Friday, October 4, 2019

How to give your home to your adult child tax-free

interesting article from marketwatch.com

In order for the transaction to work properly, you have to plan ahead — here’s a rundown of your options

Before the days of income and estate taxes, adult children often just moved into the family home after their parents died. Unfortunately, it’s not that simple anymore.

There are several ways to give a home to your child. And a few are tax-free. But to get the best tax results, you’ve got to plan ahead. Here is a rundown of your options.

Stay put

If you plan to live in your home until you die, and your estate is below the unified federal estate gift and estate tax exemption amount ($11.4 million for 2019), this is your best strategy. When you die, your home’s tax basis will be stepped up to fair market value as of the date of death. So you and your heirs will escape capital-gains tax on all the appreciation that occurs up to that date. And, because the value of your estate is below the estate tax exemption, your heirs will owe no federal estate tax. They are free to move into the house, or sell it and keep the cash while owing little or no tax to the Feds (thanks to the basis step-up rule). If they do move into the house, their tax basis for calculating the gain or loss on subsequent sales will be the home’s fair market value at the time of your death.

This is a much better strategy than gifting your house to heirs while you continue living there. Why? Even if you pay a market-rate rent to your child, the IRS might argue the home’s full date-of-death value still belongs in your taxable estate. The only sure way around this problem is with a qualified personal residence trust, which is explained later in this story.

Outright gift

If you are moving out of your home, you can give the property to your child today. However, you will probably have to dip into your unified federal gift and estate tax exemption ($11.4 million for 2019). Here’s how it works.

First, offset the amount of the gift by using your $15,000 annual gift-tax exclusion. Remember it is $15,000 per donor per donee (gift recipient). So if you and your spouse make a joint gift to both your child and his spouse, you can offset $60,000 of the home’s value (4 x $15,000) for gift tax purposes. Then, as long as the net figure is less than $11.4 million or $22.8 million for a married couple for 2019, you won’t owe any current gift tax (unless you made very substantial gifts earlier that used up part of your exemption).

There are two drawbacks to this strategy. First, your child’s tax basis on the home will be your presumably low cost for the property, which increases the odds he or she will owe capital-gains tax on a later sale. Second, you’ve whittled down your unified federal gift and estate tax exemption (the exemption is reduced dollar for dollar by gifts in excess of the $15,000 annual exclusion amount).

On the plus side, you at least get any future appreciation in the home’s value out of your taxable estate.

Sale for a bargain price

If you sell a home to a perfect stranger for less than fair market value (FMV), you’ve simply made a bad deal. The IRS doesn’t care. When you sell to a relative, however, it’s a different story. You will be treated as making a gift equal to the difference between FMV and the sale price.

For example, if your house is worth $700,000 and you sell it to your child for $350,000, you just made a gift of $350,000. Of course, you can use your $15,000 annual gift exclusion to whittle this down. The net amount of the gift then goes against your unified federal gift and estate tax exemption ($11.4 million for 2019). However, that’s OK if the property is expected to appreciate, because the sale successfully removes all future appreciation from your taxable estate.

For income tax purposes, you subtract your tax basis in the home from the $350,000 sale price to calculate your gain or loss. Any loss is nondeductible. If you have a gain, it’s probably eligible for the $250,000 (for singles) or $500,000 (for married couples) home sale gain exclusion. However, your child’s tax basis in the home will be only $350,000, which increases the likelihood that he will owe capital-gains tax on a later sale.

Full-price sale with seller financing

Instead of making a bargain sale, consider making an installment sale for full market value instead. As you will see, this can still meet your primary objective of transferring the home to your child in a way he or she can afford — probably with better tax consequences.

Here’s the deal. You sell the property to your son or daughter for a relatively small down payment and carry a note for the balance of the purchase price. Let’s again say the house is worth $700,000 and your child can afford to pay $70,000 down. So you take back a note for $630,000. Make sure it’s a written note. Also, it definitely helps your case if the child has the wherewithal to make the monthly payments.

Speaking of payments. You should charge at least the applicable federal rate (or AFR) on the loan. That rate, which changes monthly and is almost always well below the average commercial mortgage rate, is available in monthly Internal Revenue Bulletins. You can find them on the website at www.irs.gov. Make sure to go through the legal process of securing the note with the house. That way, your child can deduct the interest payments make to you as qualified mortgage interest. If you fail to take this step, your child won’t be able to deduct the interest payments.

