Tom Kelly

High-end owners eye possible capital gain increase
Wealthy homeowners, especially those with more than one home, are reportedly contacting their real estate agents with a request: Please sell their home within the next five months, CNBC reports.
Why are they suddenly in such a rush to sell?
Wealthy homeowners-those with million-plus home values-are seeing January 1 as a deadline to sell their home in case Congress allows the Bush tax cuts to expire and for capital-gains taxes to rise (the current 15 percent rate could rise to 20 percent). If these go into effect, wealthy home owners could owe millions of dollars more in taxes on their home sales, CNBC reports.
Regardless of the rate rise, the capital gains exclusion remains in effect. This means that, under the current federal Tax Code, any sales gain of $250,000 or less for single filers and $500,000 or less for married couples filing jointly will still be exempt from capital gains tax on a primary residence. Second homes do not receive the exemption.
"Real-estate experts say that, as more of the wealthy sell out of fear of a tax increase, they could drive up inventory and lower prices in the top of the real estate market, which has been one of the few bright spots in the economy," CNBC reporter Robert Frank wrote. "Any softening at the high end, or a spike in inventory, could ripple through the housing market and add new pressure to prices, although it could also increase sales volume."
Some sellers are in such a rush to sell that they are even accepting lower asking prices in order to avoid the possible increases in taxes next year, according to CNBC.

With more family members-adult children and aging parents included-moving in under the same roof in recent years, more homeowners are pressing for zoning law changes so they can better accommodate their growing households.
Others are looking to cash in on a hot rental market by adding units to their single-family homes.
"Many suburban communities have long made it difficult, or impossible, for homeowners to convert underused space-barns, garages and basements-into rental apartments," The Wall Street Journal reports. "But across the U.S., homeowners are pressing for changes in zoning laws to allow rentals while home builders report a rise in demand for houses with in-law suites or quarters with separate entry."
Some communities are concerned that adding rental apartments to suburban, single-family homes could strain public utilities, overcrowd schools, and cause traffic and parking problems. Others allow homeowners to have multiple units in their single-family homes, but they may require that the homeowner still occupy at least one portion of the home and that there is adequate parking and utility capacity.
Still others ban homes from being rented out and even the construction of kitchens or full bathrooms in areas that could potentially be rented out. The ban has brought about a growing number of illegal rental conversions in single-family homes, The Wall Street Journal reports.
Prompted by the Great Recession, more households have been "doubling up" to curb housing costs. For example, one in five college graduates age 25 to 34 are living with their parents, according to the Pew Research Center.
The number of shared households-not counting a spouse-has increased 11.4 percent from 2007 to 2010, according to the U.S. Census data. The booming rental market has prompted others to add accessory apartments in their home so they can bring in tenants for extra income potential.

A homebuyer sued his real estate agent after he broke his ankle, wrist and elbow while previewing a home for sale. However, a judge last week ruled that the real estate agent was not liable for homebuyer Michael Davies' injuries.
The case stems from a 2008 home showing. The Associated Press reports that Davies fell four feet in a dark garage when looking at a home that had no electricity.
The court ruled that the agent, Sandra Johnson, and her brokerage, Greenridge Realty, did not contribute in any way to the "hazardous condition." The judge added that the agent had no responsibility to inspect the house to look for possible falls before taking the buyer into the home.

Two recent reports highlight the strength of the commercial real estate market.
Morningstar reports that commercial real estate is much stronger than housing as evidenced by real estate funds, which have recorded an average annualized return of 33 percent over the past three years.
Through June, real estate funds have attracted $2.9 billion in new cash while investors have pulled out of nearly every other stock fund group. The decline in commercial real estate was not nearly as severe as the residential market crash due to the fact that office buildings, industrial facilities, hotels, and apartments were not overbuilt to the same extent as homes.
Meanwhile, Fitch Ratings reports that delinquencies on commercial real estate collateralized debt obligations (CDO) declined in June for the second month in a row.

Federal Reserve Chairman Ben Bernanke warned of threats to the economic recovery and the nation being at risk of slipping back into a recession . Bernanke did offer a positive outlook for the housing market, however: He acknowledged the housing market is showing signs of improving, but he said that it is contributing less to economic growth than it has in past recoveries.

Wells Fargo has agreed to pay at least $175 million in a settlement over allegations that it discriminated against black and Hispanic borrowers, although the bank continues to deny such claims.

The Consumer Financial Protection Bureau has proposed a redesigned mortgage form that sets out to help homebuyers better understand the cost and risks of getting a mortgage.

Russian tech billionaire Yuri Milner paid $100 million for a Silicon Valley mansion last year, breaking sales records . But now the Santa Clara County assessor says that he overpaid-by about half the true cost of the mansion that he has no immediate plans to occupy.