Estate Tax and You

It is unfortunate that the U.S. Senate has been unable to forge a resolution to the repeal of the estate and generation skipping tax which took effect on January 1st. These changes last one year and then in 2011 and then we go back to a death tax with only a $1.0 million exemption per taxpayer. The big question is whether Congress will pass legislation during 2010 which will be retroactive to January 1, 1010. Who knows?

The back story:
In the 2001 Tax Act, many changes were made to the transfer tax system, including increasing the estate and generation skipping (GST) transfer tax system gradually to $3.5 million as of 2009, lowering the top rate for all three transfer tax systems to 45%, eliminating the state death tax credit and ultimately repealing the state and GST taxes (but not the gift tax), and thereafter lowering the top gift tax rate to 35% and eliminating of the "step up" in basis under section 1014e of the IRS code, so a decedent's basis will 'carryover' to those who inherit his or her property.

Stay tuned for the what's coming!


Foreclosure Update
Distressed properties continue to dominate the market. Fierce competition is at hand for properties in Santa Cruz county between $400,000 and $650,000. Have your financials, verification of funds, loan approval and pay stubs up to date and be prepared to battle. We are returning home values to more realistic levels.. It is bloody and brutal and lives are being upended. Yes, the banks led us to the slaughter but the good news is hopefully you will not have to be a slave to your mortgage payment. A home will once again become a home, and no longer an ATM machine. Takes a lot of pressure off. But for now, the stories are painful, the stress is enormous and many people will be starting over. It's okay. You are not alone. And the future may be a much better ratio of mortgage to take home pay. Keep fighting for your dreams.

Luxury Market Update
In the last three months 11 properties sold at over $1 million dollars. The winner was a lovely newer home in Rio Del Mar that closed at $3,500,000. But the bulk of the sales were under $2 million with a couple of exceptions. 8 of the 11 homes had market times over 100 days, while the remaining 3 sold in less than a month. Let's see what spring does to this market,
and will over heating in the valley drive those sales come summer?

Selling Hints
Nothing is more important than clearing clutter, you must be able to see the floor, with only the legs of furniture on it. Cleanliness is next to Godliness, or whatever higher power you admire,
and pet or smoking odors are the kiss of death. (Ask a truthful friend if your house is stinky)
Keep the curtains open, light is the most requested quality home buyers ask for. If you can afford it, put in a skylight. You'll get your money back, or you'll get your money from the house because it may mean the difference between selling or not.

Ok, keep the faith, get a great agent that cares about you, understands technology and has seen the inventory.

Peace and competence,

Terry