Seniors looking to downsize?





For seniors looking to downsize and buy a new, smaller home, navigating the real estate process can be tricky. From finding the perfect new place to navigating finances, you may need some advice to help you out along the way. Before you start looking for your new home, commit these useful tips to memory.


Planning for Your New Adventure


You’re no stranger to the benefits of planning ahead. From raising a family to retirement, staying organized is the key to ensuring success. The same holds true for buying a new home. You need to put together a roadmap to help guide you through your new real estate venture. Start with the reason for your move, and then begin listing all the steps you need to take along the way. Start packing early, even if it’s bit by bit, so you have a chance to go through all of your belongings and decide what to keep and what to let go of. All that planning will pay off when it comes time to start making big decisions about your new house and your move.


Finding a Home That Fits


You’ll be spending your golden years in your new home. So, it’s important to find one that is just right for you. Think about the size you need and the amenities that will make your life easier. Maybe you need some extra space for the grandkids, or perhaps you’d like a quiet space to do some gardening. Keep your lifestyle in mind when you are looking at neighborhoods and homes. If you or anyone in your family needs accommodations for accessibility, look for homes that have those features or where adding them won’t be too much of a hassle.


Handling Financial Decisions


One of the least fun parts of picking out a new home is getting through all the financial aspects and choices and figuring out how much you can spend. You’ll need to consider details like the down payment and inspection costs right off the bat. It’s also wise to take a look at your credit to make sure everything is in good shape. Comb through your report to spot mistakes and signs of identity theft. Knowing your credit score will make it easier for you to negotiate your best interest rates on home loans. To make the home-buying process simpler, try to get preapproval for your home loan before you start looking at properties.


Enlisting Professionals to Help


Working with an agent, realtor or broker could make your home buying experience less stressful. These professionals will know the market in your area and be able to point you to properties that fit your needs. You also may want to consult a financial advisor or mortgage expert to help you with any financing or monetary concerns. Finally, take care when looking for contractors to make repairs or upgrades on your new home. Look for a licensed contractor, and always have an agreement drawn up before work starts.


Avoiding Regrets and Mistakes


When it comes to finding and buying a new home, it pays to be patient. You want to end up in a home you love, but try not to let your emotions interfere with your decisions. If you fall in love with a home that doesn’t meet your needs or price range, you need to be able to move on and find something that does. Don’t rush into any decisions or agreements, and don’t let homeowners or professionals pressure you into buying something that doesn’t fit your lifestyle. Stay focused on the plans you made earlier, and be prepared to take time to get into a home that’s just right.


Staying Stress-Free


Sure, looking at nice houses can be fun, but actually buying one can be stressful. From putting in an offer to finalizing paperwork, you may find yourself a bit frazzled. You don’t want stress to cause any serious issues, so make time for some self-care. Planning and patience will help relieve some stress, but find other ways to help yourself relax. Reserve a few nights for some dates with your spouse or go for a round of golf to relieve tension.


Getting through the process of buying a new home can be confusing, but it doesn’t have to be. With a little planning and some research, you can find your perfect home faster and start enjoying the best years of your life there.


Photo Credit: Unsplash

Home Price History

How is the market? You ask. Well Ill tell you. To get a really good perspective of where we are today and where we have been take a look below.

 Now as you will see we have market corrections on average every 7 - 9 years. Currently we are in the 8th year of recovery and appreciation. Its always interesting to listen to the folks I meet at open house. The narrative at the moment is all on buying, maybe we are not in a frenzy period but the market is still very strong. Still if I am a potential seller, and   I have a CHOICE  on  when I sell, I may want to consider how much longer this bull market in local real estate will continue!

Now as you will see we have market corrections on average every 7 - 9 years. Currently we are in the 8th year of recovery and appreciation. Its always interesting to listen to the folks I meet at open house. The narrative at the moment is all on buying, maybe we are not in a frenzy period but the market is still very strong. Still if I am a potential seller, and I have a CHOICE on when I sell, I may want to consider how much longer this bull market in local real estate will continue!

