We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help!

Good column from NJMoneyhelp.com.

  

When we sell our house, should we rent instead of buy?

Q. My wife and I would like to downsize the home we live in now since our kids are gone. We built the house 41 years ago and it has served us well. We intend to stay nearby so we can see our grandchildren. Our home has been paid off and we think now is a good time to sell but not really a good time to buy. We are considering renting for a year or so. Any thoughts?

— Seller

A. You’re correct that we’re certainly in a seller’s market, with many homes getting multiple offers and even price wars among potential buyers.

Your question is a common one.

It seems your strategy would work out to your benefit if there are a few key assumptions made, said Ken Van Leeuwen, a certified financial planner with Van Leeuwen & Company in Princeton.

One consideration is how you would be investing the proceeds from your current home.

“Investing the proceeds would make the math work more in your favor, instead of keeping it in a cash account earning next to nothing,” he said.

It’s also important to note that you don’t want to take too much risk with any funds you will need in the near future.

You are also assuming that the housing market will “cool off” and there will be a more interesting home at a better price in the future, he said.

In that case, renting can make a lot of sense for families looking to maximize their current home value without buying another property at all-time high prices.

He recommends you stick with a 12-month lease when you rent, noting that many rentals will allow you to break the lease early, but you would be responsible for the monthly payments until the unit is rented to someone else.

“This could still be cheaper than paying an increased monthly rent for a shorter period of time,” he said. “Just make sure to check the lease to see what your options are for breaking the terms early.”

Email your questions to Ask@NJMoneyHelp.com. This story was originally published May 25, 2021.

For your real estate purchase or mortgage refinance or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

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Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

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If you read it on the Internet, it must be true. Well, not always

New Jersey's "exit tax;" who does it affect?

A recent consumer help column intended to answer a reader's question about the so-called "exit task," but missed the mark.

The question headline was:

I sold a vacation home. Do I owe the exit tax?

Q. I am a partner in an LLC that owned a vacation home for 15 years. The property was sold in 2020 and sale proceeds were split according to share ownership. I am now purchasing another property in the same New Jersey town. Will I still need to pay the exit tax?

The answer, with my corrections in [ ] was:

A. We’re going to assume you are a New Jersey resident for the answer to this question.

We get lots of questions about the “exit tax” when you sell a home and then move out of the state.

This “exit tax” is actually a withholding or estimated tax that is paid in advance if you are moving out of state. The cost is the greater of 8.97% of the profit on the sale of the home or 2% of the selling price, said Gerard Papetti, a certified financial planner and certified public accountant with U.S. Financial Services in Fairfield.

He said the state requires all real property owners to execute a special tax form that must be attached to all deeds upon sale of the property. Otherwise, or the deed would be rejected by the recording office, he said. [The most commonly used form is the GIT/REP-3]

Form GIT/REP3 – Seller’s Residency Certification/Exemption” is for New Jersey resident taxpayers [and non-residents claiming an exemption] and contains 14 [16] exemption choices, actually called “seller’s assurances,” that allow for any taxes on the gain to be paid when filing your NJ Resident NJ-1040 Gross Income Tax return, he said.

“Exemption No. 1 applies to New Jersey residents and states that all applicable taxes on the gain from the sale will be reported on a NJ Resident Gross Income Tax Return,” he said. “Exemptions No. 2 through No. 14 apply to non-residents [and residents claiming an exemption] and will not apply to you.”

Papetti said a New Jersey resident that sells real estate in the state, and then moves out of the state, is considered a non-resident on or after the day of transfer.

Part-year residents are considered non-residents.

The forms must be completed at the time of closing and given to the buyer/buyer’s attorney, he said. The buyer’s attorney must submit the original Seller’s Residency Certification/Exemption Form GIT/REP-3 or Non-Resident Form GIT/REP-1 to the county clerk at the time of recording the deed. Failure to do so will result in the deed not being recorded, he said.

