Gifting The Family Home

ERA Justin Realty brings helpful topics to Bergenite readers. Ron Darby, broker co-owner offers tips and hints about gifting the family home. The firm serves buyers and sellers in Bergen, Passaic, Essex and Hudson Counties and are celebrating their 62 years in area real estate.

 

                           ERA Justin Realty Report:  Gifting The Family Home

“If you are getting ready to move out of your longtime home and into more sunshine, you can actually gift your home to a child or friend but that gift will come with a few strings attached. In many countries around the world, once the parents die, the children simply move into the home and take over the master bedroom. While that progression still occurs in the United States, estate taxes, home values, job transfers, and the desire for a separate space and different environment have changed the use of the traditional family home. The bottom line is that the home has evolved from basic shelter to the average person's most valuable possession. It needs to be carefully protected, guarded, and even nursed along--much like the responsibilities that took place within the home itself. And the financial value is usually accompanied by priceless memories and experiences, making the family home beyond doubt the ultimate asset.”  This is information brought forth by author Tom Kelly in his book "Real Estate for Boomers and Beyond,” reported ERA Justin Realty’s broker co-owner Ron Darby, his firm awarded for their commitment to excellence from approximately 30,000 ERA brokers and agents.

Darby stated, “First and foremost, your child or friend's basis in the house will be what you paid for the property, plus major improvements. Because this cost you paid years ago may be lower than today's home value, there's a chance tax will be owed on a subsequent sale. Carefully note that tax laws change and everyone should review their specific situation with their tax advisor for the most current laws and tax information.”

Kelly’s book states, “For example, if you purchased your home in 1970 for $60,000 and it is now worth $450,000, your child's basis would be $60,000 if you chose to transfer the home to the child as a gift. If the married child sells the home 10 years down the road for $760,000, their tax liability would be on $200,000 ($760,000 minus the $60,000 basis, minus the $500,000 exclusion for married couples). Taxpayers in the 15 percent tax bracket would thus owe the Internal Revenue Service approximately $30,000 in capital gains tax. The actual gain is the difference between the adjusted sales price (selling price less selling expenses) and the adjusted basis. The adjusted basis is the original cost plus capital improvements. Capital improvements are the cost of improvements having a useful life of more than one year. Examples include the new roof, dock, deck, remodeled bathroom, and finished basement. Generally, an expense is a capital improvement if it adds value to the property or extends its useful life. If these criteria are not met and the expenditure is considered necessary to maintain current usefulness, it is a maintenance cost.

The outright gift would also reduce your lifetime gift tax and estate tax exemptions. While the limits on both the lifetime gift tax and estate tax used to be the same (there was one overall exemption, and the individual used it up by making gifts during life and at death), the 2001 legislation set the gift tax and estate tax on different roads beginning in 2004. Both were combined into a ‘unified’ exemption because gifts made during life also counted against the total. The overall, or unified, exemption remains for the entire estate, but a gift exemption limits the amount that can be given during a lifetime. Once the unified exemption is used up, the tax rates that apply are quite high. The estate tax is being phased out over a 10-year period, but the gift tax will remain in place. The gift tax exemption is $1 million in 2006, but the estate tax leaps to $2 million. In future years, the gift tax exemption will remain at $1 million, while the estate tax exemption rises until the estate tax is fully repealed in 2010. At that time, the top gift tax rate again will equal the top income tax rate.

If you are going to gift your home to an individual, it's best to offset the amount by first using your annual gift tax exclusion of $11,000 per gift. You can gift $11,000 (this amount will rise and is tied to inflation) to any one person in any year. Hence, if you and your spouse each make a gift to both your child and her spouse, you can offset $44,000 of the home's value. Then, as long as the home's net figure is less than $1 million, you won't owe any current tax (unless you made substantial gifts earlier that reduced your remaining exemption).”

Darby concluded, “Tax regulations do change, so take the time to check with your tax attorney or your accountant before making any moves. Be certain that goals are shared and discussed. You'll find it saves time, money and anxiety.”

ERA Justin Realty proudly received the prestigious ERA 2003 through 2011 Commitment to Excellence Award, from approximately 30,000 ERA real estate brokers and agents.  For these reasons ERA Justin Realty should be your buying and selling Realtor of choice.

All of the ERA Justin Realty listing and sales professionals can be reached at either of their two Rutherford offices at 118 Jackson Avenue and 57 Park Avenue, by office phone (201) 939-7500, (201) 438-0588 or (201) 438-SOLD. Also view 1000's of homes at their websites at www.ERAJustin.com, www.ERAJustinRealty.com and www.SellBergenCounty.com.

ERA Justin Reports On Recommended Work Before Selling

ERA Justin Realtor Michelle Korosy offers a report on recommended work before selling.  ERA Justin Realty serving Bergen, Passaic, Hudson and Essex Counties since 1950 has generated many thousands of successful real estate transactions. Korosy is an integral part of the real estate team who serves the firm's buyers and sellers.

 

ERA Justin Reports On Recommended Work Before Selling

Sellers often order pre-sale inspection reports. This inevitably raises the question of how much, if any, of the recommended work should be done before selling.  Ideally, any defect that would be hazardous to buyers who preview the property during the sale process should be corrected. An example is a trip hazard that might cause someone to fall. In addition, to maximize your return from the sale, you should repair defects that adversely affect how the property looks.