If you wish, you can then ease your child’s financial burden by making gifts under the annual $15,000 gift-tax exclusion rule. Just make sure your child actually makes all the payments on the note. Then write checks for any gifts you decide to make. That keeps the sale, the note and the gifts separate. If you simply forgive some of the payments, the IRS may recast the entire arrangement as a bargain sale (with the less-desirable tax consequences explained earlier).

Income-tax-wise, you are treated as making a sale for $700,000. Assuming you qualify for the $250,000/$500,000 exclusion, you will hopefully be able to dodge any federal capital-gains tax. You will however owe income tax on your interest income from the note. But remember, your child will get an equal mortgage interest deduction, and the whole idea was to help the kid out. Your child’s tax basis on the property is now the full $700,000 purchase price, which reduces the chance he or she will owe any capital-gains tax when the home is eventually sold again.

As far as the gift tax is concerned, you are in the clear. Estate-tax-wise, the sale removes from your taxable estate any future appreciation in the value of the home.

A few years after the sale, your child may be able to refinance and pay off the note. If so, your generosity comes to an end with no further tax implications. However, if there’s still a balance due when you die, your child will be treated as receiving a bequest if the note is forgiven at that point. Of course, this uses up part of your estate-tax exemption, but that’s OK because of the other tax benefits.

What if you want to live in your home?

Unfortunately, the IRS gets cranky when you transfer your home to a relative and then continue to live there. So tread carefully if this is your intention. One strategy is to make a seller-financed full market value sale to your child, as explained above, and then rent the property back at the market rate.

In a perfect world, this would remove the home’s future appreciation from your taxable estate and you could shelter all or part of your gain with the $250,000 (for singles) or $500,000 (for married couples) home sale exclusion. The rental payments to your child could, in effect, finance at least part of the cost of buying the home. The payments would be nondeductible to you and taxable income to your child. But he or she could claim rental property depreciation write-offs, opening up the possibility of noncash deductible losses each year.

In fact, all these nice tax outcomes should be possible — if you sell the home for FMV and pay market-level rent afterward. If you sell for less or pay below-market rent, an obscure tax code provision could include the full date-of-death value of the home in your taxable estate. Why? Because you are considered to still own the home since you never completely gave up “possession and enjoyment” of the property. Also, paying below-market rent will preclude any deductible rental losses for your child.

The bottom line: If you want to transfer ownership to your child but stay put, make sure you make a FMV sale (as opposed to any gift or bargain sale arrangement). Then be sure to pay market-level rent to your child. You can still make $15,000 annual tax-free gifts to help your child out. However, keep these acts of generosity separate from your dealings regarding the sale or rental of the house. In other words, don’t forgive payments on your seller-financed note and don’t include gifts in your rent checks.

Qualified personal residence trusts

There is one way you can make an IRS-approved gift of your home while still living there. That is with a qualified personal residence trust (or QPRT). Using a QPRT potentially allows you to get the residence out of your taxable estate without moving out — even though you have not made a full FMV sale to your child. But there are heavy risks involved.

Here’s how a QPRT works. Say a retired doctor in Florida wants to give his $1 million beachfront home to his two daughters. This strategy would require the doctor to put his home into an irrevocable trust for several years, while he continues to live in it. Through a complex IRS calculation based on interest rates, the length of the trust and his age, the IRS values his right to live in the house at, say, $600,000.

For the purposes of his taxable estate, that knocks the value of his house down to just $400,000 — regardless of how much the house appreciates in the meantime. (That $400,000, though, comes out of the doctor’s unified federal gift and estate tax exemption.) When the trust is up after the stipulated number of years, if he chooses to continue living there, he can pay his daughters rent, further reducing the size of his taxable estate.

Of course, if you have a poor relationship with your kids, you might find yourself out on the street. And there is a tax catch to this kind of trust: You have to outlive it. If you die before the term of the trust expires, the full date-of-death value of the house is included in your taxable estate and your heirs receive no estate tax benefit.

Tuesday, October 1, 2019

Metro Denver Home Price Gains Now Lagging

helpful info here on the changing market...from the Denver Post....

Below average isn’t something most people aspire to, but that is what homeowners in metro Denver likely face after years of robust home price appreciation, according to Zillow.

Zillow said its Denver Home Price Index has risen 3.4% to $411,200 the past year through August.

That contrasts with a gain in the national index of 4.9% to $229,600.

Higher interest rates weighed on the market in the first part of the year, and when they moved lower again, home price appreciation accelerated, but at a more modest pace.