“While some may feel the 2% minimum realty transfer tax is an exit tax, it applies to any non-New Jersey resident selling real property in New Jersey regardless of if they were a New Jersey resident prior to the sale,” Papetti said. “Assuming you are a New Jersey resident and will file a New Jersey resident tax return and qualify for Exemption No. 1, there will be no 2% ‘exit tax’ at the time of closing.”

Email your questions to Ask@NJMoneyHelp.com.

[In the question posed by the writer, it states the seller is an LLC.  No "exit tax" is collected because the withholding requirement only applies to individuals, estates, and trusts.  An LLC is not one of those and is entitled to claim an exemption by checking off box 5 on the GIT/REP-3.]

Here's a link to see the form and its instructions: 

https://www.state.nj.us/treasury/taxation/pdf/other_forms/tgi-ee/gitrep3.pdf

If you have any questions about what is written here, please contact me.

We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help!

For your real estate purchase or mortgage refinance or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow@vested.com

@vestedland

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Capital gains tax when you sell your home

Will you owe income taxes when you sell your home in New Jersey?

Capital gains tax is tied to how long you have owned your home and how long you  have lived in it.

The following question was asked and answered NJMoneyHelp.com

Q. I bought a house in December 2016 and I expect to sell it in June 2020 for $745,000. I’m moving to North Carolina for a job. The exemptions for the exit tax confuse me, including the line that says “you must have used the home that was sold as your primary residence for two out of the last five years.” I haven’t had the home that long, and I file taxes married filing jointly.
— Moving

A. Congratulations on the new job.

On your move, taxwise, you should be okay.

The State of New Jersey follows the federal government when it comes to the sale on a home.

Internal Revenue Code Section 121 gives an exclusion of up to $250,000 of capital gain from the sale of your main home or $500,000 if your filing status is married filing jointly, said Cynthia Fusillo, a certified public accountant with Lassus Wherley, a subsidiary of Peapack-Gladstone Bank, in New Providence.

There are two tests to qualify, she said. One is for ownership and the other is for use.

“You must have owned your home, and used it as your main home, for a period totaling at least two of the most recent five years immediately prior to the sale date,” Fusillo said. “Based on the fact pattern you provided, you should be eligible to exclude the expected gain on the sale of your home.”

She said you will have to report the sale on your tax return for the year of sale based upon the expected sale price.

However, the resulting gain, if falling within the $250,000/$500,000 parameters, will not be taxed, she said.

Email your questions to Ask@NJMoneyHelp.com.

This story was originally published on March 12, 2020.

Remember to always seek advice from a personal professional tax and legal advisor who understands your unique individual circumstances.

We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help!

For your real estate purchase or mortgage refinance or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow@vested.com

@vestedland

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Seller changes mind, what's a buyer to do?

We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help!

When Home Sellers Have Regrets

Real-estate agents recall desperate measures that sellers took to try and stop a home purchase.

Great feature article from the WSJ.COM about sellers who change their minds about selling right before closing and transfer of title.

Q:Have you ever worked with a client who went to desperate measures to stop a sale?

Andrew Karigan, 

Karigan Residential Group at Douglas Elliman Real Estate in Newport Beach, California

“Just after we accepted an offer, the seller changed his mind. The buyer would not let him out of the contract, so the seller did everything possible to try and sabotage the deal. The home had a lot of deferred maintenance, and there were issues concerning lack of permits. After getting a large ‘request for repair’ document back from the buyer, the seller refused to do any repairs. The buyer still wanted to proceed. The seller then wrote a disclosure statement stating that the home was haunted. This didn’t work either."

In New Jersey, we have a legal device called a "Notice of Settlement" that gives buyers a fair amount of protection.  But, at the end of the day, you need a good lawyer.

Read the full article here.

For your real estate purchase or mortgage refinance or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow@vested.com

@vestedland

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Selling your home? Do you have a for sale sign on the lawn? Some people would like to ban for sale signs.

We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help.

From the New York Times:

Does a For Sale Sign Help Sell a House?

Many towns in the New York area have long banned the lawn signs, but some believe they still have value in a rapidly evolving marketplace.