Plans to transfer your property tax


Hopefully by now you’re aware of the historic effort C.A.R. is spearheading to qualify a ballot initiative for the November 2018 ballot. Known as the Property Tax Fairness Initiative, this measure would allow homeowners 55 years of age or older to transfer their Prop. 13 tax base to a home of any price, anywhere in the state, any number of times, These protections also would be extended to people who are disabled and those who have lost their homes to a natural disaster. It’s a carefully written initiative that includes appropriate safeguards while eliminating California’s property tax “moving penalty.”

In order to qualify the initiative for the ballot, C.A.R. must collect approximately one million signatures from California registered voters. Petitions were mailed to each C.A.R. member in early January, urging them to sign the petition and to obtain four additional signatures of registered voters within the same county, and mail it back to C.A.R.

People are responding enthusiastically to the measure, but C.A.R. also has received a fair number of questions regarding this initiative and how it works, especially in relation to Props. 13, 60, and 90.

We hope this short Q&A will help answer those questions.

Why is the Property Tax Fairness Initiative Needed?
It’s no secret that California is in the midst of a housing crisis. Not only is affordability near an all-time low, but housing inventory remains stubbornly low – wreaking havoc on the market and reducing homeownership opportunities for many would-be buyers in California.

On top of these challenges, nearly three-quarters of homeowners 55 years of age or older have not moved since 2000, furthering constricting inventory. Research has indicated that one of the primary reasons these homeowners are effectively “locked” into their homes is the prospect of paying higher property taxes.

C.A.R.’s Property Tax Fairness Initiative will help these homeowners sell their current homes and move without being subjected to what is effectively a massive “moving penalty.” These homes will then be available for families and other would-be buyers to purchase.

How Do Property Tax Assessments Currently Work?
The amount a homeowner pays in property taxes is based on the assessed value of the home at the time of purchase. Generally, Prop. 13 limits property taxes to 1 percent of the assessed value at the time of purchase, even if the value of the property subsequently increases.

What is Prop. 13?
Prop. 13 is a California proposition that limits the property tax rate to 1 percent for all California property and annual tax increases to no more than 2 percent. This protects homeowners from losing their homes due to unforeseen property tax increases.

There also are two other propositions that affect property taxes – Prop. 60 and Prop. 90.

What is Prop. 60?
Prop. 60 allows senior homeowners, 55 years of age or older, to transfer their property tax baseone time -- to another home in the same county, as long as the purchase price of the replacement home is equal to, or less than, the sale price of the original residence.

What is Prop. 90?
Prop. 90 is an extension of the original Prop. 60 program. Prop. 90 allows senior homeowners to transfer their property tax base, one time, to a home in a different county, as long as the county accepts such transfers.

 Prop. 60Prop. 90C.A.R. Property Tax
Fairness Initiative

Transfer Tax BaseOne timeOne timeUnlimited

Counties AllowedSame countyDifferent county
(if new county
accepts transfer)Anywhere in the state

PriceReplacement home equal to,or less than, the price of the property soldReplacement home equal to,or less than, the price of the property soldAny price

For more information about C.A.R.’s Property Tax Fairness Initiative, visit or send us an email at


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How real estate investors can cash in under new tax law

The new federal tax law took away some benefits of homeownership but gave real estate investors a gift they might not be aware of yet.

Owners of investment property — from mom and pop landlords to big-time real estate moguls — could get a federal tax deduction of up to 20 percent of their net rental income for tax years 2018 through 2025. Most people who own shares in real estate investment trusts can also deduct up to 20 percent of their ordinary REIT dividends.

This tax break has been overshadowed by all the wailing over the law’s treatment of homeowners. It will reduce the mortgage interest and property tax deductions for some homeowners, but these new limits do not apply to interest and property taxes on income property.

More importantly, real estate investors get a potentially large tax break they didn’t have before.

It comes under the section of HR1 titled “Deduction for qualified business income of pass-thru entities.” Congress “used the Facebook spelling” of “through,” quipped Paul Bleeg, a partner with accounting firm EisnerAmper.

Bleeg said the new deduction could increase investor demand for real estate, offsetting any potential drop in demand from homeowners.

The pass-through provision is insanely complex, but it essentially lets owners of pass-through entities deduct up to 20 percent of their business income on their personal tax return, subject to certain limits.

Pass-through entities pay no business tax. Instead, their income passes through to their owners and is taxed at their personal tax rates. They include sole proprietorships, partnerships, limited liability companies and S corporations.

