Jeff Duneske's Blog

• Trim property taxes. If a house has lost value, have it reappraised by the municipal assessor. Consider petitioning — or even suing — to get back taxes overpaid in the last few months.

• Deduct a home office. Some people avoid the home office deduction because it requires deducting depreciation, but if the property has lost value, this isn’t an issue.

• Sale-leaseback with a relative. If you're convinced your property is due for a big price correction and you have equity in the home, then sell now. For example, if you have a $1 million home that has been appraised at $1.8 million, you can sell it and take home $500,000 of the $800,000 gain tax free — due to an exemption on profits from the sale of personal residences. Sell the property to a trusted friend or wealthy relative and then become a tenant and pay the buyer rent at market rates — a much more attractive amount than Treasury bonds are paying now. When the housing market corrects, buy the property back.

• Invest in housing futures. The Chicago Mercantile Exchange sells investment instruments that trade based on house price indexes for each of the 10 largest U.S. cities. You can sell futures, buy puts, or sell calls on this market to hedge losses in the value of your home.

Contrary to popular belief, buyers shop for homes all year round, including the holiday season. In fact, sellers who put their homes on the market during the holiday season (roughly between November and January) may have an advantage because there are fewer houses on the market so there's less competition. There are several other reasons to consider putting your home on the market during the holidays:

1. Many home buyers have extra time off during the holiday season so they have more time to look for their new home.

2. Because of the limited supply of homes for sale, sellers may be able to receive a higher purchase offer than expected.

3. Buyers looking for homes during the holidays are usually highly motivated to buy before the end of the year so they can get extra itemized income-tax deductions for mortgage loan fees, interest and pro-rated property taxes.

4. Festive lights and holiday decorations can help a home "show better."

5. Because January is traditionally the month for transfers, having a home on the market at the end of the year can capture the transferees who may not be able to wait until the Spring to buy a home.

When a owner is selling their home and it is worth less then what is owed on the property and the mortgage company forgives the difference on what is owed on the property so the property can be sold is a short sale.

Here is an example...

A home owner has a mortgage on their home for $300,000. The home owner receives an offer for $270,000 and the bank agrees to sell the home for $270,000, even though their is a difference of $30,000 of outstanding debt on the property. The bank forgives the $30,000 debt but will usually report to the IRS that the home seller was gifted that amount and will be taxed accordingly. Also, the bank will typically require a licensed appraisal to verify that the home is not worth more then the sales price and also must prove that their is no relationship between seller and buyer.

The first press conference for Ax the Tax, which the coalition held today, was truly a success in getting the attention of the Michigan Senate. Following the press conference, the Senate voted and passed SB845 to delay the implementation date of the tax on services from the initial date of December 1 to December 20. It is also expected that the Senate tie-barred SB845 to SB838 that would repeal the tax on services. The Senate Finance Committee has a hearing regarding SB838 scheduled for next Tuesday, November 6. Though real estate services in general were not included, several items were that would impact the real estate industry such as the cost of conducting business in Michigan. There is still a lot of work to be done and there will be much debate about how to replace this revenue stream, but this is the first step in a better direction.

More information can be found at the coalitions Web site, http://www.axthetax.com