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What does this mean to consumers?
In a typical $250,000 home transaction, the additional tax amount will be about $1,500. This is the new tax on top of the Mortgage Registry and Deed Tax housing consumers already pay when they are involved in a real estate transaction.
The release of Governor Dayton’s budget recommendations to the Legislature was by far the biggest event at the State Capitol last week. The Minnesota Association of REALTOR's (MNAR) lobbyists continued to make their rounds, meeting with members of the Taxes, Commerce, and Housing Committees. Any free moments, outside of member meetings or committee hearings, were spent deciphering the Governor’s budget and tax reform proposal.
The most significant change recommended by the Governor calls for expanding the sales tax base to include most previously exempt services. This component of the proposal has proven to be a moving target with new details emerging daily. MNAR, and similarly situated groups, continue to press the Administration and the Legislature for more specifics regarding which services would be subject to the sales tax and which services would remain exempt.
Absent clear documentation to the contrary, we must assume that real estate-related services, including REALTOR® services, mortgage broker services, title/closing services, appraisals, home inspections, septic inspections mandated by counties, well inspections, surveys, and any attorney or tax services required due to the sale of a property would be subject to the sales tax.
Taxing real estate services would significantly increase the costs associated with a real estate transaction and comes at a time when the housing market is showing positive signs of recovery. MNAR has opposed the expansion of the sales tax to services in the past and will again be actively opposing an expansion at the Legislature this session, as the Governor’s recommendations are discussed.
On a positive note, the Governor’s budget recommendations include several property tax relief proposals, such as:
The Governor’s recommendations represent the beginning of the discussion. Over the next few months, the Legislature will review the Governor’s recommendations and take testimony from interested parties, including MNAR. In April, the Senate and House will produce their own budgets, which may look very different from what the Governor has recommended.
MNAR lobbyists will be representing the interests of homeowners throughout the legislative process.
In the Senate:
On Wednesday the Senate Commerce Committee held a confirmation hearing for Department of Commerce Commissioner Mike Rothman.
In the House:
On Tuesday the House Commerce Committee held a hearing on a bill that would establish a Minnesota Health Insurance Marketplace.
The House Taxes and House Ways and Means Committees are scheduled to begin hearings on Governor Dayton’s budget and tax reform proposal. The Senate Taxes Committee has scheduled a Confirmation hearing for Department of Revenue Commissioner Myron Frans and will begin its overview of the Governor's Budget Proposal.
This 3BR 3BA home is situated in the fabulous Dufferin Park neighborhood and offers an open and spacious floor plan, hardwood floors and stunning French entry doors. The home includes a vaulted living room, family room with brick fireplace, and both formal and informal dining rooms. This home awaits our buyer's peronsal touches for carpet and appliances. The basement is framed and ready for finishing!
SOLD at $235,000
The first full week of 2013 market data looks a lot like most of 2012 did. But let's go beyond the obvious. Consider this: Americans formed substantially more new households in 2012 than we built, which is partly responsible for the ongoing declines in active listings.
Our population continues to expand from both natural reproduction and in-migration. But builders and lenders lacked the confidence and risk appetite to build in larger volumes. Unlike our sluggish jobs recovery, this imbalance actually stands to further fuel our fledgling housing recovery. If only all those new households could secure adequate employment, we'd be off to the races.
In the Twin Cities region, for the week ending January 12:
• New Listings decreased 8.0% to 1,120
• Pending Sales increased 4.3% to 722
• Inventory decreased 31.7% to 12,123
For the month of December:
• Median Sales Price increased 15.9% to $168,000
• Days on Market decreased 23.4% to 108
• Percent of Original List Price Received increased 3.5% to 93.8%
• Months Supply of Inventory decreased 42.0% to 2.9
Decreased supply, strong demand and higher prices are among the encouraging developments in 2012 that make the case for continued recovery in 2013. Consumer purchase demand increased organically, absent any government incentives.
As the active supply of homes for sale fell to 10-year lows, absorption rates improved to levels also not seen since 2003. Multi-decade low interest rates and record housing affordability resulted in a 16.9 percent increase in home sales for the 13-county metro.
