New Real Estate Actions for 2009

Stimulus Programs and Interest Rates

Since Thanksgiving interest rates have dropped a full point to 5.5% on thirty year loans up to $625k. Rumors of additional reductions to 4.5% are being considered for home purchases only (no refinancing) and for loans only up to $417k. These won’t be finalized until after the inauguration.

There are currently considerable incentives to buy down the rates. One point may get you a 1% lower rate.
Since the mortgage market is changing weekly, if you want current news, please call me.

Conforming Loan Limits:

Mortgage Loan limits for conforming (non-Jumbo) loans have increased. In the past, any loan over $417,000 was considered a Jumbo Loan and had higher interest rates. In 2009 the conforming limits will be $625,000. This is true for both new loans and refinanced loans. (This limit was temporarily increased to $729,500 until the end of 2008.). With the increased loan limits, historically low loan rates, and incredible opportunities in the market, this is an excellent time to buy a home at a very enticing price and terms.

Capital Gains Tax Exclusion on the Sale of your Home:

There are also changes to the capital gains tax exemption on the sale of your home. The rules allow for an exemption of $250,000 per person (or $500,000 if filing jointly) for a home lived in as a principal residence for two of the previous five years. For most people selling their homes, there will be no change from what has been the law for nine years. In the past, however, even if the home was occupied as a rental property for the remaining three years, you could still claim the full $250,000 ($500,000) deduction to your capital gains. Starting in 2009, the deduction will be pro-rated based on the percentage of time the home was actually used as your principal residence. Using the above example, your exemption could be reduced by as much as 60%. Furthermore, if the property was involved in a prior 1031 exchange before this sale, there are additional new limitations and restrictions on your write-off.

Please consult with your tax advisor to determine your best options. Meanwhile, if you or a friend is thinking of buying or selling a home, or simply has a real estate question, please call me. I will give you the respect and professional service you deserve.