Q: Bob, in this downward market, do you have any advice on renting versus owning/buying. We are renting a home in Fort Myers, and keep hearing how owning a home (especially in this market) can be a big tax advantage. Can you give us any examples on owning vs. renting and should we wait for the market to go lower?
J & P.
A: J. & P., don't know what the market will do, maybe a little lower? If you're a young couple with small children still searching for ways to scrape together enough money to get into your first home, you may not have to look too far to come up with a little more money (credit is a rough thing in this market) each month. You're probably sending it to Uncle Sam.
Consider a fictitious couple in their mid 20s with two small children.
Assume that their gross income is about $48,000. They currently rent and figure that, in addition to the down payment they've been saving, they need to have about $100 a month of disposable income to defray a mortgage payment.
Good news! They may have already that $100 a month. Bad news! They may not even be aware of it. Since they can't itemize deductions, their past tax bill came to about $4,900. Had they owned a home last year, they could have deducted mortgage interest and real estate taxes. Assuming those deductions came to about $5,000, and that they had other deductions of about $2,500 their federal tax bill would have reduced by nearly $100 a month!
Add to all of this that the couple probably would also save on any local and/or state taxes by owning a home. I'm not a tax expert and since your tax-savings "mileage" may vary, consult your personal tax adviser to learn about any "hidden" money you may actually have.
Q: I understand that the most important task in selling a house is decided on the right sales price. How do you come up with the best price?
A: Wow. Tom you are very right especially in this market. This is not done by looking into a crystal ball or consulting a guru. The most important factor is the price of comparable sales in your immediate area.
These are sales that have already been completed of homes as nearly like yours as possible.
The sales should also be near in time, for two-year old sales have almost no meaning in today's volatile market. Also, the homes should be similar in style, size, and condition as your property-the closer the better. I hope everyone is enjoying the new year and is looking forward to the coming (I hope ) controls. We will know after this month possibly ??
Have a real estate question? Write, call, fax or e-mail:
Bob Jeffries, Realtor,
Century 21 Birchwood Realty, Inc.
4040 Del Prado Blvd., Cape Coral, FL 33904