Tuesday, January 30, 2018

Real Estate News - Tax Reform

The Low Down on Tax Reform: Your Guide to its Impact on Housing

Tax Reform

Now that the dust has settled on tax reform, what do you need to know as a homeowner or aspiring homeowner?

The changes that most directly relate to housing are listed below along with the impact they have on various personal situations.

Change #1 – The limit on deductible mortgage debt was reduced from $1,000,000 to $750,000 for new loans taken out after 12/14/17. Current loans of up to $1 million are grandfathered and are not subject to the new $750,000 cap.

The impact:

  • Current homeowners – No change. No need to do anything. Also note – Homeowners may refinance existing loans up to $1 million and still deduct the interest, so long as the new loan does not exceed the amount of the mortgage being refinanced.
  • Homebuyers purchasing a home with a loan smaller than $750,000 – No impact.
  • Homebuyers purchasing a home with a loan greater than $750,00 – May want to consider a larger down payment to bring loan amount down to $750,000. If that’s not feasible, the loss of the deductibility on the $250,000 differential between $750,000 and $1 million for those who have a loan amount of a million or more will result in paying about $3,500 more in taxes annually at today’s interest rates and assuming a tax rate of 35%.

Change #2 – The tax deduction for property taxes, and state and local income taxes and sales taxes is now limited to $10,000. This $10,000 limit applies for both single and married filers.

The impact:

  • Homeowners who pay less than $10,000 in property, state, and local taxes – No impact.
  • Homeowners who pay more than $10,000 in property, state, and local taxes – Significant loss of deductible taxes could potentially cause some homeowners to consider selling their existing home to lower their property taxes. On its own, that’s probably not a reason to cause many home owners to move, but lower property taxes may become a more important consideration for those who were already planning a move.
  • For homebuyers – The change should lead to more awareness of the property taxes on any listing under consideration. When combined with one’s state tax burden, knowing whether one falls above or below the $10,000 limit is important. That said, most homebuyers choose a home because it meets their needs and they want to live there. The tax benefits are “icing on the cake” and not the primary driver.

Change #3 – Increasing the standard deduction from $6,350 to $12,000 for individual filers and from $12,700 to $24,000 for joint filers.

The impact:

  • For homeowners who do not itemize deductions – the new standard deduction will apply.
  • For homeowners who itemize – The increase in the standard deduction may be greater than itemized deductions, so now the standard deduction will be taken. These home owners may want to consider paying down their mortgage to reduce their interest payments which no longer have a tax benefit.
  • For homebuyers – Those who qualify for the standard deduction, even with the addition of a mortgage payment after purchasing, may want to consider a smaller mortgage and a larger down payment if able since mortgage payments no longer have any tax benefits for those taking the standard deduction.

These are the major changes. The law also includes several changes that appear to make investing in real estate much more attractive. The details of these changes are too complex for the scope of this newsletter, but if you are real estate an investor or thinking of becoming one, this may be a good time to consult your tax advisor…and me!

Lastly, a final note in our housing guide to tax reform. Several proposed changes were bandied about and made headlines in the negotiations leading up to the final bill. Many of these, however, were left on the table and did not make the final bill. Let’s lay those to rest because they have no impact on housing or your real estate decision making. These “dogs that didn’t bark” include:

  • No changes to the capital gains exemption on the sale of a home ($250,000 single/ $500,000 married)
  • Interest is still deductible on home equity loans (or second mortgages) if the proceeds are used to substantially improve the residence.
  • Interest remains deductible on second homes, but subject to the $1,000,000/$750,000 limits.
  • Like-kind 1031 exchanges for real property were preserved

While the new tax rules may influence the decisions and behavior of some home buyers, sellers, and homeowners, most will continue to make real estate decisions first and foremost based on their lifestyle needs, desires, and dreams. At the same time, we feel it is important to always be aware of the tax considerations. I hope this guide helped in that regard.

A Refreshing Look at the Question “What is my House Worth?”

Let’s take a look at some of the stats for our area to get a better idea of what is going on in the local housing market!

In Arapahoe County for Dec 2017, the average sales price* was:

  • $382,000 for Single Family Homes (up 7.6% from 1 year ago)

  • $239,900 for Condos/Townhomes (up 12.1% from 1 year ago).

