Five Ways Real Estate Can Reduce Your Taxes.

By Troy Corman, www.t2realestate.com

I don't know of any investment vehicle that can compete with the great tax deductions that rental real estate investors enjoy. Rental real estate investors get to deduct insurance, advertising, repairs, interest expenses, property taxes and depreciation of buildings and appliances. On a $100,000 home in a Dallas area suburb, tax deductions are roughly $10,000 on an 80% loan, just including taxes, mortgage interest, insurance and depreciation.

Below are a few additional real estate tips to help reduce your income tax liability.

1. Rent deposits should not be counted as income if you plan on deducting that money back to the tenants at the end of the lease.

2. On the sale of your rental property held for more than a year, you'll only pay capital gains - or 15%, versus the regular income tax rates (that are likely to head higher). You should also deduct commissions, title charges, recording and transfer charges, and settlement costs.

3. The costs of building your own property web site, as long as it's an ordinary and necessary advertising expense is deductible. Others include newspaper ads, signs, banners, and postage for direct mail.

4. Sell your homestead to yourself with a S-corporation. With this method, you are able to satisfy the requirement of occupying a home 2 out of the last 5 years to avoid paying capital gains. Say for example, you wanted to rent out your previous home to tenants for a long time period. Well, you could simply set up your own S-corporation and have it buy the home from you personally, and book the profits tax-free - as long as you've lived in the home 2 out of the last 5 years.

5. Refinancing your rentals. Once your rental home has appreciated in value or you've paid down the loan quite a bit, you can refinance the home at a higher loan amount, pay off the old loan, and put the excess cash in your pocket, tax-free. Of course, you'll have to pay closing costs associated with the new loan, but it's free income.

If you have multiple homes, you might consider refinancing into a portfolio loan. A portfolio loan would include multiple properties on one loan and could make it easier to qualify for additional fannie mae and freddie mac mortgages.

Lastly, there's never been a better to buy rental real estate. Foreclosures have subsided but are expected to swell sharply in late 2012. At the same time, mortgage rates are at an all-time low. Plus, ask any landlord, the rental business is booming! And real estate is a great hedge against a weak dollar and inflation, which is sure to surface sooner or later as Helicopter Ben has printed trillion$ with a "t". In fact, farm and rural land prices are setting new records in many parts of the country, right now!

Just remember, studying and learning will not get you to the promised land. You've got to take action. As they say, words without deeds is dead. I'd love to help you if I can, as I've been buying, fixing and renting Dallas area foreclosures since 2005. You can usually catch me on my cell at 214.690.9682. Best of luck!

Troy Corman is the founder of t2 Real Estate LLC, a Dallas real estate firm providing specialized knowledge with a hands-on approach. Specialties include residential real estate brokerage, land and acreage, and commercial real estate services. Contact us today at 214.827.1200 if you need to sell, buy or get your DFW property leased.

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8,000' Garland Commercial Building For Sale - Owner Financing.

926 N 1st Street. Central Air conditioned/heat in 6,000' with two 10-ton Trane units. This industrial building built in 1985 features drop ceilings, tilt-walls and three overhead doors. The front area features three offices and a bathroom. 400 amp breaker box can handle almost any need. Underground electrical was updated approximately ten years ago. Also for lease at $3,900 monthly plus insurance. Owner-financing option for qualified buyers.

View details and photos at t2realestate.com

Call Troy Corman at 214.690.9682.

2Bed, 2.5Bath, 2Car Garage Townhome For Rent - Edge Of Downtown Dallas

3 Bedroom Lakewood Home - Only $239K

Downtown Dallas Townhome For Lease Or Sale With Owner Financing.

10637 Marsh Lane Home On Huge Lot

3 Bedroom Downtown Dallas Townhome For Sale Or Lease With Owner Financing. $324K. Lease At $2,200 Monthly.

Located literally a couple minutes from downtown Dallas, Uptown, the Dallas Arts District, and the Baylor Hospital and medical center, this 3-level townhome features 3 bedrooms, 3.5 baths, and a rooftop deck. The rooftop deck overlooks the neighboring greenbelt and jogging trail at Exall Park and allows 360 degree views of the city of Dallas.

Floors are hardwoods, marble, and berber carpet, while granite counter tops, stainless appliances and 42" wood cabinets detail the kitchen. The professional series fridge is included along with a full-size washer and dryer, and a 42" Plasma TV with 5-speaker surround system.

