Yearly Archives: 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.

 

 

How to check exemptions on Cook Co. Real Estate Taxes

Real Estate-Purchases, Real Estate-Sales,

The exemptions on Cook Co. real estate taxes used to be :

1. Homeowner’s exemption;

2. Senior citizen exemption;

3. Senior Freeze.

We just got four more exemptions (disabled, disabled veteran, Long-Term Occupant and Returning Veteran). It used to be hard to understand, now it’s impossible!

If you are considering buying a property in Cook Co. you should know what exemptions are on the property, so that you get the correct tax credit. The easiest way to do this is to look at a copy of the second installment tax bill. Unfortunately, the Cook County Treasurer does not break down the exemptions on their website.

The next best way to check the exemptions is to use the Cook County Assessor’s website. Here is how to do it.exempt

Predatory Lending Database

Real Estate-Purchases

Another layer of administrative hassle has been added to the real estate world. On July 1, 2008, all of Cook County will be subject to the Predatory Lending Database Program. The purpose of this mess of  a program  is to stop lenders from forcing bad loans on people. (After many years of doing closings, my view is that most people know what they are getting in a bad loan, but sign up for it anyway!)

It works like this: A mortgage document cannot be recorded in Cook County unless a “certificate of compliance” or a “certificate of exemption” is attached to the mortgage. It only applies to owner-occupied, 1-4 unit homes.

This applies to all refinances and all purchases by first-time buyers where any of the following loans are being used: Interest only, negative amortization, more than 5 points being charged, a prepayment penalty or an adjustable of 3 years or less.

If the buyer/refinancer fits this profile, he has to go to counseling  (scream therapy may be needed by those sitting through the session) and if it’s determined he really, really still wants the mortgage, the certificate of compliance is issued and then the closing will occur.

The problem is that it’s too much hassle, an extra expense ($100-$200 just for the certificate) and it’s about 2 years too late. Most of the mortgage programs that are targeted here are gone, wiped out by the sub-prime cleansing.