The Real Folsom Blog

How You Hold Title Is Important

Recently I sat down for a one to one talk with a local escrow officer. She brought up the topic of how couples hold title when they purchase real estate. It's worth giving this one some thought before making your decision as your choice can have serious legal consequences. It used to be, the escrow officer told me, that couples generally took title as joint tenants (the main choices being: tenancy in common, joint tenancy, community property, and community property with right of ownership). Since July 1, 2001, married couples also have had the choice of community property with right of ownership. I'm not going to tell you here which one is better, neither should the title officer be advising you. For this decision, because it involves legal matters, you will want to get advice from a an attorney, a certified tax consultant, or other qualified professional. Just know you will need to make a decision when you go in to close escrow on your property, so give it some though beforehand.

Something You Should Care About: 'Tax Portability'

I know, I know, your eyes probably glazed over the moment you read those words: 'tax portability' but please bear with me. This one's an important issue that could mean more money in your pocket in the future. With a median home price of $600,000 in California, it's a stretch for middle-class families to purchase a home these days--an issue of concern to many including the California Association of Realtors. Earlier this year a new CAR task force started exploring the feasibility of expanding property tax basis portability--specifically looking at the circumstances under which a homeowner would be allowed to transfer his or her property tax basis to a new home. Tax portability would allow homeowners to move up without getting hit with an increased tax bill. In our current market, if a homeowner moves their property tax is based on the purchase price of the new home. Currently moving seniors can retain their property tax basis so long as they move withing the same county and the replacement home is of equal value or lesser value than the sale price of their former home (this under Prop 60 passed in 1986). There is also a Prop 90, which deals with seniors moving across state lines but only seven counties participate in that program. The CAR task force is looking at various possibilities including removing Prop 60's program limitation to seniors and at the  impact on local governements from the loss of property tax revenues if Prop 60 were expanded. No word yet on when we can expect a final report but this one's worth keeping an eye on.

Your Home Offers You More Than One Type of Shelter

It’s a place to stay out of the rain or, in the case of sunny Folsom, out of the sun. At the very least a house gives you shelter but the great news is that homeownership also provides you with shelter from the “tax storm”. An article in the July issue of California Real Estate magazine talks about these benefits.  Mortgage Interest: The Internal Revenue Service allows you to deduct from your tax return the interest from a first-time home purchase; the interest from a home equity loan in the year the loan is made; and the interest from any purchase or improvement for a first or second home. And, if you are looking for an even greater shelter, you can consider consolidating credit debt via a home equity loan. Talk to a tax expert for details and more information on these tax shelters. The more informed you are the better off you’ll be. What’s not tax deductible: homeowners’ association dues. If you’d like a copy of the complete article, which also talks about property taxes and PMI deductions, e-mail me and I’ll put a copy in the mail to you. Or if you’re up to it, you can learn more about the IRS guidelines on mortgage interest deductions at www.irs.gov/pub/irs-pdf/p936.pdf.