Homebuyers to be affected by changes in FICO score?

Homebuyers and the FICO score, will the changes help or hurt?

NYTimes.com points out- FICO is tweaking its all-important formula. Scores will rise for about 40 million people and drop for another 40 million.

The New York Times reports:

Your credit score — that all-important passport within the financial world — may be about to change. And it won’t necessarily be because of anything you did or didn’t do.

The Fair Isaac Corporation, the company that creates the widely used three-digit FICO score, is tweaking its formula. Consumers in good financial standing should see their scores bounce a bit higher. But millions of people already in financial distress may experience a fall — meaning they’ll have more trouble getting loans or will pay more for them.

For homebuyers, this can be trouble as those who are down-rated may not qualify for the best mortgage rates.  In those cases, borrowers may have to obtain private mortgage insurance (PMI) to complete the loan transaction.

Read the full article here.

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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Pennsylvania resident asks: Can I deduct the ‘exit tax’ on my tax return?

New Jersey's "exit tax" again raises questions.

We recently posted another column about New Jersey's supposed "exit tax."  But out of state sellers keep asking questions about the minimum 2% of the sales price that was withheld at the time of closing and sent to the New Jersey Division of Taxation.

At NJMoneyHelp.com, a Pennsylvania resident asks if the payment can be deducted on his Federal income tax return.  Here's the answer:

Q. We live in Pennsylvania and sold a townhouse in New Jersey. We were charged the exit tax. Can this tax be claimed on our federal income tax return? — Taxed enough

A. Let’s first clarify what the so-called exit tax means.
 It’s not a special tax levied on a person who sells property in New Jersey.
 Instead, it’s an estimated income tax withholding imposed by the New Jersey Division of Taxation on the closing of a nonresident taxpayer’s sale of a New Jersey residence, said Neil Becourtney, a certified public accountant and tax partner with CohnReznick in Holmdel.
 The amount withheld is the greater of 10.75% of the gain realized or 2% of the selling price.
 Even if the residence was sold at a loss, this withholding will apply, Becourtney said.
 Becourtney said you can include this state income tax as part of your state and local income and real estate tax deduction, commonly referred to as the SALT deduction.
 “However, the Tax Cuts and Jobs Act (TCJA) imposed a severe limit on the SALT deduction: $10,000 if your filing status is single, married joint, or head of household, $5,000 if it’s married separate,” Becourtney said. “If you had more than $10,000 of state income tax and real estate tax payments during the year, the `exit tax’ will produce no federal tax benefit because you will have already reached the maximum SALT deduction.”
 This situation is predicated on your itemizing your deductions, he said. With the $10,000 SALT deduction limit, far fewer taxpayers itemize their deductions and instead take the larger standard deduction.
 “The standard deduction for a joint filer for 2019 is $24,400, with an additional increment of $1,300 for a spouse who has attained age 65,” he said. “If both spouses have attained age 65, the standard deduction for 2019 is $27,000.”

* * *
There you have it.  The answer - it depends!  But it is the correct answer.

As one of New Jersey's most experience title insurance agents, we get a lot of questions from buyers and sellers.  Have one for us?

Let us know!

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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Florida resident sells a home in New Jersey? What taxes will you pay?

Sold a home at a profit, what taxes will you pay?

Is it really New Jersey's "exit tax"?

Out of state residents who own real estate in New Jersey are often shocked to find that a minimum of two percent (2%) of the sales proceeds is collected at closing and sent to the State of New Jersey Treasury.  Some call this an "exit tax" when, in reality, it's nothing more than an estimated income tax payment.

This article from NJMoneyhelp.com discusses this payment:

Q. I have been a resident of Florida for the past 16 years and have just sold a two-family family house in New Jersey. Do I need to file anything other than an A3128 for a refund? We did make a substantial profit. What should I expect? — Seller

A. Congrats on your home sale.

It looks like you may need to pay taxes to New Jersey on your profit.

Unless the house was used solely as a personal residence and falls within the guidelines for the sale of a personal residence — which is unlikely given that you’ve lived in Florida for 16 years — you should expect a tax bill, said Michael Karu, a certified public accountant with Levine, Jacobs & Co. in Livingston.

You will have to file Form NJ-1040-NR as a non-resident, he said.

The profit will be calculated based on the difference between the selling price and the cost basis,” Karu said. “ If the property has been rented, there may be depreciation recapture as well.”

Upon the sale of a business, business interest, or real property in New Jersey, a non-New Jersey resident is subject to New Jersey gross income tax on the profit from that sale, he said.

“In order for the State of New Jersey to be sure that it gets paid, taxes are withheld at closing,” Karu said. “While people call it an ‘exit tax,’ the reality is that the payment is simply an estimate tax payment against the tax that gets calculated when the non-resident income tax return is filed.”

* * * *

So, there you have it, it's a tax but not an "exit tax."

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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Medicaid and a reverse mortgage

Reverse mortgages are a popular lending vehicle that allows seniors to alleviate financial strains.  Reverse mortgages take different forms, tailored to each borrower's specific needs.

But the question arises on the pages of NJMoneyHelp.com:

What happens to a reverse mortgage with Medicaid?

Q. Does recovery of a Medicaid lien on a home take precedence over a reverse mortgage? Or even a regular mortgage? I could foresee a situation where someone would take out a reverse mortgage to cash out, figuring they would be losing their home to Medicaid anyway.
— Curious

A. You’re right that people try all kinds of strategies to protect their assets from Medicaid.

But the rules surrounding Medicaid eligibility are strict, and the scenario you pose isn’t a simple one.

Regular mortgages and reverse mortgages take precedence over a Medicaid lien, said Shirley Whitenack, an estate planning attorney with Schenck, Price, Smith & King in Florham Park.

But, she said, there is a limit to the amount of equity that a person can take from a reverse mortgage.

“Moreover, reverse mortgage payments may affect a person’s eligibility for Medicaid benefits,” Whitenack said. “Mortgage payments are not counted as income as long as they are spent in the same month that they are received.”

Whitnack said the unspent balance from a lump-sum reverse mortgage, however, can result in excess resources over the Medicaid limit.

In addition, she said, if a person moves out of their home, for example, to a nursing home, the mortgage will likely come due.

You can read the above, and other columns of financial interest at NJMoneyHelp.com.

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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Commit short-sale fraud; you wind up in jail

Father and son sentenced in fraudulent short sale scheme

 Real estate investing is one way to make money.  Sometimes, though, you wind up in jail.  Per the US Department of Justice:

A father and son from Bergen County, New Jersey, were sentenced today to 27 months in prison and eight months of home detention, respectively, for their roles in a scheme to use straw buyers and short sales on properties to defraud mortgage lenders out of hundreds of thousands of dollars and to avoid paying taxes on the proceeds of the scheme, U.S. Attorney Craig Carpenito announced.

George Bussanich Sr., 60, of Park Ridge, New Jersey, was sentenced to 27 months in prison. He previously pleaded guilty before U.S. District Judge Claire C. Cecchi to a superseding information charging him with one count of bank fraud conspiracy and one count of tax evasion. His son, George Bussanich Jr., 39, of Upper Saddle River, New Jersey, was sentenced to eight months of home detention. He previously pleaded guilty to tax evasion. Judge Cecchi imposed both sentences today in Newark federal court.

Apparently, these two were not content with the normal practice of buying low and selling high.  Instead, they rigged the low side of the transaction and the subsequent sales.

Read the full report here. 

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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