Friday, October 24, 2008

Inheritance and deeds

Q: I have a situation that seems to be complicated, especially as I try to explain it to my tax and financial advisers. I can't believe I'm the first one in a situation like this.
My grandfather (my mother's father), upon being admitted to a convalescent home, put my mother (his daughter) on the deed in joint tenancy with him. He owned the home free and clear at the time. His original purchase price on the home was a mere $15,000.
He has since passed away, leaving my mother as owner of the entire property. A year and a half later after his passing, my mother quitclaimed the property to me. I have recently sold the property for $225,000.
I need to know what my cash basis of the house is so that I can determine if I'm selling at a gain or loss. When my mom transferred the home to me a year and a half ago, the fair market value was about $385,000.
I am not sure if I should use the fair market value of the property at the time of my grandfather's death, or the date the property transferred to me in calculating the cost basis.
Please help, as I am holding up the closing trying to figure out what tax documents to fill out. I appreciate any information you can provide on this situation.
A: Your situation is a bit complicated, but it's not unfathomable.
When your grandfather added your mother to the deed, he gave her half the house. Her cost basis was whatever he paid for the property (in this case $15,000) plus any structural or capital improvements made. Let's assume he added another $5,000 to the property while he lived there. The cost basis for her share became $10,000, or half of $20,000.
When he died, the fair market value of the property was $385,000. She inherited his half at $192,500. Remember, she got her half at $10,000.
When she quitclaimed the property to you, you received her half at $10,000 basis, and the inherited half at $192,500. (The total value of her gift to you is $202,500, but we'll come back to that number in a moment.)
You have now sold the property for $225,000. The profit on the share of the house your mother was given is $102,500 ($112,500 minus $10,000 equals $102,500). The loss on the inherited half is about $80,000 ($192,500 minus 112,500 equals $80,000). You would subtract half of any costs of sale or cost of improvements that you've made to the property from whatever profit you have from your mother's half.
Unless you lived there for two out of the last five years as your primary residence (as the owner of the property), you would owe long-term federal capital gains tax on the $102,500 plus applicable state tax. At 15 percent, you'd pay $15,375 plus any applicable state tax. Unfortunately, you would not be able to deduct the loss on the inherited half of the home.
But there are also gift tax considerations. Anyone can give away to individuals up to $1 million in a lifetime. You can give away $12,000 in 2008 (rising to $13,000 per person in 2009) to any number of people without deducting from your lifetime gift exemption. But your mother gave you a house, which was roughly valued at $202,500 (her cost basis of $10,000 plus the inherited half's cost basis at $192,000). She should find out what, if any, forms she needs to file with the IRS.
This is a great example of why someone should leave real estate in their estate to their heirs instead of putting them on the deed. If your mother had inherited the property from her dad, she would have received it at the fair market value the day he died, which you've said was $385,000. If your mother had sold the property that same day, she would owe no taxes on it.
Just to be sure I had the details right, I ran your question by two tax professionals, Chet Burgess, an enrolled agent who owns Brookwood Tax Service in Atlanta, and Julianna Clementi-Ryan, a vice president with Nationwide 1031 Exchange, a 1031 exchange company. They concurred with my answer to you, but you should consult with your own knowledgeable tax professional, because there may be extenuating circumstances or other facts you might have failed to include in your e-mail.
For more information on this topic (and I've written about it frequently online), and other similar questions I've answered, please visit my Web site,

Reposted from a news article

John Holbrook
Prudential Chaplin Williams Realty
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Tuesday, October 21, 2008

Cartesian Pointe Home

View from the rear patio

$184,500 Cartesian Pointe Home in Yulee. Upgrades include: Premium homesite, bay window in bedroom, volumne ceiling, coffered ceiling in master