The master bath features a jetted tub for two and a huge walk-in closet. The garage and rooftop decks are each painted with special coatings which make cleanup a snap.

For more information and photos, visit www.t2realestate.com, or call Troy Corman at 214.690.9682 to arrange a viewing.

Dallas Home Prices Up 1.4% Over Last Year In Latest Case-Shiller Home Price Index

By Troy Corman, t2realestate.com

The latest S&P/Case Schiller Home Price Index was released today January 26, which reflects the statistics from national home prices during November 2009. The Index measures residential housing prices in 20 metropolitan regions in the U.S.

Dallas posted a 1.4% increase in average home prices that were recorded from homes sold in November compared to November 2008. Three other cities also posted increases.

Although home sales were sluggish in December following the original deadline for the government tax refund, home prices are likely to stabilize or increase as we approach the revised home purchase contract deadline date of April 30, 2010. You must have a signed, executed contract by that date. Also, income limits have been relaxed to allow singles with incomes up to $145K to receive a refund, while couples filing jointly are eligible with incomes up to $245K.

In addition, if you have lived in your current home for 5 years, you can also qualify for the $8,000 tax refund. With rates near historic lows, and home prices at affordable levels, now is a great time to buy. So stop making the landlord rich!

Search DFW homes now at dallashomes2buy.com

DFW Area Four Seasons Gets Foreclosure Notice

Wall Street Journal article summarized by Troy Corman, www.t2realestate.com

Search Dallas homes for sale at www.dallashomes2buy.com

The Four Seasons Dallas, located in Irving, Texas and home of the PGA's Byron Nelson Golf Championship received a foreclosure notice this week. The 431-room hotel was bought in 2006 by BentleyForbes Holdings LLC, which failed to make it's October mortgage payment. It seems it was hoping that the mortgage servicer, CWCapital Asset Management would revise the terms of the loan - since the hotel's cash flow isn't covering the $10.9 million interest payment.

The owners claimed that they have acted in good faith, and point out their $60 million renovation of the property since they purchased it in 2006.

The Four Seasons hotels in San Francisco and New York are also in financial trouble, as cash flows no longer cover the mortgage debt.

Commercial Real Estate Blows To Increase In 2010

American Banker article summarized by Troy Corman, t2realestate.com

Banks will face major problems with commercial real estate in 2010. For many community and regional banks, it will be their biggest headache. Many talking heads are usually referring to CMBS, or commercial mortgage-backed securities when discussing commercial real estate. But many local and regional banks hold whole loans on their books. Most of these loans have short maturities of around 3 to 5 years. And many were financed during the boom. As many commercial assets must refinance out of those loans in the next few years, the problem is that the underlying real estate has declined in value so much that it is now under water. And it's getting worse every day. Each quarter, non-performing loans and commercial mortgage delinquencies are rising.

There is nearly $40 Billion in problem commercial real estate loans but only $5.8 Billion in commercial REO, or properties banks have seized through foreclosure. Unfortunately, the problems are accelerating.

Sooner or later, someone is going to have to pay the piper, and let's hope it's not the American taxpayer again. For those with access to capital and real estate investing expertise, the next few years will mark a golden opportunity.

First Look Program Allows Owner-Occupants 15 Days To Bid On Fannie Mae REOS.

By Troy Corman, t2realestate.com

Fannie Mae has implemented it's "First Look" initiative to allow owner-occupants a chance to buy Fannie Mae foreclosures the first 15 days they're on the market. Investors and those not intending to live in the home can only make an offer after the first 15 days have passed.

Fannie Mae is also allowing owner occupant buyers up to 45 days to close, 15 days more than normal. The First Look initiative is intended to help owner-occupant buyers and low-income buyers.

This initiative will probably help a few buyers but it will undoubtedly slow down the foreclosure purging process that needs to take place. The sooner we can purge the foreclosures, the sooner ALL home owners can benefit.

Meredith Whitney On The Banks And Dramatically Rising Mortgage Rates.

