There are signs pointing to an invigorated residential real estate market in spring of 2013. Whether homeowners are gearing up to list their homes on the market or not, the signals are as evident as the crocus bulbs poking their heads out of the snow-riddled ground.

While spring-cleaning is a seasonal rite of passage, this year looks to take the phenomenon a bit further. People are remodeling their homes for two possible reasons. First, by taking advantage of what may be the tail end of low interest-rate refinancing, baby boomers can retrofit their houses in advance of retirement, including enhancements to help them “age in place.”

Second, other homeowners may be anxious to relocate for better job prospects or have been waiting to trade up – or down – depending on age and financial situation.

While many of the distressed homes we’ve read about for years have hit the market and caused real estate values to bottom, they’ve also been scooped up by investors and qualified buyers. The good news is that the inventory available for sale has dried up in many parts of the country, helping raise prices.

[CLICK HERE to read, "Home prices continue to rise; housing is now economic bright spot," at NPR.org, January 29, 2013.]

[CLICK HERE to read, "Homes sell in two weeks with low supply for spring buyers," at Bloomberg, February 5, 2013.]

[CLICK HERE to read, "Asking prices up in 86 of 100 largest markets," at Inman News, February 5, 2013.]

Whether or not prices will continue to rise as more houses hit the market this spring remains to be seen. One issue homeowners are dealing with is whether they can get back the money they invest in upgrades. To this end, a couple of new resources are available to help homeowners determine the cost of upgrades versus the value they’ll receive on resale. These include ZillowDigs and Remodeling Magazine’s Cost vs. Value 2013 Report.

[CLICK HERE to read, "Remodeling the Kitchen? Crunch the Numbers First," at CNNMoney.com, February 8, 2013.]

[CLICK HERE to read, "Remodeling Cost vs. Value Report 2013," at Remodeling Magazine, 2013.]

[CLICK HERE to read, "Zillow Digs Provides Home Modeling Inspiration and Cost Estimates," at the Washington Post, February 6, 2013.]

Some experts caution that investing in residential real estate should be considered a place to live, not a long-term money maker. Just recently, industry expert Robert Shiller warned investors against jumping into the market for the sake of a return on their money. While he admits the two homes he owns provide diversification for his portfolio, he hastens to add he bought them because they were the houses he – and his wife – wanted to live in.

[CLICK HERE to read, "Shiller Sees No Major Rally in the U.S. Housing Market," at Bloomberg.com, February 6, 2013.]

Ultimately – buying, selling, remodeling, staying in place, aging in place – these decisions are all as personal as our career and family choices. What works best for you may not be a good move for your neighbor. We’re happy to help evaluate your financial situation and objectives to help you make the right decisions.

By contacting us, you may be offered insurance products for sale. The links provided above are from sources believed to be reliable, but accuracy and completeness cannot be guaranteed.  They are for informational purposes only.

The information and opinions contained herein are provided by third parties and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by our firm. Content is provided for informational purposes only and is not a solicitation to buy or sell the products mentioned. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. 

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Baby boomers are giving new meaning to an established term. “It takes a village” – used in the title of Hillary Clinton’s 1996 book – comes from the African proverb “it takes a village to raise a child.” The idea behind the phrase is that people beyond the family unit have influence over a child’s well-being.

With 75 million baby boomers on the cusp of retirement, the phrase is being retooled. Now it pertains to the formation of networks and communities designed to provide aging seniors with the resources and connections they need to “age in place” (at home).

[CLICK HERE to read, "Village People: Community Networks Help Boomers 'Age in Place'," at Bloomberg, January 24, 2013.]

Villages are cropping up all over the United States. According to the Village to Village network, a website that lists contact information for villages nationwide, 93 villages are currently up and running with another 125 in development.

These membership-driven establishments charge an annual fee for access to volunteers and support services (including a vetted rolodex of plumbers, roofers, electricians, maids, handymen, etc.), and even planned social activities. The organizations also can serve as the local emergency contact for members if grown children and/or other family members live far away.

[CLICK HERE to visit the Village to Village Network website, 2013.]

Another way to plan for aging in place is to take advantage of a low interest rate loan to retrofit your home for senior living. Most people don’t even think about this until they suffer some type of debilitating accident or illness. Once it’s time to think about leaving the hospital, many people realize they won’t be able to climb stairs or step into a deep tub when they get home. That’s how a lot of seniors end up in a rehabilitation or assisted living facility.

You might as well find out ahead of time if it’s even possible to widen doors and hallways (for potential wheelchair use) and eliminate any raised step-ups inside your house. Even if you hadn’t considered it before, downsizing to a smaller, one-story residence may help your chances of being able to grow old at home in lieu of a facility.

[CLICK HERE to read, "Remodeling as Retirement Planning," at Bloomberg, November 29, 2013.]

