Monday, January 29, 2007

What are you waiting for?

It's a great time for Buyers in the East Bay Market!!!

Homeownership is a safe, secure way to build longterm wealth. According to the National Association of Realtors (Nar), the naional median price of homes bought ten years ago has increased 88%. The number of US households is expected to increase 15 percent during the next decade, creating a continued high demand of housing.

Mortgage rates are still low! The average 30-year fixed rate remains low. Currently, at 6.125%, this is more than the entire percentage point below 2000 levels.

There is plenty of inventory on the market! Buyers have negotiating power. Imagine if you had bought two years ago?? It's time to get in the game and purchase your first home or buy up. Get into a better area than you are now.

Are you interested in finding out what is the best strategy for you? If so, shoot me an email or give me a call.

www.odomrealestate.com

Friday, January 26, 2007

What is a 1031 exchange?

Mechanics of an Exchange:

The exchange must meet three requirements to fully defer all capital gains taxes:

1.Reinvest all net proceeds into the replacement property.
2.Obtain an equal or greater amount of new debt on the replacement property or add equivalent cash to offset the debt difference.
3.Title to the replacement property must vest in the same manner as how the relinquished (sold) property was conveyed.

Example 1:

Sales Price $400,000 Replacement Property $700,000
Minus Debt ($150,000) New Debt $480,000
Minus Cost ($30,000)
¬---------------------------- --------------------------------
Net Proceeds $220,000 Down Payment $220,000

Example 2:

Sales Price $400,000 Replacement Property $340,000
Minus Debt ($150,000) New Debt $140,000
Minus Costs ($30,000)
------------------------- -------------------------------
Net Proceeds $220,000 Down Payment $200,000

*Since there is an excess of exchange proceeds of $20K and a debt difference of $10K the sum total of $30K is considered ‘boot’ which is taxable. In this example, there will be a 3 1/3% withholding on the cash boot of $20K in the property is located in California.

info taken from www.exchangeresources.net