Posted by Troy Corman, t2 Real Estate

Banking analyst Meredith Whitney doesn't expect bank lending to loosen any time soon. Personally, I've been having a heckuva' time going through a refinance. She expects mortgage rates to go up at least 10%. So lock in low rates now. Tight lending should fuel great housing deals for the remainder of 09 and 2010. Meredith Whitney was the first banking analyst to call the problems at Citi Group and other banks before the official bust. See her sobering outlook in the video below.

How To Add $100K To Your Net Worth In Uncertain Times.

By Troy Corman, t2 Real Estate

We live in uncertain times. Pundits argue if we're out of the recession, if the stock market will continue to rise, and if we're looking at another leg down in the economy when the government exhausts it's stimulus programs.

So what's one to do to not only protect, but create wealth? You can store it in the bank in low-yielding money market accounts. But that doesn't produce gains if we get hyper-inflation. You can continue to speculate in the stock market. But the market can produce horrific losses if the doomsdayers are correct and we get a massive decline. You can buy gold, but gold doesn't pay you monthly income, or give you terrific tax deductions, and it is much more volatile than my investment of choice, rental real estate.

Rental real estate makes you money in 5 ways.
1. Cash Flow - renters pay more each month than the home's carrying cost.
2. Principal Pay Down - rent money pays down our mortgage each month.
3. Equity Capture - we buy homes for thousands less than they're worth.
4. Appreciation - we sell homes in a sellers market when prices are rising.
5. Depreciation - rent homes produce about $10K in deductions per $100K home annually.

The formula to add $100K to your net worth is simple. We buy homes that would be worth around $100K once they are repaired. We look for a $20,000 profit margin by subtracting the purchase price and rehab costs from the home's ARV (after repaired value). In other words, we buy a home for $70K, put in $10K in upgrades and repairs, and sell the home for $100K or more. Buy 5 homes using this formula and you've added $100K to your net worth.

In this price range, we're able to rent the homes for around $1,000 a month, which will produce $100-$300 a month positive cash flow. The cash flow helps cover vacancies and any repair work. We never buy homes that don't have positive cash flow because then we've just bought ourselves a liability.

So should we invest in real estate in Dallas/Fort Worth now? Yes. I expect lenders and banks to ramp up the disposition of their bank-owned real estate and foreclosed properties. Many have talked about a shadow inventory of foreclosures that have yet to hit the market. According to the November 9th issue of National Mortgage News, "Bank of America is now saddled with $33 billion worth of nonperforming assets, almost triple what it had a year ago". Wells Fargo comes in with $20 billion in nonperforming assets, double what it had a year ago. Sooner or later, those nonperforming assets, whether they're residential or commercial real estate, have to be off the books.

As a result, I think that 2010 will offer a once-in-a-lifetime gold-mine for investors willing to take action. The economy, government spending and unemployment will freeze many in fear, which means there will be more deals for those that step up to the plate. Despite some dour predictions of a W-shaped recession, the Dallas/Fort Worth real estate market is consistently ranked as one of the top 10 markets in the nation. Out-of-staters continue to migrate to the Lone Star state in droves attracted by our job market, affordable cost of living and lack of a state income tax. So take action. Because as Wayne Gretzky says, "you miss 100% of the shots you don't take".

Check out this video about the future of Texas real estate.

Homebuyer Tax Credit Extension May Pass This Week.

Brought to you by T2 Real Estate. Credits to RISMEDIA.
RISMEDIA, November 5, 2009—After two weeks of delay, the Senate cleared the way to pass a seven month extension and expansion of the tax credit for homebuyers. By an 85 to 2 roll call vote, the Senate voted to cut off debate on a package of measures that includes the homebuyer credit, making it virtually certain that the legislation will reach President Obama for his signature this week.

The homebuyer tax credit, due to expire at the end of November would be extended through April 30 of next year. First-time buyers who are in the process of making a purchase would not need to worry about qualifying for the $8,000 credit if they close after the November 30 deadline.

For the first time, the legislation that was recently cleared makes move-up buyers as well as first-time buyers eligible for a credit. The $8,000 maximum first-timer credit will continue and will now be available to couples with income up to $225,000, a nearly $55,000 increase above the level in existing law. A new $6,500 maximum credit would also be available to move-up homeowners who have lived in their current residence for five of the prior eight years.