Amelia Island Plantation

Amelia Island Plantation Announces Letter of Intentwith Redquartz Developments Atlanta
In order to further its long term strategic plans for growth of Amelia Island Plantation, the Amelia Island Company has been pursuing prospective investors, partners and lenders over the past two years for capital improvements to our hospitality resort business model. These efforts have progressed to the point where the Company has signed a letter of intent with a prospective partner to help with the planned expansion of the resort’s facilities. While there are many more details to be worked out, the Company is pleased to announce signing a Letter of Intent with Redquartz Development. Redquartz Development was attracted to this partnership opportunity based largely on the strength of Amelia Island Plantation’s management team, strategic plan and long range goals.
Redquartz Developments Atlanta (RQD) is a real estate investment company, who is partnered with Redquartz Developments, Ltd. (“Redquartz”), a Dublin based Property and Investment Company with investments in projects with more than $3 billion of value. Redquartz specializes in mixed-use developments to include commercial, residential, retail, hotel & leisure facilities. Their group philosophy is about partnerships that offer access to expertise and resources in addition to reducing the risk profile of individual projects. Redquartz Developments, Ltd. is located in Dublin, Ireland. Headed by Patrick (Paddy) Kelly, Redquartz has over 40 years experience in property development in Ireland, Europe and the USA.
Redquartz Developments Atlanta spearheads development activities in the United States from it offices in Atlanta, Georgia.

Interested in Property on the Amelia island Plantation - Search
John Holbrook - Realtor
Prudential Chaplin Williams Realty

Friday, October 3, 2008

Jacksonville Market update

Monthly Survey of Real Estate Agents
Foreclosure Pricing Needed to Attract Buyers

■ Start of the fall season, but few buyers are found, aside from foreclosure-rich markets. Our Monthly Survey of Real Estate Agents showed another slight decline in September, with traffic worsening over the course of the month. Agents generally noted fear among buyers about buying before prices reach their low, difficulty getting a mortgage, and the elimination of down-payment assistance on Federal Housing Administration (FHA) loans as the main issues.
■ But there are signs of better traffic again in the hardest hit markets. Overall, our traffic index fell to 24.0 in September from 25.9 in August (readings below 50 point to traffic below expectations). However, we saw improvement in traffic in September in hard-hit markets such as Ft Myers, Las Vegas, the Inland Empire (CA), and Sacramento. The key driver of the better traffic is the improved affordability as the lower home prices on the many foreclosure sales (foreclosure sales have represented as much as 40-50% of sales in these markets) have restored affordability back to attractive levels (p. 5). We are encouraged that there seems to be a clearing price in many markets, but foreclosures are typically sold at least 20% below current market pricing so there will likely be a painful further adjustment for traditional sellers.
■ Texas markets (Austin, Dallas, Houston, and San Antonio) show further weakness along with a couple Florida markets (Jacksonville and Miami). We expect those builders with significant concentrations in Texas (MTH, DHI, LEN and RYL) to see worsening order trends based on the declining traffic. Unlike the other markets with significant foreclosures, we have not seen similar improvement in traffic in Phoenix. The Washington, D.C. area (p. 27), in which we had seen better traffic from April-July slipped back to a lower level of traffic in both August and September.
■ Pricing drops further, consistent with high inventory levels and weak traffic. Our price index fell to 17.5 in September, down from 20.1 in August (readings below 50 point to sequentially lower prices).
■ Inventory levels near stabilization. Our home listings index increased to 39.5 in September, up from 37.5 in August (with a level of 50 indicating flat inventories sequentially with levels above 50 pointing to falling inventory levels). Denver, Las Vegas, Minneapolis, Sacramento, Sarasota, Tucson, and Washington, D.C. were among the markets showing flat or falling inventory levels in September. We continue to believe that declining inventory levels are necessary for home price stabilization.

John Holbrook-Realtor
Prudential Chaplin Williams Realty

Thursday, October 2, 2008

Amelia Island Wine Shop

One of the great things about Amelia Island is the great shops and restaurants. Here is a posting with activities at the local wine shop this month.