In the past, 100 percent of this income was taxed at the owner’s ordinary income tax rate. In the future, some owners can deduct up to 20 percent of it on their federal return (but not their California return unless the state conforms to this provision). Taxpayers won’t have to itemize to claim the new deduction, which will show up on a new line after adjusted gross income, said Mark Luscombe, principal tax and accounting analyst with Wolters Kluwer.

Congress put several limits on the new deduction, which differ depending on the type of business and the owner’s taxable income.

The first limit applies to everyone claiming the 20 percent pass-through deduction. It says your deduction generally cannot be more than 20 percent of your taxable income, excluding capital gains and the pass-through deduction itself. (Taxable income is your household income from all sources minus your deductions.)

If your taxable income is less than $157,500 (single) or $315,000 (married filing jointly), that is the only limit that applies. If your taxable income is above those amounts, then other limits apply, depending on the type of business.

If you are in a “specified service trade or business,” your deduction will be phased out between $157,500 and $207,500 in income (single) or between $315,000 and $415,000 (married filing jointly) according to a fairly simple formula. If your income exceeds the top of the phaseout range, you get no deduction.

Specified service professions include health, law, accounting, actuarial science, performing arts, consulting, athletics, financial and brokerage services or any business where the principal asset “is the reputation or skill” of one or more employees. (Curiously, architects and engineers were excluded from the list.)

This income limit would apply to real estate agents but would not apply to real estate investors because their principal asset is their property, not their skill, said Kenneth Weissenberg, chair of real estate services at EisnerAmper.

If you are not a service professional and your taxable income exceeds $157,500/$315,000, then your pass-through deduction may be limited by a convoluted computation. It says: Your pass-through deduction can’t exceed the greater of either 50 percent of W-2 wages or 25 percent of W-2 wages plus 2.5 percent of the “unadjusted basis” of depreciable assets, which generally means what the owner paid for the assets, excluding land. Real estate investors would be subject to this nutty math if their income exceeds the limit.

To get the deduction, real estate investors must have net income from a property. Many real estate investors have net losses thanks to depreciation, interest, repairs and other expenses.

Suppose Donna is single, earns $100,000 a year working for a tech company, and owns a duplex that generates $20,000 a year in net income. Her taxable income, we’ll assume, is $108,000.

Under the new law, her pass-through deduction would be 20 percent of $20,000 or $4,000. It is not reduced because $4,000 is less than than 20 percent of her taxable income.

Now suppose she makes $200,000 at her tech job and her taxable income including the rental is $208,000. In this case she would have to do the complex computation.

We’ll assume she bought the duplex for $600,000 but $100,000 of that was land value. Her unadjusted basis is $500,000, and 2.5 percent of that is $12,500. She doesn’t pay anyone a salary, so her W-2 wages are zero. Her deduction still is not reduced because $4,000 is less than $12,500.

“The wages and depreciable property limits won’t impact most real investors,” said Stephen L. Nelson, a CPA in Redmond, Wash., who wrote a monograph on the new deduction.

One gray area is whether people who own real estate in their own names and file their rental income on Schedule E would qualify for the pass-through deduction.

“It’s not 100 percent clear,” said Jeff Levine, director of financial planning with Blueprint Wealth Alliance. To get the percent deduction, “it has to be a qualified trade or business.” The new law does not clearly define trade or business, and the term is defined differently in different parts of the tax code. “Depending on IRS interpretation, a taxpayer’s involvement in the rental property could be a factor” in whether he or she qualifies.

Luscombe said he believes Congress intended real estate investors who use Schedule E to qualify for the deduction, and a congressional committee report supports that idea.

Weissenberg said they clearly would qualify for the deduction.

Nelson also said they should qualify, “but we’ll have to see what the IRS says” when it issues regulations.

Real estate investors do not need to form a limited liability company to take this deduction, Nelson added. They can put property into an LLC (many do for liability reasons) as long as it’s not taxed as a corporation.

The law does state that people who own shares in a real estate investment trust can deduct 20 percent of their ordinary dividends (but not capital gains dividends) starting in 2018. This deduction cannot exceed 20 percent of their taxable income, but other limits do not apply.

“Real estate is a big-time winner” in the tax law, Weissenberg said, thanks to this and other provisions.

- Written by Kathleen Pender of the San Francisco Chronicle