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Below is a summary of a new Hawaii law regarding withholding of funds for the State of Hawaii Tax Collector.
Did you occupy the unit 2 of the last 5 years? If not and unless you have received an exemption from the State of Hawaii Tax Collector, it appears that escrow at closing will be required to withhold 7.25% of the sales price if a sale on the property closes AFTER September 14, 2018.
You should consult with your tax preparer or tax attorney regarding taxes.
Call me if you have any questions.
John Riggins really put forth extra effort to find the perfect home for my wife and me. He is a real estate expert who places the client’s interests first and will not rest until the right property is found that meets a family’s personal as well as financial needs. Professionalism, Respect, Honestly, and Sincerity are evident in all of his transactions and are obvious personal character values. Thank you John for enriching our family life in our new home! Phil (Wayne) and Sunny Gray
Acquisition Debt is the amount of money borrowed used to buy, build or improve a principal residence or second home. Under the new tax law, mortgages taken after 12/14/17 are limited to a combination of $750,000 on the first and second homes. The mortgage interest on this debt is tax deductible when itemizing deductions.
It is a dynamic number that is reduced with each payment as the unpaid balance goes down. The only way to increase acquisition debt is to borrow money to make capital improvements.
Prior to the new law, homeowners could additionally borrow up to $100,000 of home equity debt for any purpose and deduct the interest when itemizing deductions. Mortgage interest on home equity debt is no longer deductible unless it is for capital improvements.
Acquisition debt cannot be increased by refinancing. Some confusion occurs because mortgage lenders are concerned in making home loans that will be repaid according the terms of the note and using the home as collateral. That does not include making a tax-deductible mortgage.
Another thing that adds confusion to the issue is that the lenders will annually report how much interest was paid in a year but only the amount that is attributable to acquisition debt is deductible.
Even if the interest on the cash-out refinance is not deductible, it may be advantageous to pay off higher interest debt such as credit card debt and replacing it with lower mortgage debt.
It is the responsibility of the taxpayer to know what part of their mortgage debt is deductible. The challenge becomes more difficult after a cash-out refinance. Homeowners should keep records of all financing and capital improvements and consult with their tax professional.
It's common for Sellers to consider offering a home warranty or protection plan to make their home more marketable. A growing number of homeowners are now purchasing this type of protection for themselves to limit the unexpected expenses of repairs and replacements.
A home protection plan is a renewable service contract that covers the repair or replacement of many of the components in a home. Some homeowners especially like the convenience that it organizes a qualified service provider as well as the cost of the repairs or replacements.
There are a variety of companies that offer home warranties and the coverage may differ but the majority of things will include heating, air conditioning, most built-in and some free-standing appliances, as well as other specific items. Additional specific coverage may be available for other items like pool and spa equipment.
Some investors are even placing this coverage on their rental properties to limit the amount of repairs during the year. It is a viable way to manage the financial risk and the stress dealing with unexpected expenses.
Call me at (808) 523-7653 if you'd like a recommendation of available programs.
Carbon monoxide is a silent killer you don't want in your home but because it is colorless and odorless; you may not even be aware the deadly condition exists. The Center for Disease Control says more than 400 people in the U.S. die annually from carbon monoxide poisoning and over 10,000 require medical treatment each year.
Unmaintained furnaces, water heaters and appliances can produce the deadly gas. In addition, other sources could be leaking chimneys, unvented kerosene or gas space heaters or exhaust from cars or trucks operating in an attached garage.
The Environmental Protection Agency suggests the following to reduce exposure in the home:
Headaches, nausea, vomiting, dizziness and feelings of weakness or fatigue are a few of the most common symptoms. Lower levels of exposure to carbon monoxide may be mistaken for the flu.
Carbon monoxide alarms should be on every level of a home and especially, in sleeping areas. The alarms can be purchased for as little as $25 and plugged into the wall like a night light.
Regardless of the government requirements, no one would want to put their family, guests or themselves at risk for something so deadly.
An economist responded when asked how interest rates would change: “They may fall some and then, rise and after that, they’ll fluctuate.”