[CLICK HERE to view the video, "Are Communities Prepared for Aging?" at UC Berkeley's Center for the Advanced Study of Aging Services, February 2, 2008.]

Deciding where to live – and what that might cost – is just as important as creating a plan for how you want to live in retirement. Please contact us to discuss the myriad of strategies available for a comprehensive retirement plan.

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The information and opinions contained herein are provided by third parties and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by our firm. Content is provided for informational purposes only and is not a solicitation to buy or sell the products mentioned. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. 

The American Tax Relief Act of 2012, recently ratified by Congress included several provisions that will impact homeowners, sellers and buyers in the coming year. For example, the deduction for private mortgage insurance has been reinstated and is retroactive for premiums paid in 2012. A full deduction is available to single and married-filing-jointly homeowners with AGI of $100,000 or less, while married couples who file separately may write off 50 percent of premiums. Taxpayers with taxable income exceeding $100,000 may qualify for a partial deduction on a sliding scale.

[CLICK HERE to read, "Fiscal cliff bill extends real estate tax breaks," at Inman News, January 4, 2013.]

While the mortgage interest deduction currently is still available, it is one of many issues that will be hotly debated in coming months as the House and Senate negotiate government spending reductions and tax reform. You should be aware, however, that the recent fiscal cliff-saving tax bill eliminates up to 80 percent of total itemized deductions for single taxpayers earning more than $250,000; $300,000 for couples filing jointly.

[CLICK HERE to view a flowchart infographic to determine, "Is My Home Mortgage Interest Fully Deductible?" at IRS, Publication 17, 2011]

The new tax bill also extends debt forgiveness to homeowners who are given principal forgiveness or undergo a short sale or foreclosure this year. This means they will not have to pay taxes on the amount of debt forgiven. 

As in the past, home sellers who realize profits exceeding $250,000 (individual) or $500,000 (couple) from the sale of a principal home are required to pay capital gains taxes on the excess amount. The rub this year is that the capital gains rate has now increased to 20 percent for taxpayers with more than $400,000 in taxable income ($450,000 for married couples).

Even if you don’t earn enough to be subject to the higher capital gains rate, your home-sale profit still may get hit with the 3.8 percent Medicare tax starting this year. This particular tax, which was included in the Patient Protection and Affordability Act of 2010, applies to home sellers who earn more than $200,000 ($250,000 for couples filing jointly).

[CLICK HERE to read "The 3.8% Tax: Real Estate Scenarios and Examples," at NAR,  January 1, 2013.]

And finally, the Consumer Financial Protection Bureau came out with new guidelines designed to protect homebuyers from “irresponsible mortgage lending.” The new rules require lenders to ensure that borrowers have the ability to repay their mortgage, essentially putting an end to loosey goosey practices such as the no-doc and interest-only loans.

[CLICK HERE to read, "New federal rules aim to curb risky mortgages," at US News & World Report, January 10, 2013.]

[CLICK HERE to read, "The CFPB's New Mortgage Rule: A Good Start, but Only a Start ," at Bloomberg, January 10, 2013.]

Please contact us if you’d like to discuss how your plans to buy or sell a home this year could impact your financial situation.

This information is not intended to provide specific legal or tax advice, nor promote, market, or recommend any tax plan or arrangement. Please consult a tax and or legal professional for guidance with your individual situation. The information and opinions of the links contained herein are provided by third parties and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. This information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. 

* By contacting us, you may be provided with information regarding the purchase of insurance products.

The IRS recently issued a series of Proposed Regulations for the 3.8 percent and the 0.9 percent Medicare taxes slated to begin in 2013 as part of the Patient Protection and Affordable Care Act.

[CLICK HERE to read the actual Act, "HR 3590: The Patient Protection and Affordable Care Act," at Congressional Health Care Caucus, January 5, 2010.]

The 0.9 percent surtax will be applied to wages and self-employment income that exceed $200,000 (for single filers) or $250,000 (for couples filing jointly). However, the tax will apply only when wages surpass the $200,000 threshold each year, continuing at the higher level for the remainder of the year.

The new 3.8 percent Medicare surtax will be applied to 2013 investment income received by high-income taxpayers. It will be levied on the lesser of either your net investment income or the amount by which modified adjusted gross income (MAGI) exceeds the same thresholds.

The tax will be levied on interest and dividends; distributions from annuities (other than tax-deferred distributions); rent and royalties; gains from investments in passive activities; trades of financial instruments and commodities; and the net capital gain from the sale of real property.

Note that “net investment income” for purposes of this tax does not include distributions from IRAs and qualified retirement plans, income from tax-exempt municipal bonds, or tax-deferred income from nonqualified annuities.