“We have persistently strong consumer confidence and the significant drop in mortgage rates to thank for the housing market’s return to modest home value growth,” Skylar Olsen, Zillow’s director of economic research, said in her report.

Annualizing the quarter-over-quarter change through August, home prices are rising 3.4% nationally, while metro Denver’s gain is only running 1.1%, according to Zillow.

Both those are better than the 0.4% quarterly annualized pace seen in May for the U.S. and Denver’s annualized 0.6% decline.

Not every market saw gains turn positive again with lower mortgage rates. In California’s San Francisco and San Jose markets, home prices are down 1.9% and 10.8% respectively over the past year, according to Zillow’s counts.

And they are dropping on a quarter-over-quarter annualized basis in Las Vegas, Chicago, Portland, Seattle, Sacramento, Boston, Baltimore, New York, Los Angeles, Washington, D.C., and San Diego.

Major metros where homeowners are enjoying the greatest price momentum are Indianapolis, up 7.9%; Charlotte, N.C., up 7.1%; and Atlanta, up 6.9%.

Tony Carnesi, CEO and managing broker of Keller Williams Realty DTC, said the prime summer selling season wasn’t as robust as expected this year in metro Denver, which he attributed to a colder-than-usual May and June.

“We had such a weird summer,” he said. “We usually see a summer spike. We never saw that. Our summer got so compressed.”

His hope is that the sales that were delayed this summer show up in the fourth quarter, or what he calls the second season.

Part of the struggle the local market faces is that sellers continue to hold unrealistic expectations of what they can get for their homes.

That stubbornness has caused some listings that went on the market in March to still be sitting there.

“A lot of sellers have been overpricing their properties, and they are taking longer to sell,” he said.

To back up his point, he provides some statistics from the past week. In the past seven days in the six-county core metro area, there have been 1,847 new listings, but also 2,091 price decreases on existing listings.

But there were also 1,993 listings that went under contract, which points to demand still being there, he said.

Tips for Selling Your Home in the Fall and Winter

helpful snippets from an hgtv article on selling in the fall and winter:

Show Buyers What It Looks Like During the Spring and Summer

Showcase what your home has to offer by giving potential buyers the opportunity to see the home during other months of the year. Michelle Caracci Corsi from Howard Hanna Real Estate Services suggests you "include a photo album or digital slideshow of the exterior in the summer, spring, and fall. Highlight garden beds, and patios or decks with furniture so the buyer can envision the home year-round.”

She also adds, "Consider using a realtor who can provide a digital 3-D tour that shows the home in the daylight. Folks who work during the day usually tour homes in the evening when it's dark. Less natural light makes the home feel smaller, and it’s hard to picture the outdoor space.”

Get 5-Star Curb Appeal to Enhance the Outdoor Experience

Leaf- and snow-covered sidewalks can make a perfectly nice home look sloppy and poorly maintained. Use a leaf blower daily to keep leaves, branches, and outdoor dirt off the walkways, and do your best to keep the yard clear of leaves, too.

Add fresh mulch to garden beds so they look their best.

Rinse loose dirt from your home’s siding one last time before the temperature drops.

"Another challenge for buyers in the fall and winter is that everything usually looks dull and drab," adds Michelle. The lot lines are not as visible covered with snow and leaves, so it’s difficult to get a sense of the outdoor space unless it is clearly defined. Define property boundaries with brightly-colored flags tied to stakes, and place them at the four corners of your property.

If it's snowy, keep the deck shoveled and salted so buyers can walk outside to experience the space. If the climate allows, keep outdoor furniture on your patio so they can get a better feel for the outdoor living space.

Let There Be Light


Retract blinds, and widen curtains, so there’s minimal window coverage. The windows will look bigger, and it’ll encourage daylight to flow into your space.

Experiment with your lightbulbs to find the most flattering hues for your space. A bathroom looks great with daylight bulbs (5,000-6,500K) and living spaces, such as bedrooms and living rooms, look best with soft white bulbs (2,700K). In general, your home’s design and color palette will play a part in what looks most appealing. Go for cozy and bright. If you’re upgrading bulbs in hard-wired fixtures, consider going all LED. Let the buyers know you’re leaving the bulbs for them.

Use hardwoods to your advantage. In my experience, nothing shows off a home better than daylight bouncing off beautiful hardwood floors. Remove unnecessary area rugs to maximize the effect.

Bring in extra floor lamps. Add them to rooms with dark corners to create a warmer setting.