In Douglas for Dec 2017, the average sales price* was:

  • $472,466 for Single Family Homes (up 6.5% from 1 year ago)

  • $309,000 for Condos/Townhomes (up 8.4% from 1 year ago).
*Median sales price based on a six-month moving average

Friday, January 12, 2018

Community News

Hello Morning Mesa Community!
Here is some news from your Board of Directors.
Recently in November and December of 2017, the Board of Directors and Managing Agent met with the City of Aurora & Aurora Water to review ways the Community can reduce water consumption and therefore reduce the HOA's largest yearly budgeted item.  Last year in 2017 the HOA spent almost $46,000 on water alone. That figure represents 39.4% of our Annual Budget.
Aurora Water stated that almost 75% of all water loss/waste comes from leaking toilets alone.  The Board of Directors respectively ask its members to review their toilets and faucets to make sure that they do not have any leaks.  If you do, please seek remedy and repair.  If you do not know of a service to contact, Shane at Cherry Creek HOA could refer you to a couple of contractors as possible options for you.  Failure to provide repair is literally watching your dollars go down the drain.
Additionally, City of Aurora & Aurora Water will be sending out postcards to all residents letting them know about a rebate that that they are currently offering.  If your toilet is a 1994 model or older and uses 3.5 gallons per flush (gpf), replace it with an ultra-high-efficiency model that averages 1.1 gpf or less.  You could get a rebate of up to $150.00 from Aurora Water.  Call 303.739.7195 to first get started, or go to AuroraGov.org/Rebates.  In some cases, that is a free toilet for individuals, so please review.  Such measures can help save the HOA monies and limit future Monthly Dues increases.
In 2018 the Board plans to review ET Smart Controllers for the Common Area Irrigation systems that can help save almost 20% in water savings.  Of course there are costs associated with such a renovation and upgrade, the Board will review such costs and take advantage of City rebates as well to help such transition on the exterior to assist in community water savings.
The Board has also updated its Collection Policy with the HOA Legal Team and Managing Agent, (last updated in 2009) this update brings the HOA into compliance with Colorado Fair Debt Collection Procedures.  Please lookout for a copy of that document to come to you via mail in the next few days.  You can also see the document anytime under Governing Documents Tab on the Community Website.
Thank you for those who reached out to the Board and provided recommendations' to the updated Rules & Regulations the Board has been working on since our last Annual Meeting in October.  The Board and its Managing agent have made their final draft edits and has forwarded that to the HOA Legal Team for their blessing and review to make sure the document has no language in conflict with existing HOA Governing Documents including Federal, State and City applicable Laws.  Once that Legal review has been finalized, the Board will send out the new copy out to every home owner and also post on the Governing Documents Tab on the Community website.
In 2018 the Board plans on a review of Gates into unit courtyards to make sure that they are functioning properly.  If you know that your gate has such a concern, please reach out to Shane so he can coordinate repairs this year.  The Board also plans a continued ongoing review of Concrete flatwork repairs & replacements to community sidewalks & driveways.  If you have such a concern near your unit, please let Shane know so he can let us review for remedy & repair.  Those areas identified for insurable liability concerns and structural failures will take priority in such repairs by the Board.  The Board also plans on continued Phase 3 of the Community painting project this summer.  Units planned for completion this year are those remaining units located in Layton Place.  Remaining Saratoga Units are currently planned for completion in 2020.
In 2018 the Board wanted to make sure Owners are also aware of the meeting schedules and times.  Odd months (i.e. January & March) meet at 6:00pm at Smoky Hill Library upstairs in the study rooms.  During Even months (i.e. February & April) meet at 3:30pm again upstairs in the library study rooms. We hope that the flexibility of hours allows more to be able to attend and be in the know with their community.
Beginning in the next couple of weeks the Board will also have Arborists complete tree trimming to those trees in the Common areas (not owners private patio trees).  Each tree will be reviewed individually for such work of pruning/trimming to remove limbs that are encroaching onto building structures and also driveways/sidewalks.  Some trees will also have dead limbs removed that pose a liability risk to individuals.  Again, some trees may have more or less in their work competed to also help provide proper tree health as well as these landscaping assets have value to our community as well.
Upon completion of tree work, the Board has also contracted for Wet Gutter Cleaning to help remove the fall debris stuck in those gutters and downspouts.  The Board plans to alternate between wet and dry cleanings every other year (last year was dry cleaning).
Additionally, the Board plans to have a walkthrough of the Community on January 24, 2018 around 4pm (weather permitting).
Should you have questions or concerns, feel free to reach out to our Managing Agent (Shane Lussier) or visit us at one of our Board meetings.
Thanks again,
Your Morning Mesa Board of Directors
Shane Lussier | Sr. Community Manager | CAM, CMCA®
14901 E Hampden Ave #320 | Aurora, CO 80014
T 303.693.2118 | F 303.693.8803

Thursday, January 4, 2018