2012 by the Numbers
• Sellers listed 65,914 new homes on the market, a modest 4.3 percent decrease from 2011 and a 10-year low.
• Buyers purchased 48,641 homes, up 16.9 percent from 2011 and the highest figure since 2006 (783 units shy).
• Inventory levels dropped 31.8 percent from 2011 to 11,875 units, the lowest level in 10 years.
• Months Supply of Inventory dropped 42.2 percent to 2.9 months.
• The Median Sales Price of closed sales was up, rising 11.9 percent to $167,900.
• Cumulative Days on Market was down 20.6 percent to 117 days, on average.
• Lender-mediated properties made up a smaller share of overall activity.
• 34.6 percent of all New Listings were lender-mediated (either foreclosures or short sales), down from 41.9 percent in 2011 and 42.6 percent in 2010.
• 37.3 percent of all Inventory was lender-mediated, down from 44.4 percent in 2011 and 47.4 percent in 2010.
• 39.7 percent of all Closed Sales were lender-mediated, down from 50.0 percent in 2011 and 47.9 percent in 2010.
All information is according to the Minneapolis Area Association of REALTORS® (MAAR) based on data from the Regional Multiple Listing Service of Minnesota, Inc. MAAR is the leading regional advocate and provider of information services and research on the real estate industry for brokers, real estate professionals and the public. MAAR serves the Twin Cities 13-county metro area and western Wisconsin.
In a previous WestSavageBlog post, we discussed the characteristics of the 2012 Minnesota home buyer. This time we look at home financing and experiences and comments from SELLERS.
Home Sellers and Their Selling Experience
Home Selling and Real Estate Professionals
Financing the Home Purchase
Home buying and selling remains an important segment of the national and local economies, especially due to the housing sector’s unique power to revitalize the economy during challenging times. With historically low mortgage rates, buyers and sellers continue to have opportunities to trade up, trade down, relocate or purchase a second home. In Minnesota, First-time buyers are now 41% of the market, are discovering and capturing the benefits of homeownership, which contributes to significant wealth accumulation, among other financial, social, and personal rewards.
Consumers rely on the experience and expertise of real estate professionals to assist when buying and selling a home. Working in an extremely competitive environment, agents and brokers provide high levels of service to meet the varied needs of home buyers and sellers. The value that consumers place on the services offered by real estate professionals is reflected in the large majority of both buyers and sellers who would use their agents again or recommend them to others.
For more information, please view 2012 Characteristics of Minnesota Home Buyers.
JUST SOLD! Tucked into a quiet no-outlet street, this 2BR 3BA townhome at 7519 Derby Lane offers a large living room with gas fireplace, and kitchen with breakfast bar. A charming patio lies off the living room. A powder bath and mud room lie off the kitchen.
Upstairs, you’ll find a spacious master suite with private bath and walk-in closet, another bedroom and bathroom, a large hall closet and an upper level laundry. Close to local amenities and freeways, this home is convenient and comfortable!
7519 Derby Lane is offered at $79,900.
SOLD AT $81,000
Proudly marketed by Chad and Sara Huebener of Edina Realty. For more information or to request a private showing, call 952-212-3597.
On January 1 both the Senate and House passed H.R. 8, legislation to avert the “fiscal cliff.” The bill will be signed shortly by President Barack Obama. Below are a summary of real estate related provisions in the bill.
Mortgage Cancellation Relief is extended for one year to January 1, 2014
Deduction for Mortgage Insurance Premiums for filers making below $110,000 is extended through 2013 and made retroactive to cover 2012
Leasehold Improvements: 15 year straight-line cost recovery for qualified leasehold improvements on commercial properties is extended through 2013 and made retroactive to cover 2012.
Energy Efficiency Tax Credit: The 10% tax credit (up to $500) for homeowners for energy improvements to existing homes is extended through 2013 and made retroactive to cover 2012.
Capital Gains rate stays at 15% for those the top rate of $400,000 individual and $450,000 joint return. After that, any gains above those amounts will be taxed at 20%. The 250/500k exclusion for sale of principle residence remains in place.
The first $5 million dollars in individual estates and $10 million for family estates are now exempted from the estate tax. After that the rate will be 40 percent, up from 35 percent. The exemption amounts are indexed for inflation.