Michelle Korosy, an ERA Justin Realtor said, “First impressions are important. So, if the fence or porch portions are rotted and look shabby, you might want to repair them. If the exterior paint is peeling, repainting is in order if the budget allows. You get positive results when you repair a defect and improve appearance by doing so.  For example, let's say that the wood pest (also known as termite) inspector finds damage under the vinyl covering in a bathroom. If the vinyl is worn and outdated, you'll do better on the sale if you replace the floor covering with new covering. In the course of doing this, the damaged wood can be repaired. The result is that the house shows better and a defect is eliminated--two benefits for the price of one.

You certainly can't be expected to rebuild your home in order to sell it. Nor is this a sensible thing to do economically. As an example, take a house that had a deck that looked okay and wasn't unsafe. But there was dry rot damage scattered throughout the deck. The only way to repair the deck was to replace it. It would be difficult to get the job done in the timeframe in which the seller wanted to sell.  The deck was old and no longer met current code requirements. It would have had to be redesigned. So the seller decided to leave the deck as it was and disclose that the deck needed to be replaced. The future owners could have the new deck designed to meet their needs at a later date. Upfront disclosure is better than surprises during the sale process.

When structural elements are in need of repair and you haven't the time or money to repair them, it's a good idea to get repair estimates and make these estimates available to prospective buyers before they make an offer. This way, you're in control of the process and can find reliable contractors or engineers who will give you reasonable and not exorbitant estimates.

It can be unsettling to a buyer to discover that the roof is in poor condition or the foundation needs work. Most buyers will have no idea how much it will cost to make repairs. Fear of the unknown makes people anxious, which isn't a good frame of mind for someone who's trying to decide whether to buy your home."

Ron Darby Broker added, “At ERA Justin Realty the words, ‘There is a difference in real estate companies’ is more than a phrase.  We live it every day.  Because of our daily priorities, we proudly received the prestigious ERA world-wide 2003 through 2011 ‘Commitment to Excellence Award’, a firm from approximately 30,000 ERA brokers and agents nationally. Ask to see our written report of over 700 reviews of our company from our buyers and sellers. For these reasons ERA Justin Realty should be your buying and selling Realtor of choice.” 

All of the ERA Justin Realty full service Realtor professionals can be reached at either of their two Rutherford offices at 118 Jackson Avenue and 57 Park Avenue.  By office phone (201) 939-7500, (201) 438-0588 and (201) 438-SOLD.  Additional cutting-edge real estate technology information awaits you at www.ERAJustin.com and www.ERAJustinRealty.com.  For a rewarding real estate career visit www.NorthJerseyRealEstateCareers.com.

ERA Justin Realty Home Protection Plans Give Peace-of-Mind

Jennifer Darby Metzger, ERA Justin Realty Broker Co-owner shares valued information about home protection plans and how they benefit both buyers and sellers. The company on-the-grow attracts career professionals having six new agents recently join their team who will make the plan available to their buyers and sellers.

 

                     ERA Justin Realty Home Protection Plans Give Peace-of-Mind

Everyone has his or her own "house horror story." The Sheffield’s saga began just days after they moved into their new home and continued throughout the first year. The pool pump broke, the built-in vacuum stopped working, and most devastating, the air conditioning system ceased operating on the first day of the summer heat wave. Thereafter, the Sheffield home was nicknamed  "The Money Pit."

Fortunately, the Sheffield’s had the forethought to purchase a home protection plan from their ERA Realtor, which covered all or some of the costs of repairing or replacing the broken home components.

Jennifer Darby Metzger, ERA Justin Realty Broker Co-owner said, “The Sheffield’s story repeats itself thousands of times a day across the country.  It is for that reason that ERA-Justin Realty has the ERA Home Protection Plan program available for both our Buyers and Sellers.”

Jennifer continued, “A home protection plan safeguards a Buyer or Seller from unexpected expenses when covered mechanical items break down. Our ERA Buyer Protection Plan and Seller Protection Plan provide replacement coverage as well as comprehensive repair of major mechanical systems and appliances such as air conditioning, heating and electrical systems, interior plumbing, built-in appliances, water heaters and accessible ductwork, subject to a small deductible per service call.

For Sellers, a home protection plan makes a house desirable to the market and protects them at a time when they would rather not make major investments in their property. It has been reported that on average, homes listed with a warranty sell more rapidly than homes listed without a home warranty. The ERA Protection Plan goes one step further by covering the Seller for up to six months provided that the Seller agrees to purchase the plan at a nominal fee for the Buyer. It's a win-win situation for the Seller having protection in place while the house is on the market for sale.

For Buyers in New Jersey, the ERA Protection Plan provides coverage generally for a year after the purchase on resale homes.

If one considers that the most costly purchase in life is generally one's house, a home protection plan is a small price to pay for peace of mind and to insure oneself against the unexpected.”

“There is a difference in real estate companies, and our ERA Protection Plans are perfect examples. We ask Buyers and Sellers to compare.  We believe that in order to exceed expectations of what a real estate firm is about, we don’t offer just real estate basics, and we try to be as comprehensive as possible.  In that way, we know that our Buyers and Sellers will hold us all in the highest regard.  Ask to see our over 700 written 'What People Are Saving'  reviews about our company. Additionally, we've recently had six new Realtors join our strong team.  All of our team can answer your home protection plan questions,"  she added.

The ERA Justin Realtor professionals can be reached at either of their two Rutherford offices at 118 Jackson Avenue and 57 Park Avenue.  By office phone (201) 939-7500, (201) 438-0588 or (201) 438-SOLD. Also view 1000's of homes at their website at www.ERAJustin.com, www.ERAJustinRealty.com and www.BuyBergenCounty.com.