SheldonTeam.com - Eastern Connecticut REALTORs "Your satisfaction is our first priority!" - Tom and Cathy Sheldon
Tom and Cathy Sheldon

www.SheldonTeam.com . . . YOUR 1st choice in Southeastern Connecticut REALTORs.   We work with BUYERS and SELLERS throughout Eastern Connecticut, primarily in New London County, but also in Windham and Tolland Counties.

Click to see the latest Town Profile information from the Community Economic Resource Center [CERC] in the communities we serve: Brooklyn - Bozrah - Canterbury - Colchester - Columbia - East Haddam - East Lyme - Franklin -Griswold - Groton - Hebron - Jewett City - Lebanon - Ledyard - Lisbon - Lyme - Montville - New London - Niantic - Oakdale - Old Lyme - North Stonington - Norwich - Pawcatuck - Plainfield - Preston - Quaker Hill - SalemSprague - Scotland - Stonington - Uncasville - Voluntown - Waterford - Windham  

 


NEW 3.8% Tax on Some Real Estate Investment


Beginning January 1, 2013, a new 3.8 percent tax on some investment income will take effect. Since this new tax will affect some real estate transactions, it is important to understand the tax and how it could impact your investment strategy. It’s a complicated tax, and it will affect every buyer or seller differently.

Understand that this tax WILL NOT be imposed on all real estate transactions, a common misconception. Rather, when the legislation becomes effective in 2013, it may impose a 3.8% tax on some (but not all) income from interest, dividends, rents (less expenses) and capital gains (less capital losses). The tax will fall only on individuals with an adjusted gross income (AGI) above $200,000 and couples filing a joint return with more than $250,000 AGI.

New Tax Rate: New Tax Rate:

Applies to: Individuals with adjusted gross income (AGI) above $200,000 AND Couples filing a joint return with more than $250,000 AGI

Types of Income: Interest, dividends, rents (less expenses), capital gains (less capital losses)

Formula: The new tax applies to the LESSER of (a) Investment income amount, (b) Excess of AGI over the $200,000, or (c)  $250,000 amount


New IRS 1099 Requirements for Landlords!


Starting in 2011, there is a new tax requirements for landlords. All landlords who receive $600 or more in rent for the year must send a 1099 to all service providers that the landlord paid $600 or more during the year, such as plumbers, carpenters, yard services, and repair people.

The new requirement applies to owners of both residential and commercial property. Prior to 2011, this requirement had only applied to those involved in full-time property management, but now the requirement covers all types of landlords. Landlords will need to gather federal tax ID numbers from service providers in order to file the 1099s. Failure to file the 1099s with the IRS can result in fines of $50 per 1099 not filed with the IRS. In 2012, these requirements will expand to cover providers of good to landlords.

NAR actively opposed this change in the law and is working with others to have this requirement repealed or otherwise modified. Congress took this action in order to assure that income paid to contractors can be verified through a section 1099.


FHA Mortgage Changes


 Condominium Financing 

The Federal Housing Administration (FHA) released an implementation schedule and Project Approval and Processing Guide to update existing guidance and provide increased flexibility for FHA condominium financing.

In the new guidance, FHA requires that 50 percent of units be owner-occupied but FHA will reduce this to 30 percent for new construction. At least 30 percent of units must be sold prior to endorsement of any mortgage by FHA. This pre-sale requirement is not applicable to existing projects or non-gut rehabilitation projects.

One of the more notable changes is in the calculation of delinquent homeownership association (HOA) dues. Previously, FHA permitted no more than 15 percent of units to be in arrears but this did not include bank-owned foreclosures. The new guidance states that the calculation includes all units - occupied, investor, bank-owned, and vacant). FHA did not increase the maximum permitted investor ownership of units or commercial space requirements.

FHA Mortgage Requirements

The Federal Housing Administration (FHA) mortgage has been popular because its minimum down payment is 3.5%, whereas most conventional loans require a much higher down payment. But FHA’s shrinking funds and its ability to handle increasing defaults have caused the agency to change the regulations.

The following changes have been implemented for FHA lending:

  • Upfront mortgage insurance premiums decreases from 2.25% to 1.00%.

  • The 0.55% annual premium increased to 0.85% for mortgages with loan-to-value ratios up to and including 95%, and to 0.90% for loan-to-value ratios above 95%.

  • Borrowers must have a credit score of at least 580 to qualify.

With the fees going up on FHA-backed loans, borrowers who are in the high LTV space, are advised to compare against alternative conventional loans with Mortgage Insurance (MI), particularly high-FICO score borrowers.


EPA Lead Paint Rule


Lead Paint Renovation and Repair Rule


The Partner Network Office Locations


 

180 Flanders Rd [Rt 161]
Niantic, CT 06357
Phone: 860.701.0600 x238 (Tom) x239 (Cathy)

sheldon_REALTOR@hotmail.com

Fax: 860.691.2295 or 860.701.0644 

210 West Town Street
Norwich, CT 06360
860.887.1145
www.SheldonTeam.com

 


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