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When the price is right . . .

Better to present your property properly from the start

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median price, gay news, Washington Blade
sellers, gay news, Washington Blade

Sellers who price correctly and present their homes well are rewarded.

The 17-day government shutdown last October put a pause on the year-long frenzy that was the Washington market from fall 2012 until fall 2013.

Sellers are still receiving high prices and multiple offers and prices have continued to climb in many neighborhoods, but the market became a bit more even-handed between buyer and seller than it had been for the last several seasons. Buyers used to writing offers with escalation clauses began to approach writing offers with some trepidation due to the uncertainty that came with our political dysfunction.

A memorably long winter went by and spring came quite late — the market was tepid during Jack Frost’s ill-conceived joke on the East Coast but started to heat up again in April and May and continued through the summer. A seller looking at the market must ask himself: What is a recipe for success in this market climate?

Sellers by nature have a tendency to overplay their hands in sellers’ markets and many sellers find themselves lagging behind with a market mentality that was completely reasonable six months ago, but is not now. This is mainly due to the delay in market news reporting and sellers’ reluctance to change their approach. Many sellers feel they can ask whatever they want for their properties and because of the market, they are guaranteed to get multiple offers. Others feel that they can price a bit high to “test the market” and lower the price later. I can say with certainty that the market is not treating sellers who overprice their homes kindly. The house will indeed sit.

As I tell all my seller clients, first impressions are important and buyers give your property one chance to impress them when it comes to market. If they decide your property is overpriced, they will go elsewhere and you will have to wait for a new crop of buyers who have not yet seen the property to come into the market or make a major price and presentation adjustment to get buyers back in the door.

Inventory is still tight, but even being the only game in town does not mean you can ask whatever you want. Markets are efficient and buyers are more sophisticated than sellers sometimes give them credit for.

So why are there still bidding wars? Sellers who price correctly and present their homes well are rewarded — this value pricing enchants buyers. You essentially cannot underprice a property in D.C. — if you do, it will bid up.

Certainly you do not want your sale to be a de facto auction. Pricing right though, not only do you often get more money, you benefit from the pent-up demand for inventory and may have buyers waive many or all of their contingencies. You have better offers to choose from.

In the spring, I wrote about a house in Potomac that we were refreshing to meet the desires of today’s buyers. The house received multiple offers in three days and settles this Thursday for well over the asking price in a market where the average house in that price range takes several months to sell for far less than the original price. My sellers wisely chose to go to market with a time-tested approach, an excellent presentation combined with a fair price.

Don’t let a prospective listing agent “buy” your listing from you by promising the price you want to hear. A cycle of reductions almost always nets the seller less money in the end in addition to being a completely inefficient way to get the job done. I will say it once more — the best way to get your house sold is to price it correctly from the get-go. The market will reward you for it.

Sammy Dweck with Evers & Co. Real Estate, Inc. is a licensed real estate agent specializing in residential resales in the D.C. metro area. He was the Evers & Co. Agent of the Month in April 2014. Reach him at [email protected] or 202-716-0400.

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Real Estate

2024 tax season tips for landlords

A crucial period for investors to assess financial standings

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For many landlords, March can be a stressful time due to the upcoming deadlines to file annual tax returns. The year prior to April is a crucial period for property investors to assess their financial standings, ensure compliance with tax regulations, and take advantage of available tax-saving strategies. As a housing provider, understanding the intricacies of the tax code and how it impacts landlords can significantly impact your bottom line. 

Deductions for Rental Property Owners

One of the advantages of being a landlord in the United States is the ability to deduct numerous expenses related to the rental which can significantly reduce your taxable income. Do not overlook this benefit as it is the federal government’s incentive to promote the development and ownership of rental property. Schedule E of the federal form 1040 organizes the financial results of the rental property from the tax year and is how you report it to the IRS. 

If you qualify as a real estate professional under IRS guidelines, you may be able to deduct rental real estate losses against your other income, reducing your overall tax liability.