Consider investing in landscape lighting, since visitors touring during the late afternoon or evening will have a much different experience than visitors who tour a home earlier in the day. Outdoor lighting accessories will amplify your home’s appeal, so consider solar lights lining a walkway, motion-activated spotlights, and landscape spotlights.

Remove screens from the windows to allow more natural light to flow into your home, and clean the windows. Be sure to let potential buyers know you will replace the screens.

Spend Time on Basic Home Maintenance

Check window seals and doors for drafts. A drafty window is most noticeable on a cold day, so take extra efforts to weather seal and insulate around windows and doors.

Have the furnace or boiler maintained prior to putting your house on the market On a cold day, buyers will make sure the systems are in good shape. Be a step ahead by having your maintenance team leave a sticker or magnet marking the date of the last inspection to add peace of mind for buyers.

Swap out the HVAC filter to help reduce any odors or fall allergens in the home.

Check for spiderwebs – everywhere.

Deep Clean: A Few Places You Might Forget About

Clean inside the cabinet beneath your sink. It’s likely they’ll glance at the plumbing, and they'll notice if the plumbing and inside of the cabinet are dirty. Clean it well, consider adding a new piece of shelf liner on the bottom, and install slide out drawers or extra utility that’ll be appealing.

Make shower heads look like new.

Dust ceiling fan blades and the inside of your dishwasher and washing machine. Don't forget all the nooks and crannies in the kitchen.

Paint? Maybe.


Contrary to many pro recommendations, I’m not a huge fan of painting walls neutral colors to make a home more salable. A light-colored interior will reflect more light than a dark one, and that may make all the difference on a gloomy, cool day.

If the walls look dingy or dated, refresh the look of a room with a $25 can of satin or eggshell.

Embrace Hygge

That’s to say, make your home as cozy and inviting as possible, so potential buyers can easily envision it as a friendly, welcoming space for family and friends.

Accessorize the main living area with neutral-but-coordinated throws and pillows and unscented candles for ambiance.

Make an impression with your gas or electric fireplace. Leave a note with the remote, prompting the potential buyers to turn it on, so they can enjoy the ambiance. Include a reference sheet that cites the maintenance schedule you followed and the increased utility costs you experience in running the fireplace.

Remove the TV in the living room if you can live without it. Yep, big black screens are an eyesore, especially if they’re blocking light or detracting from a beautiful mantel.

Take another look at how the furniture is positioned now that the TV isn't there. Consider rearranging to maximize the functionality of the space. It might not be how your family used the room, but it’ll present really well.

Be Sensitive to Seasonal Decor


Both in your listing photos and in real life during showings, keep the seasonal decor at bay while you’re trying to sell. No one expects a home to completely lack holiday decorations during these months, but simplicity is appealing. Opt for modest, neutral accessories — think white string lights or a Christmas tree that truly flatters the space.

Do you have vaulted ceilings? You’re green-lighted to get a big tree, so buyers can appreciate the spectacular height of the ceilings.

One snowy weather accessory that wins us over? A classic snowman in the front yard.

Resist the urge to add too many scents to your home – it’ll look like you’re hiding something. An unlit pine candle in a bathroom will appeal to the senses.

Have holiday music playing low on a radio during December. During an open house, offer freshly-baked cookies, pumpkin muffins, or hot cocoa for visitors.

Maintain Cleanliness Between Showings

Dry mop to remove dust and dirt that you track in every evening. Vacuum area rugs and entryway mats daily, and keep toys at bay.

Keep a focus on curb appeal. Continue to sweep or snowplow sidewalks, driveways, decks, and patio spaces.

Denver Remains at top of Recovery for Home Prices

interesting article from the Denver Post...

Of the 100 largest metros in the United States, 75 now have home prices above the peak reached before last decade’s housing crash, according to the latest update to the Home Price Recovery Index from HSH.com. And metro Denver continues to hold the top spot — something it has done in every quarter but one since the index launched in 2015.
Home prices in Denver-Aurora-Lakewood are 91% above the old high. Runners-up include Austin, Texas, with an 81.4% increase, and San Francisco, up 73.5%.

“Aside from routinely strong home price appreciation, it’s important to know that the Denver metro’s housing ‘bust’ was relatively short and shallow,” said Keith Gumbinger, the report’s author.
The peak-to-trough for home values was only three years long and the total decline in value was just under 8 percent in metro Denver, he said. By contrast, a half-dozen large metros have seen home prices more than double from their lows and still not reach the old highs. On that list are Las Vegas, Sacramento, Calif., and Cape Coral, Fla.
“A short-term, relatively small drop meant a sooner start on recovery and less ground to make up,” Gumbinger said of Denver. Yet, metro Denver has also managed to outperform Texas metros when it comes to home price gains, which also didn’t get carried away in the housing boom and had strong migration. The difference appears to be that Texas is doing a much better job of building homes than Colorado, according to a count of permit activity.