A planned ban on For Sale signs in New Canaan, Conn., hadn’t even begun before it was over.
 The New Canaan Board of Realtors had publicly announced the six-month trial ban in early June, citing the dramatic shift toward online house-hunting and a desire among its members to improve the look of the pricey town. For Sale signs have multiplied noticeably in New Canaan this year as the community has struggled to attract enough buyers to whittle down its substantial supply.
 “When you have as much inventory as we have, the signs make it look like there’s something wrong,” said Doug Milne, an agent with Houlihan Lawrence who specializes in the towns of New Canaan and Darien, explaining part of the thinking behind the proposed sign ban.

So, is it for giving the neighborhood an aesthetic look by banning signs, or is because a plethora of signs make people thing there's a fire sale?

I'll let you read the full article.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow@vested.com

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Thinking of selling your home? Here's a checklist.

 

What You Should Do Before You List Your Home by Lillian Montalto on Realty Times.

You've decided to sell your home. Congratulations! Here’s a checklist of things you need to do right now, before you list your home for sale.    

1)      Establish a master plan. Are you moving into a new property? Now is the time to think about what you are looking for so that you can set out on your search immediately and be prepared to buy a new home as soon as your current house sells. Look into neighborhoods you are interested in and find out how much inventory is available. Assess your finances and determine what you can afford. Then shop around and find a lender who will provide financing. Finally, get pre-approved for a loan (not just pre-qualified). This can take a while these days, so be prepared to wait. [Consider having a contract for the sale of your home in place before you sign for the purchase of your new home.]

2)      Find a real estate agent. You’re in the driver’s seat here, so unless you have worked with someone you liked before, do your research and interview several agents before making a choice. Make your decision based upon the individual agent’s record of sales in the past 6-12 months.  Do not base it on the number of properties the company has sold, as many larger companies have 80-100 agents, but the individual agents do an average of only 4-6 sales/year.  Many agents are part-time.  This is a business decision and is usually the largest financial transaction you will make in a lifetime.  Make sure you hire the top agent in your area.  Someone that is going to guide you through the process, may have staging services available, and most importantly, an agent that will tell you “what you need to hear, not what you want to hear”.    The best advice I can give you is NOT to hire a friend as I have seen too many friendships end on a sour note, and your friend will be hesitant to tell you what you need to hear in order to not hurt your feelings.  Get some recommendations from family or friends about specialists in your area or neighborhood. Have each do a walk-through of your home and ask for a general impression of your property as well as local comps. Discuss a marketing plan and listing price, and assess general knowledge of the market in your area. Most importantly, make sure that you and the agent you choose “click” and will be able to work well together.  [We can recommend agents in your neighborhood, just give us a call and we'll be glad to help.]

3)      Whip your home into shape. Check your water heater, furnace, roof, and chimney to make sure everything is in good condition. If necessary, hire a licensed home inspector to do this for you. If replacements are needed, get estimates from different companies about how much the work will cost. You should also make any small repairs and touch up paint. Assess your curb appeal and work on cleaning up your yard and making the exterior of the house look inviting to prospective buyers. De-clutter the interior: store keepsakes, toss anything no one could ever use, and donate the rest of your unused or unneeded belongings. Keep the bare minimum – it’s liberating! Finally, clean everything in your house, including the inside and outside of windows, blinds, carpets, oven, refrigerator, and anything else that hasn’t seen a good cleaning in a long time. Sounds daunting? You don’t have to do it all yourself. Hire a cleaning service! [Can not over-emphasize the need to declutter.  Give stuff to your children and let them throw it away if they do not want it!]

4)      Locate your paperwork. Get all of your home documentation together in a folder for the buyer to see. Include any notes on paint colors, manuals for appliances, and receipts for work you’ve recently done. If your utility bills might be lower than a buyer’s, have them handy to offer as additional incentive to buy. [Do not forget to look for a copy of your Title Insurance Policy and survey.]

5)      Finally, be prepared. Do you have a plan in place in case you are asked to close quickly? Most people don’t expect an immediate offer, but depending on the market and the buyer, it can happen. Better to be prepared to move out than to refuse an offer that comes your way.  [Couldn't agree more.  Avoid the aggravation of losing a buyer who must be in the house by a certain date.]