Here are some key deductions to consider:

Mortgage Interest: Landlords can deduct the interest paid on mortgage loans for rental properties. Keep detailed records of your mortgage payments and ensure that the loan is used to acquire, improve, or maintain the property.  The lender delivers a form 1098 form to owners of the property to make it easier to claim this deduction.

Property Expenses: Ordinary and necessary expenses related to the property can be deducted. This includes all expenses getting the property ready to rent, charges for finding tenants, management fees, repairs, preventative and on-going maintenance, utilities, HOA dues, etc.  Homeowner insurance premiums and real property taxes can also be deducted and if they are paid to the lender in escrow who in turn pays those bills for you. Those payments will be located on your annual escrow report from the lender or on the form 1098.  Even travel expenses incurred for property-related purposes may be deductible from rental income.

Professional Services: If you do not manage your rental properties yourself, any fees paid to property management professionals such as my firm, an accountant you may have, or real estate attorneys you retain are deductible. These experts should also be able to help you navigate the complexities of tax on income generated by owning and renting out residential real estate.

Depreciation: Depreciation is a non-cash deduction that allows you to account for the wear and tear of your rental property over time. Even though you are not recording this as an expense that you pay for, the IRS provides for a declaration of depreciation expense to recognize that assets lose their value over time.  There are specific guidelines for depreciating different components of your property, such as buildings and appliances or capital improvements made.

Depreciation: A Valuable Benefit to Landlords

Depreciation is a powerful tax-saving tool that deserves special attention. It allows you to allocate a portion of the property’s cost over its useful life, thus reducing your taxable income. To make the most of depreciation, consider the following:

The Modified Accelerated Cost Recovery System (MACRS) is the method used by the IRS to determine depreciation deductions.  MACRS tables to calculate depreciation accurately are located online and individual residential properties depreciate at a rate of 3.636% each year for 27.5 years.  Note that only buildings and contents are depreciated.  You cannot depreciate the land value.  

Make sure to maintain good records of the property’s original purchase cost, all acquisition fees and charges paid, improvements over time, and other expenses that can be depreciated. These records may be harder to locate if you have lived in the house as owner occupant for some time.  All of this information will be needed to set up your depreciation schedule whether you do it yourself or rely on a tax preparation professional.  Lastly, be aware of  the “recapture tax.” If you sell a rental property for a profit after having claimed depreciation expenses, you may need to pay “recapture tax” on the accumulated depreciation deductions. Proper planning can help minimize this tax liability.

Tax Preparation Tips for DC Landlords

If someone else collects your rental income for you, they will deliver to you a form 1099-MISC. The income reported should match the gross income you receive over that tax year, not the net income after expenses. This is a common misunderstanding.  All rental related expenses can be deducted from the reported gross income.

If your rental income includes subsidized rental payments from the DC Housing Authority, you will be sent a form 10099-MISC.  If your manager also issues a form 1099 on your tax ID, then it needs to be reconciled in your tax return to inform the IRS and to avoid double reporting (and taxation) of rental income.

Every year owners with rental property in the District of Columbia need to file tax returns with the DC Office of Tax and Revenue (OTR). It is important to keep your tax filings current as it can create a roadblock in the future to renew your business license or do other business with the District government if you need a clean hands certificate.

A D-30 form is filed to report rental income, even if you do not earn other income in the District. You must also file a Personal Property Tax return FP-31, even if you have no personal property at the rental. The latter filing can be done online within minutes as a zero dollar return in your MyTaxDC portal. CPM has instructions if you need help. 

If you wish to file an extension so that your DC taxes are filed later in the year, use form FR-128 and file it on time.  NOTE: If you expect to have tax due for when you file the D-30, you must pay the estimated amount at the time of filing the extension. Failure to do so or failure to pay the right amount, will result in fines and penalties.

Navigating tax season as a property investor or landlord requires careful planning, attention to detail, and a good understanding of the tax code. Deductions, depreciation, and tax-saving strategies are essential tools that can help you maximize your return on investment and minimize your tax liability. 