For homebuyers across the country, the expanded tax credit would allow more people to qualify for the credit. While two-thirds of American families own their own home, and most earn less than the income limits that have been established within the extension, more buyers may be eligible. Move-up buyers don’t have to sell their current home to qualify for the new credit, but the money cannot be used to buy a vacation home. “It’s only for a primary residence,” said Regan Lachapelle, a spokeswoman for Sen. Harry Redi (D-Nev.), who helped engineer the deal. “In expanding the tax credit, we are helping first-time home buyers, as well as homeowners looking to move up to a new home, but we would exclude from the credit speculators who may have recently purchased a home intending to flip it for a fast profit,” said Senator Max Baucus, Democrat of Montana and chairman of the Finance Committee.

The tax credit has fired-up the housing market, driving existing home sales to the highest level in over two years. The National Association Realtors reported sales jumped 9.4% to a seasonally adjusted annual rate of 5.57 million units in September and are 9.2% higher than the 5.10 million-unit pace in September 2008.

The legislation included provisions added to address complaints of fraud as well. The Internal Revenue Service is given greater authority to oversee the process to root out fraud, and provisions are added in response to past abuses of false sales or underage buyers. An investigation by the Treasury Department’s Inspector General for Tax Administration found that more than 580 children, some as young as four years old, had received $627,000 in first-time homebuyer credits. The IRS has identified 167 suspected criminal schemes and opened nearly 107,000 examinations of potential civil violations of the first-time homebuyer tax credit.

Attending The Five Star Default Servicing (Foresclosures) Conference

This week in Fort Worth is the 2009 Default Servicing Conference. It should be quite interesting. I'm looking forward to gaining more education in the foreclosure selling process and meeting with some of the servicers and banks that need help marketing and selling their Dallas/Fort Worth foreclosure properties.

According to Friday's edition of Investors Business Daily, industry insiders believe that as much as 70% of foreclosed properties nationwide have yet to be listed with real estate agents and brokers. Nationwide, distressed properties accounted for nearly a third of the 5.24 million homes sold in June.

"Adjustable-rate mortgages will trigger the next wave of defaults, which will make the subprime meltdown look like a walk in the park," according to Rick Sharga, with RealtyTrac.

Michael Barr echoed that statement in a meeting with a House committee last week. The Treasury assistant secretary said, "Expect millions of foreclosures ahead" despite loan-modification efforts.

Jeff Frieden, CEO of Real Estate Disposition Corp, the nation's largest residential-auction firm shared in those views. His quote, "we expect 2010 to be a watershed of a year for us as millions more of foreclosures loom. Some have sensed it's the bottom of the market; we feel that's a false sense."

I'll compare these sentiments with those attending the foreclosure conference this week. But if these guys are right, now would be the time to sell if you're sitting on the fence - because I would expect a big wave of foreclosures will put downward pressure on most sales prices in 2010.

Dallas home prices drop in one survey, rise in another

The latest research on Dallas-area home prices will cause a lot of head scratching.

One report released Tuesday says local home prices were down at the end of the year, while a second benchmark national survey found they were still rising.

"Which one do you believe?" asked Texas A&M University economist James Gaines. "We researchers are confused, too."

According to the monthly S&P/Case-Shiller home price index, Dallas-area home prices fell 2.4 percent in December from a year earlier – the biggest drop yet in this closely watched housing study.

The Dallas numbers were still much better than the almost 9 percent nationwide decline in Case-Shiller's report.

But another respected home-price survey came up with the exact opposite conclusion about the Dallas-area housing market.

The Office of Federal Housing Enterprise Oversight's numbers say that home prices here in the fourth quarter were 2.95 percent higher than a year earlier.

And nationwide, the federal agency estimates that prices inched up 0.84 percent.

Disagreement among analysts is nothing new, and most housing studies have subtle differences in their conclusions, depending upon how the research is done.

But rarely do two such important home price gauges released on the same day provide such dramatically different data.

"I track four or five of these things, and most of the time, they are not that far apart," said Dr. Gaines, who is in Texas A&M's Real Estate Center.

The volatility of many housing markets caused by falling sales and rising foreclosures is making it harder for analysts, he said.

"These indexes have trouble when things are changing," Dr. Gaines said. "When things are nice and smooth and steady, they are consistent.

"But when the market is going up or down, they can get the data off."

Case-Shiller and the federal housing office take different routes to formulate their home price indexes.