Metro Denver’s inadequate supply has put pressure on surrounding markets. Colorado Springs in the second quarter broke into the top 10 metros for its home price recovery, with a 45.8% gain above the pre-crash high. A year ago, Colorado Springs ranked 13th for the size of its recovery, and two years earlier, it was 20th. Whether robust home price gains are a good thing depends on if someone already owns a home or wants to own one. And there are more signs emerging that the trend could shift the other way. In three of the 100 metros, home prices are down year-over-year, according to the Federal Housing Finance Agency’s Home Price Index. They include Seattle, Oxnard, Calif., and Frederick, Md.

— Aldo Svaldi, The Denver Post

5 Creepy, Halloween Horror Homes

interesting article for that Halloween time of year...from hgtv.com

As All Hallow's Eve approaches, it's time for ghost stories, apple cider and walks in the woods where one can occasionally stumble upon a derelict house long abandoned or a pioneer-era graveyard with headstones barely visible. Would you buy a haunted house? According to a survey by Realtor.com, 33 percent out of 1,000 people said they would. Discover five ghoulish houses with histories of past horrors for the curious or the brave where spirits might come out to play on Halloween night.

Mannequin House



Hauntings and the macabre usually take place in abandoned structures in the woods or near graveyards, but what about a house built in 2000 in a swanky community just outside of Houston, Texas? It's a manicured and stately house from the street like all the neighboring houses, but bring your most stable friend with you if you plan on going inside and make sure you, your friend and the real estate agent are the only ones in the house when you go. Crazy? Insane? The house is filled with people but none of them are alive! You hope. Not one inch of wall, floor or table space can be seen that isn't covered in mannequins, animal skins, picture frames, taxidermy or bizarre doodads. Mannequins are sitting at the bar, hanging feet first from the ceiling and crawling under the bed with their legs sticking out.

The Mortician's House



When the last owner was in the process of turning his historic 1911 house into a Dead and Breakfast, he and his wife had first-hand experience with its resident gang of ghosties. He figured out that they were probably hanging out in the old mortuary — the remnants of which were still on the first floor. Brad Warner and his wife had bought the house in foreclosure in 2010 and were in the process of beginning a major restoration when they first became acquainted with the existing spirits. Well located off scenic I-5 across from the Sacramento River and a stone's throw from Mt. Shasta and its much-publicized Bigfoot population, there would be no shortage of human guests to fill the extra bedrooms and enjoy being terrorized by his non-human guests. But, sadly, just as a large portion of the house had been gutted for the redo, Warner and his wife divorced and the house is now back on the market for $100,000, a far cry from its original listing price of $900,000 a few years ago. Could this be the B&B, er ... D&B that you've always wanted? You'll enjoy bragging to your guests that this house was the inspiration for the best-selling book The Mortician's Wife.

Crazy Clown Motel



There may not be anything quite as foreboding than to be named "the scariest motel in America," as was the Clown Motel in Tonopah, Nev., by Roadtrippers.com. A brother and sister built a motel in the '80s next to the Tonopah graveyard so they could be close to their deceased father. This obviously doesn’t start off well from the get-go, and after they added their small clown collection as decor, the motel attracted the producers of the Travel Channel show Ghost Adventures. The show attracted clown donors from around the world, and now the Clown Motel is chock-full of horrific/funny (you choose) clowns.

At 79 years old, the owner is interested in selling the motel with the caveat that the clowns stay; he hopes to get about $900,000. He said he's had some offers. How could anyone resist the hundreds of clowns and the sublime view from the owner's apartment overlooking the old miners' graveyard?

Thousand Islands Haunted Mansion



Seventy years ago, Carleton Manor in St. Vincent, N.Y. was abandoned. Chances are with no living residents to frighten, the resident spirits got tired of waiting for someone to move in and may have moved on. Or they may still be waiting and hovering inside the falling ceilings or up the chimneys, bunking up with the ravens nesting there. When it was constructed in 1895 for the president of Remington Arms and Typewriter Company, William O. Wyckoff, Carleton Manor was one of the grandest structures in New York. The solid stone outer structure sits on an island, is comprised of 6.9 acres and is surrounded by almost one thousand feet of waterfront. For a mere $495,000, the buyer willing to make this piece of history into a grand restoration project can turn this house from a nightmare into a dream home.

