home prices

Thinking of Renting Out Your Home?

DiSalvo CPA, Melbourne, Vero Beach, SebastianReal Estate is booming here in Indian River and Brevard Counties. If you are thinking about moving to a bigger, or even to a smaller place, but you would like to keep you current home, not sell it. Then you may face some tax implications if you decided to rent it out.

If you’ve made the decision to rent your primary residency instead of selling it, there are tax implications to be aware of. The tax code in this area can be complex, so it’s important to understand the rules and regulations upfront before you take the plunge.

First off, a residence is considered primary when you live in it full-time and it is not rented out for more than two weeks in any given year. Conversely, a residence is considered rental property if you use it personal use for no more than two weeks of the year or 10% of the days it is rented.

Tax Implications
Once you have converted your primary residency to a rental property, you will be required to report any rental income as taxable income. On the reverse side, you will also be able to deduct expenses for repairing the property as well as general maintenance.

In addition, the IRS does allow you to use depreciation of the property to offset income received on the property as well as taking other deductions such as property taxes, insurance, mortgage interest, utilities, and association fees.

Any costs over the amount of the total rental income cannot be deducted unless you meet the following conditions:
-You actively participate in all real estate activities for the property
-Your adjusted gross income is under $100K for the year
-Your total losses for all real estate activity does not exceed $25K for the year

The basis for depreciation for rental property is the lower of your adjusted basis – capital improvements plus purchase price – or the fair market value. The property must be depreciated over a 27.5 year period. Also, you are only allowed to depreciate the portion of the residency that is used for income generation.

Case Shiller Index Shows Home Prices Rise in September

The Case Shiller composite index, a closely watched indicator of home price trends, showed U.S. single-family home prices rise was stronger-than-expected, year over year, in September. However, the pace of the increase slowed compared to August.

US Housing Market RiseDavid M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, stated “The overall trend in home price increases continues to slow down.”  The team at DiSalvo and company Certified Public Accountants  tends to believe that any home price increase is a good home price increase.
The S&P/Case Shiller composite index of 20 metropolitan areas gained 4.9 percent in September over September 2013.  In August, it rose 5.6 percent year over year. A Reuters poll of economists forecast a 4.6 percent increase.

On a seasonally adjusted monthly basis, prices in the 20 cities rose 0.3 percent in September. A Reuters poll of economists had forecast an increase of 0.1 percent.

The prospects for an increase in sales as well as sales prices in Florida brighten as the show belt braces for another cold and snowy winter.  Some areas like Buffalo,  NY have seen nearly a years worth of show already and it is only November!  The ice, wind and snow may be making life miserable for northern New Yorkers and Mid-westerners, but at the same time it sets the stage for a motivated set of potential home buyers heading our way.

As goes the real estate market, so goes many other industries such as floor covering, window treatments, appliances, landscaping, and of course your neighborhood tradesmen.    As we saw several years ago when the real estate market slowed abruptly, the ripple effect had far reaching effects on industries such as recreational vehicles,  that one might not have predicted.  That being the case, rising real estate values may just make homeowners feel more confident to spend money on the products and services you offer.

This information is brought to you by DiSalvo & Co. Certified Public Accountant, with offices in Vero Beach, Titusville, and Melbourne, FLDiSalvo & Company offers  accounting services,  Quick-books training, tax planning and tax preparation for individuals and businesses throughout Indian River County.

Please give Pete DiSalvo a call for a free consultation to discuss your accounting needs.

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August Home Prices up 1.3% from July

According to a report in USA Today:   Gains in home prices  likely peaked in April and have been slowing but are still strong as low inventory drives prices and buying remains cheaper than renting.

The article goes on to say: “U.S. home prices were up 1.3% in August from July , but the peak rate of gain in home prices occurred in April, a widely watched index shows. Data through August shows that prices were up 12.8% year over year, shows the Standard & Poor’s Case-Shiller 20-city index.

Both the 10 and 20-city indices showed their highest annual increases since February 2006, and all 20 cities reported positive year-over-year returns.

But while home prices continue to rise, it’s at a slower pace each month since April, the data shows. In August, 16 cities reported smaller gains compared to July.”

August Home Prices up 1.3% from July

Read the entire USA Today article here.

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US Home Prices Rise

According to Bloomberg, home prices rose in May by the most since 2006.  The Bloomberg article states:

“The S&P/Case-Shiller index of property values climbed 12.2 percent from May 2012, the biggest 12-month gain since March 2006, after advancing 12.1 percent a month earlier, a report showed today in New York. The median projection of 31 economists surveyed by Bloomberg called for a 12.4 percent advance.”

US Housing MarketRiseGood news for housing prices often translates to good news for other sectors in the economy. A strong housing market can lead to better times not only for Realtors©,   home builders,  and tradesman, the increase in the value of ones own home can lead to a sense of security that may prompt us to consider other purchases; perhaps  luxury items such as recreational vehicles, jewelry, or a dream vacation.

They say  “a rising tide lifts all boats.”  There isn’t much that can raise the tide in our economy like rising home prices can.

This news brought to you by DiSalvo & Company, CPA with offices in Melbourne, Titusville, and Vero Beach, Florida. If you would like a second opinion regarding your personal, or business finances, please Call DiSalvo & Company, CPA at (772)770-6008