New Federal Tax Changes for Homeowners

Photo by Andy Dean Photography / Shutterstock.com

Many sweeping changes have happened over the past year, the tax bill being one of the most memorable to close out 2017. Homeowners are left wondering how this will affect them and the affordability of their home. According to recent data, only 6 percent of homeowners have mortgages exceeding $750,000 (only 1.3 percent of all U.S. mortgages). Here is a breakdown of the new changes:

Mortgage Interest Deduction Ceiling
The new limit on mortgage interest debt you can deduct on your taxes is $750,000 as of December 15th last year. Any loans taken out before that date have been grandfathered in at the original $1,000,000 ceiling.  The $750,000 limit remains the same with mortgages on second homes.

Deductibility on Home Equity Loans
New in 2018, there will be no deductions of interest paid on home equity loans, with the exception of the funds being used to significantly improve the residence, effective through 2025.

New SALT Standardized vs. Itemized Deductions
Previously unlimited, the new state and local property taxes and income or sales tax can be itemized up to $10,000, which affects only 5% of homeowners who pay more than that in property taxes. However, the Standardized Deduction allowance has increased to $12,000 and $24,000 for individuals and joint filers, respectively.

What Hasn’t Changed
There are some tax laws that remain intact, like the Exclusion of Capital Gains — allowing any taxpayer who has resided in their home for 2 of the past 5 years to qualify for the capital gains tax exclusion.

While some homeowners and potential homebuyers see a decreased incentive in homeownership, the markets most affected by these changes are the areas with higher home values, like San Fransisco or New York. There remain other perks of homeownership to still look forward to — like building equity and appreciation in value over time.  It’s important to work with Real Estate and Mortgage professionals to help navigate what you can comfortably afford.


Sources: NAR | RISMedia | U.S. News

In the News: HOME and Wells Fargo begin effort to Increase African-American home ownership

Article Originally Appears in Virginia Business

Housing Opportunities Made Equal of Virginia Inc. (HOME) and Wells Fargo Bank announced on Monday a partnership agreement aimed at increasing homeownership opportunities and expanding mortgage lending for African-Americans and African-American neighborhoods in the Richmond area.

The partnership provides for more than $4 million in financial support to HOME. It was described as one of the largest agreements ever between a financial institution and an individual fair housing organization.

“Differences in homeownership between African-Americans and white Americans are the foundation of wealth inequality in Richmond and across the country, and HOME is committed to rooting out these differences in opportunity to reduce racial gaps and inequities and build a strong middle class,” Heather Crislip, president and CEO of HOME, said in a statement.

Brad Blackwell, a Wells Fargo executive vice president who is head of housing policy and homeownership growth strategies, noted that Wells Fargo announced a nationwide $60 billion lending commitment earlier this year to create at least 250,000 African American homeowners by 2027. “Our efforts with HOME in the Richmond area will be a perfect complement to the broader national commitment and establish the foundation for what we expect will be a long and substantive relationship with one of the country’s pre-eminent fair housing organizations,” he said in a statement.

The agreement provides HOME with $3 million over four years to enhance and support its foreclosure prevention, financial literacy, and homebuyer education and counseling programs.

The Wells Fargo investments are designed to allow HOME to expand access to credit in Richmond’s underserved communities and make homeownership available to qualified, first-time homebuyers throughout the region.

Wells Fargo also will provide $1 million over four years in down payment assistance to low- and moderate-income, first-time homebuyers in the region. As part of the partnership, HOME will work with Wells Fargo to conduct fair-housing compliance testing at Wells Fargo branches and provide other monitoring and training assistance.

HOME had investigated regional mortgage lending activity and brought concerns it had to government regulators and Wells Fargo about underserved minority communities in the Richmond area. “As the largest lender in our region, we believe this initiative by Wells will set the standard for other lenders to follow,” Crislip said.

Amherst Historic Mill will be turned into a hydro-powered brewery

AMHERST COUNTY, Va. (WDBJ7) The 200-year-old Historic Mill of Amherst Milling Company is getting new owners and a face-lift.

Waukeshaw Development, a Petersburg-based company, purchased the Mill and will re purpose it into the country's first hydro-powered brewery, making use of the Mill's old water wheel.

The Mill has been owned by the same family since 1941, providing Amherst County residents with many products including hay, feed, and flour.

The development company's president, Dave McCormack, plans to keep the building preserved while bringing in new elements. In addition to the brewery, he hopes to maintain the Mill's upper level to give tours.

