Monthly Archives: December 2008

Closing volume has nowhere to go but up

Real Estate-Purchases, Real Estate-Sales

The Illinois Association of Realtors keeps real estate closing statistics. Read ‘em and weep…

 In the Chicago area, the number of sales, comparing 2006 to 2005, was down about 12%.

 The number of sales from 2006 to 2007 was down 20.5%

 So far this year, the number of sales is down again from 2008 to 2007:

 1st Quarter- 29% down

2d Quarter-33% down

3d Quarter- 22% down

 October 08- 17% down

November 08- 32% down

 It’s will probably down about 30% for 2008 after you add it all up.

 So, basically the real estate market has lopped off close to 60% of its volume compared to 2005 (generally considered the peak).

 Wow, I need a drink.

 

IRAs: No required distribution for 2009

Estate Planning

Update: 12/27/08  

The House and Senate have passed a bill (and it is expected that the president will soon sign it) (and the president signed it)that allows IRA owners to skip their required IRA distribution for 2009.

This applies to those over 70.5 AND to those who have inherited IRAs. Both categories will not have to take 2009 distributions.

It was hoped that there would be relief from taking 2008 required distributions, since those are based on 12/31/07 values, but it appears that will not happen.

Are "Short sales" taxable?

foreclosures-shortsales, Real Estate-Sales

“Short sales” are sale of real estate where the seller does not have enough money to pay off the existing mortgage(s). The lender reduces the amount owed voluntarily. The “forgiveness of debt” is taxable.

However, there is an exception if you sell your primary residence in a short sale and have lived there for at least two years before you sell. In that case, there is no tax due on the forgiveness of debt.

 

Unfortunately, this rule does not apply to any investment real estate or to second homes. If either of these types of properties are sold in a short sale, the amount of the loan that is “forgiven” is TAXABLE to the seller.