Subject: October Events @ the Intercoastal Wine Company - c
Dear friends,

It's hard to believe that it is Fall already, the days are feeling a little cooler and the festivals are coming out in full force!

October 3-4- The Amelia Island Book Festival. Stop in for a bottle of wine to sip while you're reading your new book.

October 5-12- The Les DeMerle Amelia Island Jazz festival. Great music, great venues, a great time. Tickets available at Intercoastal Wine for all events. Present your jazz festival ticket stub and get 5% off a purchase of a bottle of wine (one bottle of wine per ticket stub).

October 16 (Thursday)- Lloyd Gross from Transatlantic Wines will be here from 5:30-7 to taste and talk about Spanish wines from his portfolio.

October 18- Cruizers Car Show- historic downtown Fernandina, come in and relax with a glass of wine after looking at all the great classic cars.

October 23 (Thursday)- Marlene Strobach art reception- the talented "artist in residence" will be here to meet the public and talk about her beautiful watercolor paintings. Free wine tasting with this event- 5:30 -7pm.

October 30 (Thursday)- Girl's Night out is back with a "Southern Living at Home Show". Julie Brown, independent Southern Living at Home consultant will be here to display some of the fine items from this catalog. It's not too early to Christmas shop! Free wine tasting at this event. 5:30 -7pm

Hope you enjoy the information
John Holbrook - Realtor
Amelia Island, Florida 904-415-0171

Amelia Island Jazz Festival

The Amelia Island Jazz Festival kicks off Sunday with a free concert at the Amelia Park Bandstand featuring the North Florida Jazz Ensemble directed by Dr. Marc Dickson. Bring your own lawn chairs and blankets.The festival continues Monday with a Jazz Festival Sponsors Party from 7-10 p.m. at the Hampton Inn and Suites in downtown Fernandina Beach. This event, for Gold Saxophone Festival Sponsors and above, features entertainment by the Les DeMerle Jazz All-Stars featuring Bonnie Eisele and special guest Sam Kouvaris, WJXT-TV sports director, trumpet and vocals.On Thursday from 7-10 p.m. is a Latin Jazz Concert and Dance at the Palace Saloon, 117 Centre St., with Impacto Latino, a 10-piece salsa band in the style of "El Rey," Tito Puente. Tickets are $20, with a cash bar.Friday, Oct. 10, enjoy a jazz concert from 7-10 p.m. at St. Peter's Episcopal Church courtyard. The food court will be open from 5:30 p.m. featuring cuisine from area restaurants. Performing will be the Dynamic Les DeMerle 8-Piece Band, featuring vocalist Eisele and special guests Dough Matthews, piano, and Al Waters, tenor sax, in a tribute to Ray Charles; Dirty Martini featuring Jeff Rupert, tenor sax, and vocalist Michelle Amato; the Bill Allred Classic Jazz Band; and a Big Band Grand Jam with Allred's and DeMerle's eight-piece bands. Tickets are $30.Following the concert, enjoy a late night jam session starting at 10:30 p.m. at Jack & Diane's, 708 Centre St. Cost is $10, students with ID $5 and free with any festival ticket.Saturday, Oct. 11 brings another evening at St. Peter's courtyard, with the food court opening at 5:30 p.m. and music starting at 7 p.m. The lineup includes swing music with the Amelia Island Jazz Festival All-Stars featuring Dr. Bill Prince, multi-instrumentalist, Jamie Ousley, bass, Michael Levine, piano, DeMerle, drums, and Eisele, vocals; the Harry Allen Quintet with special guest Jeff Rupert, sax; the 19-piece U.S. Navy Big Band Southeast; and a Big Band Super Jam Grand Finale. Tickets are $30.Following the concert, enjoy a late night jam session starting at 10:30 p.m. at Jack & Diane's, 708 Centre St. Cost is $10, students with ID $5 and free with any festival ticket.The festival wraps up on Sunday, Oct. 12, with a Dixieland Jazz Brunch, with seatings at noon and at 2 p.m. at the Beech Street Grill, 801 Beech St. The concert will feature the Spare Rib Six with vocals by Eisele and includes a special jazz festival menu and cash bar. Tickets are $45 and include a complimentary glass of champagne.
For tickets and information, visit or call (904) 504-4772.