Howey-in-the-Hills Haunted House



Mysterious and abandoned for years, Howey Mansion was completed in 1927 for its owner, citrus magnate, William Howey, who founded the small town of Howey-in-the-Hills just north of Orlando, Fla. The Mediterranean Revival-style house was one of the most opulent homes in the state of Florida, and to celebrate its completion, Howey engaged the New York Civic Opera Company. Even President Calvin Coolidge was a guest in the early years when Howey hosted many dignitaries and the rich and famous.

Measuring in at 8,832 square feet, the mansion has eight bedrooms, eight bathrooms and is sited on 3.63 acres. But it's not a ruin. Of course, the red-tile roof needs thousands of dollars of repairs and the marble that was stripped from the tall foyer walls needs to be replaced, but the exquisite stained glass and wrought-iron banisters, sunroom, giant cypress front door and ballroom with its romantic upper terrace are intact, though the ceilings need a redo. The mansion has had only one other owner, an heiress who died in 2015. The house foreclosed and has been sitting abandoned until April when the mortgage company put it on the market for $480,000. Bids started pouring in and it sold right away for an undisclosed amount that was considerably higher than the asking price. It's estimated that it will take another $3 million to restore it to its full glory.

Wednesday, March 27, 2019

5 Big Reasons to Sell Your Home This Year in 2019

of course, this has to be adjusted for every area of Colorado, but there are some helpful generalizations in here...

from realtor.com

It's no secret that life's been pretty good to sellers for the past several years. Even if you had no need—or desire—to move, the housing landscape might have seriously tempted you to put your house on the market anyway. After all, it's hard not to see visions of dollar signs when your neighbors are unloading their homes for tens of thousands over asking price.

But as they say, all good things must come to an end. And you've probably heard that the white-hot housing market of years past is finally beginning to cool.

So if you haven't listed your home before now, did you miss the boat? Absolutely not. But with each passing month, the experts say, you can expect the housing climate to shift a bit more in buyers' favor.

"It’s definitely still a seller’s market in most of the country. But it’s not the same seller’s market that you saw in the last couple of years," says Danielle Hale, chief economist of realtor.com®. "You might have to think about how your home compares to the competition that buyers are going to see when they're shopping. And you might have to price a little bit more competitively, or think about other enticements to attract buyers."

There's still a chance to cash in for top dollar, though, if you move quickly. Here are the biggest reasons to sell ASAP in 2019.

1. You won't be the only listing for long

The top reason sellers have been in the catbird seat for the past several years? Inventory. There simply weren't enough homes on the market to keep up with buyer demand. And when a "For Sale" sign did go up, you can bet a bidding war would soon follow.

"You might have been the only listing in your neighborhood, and you could put your home up at a certain list price and you would likely see multiple offers at or above that list price," Hale explains.

That tide is turning this year, Hale says. That's because the number of homes for sale is finally increasing, albeit slowly. For now, buyers still outnumber inventory. But if you're thinking about selling and don't want to compete with your neighbors, it'll pay off (literally) to list earlier rather than later. (This is particularly true in pricier markets, where inventory is increasing at a faster rate than more affordable areas.)

"It's going to depend on what neighborhood you're in, but we expect it to be more common this year that you won't be the only listing," Hale says.

2. You still stand to make a 'handsome profit'

Home prices have been on a meteoric rise for the past seven years. In January 2012, the U.S. median home price was $154,700. Today, that figure has nearly doubled—to $289,300—and sellers have rejoiced.

Now comes a twist: 15% of all home listings saw price cuts in January, according to realtor.com data.

That might sound like bad news if you're thinking of selling. But hear us out: Those moderating prices, combined with today's mortgage rates (more on that below), mean increased buyer demand for your house.

Plus, it's not that home prices aren't still increasing—they're just not increasing at the frenzied pace of previous years, which often featured multiple offers at or above asking price, Hale says. So even though you might have some more competition as a seller, things are still looking pretty sweet for you when it comes to cold, hard cash.

"Even if you don't get an offer above your asking price, you're probably still going to come away with a handsome profit from being a seller in 2019," Hale says.

But again, it'll pay to put your home on the market as soon as you can—before conditions change.

"Sellers who list their homes earlier in the year tend to get a higher sales price, often above list, and shorter days on market," says Ali Wolf, director of economic research at Meyers Research.