As March arrives and tax filing begins, consider consulting with a tax professional to ensure you are making the most of these opportunities. With the right approach, you can make tax season a financially rewarding time for your real estate investments rather than a burden..

This article was written with publicly available information and is not to be considered as professional tax advice. A taxpayer should always consult a tax professional to determine if the ideas and strategies presented in this article apply to their situation. 

Note: Tax deadlines may vary based on individual circumstances, state residency, and tax situations. Always verify deadlines with the relevant tax authorities and consult with a tax professional if needed.

Scott Bloom is owner and Senior Property Manager of Columbia Property Management. Bloom founded Columbia Property Management in 2012. CPM’s goal is to provide a powerful, personal level of service to clients. For more information and resources, go to columbiapm.com 

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Real Estate

Building dream homes with confidence

The pros, cons, and LGBTQ insights of new construction

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One key advantage of buying a newly constructed home is the ability to customize its finishings.

Buying a new construction home offers a unique set of advantages and challenges compared to purchasing a pre-owned property. Understanding these can help potential homeowners make informed decisions. Here’s an exploration of the pros and cons of buying a new construction home and the importance of professional real estate assistance.

Advantages of Buying a New Construction Home

Customization: One of the primary benefits of buying a new construction home is the ability to customize it according to your preferences. Buyers often have the option to select floor plans, finishes, and fixtures, making the home truly their own.

Modern Features: New homes are built with the latest technologies and materials, offering more energy-efficient windows, appliances, HVAC systems, and construction methods. This can lead to significant savings on utility bills and a smaller carbon footprint.

Less Maintenance: Since everything from the appliances to the roof is brand new, homeowners typically face fewer maintenance issues in the first few years compared to older homes where systems might be nearing the end of their lifespan.

Warranties: New construction homes usually come with warranties that cover the structure and sometimes appliances and systems for a certain period, providing peace of mind to the buyer.

Disadvantages of Buying a New Construction Home

Higher Costs: Often, new construction homes come at a premium price compared to older homes. Customizations and upgrades can also add up quickly, further increasing the overall cost.

Delays: Construction timelines can be unpredictable due to weather, supply chain issues, or labor shortages. This can lead to delays in the move-in date, which can be problematic for buyers with specific timing needs.

Immature Landscaping: Newly developed areas may lack mature trees and landscaping, which can affect the property’s aesthetic appeal and privacy. It may take years for new plantings to grow fully.

Community Development: In new subdivisions, construction can continue for months or years after you move in, leading to ongoing noise, dust, and traffic.

Importance of Connecting with a GayRealEstate.com Realtor

Expert Guidance: A Realtor familiar with new construction can provide invaluable advice on the quality of different builders, potential future developments in the area, and the negotiation of upgrades and closing costs.

Representation: Builders have their own sales agents or representatives looking out for their interests. Having your own real estate agent ensures someone is advocating for your best interests, helping to navigate contracts and warranties.

Market Knowledge: Realtors have a deep understanding of the local real estate market, which can help in evaluating the new construction home’s quality and price against current market conditions.

LGBTQ Friendly: For LGBTQ individuals and families, finding a welcoming and supportive community is crucial. Realtors from GayRealEstate.com specialize in understanding the unique needs and concerns of the LGBTQ community, ensuring a smooth and respectful home-buying experience.

Before visiting a new home community, connecting with a Realtor from GayRealEstate.com can provide you with a competitive advantage. Their expertise, advocacy, and personalized support can help navigate the complexities of buying a new construction home, making the process less stressful and more rewarding. Whether it’s negotiating the price, understanding the fine print of your contract, or choosing the right community, a professional real estate agent is an invaluable asset in your home-buying journey.

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Real Estate

Moving in together: What’s yours, mine, and ours?

Combining homes requires patience, communication, compromise

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Moving in together? There are some key factors to consider first.

