptions, let’s presume that housing prices in Washington State might fall another 7-8% over 2012 (I think that sounds like a bit much, but my crystal ball is a bit cloudy, so who knows? Note, that The Housing Predictor anticipates an approximate drop in the Seattle area of about 5.1%.)

    So … your current house valued today at, say $250,000, might be worth approximately $230,000 or maybe $235,000 by year end. Yikes … another nosebleed of $15,000-$20,000. Perhaps you owe approximately $150,000-$200,000 … and you’re paying around 6% in interest on your mortgage. (Quick math … $200k at 6% = principal & interest payment is approximately $1,200 a month – but you’re paying more than that because you haven’t refinanced since 2008 and your house was worth more and your loan was bigger. I’m guessing you’re probably paying around $1,600 a month principal and interest.)

    You want a bigger house, different neighborhood, lower interest rates. And you can buy that for, say, $275,000-$300,000 at today’s prices. At the end of the year (assuming you wait until next December), those houses might be priced at $255,000-$280,000.

    Let’s look at what that means to your pocketbook by comparing interest rates.

    Right now, rates are sitting right around 4%. They move around a bit … but let’s say 4% just for talking sake.

    Analysts have been surprised that rates have stayed as low as they are, so let’s presume they go back up to 5%. If you buy in January rather than waiting until next December, your purchase might look like this:

     

       

    Today’s Price

    		  

    Price at End of 2012

    Purchase Price

    		  

    $275,000

    -7%

    $255,000

    Down Payment

    20%

    ($55,000)

    20%

    ($51,000)

    Amount Financed

    		  

    $220,000

    		  

    $204,000

    Principal & Interest Payment

    4%

    $1,050.30

    5%

    $1,095.12

    Interesting … buying now at a higher price still saves about $45 a month over waiting until year end and paying a bit more in interest.

    Now, let’s look back at that historical trend for appreciation. Conservatively, let’s say that  house gains in value 5% a year overall for 20 years.

    Therefore, if you buy a house today at $275,000, twenty years from now at 5% a year (hmmmm, 100% increase), historically, that house could be worth approximately $550,000. Plan to keep the house 10 years? How about approximately $412,500?

    Should you sell … and buy new in 2012?  “I” think so; personally I expect prices to start to rise in 2013. But, of course it has to make sense to you. If you plan to buy a home and believe you’ll be able to stay in it for 10 years or more, then absolutely.

    If your overall payment on a replacement home is within your budget, you have the funds to close the sale of your old home and a new one, then let’s get going while rates are amazing and prices are too!

    *man on fence graphic thanks to Flickr, Michael Kuhn

    Another Truly Amazing and Unique House!

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    Everyone now and then a house just captures imagination. Such is definitely the case for this unique house located in Wales, UK. This “hobbit” house was built completely by the owner, for an amazing sum of less than $5,000. It reminds me of the fairy tale houses of childhood stories.

    Just imagine how much fun it would be to live in such a place!

    front

    Now, of course, I’m totally curious about how well our local building inspectors might appreciate the framing techniques used here:

    henge2

    An overview from the inside of the rafters:

    OLYMPUS DIGITAL CAMERA

    And the windows are perfect too!

    flowers

    The kitchen from the overlooking bedroom balcony:

    kitchen

    With many thanks for posting photos and information, please visit the owner’s site at www.simondale.net. SOOO cool!