3. There's high demand for homes under $300K

There's more good news if you own a home below the national median price of $289,300. Not only is that inventory increasing at a slower rate than its luxury counterparts, but there are more buyers shopping at those price points.

"If you’re a below-median-price seller, you will see a seller’s market that is as good as what you saw in previous years—maybe even better," Hale says. "You might still see multiple offers coming in quickly, maybe even above asking price."

4. Mortgage rates are at a new low

Something strange has been happening over the past few months. Experts predicted mortgage rates would rise—and at the end of 2018, they were indeed ticking upward as expected.

But since the start of the year, rates on a 30-year fixed mortgage (the most popular home loan) have been falling, sliding last week to a new 12-month low of 4.37%. And of course, those historically low mortgage rates mean you could have more buyers knocking on your door.

Plus, this temporary dip in rates creates an opportunity for trade-up buyers as well. After all, if you're selling your home, there's a good chance you'll need to buy another one.

Bottom line: Now's the time to hustle and get both transactions done.

"Sellers need to take advantage of low rates as much as buyers do," Wolf says. "Sellers don’t want to get stuck in their homes when rates go up and the math no longer makes sense to move."

5. Millennials are flooding the market

Historically speaking, people tend to buy their first home around age 30. And guess what? We've got a whole bunch of people turning 30 in the next two years—nearly 5 million, in fact, according to realtor.com data. So you can count on those millennials to be a driving force in the housing market.

"Millennials want to own a home as much as prior generations," Wolf says. "We saw millennial shoppers scooping up homes in 2018—and 2019 will be no different."

What's more, Hale adds, is that you won't just be seeing demand from first-time buyers. Older millennials in their middle to late 30s have already owned a home for a few years, and could be looking at now as a prime time to trade up.

"From a seller’s perspective, you’re going to have possibly more interested buyers," Hale says. "So that’s motivation to put your house on the market."

Tax Benefits of Buying a Home in 2019

interesting tax considerations on home purchasing from lendingtree.com

For many investors, buying a home has always had an almost magnetic pull. First, there’s the promise of a possible long-term return once the house is sold. But homebuying also promises more immediate tax benefits, like deductions on mortgage interest or property tax payments that might help shave a year-end tax bill.

If you are thinking of buying a home soon, you should know some of the more readily available tax benefits of home ownership recently underwent significant changes because of the new federal Tax Cuts and Jobs Act (TCJA), which Congress enacted in December 2017. Unless it’s extended, the law is expected to end on Dec. 31, 2025.

The TCJA swept in extensive tax reform, and in terms of paperwork alone, the IRS estimated it had to create or revise more than 400 taxpayer forms, instructions and publications for the 2019 tax filing season. This is more than double what a typical year requires.

For many consumers, buying a home still makes sense. But there’s no question the new law has muddied the tax picture, and consumers will most likely need time catching up with both the breadth and details of the changes. Read on to see what you need to know about the new tax law now.

Mortgage-related deductions

One of the primary tax benefits of buying a home is the mortgage interest deduction, which means homeowners can deduct the interest they pay on a mortgage for debt related to buying, constructing, or improving either a primary or secondary home.

Before Dec. 15, 2017, the mortgage tax deduction was limited to interest paid on a maximum of $1 million debt on the property for married people filing a joint tax return, $500,000 for married couples filing separately, and $1 million for single filers. Now, however, the rules are different. For home mortgages taken out on or after Dec. 15, 2017, debt caps are lower: $750,000 in for married couples filing jointly; $375,000 for married couples filing separately; and $750,000 for individuals.

What do drops in debt limit mean for potential buyers?

Let’s start by looking at a married couple filing jointly who just bought a home for $1.1 million, putting 20% down and whose mortgage is now $880,000. With the new cap, that couple can now deduct mortgage interest for only $750,000 of that debt.

If you bought your home before Dec.15, 2017, there’s no need to worry: The new law is “grandfathered in” to protect you from the debt cap changes.

“If you bought your home in 2014 and you have a million dollars of debt on the books, this particular provision does not affect you,” said Kevin Rose, a certified public accountant and certified financial planner, as well as partner at Market Street Partners in Chattanooga, Tenn.

Home equity line of credit changes

With the new tax law, there’s now also a strong chance some homeowners might have less incentive to take on a home equity line of credit (HELOC), a type of second mortgage that is also a popular tool for using home equity as a way to potentially pay off both home — and non-home — expenses.