John Holbrook - Realtor
Amelia Island, FL
Prudential Chaplin Williams Realty

New Home Loan Program

New program allows subprime mortgages to become a fixed-rate FHAWASHINGTON – Oct. 2, 2008 – A new program rolled out by HUD yesterday could help more homeowners avoid foreclosure. Under the program, the lender of an existing subprime mortgage forgives part of the debt as if it’s a short sale, and the balance of the mortgage is rolled into a fixed-rate FHA mortgage. Unlike earlier programs, however, the HOPE for Homeowners program is aimed more at lenders than homeowners.“For families struggling to keep up with their mortgage payments, this program will be another resource to refinance into a loan they can afford,” says HUD Secretary Steve Preston. “FHA remains a safe and affordable alternative to the high-priced mortgage loans that threaten homeowners’ ability to retain their homes. We strongly encourage borrowers to work with their lenders to determine if HOPE for Homeowners is the right program for them.”The Economic and Housing Recovery Act of 2008 authorized the HOPE for Homeowners program. The HOPE for Homeowners Board of Directors was charged with establishing underwriting standards to ensure borrowers, after any write-down in principal, have a reasonable ability to repay their new FHA-insured mortgage.The program began yesterday and ends Sept. 30, 2011. It’s available only to owner- occupants. In many cases, banks will have to write down the existing mortgage to 90 percent of the new appraised value of the home.Borrower eligibilityBorrowers should contact their lender to determine eligibility. General requirements include:• The home is their primary residence, and they have no ownership interest in any other residential property, such as second homes.• Their existing mortgage was originated on or before Jan. 1, 2008, and they have made at least six payments.• They are not able to pay their existing mortgage without help.• As of March 2008, their total monthly mortgage payments due were more than 31 percent of their gross monthly income.• They certify they have not been convicted of fraud in the past 10 years, intentionally defaulted on debts, and did not knowingly or willingly provide material false information to obtain their existing mortgage(s).How the program worksThe Board expects homeowners will participate in the program primarily through their current lender. HOPE for Homeowners includes the following provisions:• The loan amount may not exceed a maximum of $550,440.• The new mortgage will be no more than 90 percent of the new appraised value including any financed upfront mortgage insurance premium.• The upfront mortgage insurance premium is 3 percent and the annual mortgage insurance premium is 1.5 percent.• The holders of existing mortgage liens must waive all prepayment penalties and late payment fees.• The existing first mortgage must accept the proceeds of the HOPE for Homeowners loan as full settlement of all outstanding indebtedness.• Existing subordinate lenders must release their outstanding mortgage liens.• Standard FHA policy regarding closing costs applies.• The borrower must agree to share with FHA both the equity created at the beginning of this new mortgage and any future appreciation in the value of the home.• The borrower cannot take out a second mortgage for the first five years of the loan, except under certain circumstances for emergency repairs.The costs to the homeowner include the upfront and annual insurance premiums, as well as a share of the equity created by the write-down associated with the HOPE for Homeowners mortgage and any future appreciation in the value of the home. If the home is sold or refinanced, the homeowner will share the equity with FHA on a sliding scale ranging from a 100 percent FHA share after the first year to a minimum of 50 percent after five years.The lien holder that previously held the highest priority will receive payment up to a proportion of its original interest, not to exceed the amount of available appreciation. This type of delayed payoff will take place until all prior lien holders are satisfied or the amount of available appreciation is exhausted. All remaining appreciation is remitted to FHA.Read more about HOPE for Homeowners at© 2008 FLORIDA ASSOCIATION OF REALTORS®

John Holbrook - Realtor
Amelia Island, Florida 32034
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