The Pernicious “Unearned” Income Tax on High Income Earners

ObamaCare smacks a new tax on unearned income in order to help pay for the gargantuan program. Many refer to the tax as a real estate sales tax, or transfer tax. Even though it is not such a tax, it sure looks and smells like it; especially, when applied to net investment income generated by real estate. It also hits income generated by other forms of capital. In many ways, it becomes a double whammy on those who pay capital gains tax. The new tax goes into effect January 1, 2013. It seems like just another way to punish successful investors. The 3.8% levy will not affect any other segment of the population. Wouldn’t it have made more sense to let everyone contribute via a National sales tax? The link contains a thorough Q&A covering the important aspects of the tax.

http://brokertom.files.wordpress.com/2012/04/unearned-income-tax-healthcare-bill.pdf

 

So, How’s the Real Estate Market Doing?

I get asked this question all the time from Buyers and Sellers. It is a fair question given all the conflicting information propagated by TV, radio, newspapers, and the internet. The basis for the question always seems to be driven by a need for information about a specific area or city. All the noise on National statistics and trends is interesting, but real estate is a local condition, and the trends are not identical all over America!

Orange County, California during the past 12 months experienced a sharp decline in the number of homes for sale. The number of sales, however has remained steady. As of April 1st,  only 2.9 months of inventory exists; which is down nearly 50% over the year.  At the current rate of home sales, all if it will be gone in 3 months! About half the homes that sold were categorized as “distressed,” which means they were short sales or foreclosures. During the past year, REO sales (foreclosed and owned by the bank) have fallen off by 50%.

What is in store for the balance of the year? Well, it is an election year, so that is likely to have some effect on the market. If the inventory stays this low, then it will be a Sellers’ market. Supply and demand will drive prices accordingly. If the Federal government keeps up pressure on banks, there will not be any meaningful increase in foreclosures or short sales. Buyers and Sellers are entitled to worry about these conditions. If interest rates rise, that will add a new complication to the market.

Here’s a trend chart for Orange County OC Mar . If you want specific information about your area, call or email me for details.

Today’s Winners and Losers in Residential Real Estate

Today’s Winners and Losers in Residential Real Estate.