[CLICK HERE to read, "Affordable Care Act Tax Provisions," at IRS.gov, December 11, 2012.]

[CLICK HERE to read answers to frequently asked questions, "New 3.8% Medicare Tax on 'Unearned' Net Investment Income," at Congressional Health Care Caucus, December 13, 2012.]

One of the most notable items among the IRS’ new guidelines is that the tax code provisions that normally exempt income for regular tax purposes will also apply to the Medicare taxes. For example, the tax-deferred gains from a Section 1031 real estate exchange or Section 1035 annuity exchange will not to be assessed for the Medicare tax.

It’s also good to know that capital gains on the first $250,000 / $500,000 (individuals/married couples) resulting from the sale of a personal residence also will be excluded from the Medicare tax.

[CLICK HERE to read, "The 3.8% Tax Real Estate Scenarios & Examples Effective January 1, 2013," at Realtor.org, 2012.]

With new taxes on tap for 2013, now may be a good time to reassess and perhaps even reposition assets to avoid surplus taxes. Give us a call for a complete evaluation.

[CLICK HERE to read, "CRTs, PIFS, CLTs & CGAs - Proposed Regulations on 3.8 Percent Medicare Tax," at WealthManagement.com, December 27, 2012.]

By contacting us, you may be offered insurance products for sale. The links provided above are from sources believed to be reliable, but accuracy and completeness cannot be guaranteed.  They are for informational purposes only.

This information is not intended to provide any tax, legal, investment, or accounting advice or provide the basis for any financial decisions.  Be sure to speak with qualified professionals before making any decisions about your personal situation.

The information and opinions contained herein are provided by third parties and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by our firm. Content is provided for informational purposes only and is not a solicitation to buy or sell the products mentioned. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation.    

In 2009, Knowledge@Wharton published an article referring to reforming Social Security and Medicare as “trying to tackle two 800-pound gorillas.” Amid end-of-year discussions concerning government spending on entitlement programs, two things have become clear: Social Security is on the chopping block and, for now, Medicare is off the table.

[CLICK HERE to read, "Social Security and Medicare: Trying to Tackle Two 800-pound Gorillas," at Knowledge@Wharton, May 13, 2009.]

One cost-saving measure that’s been bantered about is increasing Medicare’s eligibility age to 67 from the current 65. According to research by the Kaiser Family Foundation, raising Medicare’s eligibility to 67 in 2014 would generate an estimated $5.7 billion in net savings to the federal government, but also result in an increase of about $3.7 billion in out-of-pocket costs for 65- and 66-year-olds, plus another $4.5 billion in employer retiree health-care costs. Furthermore, the study projects that the change would raise premiums by about 3% both for those who remain on Medicare and for those who obtain coverage through health reform’s new insurance exchanges.

[CLICK HERE to read, "House Dems to Obama: Don't Raise Medicare Age," at The Hill, December 13, 2012.]

[CLICK HERE to read, "Trade-offs in raising Medicare eligibility age," at Associated Press, December 7, 2012.]

[CLICK HERE to read, "Raising the Age of Medicare Eligibility: A Fresh Look Following Implementation of Health Reform," at Kaiser Family Foundation, July 18, 2011.]

This reminds me of the story of a father who tries to teach his son about money by offering to trade him two dollar bills for the son’s five dollar bill, observing that the boy would gain two times the number of bills. What sounds like a gain to the boy is a detriment to both father and son. Why? Because when they go to the corner drug store and the boy wants to buy a five dollar toy but now only has two dollars, the dad ends up footing the bill for the extra three dollars – lesson lost.

And you know he will. Just like our government steps in when its citizens don’t have enough money to pay for vital services like food and healthcare. One step forward, two steps back.

It kind of feels that way when you’re saving for retirement. Right about the time millions of baby boomers hit their income-earning stride, the recession pounced and they cut back on savings contributions to help pay down debt. Right about the time when retirement assets started taking off, a market correction hit and market values tanked.

[CLICK HERE to read, "Big Income Losses for Those Near Retirement," at The New York Times, August 23, 2012.]

The fact is you have more control over your finances than you may think you do. After all, you just have to worry about your own household income – the federal government is trying to look after the vastly different interests of 114,761,359 households[1] in this country. Working out issues on a much smaller scale, with far fewer people to please, is much more manageable. You can always find ways to rein in your spending habits without impacting your neighbors, friends, and a bunch of people in a different socio-economic status whom you don’t even know. Plus, you have all those great money lessons your father taught you.

If that’s not enough wisdom to get you comfortably through retirement, please remember you have us to help you as well.

By contacting us, you may be offered insurance products for sale.

The information and opinions contained herein are provided by third parties and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by our firm. Content is provided for informational purposes only and is not a solicitation to buy or sell the products mentioned. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation.