The chart below shows data relating to the Stockton Real Estate Market – in particular the amount of Sold, For Sale and Pending homes.  The amount of homes for sale has increased from the begining of the year?  This inventory increase of  homes is most likely do to the expiration of the federal and state tax credits which have discouraged many buyers to purchase.  Also, notice that the amount of sold homes has decreased.

We have had a slight increase in the amount of homes for sale at the first part of 2010, but there has also been a slight decrease in the amount of homes sold as well. Is this due to the typical slow winter season??  What do you think?

Please contact me for detailed data pertaining to your zip code or neighborhood.
David Mckeever with McKeever Real Estate, Stockton Ca

Please note I am not an accountant and do not claim to know everything there is to know about rental income tax laws.  I would advise you to speak to your accountant about any of the tips list here.  :)

#1 RENTAL INCOME TAX TIPS

The lower your rental income for the year, the less that you will owe in taxes. By minimizing your rental income, you can reduce your taxable liability.

This does not mean you should stop collecting rent, it just means you might not have to include all the rent you’ve collected in your taxable rental income.

1. You don’t have to report your rental income if you rented out your property or vacation home for 14 days or less.

2. Rental income is taxable in the year it is collected. If you did not receive the last month’s rent in the current year, do not report the income in the current year.

3. Exclude Security Deposits from your rental income if you plan on returning the deposits at the end of lease.

#2 MINIMIZE TAXABLE GAIN USING SALE EXPENSES

Many real estate investors overlook deductions when they sell their property. If you sold your rental property for a gain, make sure to minimize taxes by accounting for sale expenses – like closing costs, which can be found on the property’s settlement statement.

You should deduct Commissions Paid, Title Charges, Recording and Transfer Charges, and Additional Settlement Costs from the Contract Sales Price. This will help you minimize gain, and lower the tax liability on your sold property.

#3 LOOK FOR PROPERTIES WHILE ON VACATION

Be sure to deduct the cost of expenses incurred while looking for new property. Travel expenses in connection with the management of your investments are tax deductible if they are ordinary and necessary.

At least half of the time you spent away on travel must have been spent doing business, and the primary cause for travel must be business. Common business expenses that you can deduct while scouting for new investment properties are fees for travel, lodging, and services.

#4 ORDINARY AND NECESSARY ADVERTISING EXPENSES

Be sure to deduct any advertising expenses that are considered “ordinary and necessary” for your rental property.

Common expenses can be advertisements on the radio, in the newspaper, classified lists, and phone books. Other expenses may include the cost of

signs, banners, and postage for mailers. You can even deduct the cost of advertising for vacancies, including the cost of building a web site – just be sure that they are “ordinary and necessary” for your rental activity.

#5 DEDUCTING TENANT UTILITIES THAT THE LANDLORD PAYS

Utilities paid by the landlord for tenant use are fully deductible, provided that this is part of the rental agreement.

Landlords often incur expenses to light common areas or operate security systems on their properties. Other common expenses include power, water, gas, and cable, and internet.

Any utility costs incurred during a period of vacancy are also fully deductible – but be careful. Deducting large expenses during periods of vacancy can be a reason for the IRS to become suspicious.

#6 DEDUCTIBLE START-UP EXPENSES

Business start-up costs are generally capital expenditures, but you can elect to deduct up to $5,000 of business start-up costs incurred in 2008. The $5,000 deduction is reduced by the amount your total start-up costs exceed $50,000, and the remaining cost must be amortized.

Start-up expenses are costs incurred while creating an active trade or for investigating the creation of a business or trade. This includes expenses incurred when acquiring an existing for profit activity, as well as expenses incurred during the anticipated production of income.

Common start-up expenses may include:

Accounting fees

Analysis, survey, or study of potential markets, products, labor supply, transportation facilities, etc.

Advertisements for the opening of the business. Office equipment and furniture, setup costs Salaries and wages for employees who are being trained and their instructors. Travel and other necessary costs for securing prospective distributors, suppliers, or customers. Salaries and fees for executives and consultants, or for similar professional services

Keep in mind that certain expenses must be amortized over 5 years. Such expenses include legal expenses and expenses for setting up the business structure (as an LLC, etc…)

#7 SELL PROPERTY TO YOURSELF

ever, after moving out of the property, you sell it to your own S-Corporation, which allows you to exclude capital gain (up to $250k, $500k if married filingjointly) because requirements for the two-year rule have been met. The other advantage is you can have a new basis for depreciation on your appreciated property. Selling to your S-Corp isn’t for everyone though. You should avoid using this strategy if you cannot take advantage of the exclusion amount.

#8 PAY YOUR KIDS, OPEN THEIR IRAS

If it looks like you will have a large taxable liability at the end of the year, it’s not a bad idea to hire your kids to landscape your rentals.

You can pay your kids to do work on your properties, and put the money in IRA accounts for them. This is especially a good idea if you’ve already maxed out on your and your spouse’s IRA contribution for the year. You’re better off avoiding the taxes on your extra income, and the money will be safe in a tax free shelter.

And of course, it’s a great way to help your kids prepare for their first property!

To learn more about saving money on taxes, try the property management software and other money saving real estate software from TReXGlobal.com.

Selling property to your own S-Corporation may be beneficial in some specific situa- tions, like if you are trying to meet requirements for the two year rule ($250/500k exclusion), or if you are trying to take advantage of depreciation on appreciated property.

For example, say you lived in a property for three years, and rented it out for the next seven years – since you haven’t lived there for two out of the last five years, you cannot sell the property as a primary residence to avoid the capital gain.

#9 TRAVELING AWAY FROM HOME

You can deduct the expense of traveling away from home if the primary purpose of the trip was to collect rental income or to manage, conserve, or maintain rental property.

You can also deduct expenses incurred while staying overnight when traveling for business.

You cannot deduct the cost of traveling away from home if the primary purpose of the trip was the improvement of your property. You can read Publication 463 to learn the specifics.

#10 HIRE FAMILY MEMBERS TO MANAGE YOUR PROPERTIES

Property management fees are fully deductible, so consider hiring someone that you don’t mind paying, like a family member.

Obviously, the expense of your own labor cannot be written off, but that doesn’t mean your spouse or children have to work for free.

By hiring family members, it won’t bother you to pay manage- ment fees because the expense is fully deductible, and the money stays within your family. Keep in mind you’ll have to withhold Social Security and Medicare taxes for the income you pay.

AND of course, hiring a professional is always a good idea. Your teenager might not be the greatest candidate to collect rent

Everyone’s tax situation is different, and this information should not substitute professional advice. Taxpayers should always consult with their tax advisors to consider specific factors that might affect their situation. You can also refer to IRS Publication 535 to learn more about business expenses.

Source: To learn more about saving money on taxes, try the property management software and other money saving real estate software from TReXGlobal.com.

This wonderful family home is located in a quiet North Stockton neighborhood. Perfect for the first-time home buyer or for an investor, this property features 3 bedrooms, 1 bathroom, 2-car garage and is located on a lightly-traveled, tree-lined street.

Warmed by two fireplaces, and with beautiful hardwood floors throughout, this home is ready for a young family. The large family area with bar invites the entertainment of friends and family.  A Not-So-Hidden Bonus: A built-in gas BBQ on the backyard, covered patio, and sweet producing fruit trees.

Take David’s video walk-though below.

4 simple, quick, and efficient things to a quicker sale!
Would you buy your home if it was dirty, cluttered, overpriced, or had broken stuff?
No, me neither. So, do the following:

1. Clean the windows, carpets, walls, lighting fixtures, and baseboards to make the house shine. No dust or dirt wanted!  Please, Please, Please, clean the homes of your animals.  These things can smell!  That means your fish tanks, hamster cages, kitty litter box, etc…  If possible, have them removed all together.

2. Remove clutter and pack up your least-used items, such as large blenders and other kitchen tools, out-of-season clothes, toys, and exercise equipment. Store items off-site or in boxes neatly arranged in the garage or basement.  Pack excessive family photos.  People want to imagine themselves living in your home, not your family.

3. Do not over price the home. Hire a Realtor that is familiar with the your local market and have the home priced right. A good Realtor will prepare a comparative market analysis and visit all the other homes which sold in your neighborhood.

4. Fix the small stuff. Do you have missing grout, a broken appliance, or sprinkler. Get the small things fixed that YOU wish were fixed. All of these little things will add up and make your home more complete. They will be things the buyer does not have to worry about and thus no reason to discount your fairly priced home.

Simple and effective.

David – Stockton Real Estate Agent

In Stockton, the average sale is $150,000. Assuming a 5% down payment at 5% interest on a 30 year fixed, your monthly principal and interest payment would be $765.  If rates rise to 7%, your payment increases to $948/month.  Some buyers may be on the fence because they fear prices may drop further. Consider this. If there is a 10% decrease in price and the $150,000 falls to $135,000 in one year, but you wait to purchase and the interest rate rises to 7%, your payment will be $898.  You spend more money per month plus at the higher interest rate, you pay more interest over the life of the loan.  Real estate appreciation is always a cycle and as the economy stabilizes, values will level out.  Steve Harney is already analyzing data this is happening in many markets and that this will occur by 2014 in many states. Making a home purchase is still a decision that should be weight carefully and is not for everyone.  One important consideration will depend on how long you plan to stay in the home.

Mark Roth summed up the article, “What I’m trying to impress upon everyone is that if you are planning on being a homeowner now and/or in the foreseeable future, or if you are looking to move your family into a bigger home, then pay more attention to the interest rates than the price of the home. If you have a steady job, good credit, and the down payment, then you really are being offered the gift of a lifetime.”

I specializes in helping families make good decisions.  I do NOT think you are stupid or broke if you don’t buy a house right now.  But if you are considering purchasing a home and would like a FREE consultation, I’d love to sit down with you and help you weigh your options and direct you to a qualified, caring mortgage professional that will help you with the numbers.

The President will sit down with bank executives on Monday to discuss lending and industry reform legislation.

President Obama will meet with the chief executives of several big banks next week, in an effort to help spur greater lending to consumers and small businesses, two senior White House officials told CNN Wednesday.

http://money.cnn.com/2009/12/09/news/companies/banks_obama/index.htm

• Count the bulbs on all of your decorative indoor and outdoor lights.

• Check the wattage per bulb.

• Multiply watts per bulb by number of bulbs. (1 watt per bulb x 1,000 bulbs = 1,000 watts).

• Convert watts to kilowatts — 1,000 watts = 1 kilowatt (kw).

• Estimate the hours per month the lights are on. (5 hours per day x 30 days = 150 hours)

• Multiply the total kilowatts by the total number of hours the

lights will be on to get the total kilowatt-hours (kwh). For example, 1 kw x 150 hours = 150 kwh.

• Multiply the total kilowatt-hours by the total cost ofelectricity per kwh. (150 kwh x $0.14 per kwh = $21) In this example, the cost of holiday lighting would be an additional $21 per month.

Reprinted with permission of RISMedia, publisher of Real Estate Magazine

There are many reasons you may wish to buy a home, whether you need or want:

On the other hand, you may not be ready to buy a home. Buying a home:

The purchase of a home is, in part, a financial transaction.  Much like a trip to the grocery store to buy coffee, you have many choices and a significant price range. But unlike a bag of Costa Rican coffee, a house has certain bonuses: Equity, Tax Savings and Ownership.  What’s all that mean? Read on.  

A house is an investment in land and the existing structure.  History tells us that there is a good chance that a house will increase in value over time.  Also, by making timelymortgage payments, you are paying down the debt you owe and building equity.  Equity is the difference between the value of your home and how much you still owe.  You may not own your home outright, but your investment has a cash value. 

In addition to increasing in value over time, owning a home can have a significantimpact on your monthly paycheck – in a very positive way!  When you borrow money to purchase a home, the interest that you pay on that money is usually tax deductible.  

 For example, if you have an annual income of $45,000 and owe $200,000 on a 30-year mortgage at a fixed 7% interest rate, you’ll likely save about $200 per month intaxes the first year you own the home!

For all the doom and gloom about the housing market, it still generally pays to own a home.

http://www.msnbc.msn.com/id/33243863/ns/business-real_estate/

Make your home more appealing for yourself and potential buyers with these quick and easy tips:

1. Trim bushes so they don’t block windows or architectural details.

2. Mow your lawn, and turn on the sprinklers for 30 minutes before the showing to make the lawn sparkle.

3. Put a pot of bright flowers (or a small evergreen in winter) on your porch.

4. Install new doorknobs on your front door.

5. Repair any cracks in the driveway.

6. Edge the grass around walkways and trees.

7. Keep your garden tools and hoses out of sight.

8. Clear toys from the lawn.

9. Buy a new mailbox.

10. Upgrade your outside lighting.

11. Buy a new doormat for the outside of your front door.

12. Clean your windows, inside and outside.

13. Polish or replace your house numbers.

14. Place a seasonal wreath on your door