Just because interest rates have been low for ten years doesn’t mean they are supposed to be low. The Federal Reserve has raised interest rates twice this year and are expected to go up twice more plus three times next year. Mortgage rates have risen from 3.95% to 4.62% since the first of January.
Increased rates directly affect the payments on homes but so does the price. With inventory levels remaining low, the prices will continue to go up. When interest rates and prices rise at the same time, it costs buyers a lot more.
If the mortgage rates go up by one percent and prices increase by five percent in the next year, the payment on a $250,000 home could go up by $200 a month. In a seven-year period, the buyer would pay $18,000 more for the home.
People planning to buy a home, need to investigate the possibilities of accelerating their timetable to take advantage of lower rates and prices. Use the Cost of Waiting to Buy calculator to see how much more it could cost you to wait. Call Profile.BusinessPhone} if you have questions about what can be done now.
A principal residence and a second home have some similar benefits, but they have some key tax differences. A principal residence is the primary home where you live and a second home is used mainly for personal enjoyment while limiting possible rental activity to a maximum of 14 days per year.
Under the 2017 Tax Cuts and Jobs Act, the Mortgage Interest Deduction allows a taxpayer to deduct the qualified interest on a principal residence and a second home. The interest is reduced from a maximum of $1,000,000 combined acquisition debt to a maximum of $750,000 combined acquisition debt for both the first and second homes.
Property taxes on first and second homes are deductible but limited to a combined maximum of $10,000 together with other state and local taxes paid.
The gain on a principal residence retained the exclusion of $250,000/$500,000 for single/married taxpayers meeting the requirements. Unchanged by the new tax law, the gains on second homes must be recognized when sold or disposed.
Tax-deferred exchanges are not allowed for property used for personal purposes such as second homes. Gain on second homes owned for more than 12 months is taxed at the lower long-term capital gains rate.
This article is intended for informational purposes. Advice from a tax professional for your specific situation should be obtained prior to making a decision that can have tax implications.
The American flag is obviously a symbol of our country but it has come to remind us of every man and woman who has fought for the freedom that we enjoy. The emotions that are stirred by images of our flag can run from happiness to sadness to trust and everything in between.
Most of us learned American flag etiquette or the Flag Code when we were young but occasionally, it is a good idea to review the guidelines so that the flag is treated with the respect it deserves.
More information on flag etiquette can be found at the Veterans of Foreign Wars website.
Memorial Day is the last Monday in May Originally known as Decoration Day, it began in 1865 by decorating the graves of Civil War patriotic soldiers and later to remember the U.S. men and women who lost their lives serving their country.
John Riggins
John Riggins Real Estate 1003 Bishop Street, Suite 2700 Honolulu, HI 96813
(808) 523-7653 John@JohnRiggins.com www.JohnRiggins.com
Imagine a homeowner consulting with their agent about the price to place on their home. The agent suggests that the market data indicates that $200,000 to 210,000 would produce a quick sale by pricing it properly. The owner puts a $210,000 price on the home.
The first person who looks at the home offers $205,000. When the seller receives the offer, he comments that he thinks he priced the home too low and counters for full price. The counter-offer is rejected, the home stays on the market and at the end of the first month when based on market conditions, the home should be sold, no other offers have been made.
It may be human nature that when an offer is received so quickly, the first thought to come to mind is that it was priced too low. A more appropriate thought might be that it was priced correctly. In some cases, when a home comes on the market, there is increased competition (real or perceived) among the buyers waiting for the "right" home to come on the market. The home can sell for a higher price than if it sits on the market for several months.
There may be stories of sellers who turned down the first offer and ended up receiving a better offer that would net more money. However, real estate professionals say the first scenario occurs frequently.
The wisdom of experience advises owners to find a real estate professional that they trust and have confidence. Allow that professional to become familiar with your home and compare it to similar homes in the market that have sold recently and ones currently on the market. Determine the demand for homes in the area compared to the inventory. Decide on a price that will allow the home to sell within a relatively short period of time. And lastly, be satisfied if your home sells quickly near the price you put on it.