Before Dec. 15, 2017, homeowners could take out a HELOC and deduct interest on up to $100,000 in home equity debt, regardless of what the money was used for, even if it was used to pay for non-home expenses like college costs. Now, however, home equity loan interest is still deductible for up to $100,000, but only if it’s used to purchase, build or improve a home. That almost certainly means consumers will now find HELOCs to be less attractive options for paying for personal expenses, and that may cut down on their use, said Rose.

Private mortgage insurance changes

With the new tax law, homeowners can also expect to see a change in the tax status of any private mortgage insurance (PMI) they have to pay. That’s because private mortgage insurance (PMI) premiums are no longer tax deductible. That itemized deduction expired on Dec. 31, 2017, and it’s unknown when — or if — it will be reinstated.

First-time homebuyers are typically required to buy private mortgage insurance if they put down less than 20% of the cost of a home. Meanwhile, PMI insurance is required for any mortgage obtained through the government-insured loan program offered by the Federal Housing Administration (FHA). With FHA loans, down payments can be as low 3.5%, but PMI costs can add up quickly. That’s because an FHA loan now charges an upfront 1.75% PMI fee (as a percentage of the total cost of the loan), and annual charges are .85%.

The PMI deduction is one Congress wrestles with regularly. But Chris Hervochon, a certified public accountant and owner of SOAR — A Better Way CPA in Hilton Head, S.C., thinks the PMI tax deduction was done away with this time because the the larger standard tax deduction many taxpayers now claim is able to capture smaller itemized expenses like PMI, so eliminating the deduction actually makes it easier to prepare taxes.

Standard deduction changes

Anyone shopping for a home now needs to pay particular attention to the standard tax deduction allowed by the IRS. That means deciding whether it might be better to ultimately itemize deductions (and claim mortgage interest deductions as well), or just take the standard tax deduction the IRS allows.

Under the new law, the standard deductions allowed by the IRS increased; for example, for a married couple filing jointly, it went from $12,700 in 2017 to $24,000 in 2018. If a married couple had less than $24,000 in itemized deductions — including mortgage interest — then it might be financially smarter for them to go with the standard deduction.

There is a complicating factor: The new tax law now limits deductions of state and local taxes to just $10,000 for married couples and individuals and $5,000 for married couples filing separately. That means it also sets a cap on how much property tax can be deducted, a huge disadvantage for homeowners who live in states like New York, California, Florida and Texas, where property taxes often reach far more than $10,000 annually.

Here’s an example of how this works: If you’re a married homeowner in South Carolina who now pays $7,000 in state income taxes but your property taxes are $5,000, any property tax amount over $3,000 is not deductible under the new tax legislation.

“If you’re thinking about (taking) a standard deduction of $24,000, it’s kind of tough to get there because you’re now limited to $10,000 of real estate tax and state and local income tax,” Hervochon said.

Before the new tax law, Hervochon used to just ask clients whether they owned a home or rented.

“If they said ‘own a home,’ well, you’re going to itemize,” he said. “Now you can’t get away with asking just that question.”

Rose, for his part, said he started seeing clients trying to prepay their property taxes toward the end of 2017, and “going forward, that’s a big change.”

Tax-free profits

Even with the Tax Cut and Jobs Act, there is one significant tax benefit that is staying the same: the amount of capital gains that can go tax-free after a homeowner sells a house at a profit. For example, married homeowners may now retain up to $500,000 in tax-free profits from the sale of their home, and for single filers the number is $250,000.

To qualify for this exclusion, homeowners must have lived in and used the home as their primary residence for at least two years out of the five years before the sale date.

Moving expenses

Before December 2017, taxpayers could deduct moving expenses if they met certain requirements related to distance and time. But under the new tax law, all deductions for moving expenses have been suspended. The only exception is for members of the U.S. Armed Forces on active duty who relocate per a military order related to a permanent change of station.

Another new development: Employers who reimburse moving expenses for employees must now include those expenses as taxable income in employee wages. Before December 2017, those reimbursed moving expenses could be excluded from income.

The final word

It’s still possible some of the tax benefits described above may reappear once the new tax law expires in 2025. But until then — or until Congress passes new tax legislation — buyers in the running will need to look more closely at the tax benefits of homebuying, including whether they’re comfortable making do with potentially larger loads of debt and fewer allowable deductions.

“Sometimes [people] let the tax results affect their decision-making,” Rose said. “They convince themselves it’s a good tax move, but you don’t want to pay a dollar to save 35 cents.”

Before signing the dotted line, consult your accountant to determine if the tax benefits of buying a home make good financial sense for you.