 

Now it’s time to list your home! Call up your agent, decide on a listing price, and get ready to make that sale!

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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Capital gains tax on the sale of your home?

Ask the Biz Brain found in the Star-Ledger answers a question about the payment of capital gains tax upon sale of your home. It’s a worthwhile article, so it’s set out in full.

Q. I plan to sell my house in the spring of 2012 and relocate to another state. After I get a job and become familiar with the area, in about 18 months, I would like to buy another house. How long can I wait to buy a house before I have to pay capital gains on the money? Where would be a good place to invest or put the money until that time? -- Homie A.

The Brain hopes the housing market sees an upturn before your target selling date. But then again, a housing recovery will mean a higher purchase price for your new home.

If you are single, you can sell your home and any gain up to $250,000 is not taxable, and you do not have to ever buy another house, said Alan Meckler, a certified financial planner with Cornerstone Financial Group in Succasunna. If you are married you can exclude up to $500,000 in gain.

Meckler offers this example: If you are single and you originally paid $250,000 for your house and over the years you spent another $100,000 on improvements, the cost basis in the house would be $350,000. If you now sold it for $550,000, that would be a net gain of $200,000.

“You would not owe any capital gains or any form of taxes,” Meckler said.

You are also under no constraints to ever buy another home again. This law came into effect in 1997, under the Taxpayer Relief Act of 1997, he said. As always with tax rules, there are other qualifications you must pass.

“The individual or the couple need to have owned and lived in the property as their main residence for at least two years of a five-year period ending on the date of sale to qualify for the exclusion, and they may not have excluded the gain of another personal residence within the two-year period ending on the date of sale,” said Robert Bacino of Insight Financial Services in Flemington.

He recommends you consult with your tax preparer with regard to your particular circumstances in computing the actual gain or loss on the sale of the personal residence -- including state tax laws -- to determine to what extent the federal exclusion may apply and to properly report the sale on your personal federal and state income tax returns, Bacino said.

Now to the cash you’ll have to park after selling your current home but before you buy the new one. Meckler recommends you stay very conservative because you’re working with a relatively short time horizon.

“You could look for a short term CD at the bank or money market account,” he said. “I would not recommend you investing in the stock market unless you had a five-year time frame.”

Good luck with your move, and Jersey will miss you!

If you would like to read the article on line, go here.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Title Inc.

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 201-656-4506

E-mail vti@vested.com - www.vested.com

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Home sales up? It's all in the numbers.

You may have seen the latest home sales and price numbers and wondered: What's going on here? Are we up? Are we down?

So begins Kenneth R. Harney's latest posting on Realty Times.

Depending on which TV network reported the news last week, it sounded either like real estate is continuing along its steady road to recovery - -or that we just hit a pothole in the road.

That's just the problem with numbers, isn't it? But there is an answer according to Harney and arithmetic inclined folks,

Well, dig down into the actual numbers from the National Association of Realtors and you find that, yes, 2010 first quarter home sales were 14 percent lower than they were in the final quarter of 2009.

Home sales nationwide, however, in the first quarter of 2010 were 11.4 percent higher than they were during the same quarter the year before. And any economist will tell you: year to year comparisons are more meaningful than quarter to quarter data, which tend to be more volatile.

So, we're up. Let's see that translate into a full year increase and I will personally feel much better. Read the full article here.

For your next title order or
if you have questions about what you see here,
contact Stephen M. Flatow
Vested Title Inc.
648 Newark Avenue,
P.O. Box 6453,
Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
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Report on Existing Home Sales is Not Encouraging

The Star-Ledger writes about nationwide problems with the real estate market.

According to the coverage, the National Association of Realtors said this week "sales of existing homes fell 3.1 percent, to a seasonally adjusted annual rate of 4.98 million units in October, from a downwardly revised pace of 5.14 million in September. Sales had been expected to fall to a rate of 5.05 million, according to economists surveyed by Thomson Reuters," the Star-Ledger reports.

New Jersey is not immune from the sales fall-off.

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