"This wonderful mill might just go out of existence, period," said Victoria Hanson, Executive Director of the Amherst Economic Development Authority. "And instead, we're going to have this new creative idea that's going to bring a lot of people to Amherst County."

The mill will be closing July 6th, and the family will be holding auctions to sell the rest of the inventory. The brewery hopes to be open by this time next year.

RP "Share This Consumer Alert: Beware of Wire Fraud Schemes When Buying a Home"

June 22, 2017

Buying a home is an exciting time. You’ve saved, found the perfect home and planned the move. Now, the closing day for your home is just around the corner.

The American Land Title Association wants to make sure your home purchase doesn’t get derailed by a dangerous threat that could keep you from getting the keys, painting walls and decorating. Criminals have stolen money meant for the purchase of homes through malicious wire fraud schemes targeting consumers across the country.

Criminals begin the wire fraud process way before the attempted theft occurs. Most often, they begin with a common social engineering technique called phishing. This can take the form of email messages, website forms or phone calls to fraudulently obtain private information. Through seemingly harmless communication, criminals trick users into inputting their information or clicking a link that allows hackers to steal login and password information.

Once hackers gain access to an email account, they will monitor messages to find someone in the process of buying a home. Hacks can come from various parties involved in a transaction, including real estate agents, title companies, attorneys or consumers. Criminals then use the stolen information to email fraudulent wire transfer instructions disguised to appear as if they came from a professional you’re working with to purchase a home. If you receive an email with wiring instructions, don’t respond. Email is not a secure way to send financial information. If you take the bait, your money could be gone in minutes.

“Attorneys and title companies have taken many steps to combat this problem, such as putting consumer warnings on websites and communications, securing email communications and sending notices to consumers and real estate agents informing them of the scams,” said Michelle Korsmo, chief executive officer of the American Land Title Association. “But the criminals are smart and constantly alter their tactics to steal information and money.

“Everyone involved in real estate transactions must also be aware of the potential losses as criminals phish for information and stalk home closings, hoping someone makes a mistake. If someone does mess up, it could cost your savings or retirement.”

Here are five tips to protect against wire fraud:

1. Call, don’t email: Confirm all wiring instructions by phone before transferring funds. Use the phone number from the title company’s website or a business card.
2. Be suspicious: It’s not common for title companies to change wiring instructions and payment info
3. Confirm it all: Ask your bank to confirm not just the account number but also the name on the account before sending a wire.
4. Verify immediately: You should call the title company or real estate agent to validate that the funds were received. Detecting that you sent the money to the wrong account within 24 hours gives you the best chance of recovering your money.
5. Forward, don’t reply: When responding to an email, hit forward instead of reply and then start typing in the person’s email address. Criminals use email address that are very similar to the real one for a company. By typing in email addresses you will make it easier to discover if a fraudster is after you.  

More Homebuyer Tips & Information

The American Land Title Association helps educate homebuyers about title insurance so they can protect your property rights. Check out www.homeclosing101.org to learn more about title insurance and the home closing process.

Contact ALTA at 202-296-3671 or communications@alta.org.

Misconceptions about purchasing a home that is over $1 million

In addition to residential real estate, Safe Harbor Title Company manages multimillion dollar commercial real estate transactions on a daily basis.  Our expertise handling these transactions combined with our regulatory knowledge, makes Safe Harbor Title uniquely qualified to provide settlement and title services for luxury home buyers.

There is a misconception that if you are purchasing a home that is over $1 million you need a lawyer.  There are two reasons why that is not necessarily true: 1. Residential mortgage lending, even jumbo loans, is highly regulated by the federal government.  The loan documents “are what they are,” and cannot be negotiated.  Additionally, the terms of the contract are typically worked out among the Realtors and it is rare for contractual issues to arise.  2. As mentioned, we handled transactions with lots of zero’s on the end every day.  We understand that in these situations we may be receiving money from investment accounts (sometimes multiple), as well as from Seller’s and loan proceeds.

Recently we provided settlement and title services for a home in the West End that sold on May 1st for $1.9 million, one of the highest transactions for Residential Real Estate in the month of May. We suggest that you take a moment to read this article from Richmond Biz Sense about that property, it's a pretty great read!

June 2017 Hard Hat Happy Hour - Richmond Biz Sense

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Looking forward to doing more businesses with Marcus & Millichap in the future!