As we approach Valentine’s Day, imagine you’re sitting with your significant other at a table for two in a quiet corner of a fabulous restaurant. You have just had a sumptuous meal, along with cocktails, wine, and a flaming dessert, when your partner leans in and whispers the words of Christopher Marlowe: “come live with me and be my love.”

In the journey of love and companionship, combining living spaces is a sizable milestone. Whether it’s moving in together, getting married, or simply sharing a home, commingling the living areas of two individuals requires careful consideration, compromise, and creativity. This process involves merging not only physical belongings but also lifestyles and preferences. 

Unless either of you is still living Chez Mom and Dad, you’ll need to decide whose home will be your new nesting place. Are you currently renting and constrained by a lease? Does one of you own property? Do you both? Whose home is most convenient or closest to the size you need? 

In any personal, business, or familial relationship, communication is key. Open and honest discussions about expectations, preferences, and boundaries lay the foundation for a successful integration of living areas, even if you’re only roommates. Each person should feel heard and respected, and compromises should be made where necessary.

Whether you intend to move into one or the other’s existing residence or decide to sell “yours and mine” and buy “ours,” understanding each other’s needs, desires, and budgets will help you pinpoint a location, size, and type of home that will work best.

 For example, someone who works at home may find location to be less important than it is for a DMV commuter. Perhaps access to dining and shopping nearby is important to you. 

Is it just the two of you or will you be a Brady Bunch blended family? Do you anticipate caring for elderly relatives now or in the future? Do you need dual office spaces or an exercise area?

Will it be a condominium, townhouse, or detached home? Colonial, mid-century modern, contemporary, or one-story rambler? Also, if you clarify how your budgets will mesh up front, you may save yourself from arguing about money later. 

Once you have decided on where, what, and how much, considering each person’s habits, routines, and design tastes can help to create a space that reflects both individuals’ personalities while fostering warmth and harmony.

Practicality plays a crucial role in merging living spaces. Assessing the available space, storage needs, and functionality of each item is essential. Bring out your inner Marie Kondo. Duplicate or unnecessary items can be minimized through decluttering and organizing sessions. Deciding together which items to keep, donate, or repurpose ensures that the space remains clutter-free and functional for both individuals.

Attaining a cohesive design aesthetic can be a fun and rewarding aspect of creating new living spaces. Finding common ground in terms of color schemes, furniture styles, and decorative elements helps in achieving a cohesive look. Mixing and matching pieces from each person’s collection can add character and uniqueness to the space while maintaining a sense of balance.

Flexibility is key when it comes to compromise. Both individuals may have attachments to certain belongings or design elements, and finding middle ground is essential. Being open to trying out new arrangements or incorporating elements from different styles can lead to surprising and delightful outcomes.

Personalization is important in making the shared space feel like home for both individuals. Incorporating meaningful objects, photographs, and artwork can add a personal touch and foster a sense of belonging. Creating designated areas or corners where each person can display their interests or hobbies allows for individual expression within the shared space.

Respect for each other’s privacy and personal space is paramount in a shared living arrangement. Designating separate areas or zones where each person can retreat and have some alone time ensures that both individuals feel comfortable and respected. Clear communication about boundaries and expectations regarding personal space helps in avoiding conflicts down the road.

Flexibility and adaptability are essential qualities to navigate the challenges of turning two homes into one. As individuals grow and evolve, so do their preferences and needs. Regular discussions about how the shared space is working for both individuals allow for adjustments to be made as needed.

Most of all, combining the living areas of two individuals is a process that requires patience, communication, and compromise. By approaching the task with an open mind and a willingness to collaborate, it is possible to create a harmonious and functional living space that reflects the personalities and preferences of both parties and truly makes it your own. 

Valerie M. Blake is a licensed Associate Broker in D.C., Maryland, and Virginia with RLAH Real Estate / @properties. Call or text her at 202-246-8602, email her via DCHomeQuest.com, or follow her on Facebook at TheRealst8ofAffairs.

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