Case-Shiller says it tracks the prices of typical single-family homes in 20 metropolitan areas. The survey does not include condominiums and townhouses. It only covers pre-owned properties – no new construction.

The Case-Shiller researchers say they compare "arms-length sales" of specific single-family homes.

The agency's index, on the other hand, is a weighted, seasonally adjusted measure of home prices based on data received from Freddie Mac and Fannie Mae, the government-sponsored mortgage investors. It doesn't include any information on homes priced above $417,000. And it includes information from all home purchases and refinancings.

Another commonly quoted home price gauge – the National Association of Realtors' quarterly home price report – just looks at changes in median sales prices on the Realtors' multiple listing services.

That survey found that Dallas-Fort Worth home prices were up 0.5 percent in the fourth quarter and fell more than 5 percent nationwide.

"That doesn't mean every house in America just went down 5 percent," Dr. Gaines said.

But the broad conclusion should be that home prices are flat to declining in North Texas.

"I don't think there is any doubt that the market is slowing down."

But not every neighborhood is acting the same, Dr. Gaines said.

"Dallas is a huge market," he said. "Within Dallas there are some submarkets which are doing very well and some areas which are doing very poorly."

The best way to use home price studies is to look at the overall trends, said William B. Brueggeman, chairman of Southern Methodist University's Real Estate Department.

Getting the surveys to agree "has been a problem for some time," said Dr. Brueggeman.

"In a perfect world if you had a constant stream of information on every transaction you could do it.

"But reality is not that way."

He said that the Case-Shiller index is more mathematical and statistical while reports such as the Realtors' survey just combine all the sales data and pick a median.

Even though their numbers are different, both Case-Shiller and the federal housing office have more somber takes on nationwide housing.

"Home prices across the nation and in most metro areas are significantly lower than where they were a year ago," Robert J. Shiller, professor at Yale University and one of the developers of the index, said in a statement. "Wherever you look, things look bleak."

Office of Federal Housing Enterprise Oversight Director James B. Lockhart said in his report that "prices for home purchases in the quarter fell in every state except Maine."

"While the market weakness is most significant in areas that saw the greatest price run-ups during the boom, other states have clearly not been immune to recent declines," he said.

METRO-AREA HOME PRICES

Area	4Q Index Level	1-Year Change
Atlanta	129.43	-3.4%
Boston	164.59	-3.4%
Charlotte	131.90	2.3%
Chicago	160.03	-4.5%
Cleveland	112.07	-6.3%
Dallas	120.77	-2.4%
Denver	130.98	-4.5%
Detroit	103.30	-13.6%
Las Vegas	196.05	-15.3%
Los Angeles	233.03	-13.7%
Miami	231.71	-17.5%
Minneapolis	155.37	-8.0%
New York	201.80	-5.6%
Phoenix	187.67	-15.3%
Portland	182.47	1.2%
San Diego	202.45	-15.0%
San Francisco	189.23	-10.8%
Seattle	184.88	0.5%
Tampa	200.13	-13.3%
Washington	217.78	-9.4%
Composite-10	200.55	-9.8%
Composite-20	184.86	-9.1%
SOURCE: Standard & Poor's

First-time Tax Credit Increase to 8K And Doesn't Have To Be Repaid

Actually, I may have spoken too soon on the Democrats killing the $15,000 tax credit for first-time home buyers. Although it surely would have provided incentive to help remove the oversupply of homes for sale and foreclosures in some areas, at least they managed to sweeten the existing tax credit.

For starters, the tax credit doesn't have to be repaid back to the government as long as you stay in your new home for three years. Also, the maximum credit ceiling has been increased to $8,000 from $7,500. And, it really will put more after-tax money in your pocket. Big time! Check out the example below.

For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed). That's a pretty sweet incentive.

Real Estate Investing

Well, I'm getting ready to jump back in the market. I'm very excited - now that I'm a licensed realtor. I expect to have more control and all important direct access to listing agents, especially on the REO side of the business. My goal is to continue to expand relationships with REO listing agents and to find my clients great deals - whether it's a primary residence or an investment property.

I think that like all businesses, real estate is a relationship business. I'm fortunate to have a broker who lists REOs, and to have good relationships with a couple of other REO listing agents. My goal is to continue to expand relationships with REO listing agents and to help guide individual investors so that they don't make some of the same mistakes I made as a beginning real estate investor.