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As printed in the OC Register / Saddleback Valley NewsWritten by Jim E. Flynn, Century 21 Beachside Realtors, Lake Mission Viejo
July 09, 2010
"Health Plan" Real Estate Tax &
Foreclosed PropertiesQ. Thanks for pointing out the 3.8% Real Estate sales tax coming along with the "Health Plan". The tax goes into effect on Jan 2013 ($400K sale price = $15,200 in taxes) I have a couple of questions that you maybe able to clarify:
1) What about a short sale, due we still pay the tax?
2) Is the tax assessed on the Foreclosure property's sales price?
- C. D. SoderinA. Thanks for your prompt response to my earlier column “CD”. Before answering your questions, I wanted to be sure and checked with my Tax professional resource friend’s .which include Corp. and CPA high-end client CPA’s as well as an Enrolled Agent who can practice Tax in any of the 50 states. They all have advised after checking their most recent professional Tax bulletins that there are no known details published. Since the tax is a Proposed Tax and not slated to be effective until Jan 1 any elaboration from me or anyone else on whether the tax would still be due for a short sale or a foreclosure sale price or something else, would be pure conjecture /inference or judgment based on inconclusive evidence. Fast forwarding ahead. I have a very difficult time understanding how the Govt. would be able to collect this proposed new tax from an owner who has qualified for a Short Sale because they do not have any money. This and other huge issues certainly compound the problem.
Dryer Times Ahead for Recovery
Q. Nancy from San Juan Capistrano asked, Jim I have heard that it may take at least 10 years for So. Calif. Homeowners with negative equity recover. Do you really think it will take that long ?
A. Nancy, Even though summer Real Estate activity is showing signs of warming up here in So. Orange County, the Real Estate Economist articles that I have read recently indicate that many homeowners are just now coming to grips with the idea that prices will take years to reach the pre-crash peak. One pre-May article I read was forecasting as long as 14 years in California. While I do not believe it will take 14 years here in So. Orange county, I am reading more reports from Realtor Economist that project it may take up to 5 years or longer in this market for those who are underwater to begin to swim to a surface equity building level. Another treading water issue is that owners stuck with properties whose negative equity won't recover for years are feeling betrayed by financial institutions that they feel bankrolled the frenzy, and some homeowners are concluding that it's smarter to walk away than to stick it out. Again, pre-May statistics indicated that nearly one-quarter of U.S. mortgages, or about 11 million home loans, are "underwater," with buyers' houses worth less than their loans. While home values are regaining ground, here in south Orange County many still remain below their 2007 peak. So Nancy although a flood of “walk aways” could water damage this So.Orange County recovery by swamping the market with foreclosed properties we are optimistic that dryer times are ahead.
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Jim E. Flynn
Century 21 Beachside Realtors - © 2011
Phone: (949) 830-8839