Virginia Beach Real Estate

Virginia Beach Second-home Sellers Pay For Tax Credits

You have probably heard, last week President signed into law the Housing Rescue and Foreclosure Prevention Act. This is the most comprehensive housing bill to be enacted in over a decade. The bill is designed to help more buyers of Virginia beach real estate realize their dreams, as well as, boast the struggling housing and mortgage markets.

One of the biggest benefits, and probably one of the most talked about provisions in this legislation, is the $7,500 tax credit to first time home buyers. Tax breaks are all well and good, but they have to be paid for somehow. While first time home buyers are getting a break, second home sellers will be paying for the $15.1 million dollars in tax cuts.

Up until the new legislation went into effect last week, homeowners could exclude up to $250,000 taxable profit on the sale of their home if they're single taxpayers and $500,000 if married filing joint returns. The catch being, they had to live the in house as their primary residence for two of the five years before it is sold.

Many second home owners took advantage of this by moving into a property that was once a rental or vacation home, live there for two years prior to selling and benefiting from the tax-free profit.

With the new legislation, owners selling on or after January 1, 2009 will have to factor out the period when the property was still a rental or vacation home and pay taxes on that portion of the profit.

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With Virginia Beach real estate sales slowing a bit for the summer, many sellers are left wondering if they may be better off renting their home out for the time being until market activity picks back up. If you have already purchased another home, this option is especially attractive as it allows you to cut down on the expense of paying two mortgages while you wait for your home to sell.

Below are some items to think about, courtesy of BankRate.com, before deciding to become a landlord:

• Mortgage payments must be made regardless of if the property is inhabited.

• Costly repairs and maintenance work cannot be delayed if they inconvenience the tenant.

• Disputes with tenants could require legal representation and legal fees.

• There are many costs involved in renting a home - it is recommended that landlords budget 25-30% of the rent to be used for maintenance, repairs, or emergency. This should be a key factor when deciding how much rent to charge in order to break even.

In addition to extra tax advantages (on top of the regular deductions of mortgage interest and taxes), renting out your property might also allow you to continue to build equity in your old home at the expense of the renter. You might even be able to make a profit from the rent, if your expenses are low enough!

If you are interested in buying or selling Virginia Beach real estate, please call us at 866-222-0158 #550.

Request a complimentary market analysis of your Virginia Beach home!

Suffolk, Smithfield & Isle of Wight  June 2008 Sales Statistics

Residential sales in Suffolk, Smithfiled & Isle of Wight dropped by 35 percent in June compared to June 2007, causing the average market time to increase 23 percent, from 91 days to 112 days. The median sales price decreased 3 percent, while the average sale price decreased 7 percent to $310,513.

What do these statistics mean for Suffolk, Smithfield, Isle of Wight and Virginia Beach real estate?

It remains an excellent market for first time home buyers to get their feet wet. Market times have increased and prices have decreased, making sellers more negotiable. 

Modest near-term movement is expected in Virginia Beach real estate sales, with a recovery in sales seen during the second half of the year, according to the latest forecast by the National Association of Realtors®.

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President Bush signed into law today The Housing and Economic Recovery Act. This is the most sweeping change to housing reform since the New Deal of 1934. You need to write your Congressmen to see if we can get legislation to revoke some of the changes. FHA effective October 1, 2008 will increase the minimum required down payment from 3% to 3.5% for Virginia Beach home buyers. The legislation also calls for the elimination of seller down-payment assistance programs such as AmeriDream and Nehemiah by October 1, 2008.

As of July 14, 2008 they already made upfront MIP premiums risk based on credit scores but also increased the annual premium across the board.. Instead of the original plan of making FHA loans more affordable for potential Virginia Beach home buyers; the new legislation makes it more expensive.

High-level Details of the Housing and Economic Recovery Act:

Here are some key provisions of the Housing and Economic Recovery Act that most affect Virginia Beach home buyers:

1) Higher permanent loan limits for conventional conforming and FHA will become effective Jan. 1, 2009; the Act calls for limits to increase to a maximum amount of $625,500, depending on the metropolitan area. Note: The temporary limits established in March will expire on Dec. 31, 2008.

2) FHA floor limits will remain the same at $271,050.

3) The VA guaranty will increase.

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Portsmouth June 2008 Sales Statistics

Residential sales in Portsmouth dropped by 26 percent in June compared to June 2007, causing the average market time to increase 12 percent, from 68 days to 76 days. The median sales price decreased 7 percent, while the average sale price decreased 5 percent to $253,847.

What do these statistics mean for Portsmouth and Virginia Beach real estate?

It remains an excellent market for first time home buyers to get their feet wet. Market times have increased and prices have decreased, making sellers more negotiable. 

Modest near-term movement is expected in Virginia Beach real estate sales, with a recovery in sales seen during the second half of the year, according to the latest forecast by the National Association of Realtors®.

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