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1031 Exchanges and Tax Deferrals

With tax season upon us, we found the following excerpt from Wyoming Title and Escrow timely, informative and easy to follow. It can be difficult to stay on top of the latest practices, especially when it comes to real estate. Please contact us if you are interested in learning more about a 1031 Exchange.

“A 92 Year-Old Solution for Real Estate Investors Facing Higher Taxes in 2013:

1031 Exchanges Offer Full Deferral of the New 3.8% Medicare Surtax Tax and 20% Capital Gain Tax

The familiar adage, “It’s not how much you make, but how much you keep” rings truer than ever for real estate investors in 2013. Not only have capital gain taxes increased significantly for high earners, but many investors below the top tax bracket face an additional 3.8% surtax on passive investment income like capital gains. Fortunately, IRC Section 1031, a provision which has been in the tax code since 1921, provides critically needed tax relief.

Under the American Taxpayer Relief Act of 2012, the top capital gain tax rate has been permanently increased to 20% (up from 15%) for single filers with incomes above $400,000 and married couples filing jointly with incomes exceeding $450,000. In addition, the new IRC Section 1411 3.8% Medicare surtax on net investment income, which includes capital gains, results in an overall rate for higher-income taxpayers of 23.8% — a staggering 58% increase from 2012 tax rates!

Four Steps Involved in Determining Capital Gain Taxation

Absent the tax deferral benefits of a 1031 exchange, below is a summary of the four ways investors will be taxed on the sale of an investment property:

1) Depreciation Recapture: Taxpayers will be taxed at a rate of 25% on all depreciation recapture.

2) Federal Capital Gain Taxes: Investors owe Federal capital gain taxes on the remaining economic gain depending upon their taxable income. Since a new higher capital gain tax rate of 20% has been added to the tax code, investors exceeding the $400,000 taxable income threshold for single filers and married couples filing jointly with over $450,000 in taxable income will be subject to the new higher tax rate. The previous Federal capital gain tax rate of 15% remains for investors below these threshold income amounts.

3) New Medicare Surtax Pursuant to IRC Section 1411: The Health Care and Education Reconciliation Act of 2010 added a new 3.8% Medicare Surtax on “net investment income.” This 3.8% Medicare surtax applies to taxpayers with “net investment income” who exceed threshold income amounts of $200,000 for single filers and $250,000 for married couples filing jointly. Pursuant to IRC Section 1411, “net investment income” includes interest, dividends, capital gains, retirement income and income from partnerships (as well as other forms of “unearned income”).

4) State Taxes: Taxpayers must also take into account the applicable state tax, if any, to determine their total tax owed. Some states have no state taxes at all, while other states, like California, have a 13.3% top tax rate.”

February Real Estate Results for Jackson Hole, Wyoming

 

 A little bit of a mixed bag for real estate results in February 2012 for Jackson, Wyoming.   The bad news is that our sold transaction total fell from 18 transactions in January to 17 closed transactions in Feb.  The average price also fell to $857,976 and the median sale price of $476,000.  The highest sale for the month was a home on the West Bank in Lake Creek Acres .  It sold for $2,300,000. 

On a positive outlook we had 3 land sales in Feb. and we just had 3 additional lots go under contract in the past few weeks.  Land prices have fallen, construction costs are lower and finding professional works is much easier at this point.  My other theory is that the consumer is going to demand a newer homes in a few years and there simply will not be any due to the lack of construction and spec building during the past 4-5 years.  The opportunity is there for owners to start construction on a new home with the idea of living in it or selling it after or during construction.

Finally – the pending outlook is strong.  There are 54 pending transactions at the moment.  44 of those are priced below $1 million.

For additional information on the Jackson Hole Real Estate market please contact the Jackson Hole Experts – Jackson Hole Sotheby’s International Realty – Christy and Garth Gillespie. – 307-413-5243 or garth.gillespie@jhsir.com

Teton County, Wyoming: Real Estate Stats – Year to date Feb 2011

According to the Multiple Listing Service (MLS), Teton County real estate sales volume is on track with 2004 and 2008 sales volume levels. Through Feb 2011, there have been 43 real estate sales reported in the MLS in Teton County, which includes Jackson, Wilson, Teton Village, Hoback Junction and Alpine. Total sales volume in this period is $58.1 million. This is a 38% improvement over the same period in 2010, where there were only 22 sales and $44.5 million in sales volume through the months of January and February.  While the first two months of 2011 are will above the ‘bottom’ of 2009, which only had 8 sales totaling $9.7 million, but still below the ‘peak’ of 2006, which saw 92 sales in the first two months of the year totaling $86 million.  

Along with an increase in real estate sales volume, the number of real estate transactions in teh first two months of the year in Teton County doubled from the first two months of 2010.  Of the 21 sales in February alone, Jackson Hole Sotheby’s International Realty had a 33% market share in Teton County. For more information, including graphs, please contact The Gillespie Real Estate Team at Sotheby’s International Realty at 307-739-8078.

Jackson Hole Mountain Resort tops 300″ of snow

While it may feel like winter has just begun, Jackson Hole Mountain Resort has already received over 24 feet of snow this season. Teton Village has received more snowfall than any other ski resort in North America.

With a record amount of early season snow fall, Jackson Hole Mountain Resort was able to open 100% of the mountain, including the Aerial Tram, on opening day in late November. Since opening day, we have continued to receive consistent snow which has contributed to a strong and stable snow pack.

Word has gotten out, as Teton Village has seen high occupancy levels at all the base area hotels – including the Four Seasons, Teton Mountain Lodge, Hotel Terra and the Teton Club. Jackson Hole Real Estate activity has also increased at the base of the mountain. There are currently 19 properties under contract in Teton Village. These pending sales include ski-in, ski-out condominiums, condo hotel investments, fractional time shares and large single family homes located underneath the Aerial Tram at Jackson Hole. We are well on track to out pace last winter’s 32 closed sales in Teton Village.

If you would like to learn more about current real estate opportunities in Teton Village contact the Gillespie Real Estate Team – the Jackson Hole Experts by visiting www.jhexperts.com or calling 307-413-5243.

December 1st – Jackson Hole Real Estate Update

It has been a while since this site has been updated – we are sorry. The Jackson Hole Experts – Christy and Garth Gillespie of Sotheby’s International Realty – have been extremely busy over the past 4 months and unfortunately our Blog fell silent.

We are excited about getting back into posting current information about Jackson Hole and the Jackson Hole Real Estate Market. 2009 has been a challenging real estate climate nationally and locally. Financing continues to be a struggle and declining property and home values are creating a burden for many homeowners. We understand these issues and hope to cover topics within our blog that offer solutions and opportunities.

In our first Blog back we want to bring people back up to speed on the current market statistics. We will be updating the information soon as our last current review of the market is thru October 2009. Year to Date there have been a total of 152 closings with a sales volume of $182 million as reported by Teton Board of Realtors (TBOR) MLS system. When comparing this information to 2008 unit volume was down 41% and down 70% from 2007. Sales volume is down 58% from 2008 and 73% from 2007. Positive news is that in October we had 29 closings which was the high for 2009 and also in October we saw 7 sales over $2 million.

Christy and I believe that Sotheby’s International Realty – Jackson Hole Brokerage offers our customers the best opportunity for success. If you are a seller, hands down there is nobody in Teton County that can offer you so many marketing opportunities and exposure to the most buyers. For buyers – the same can be said – we work extremely hard in the office to educate each other on the most up to date statistics which offers our sellers the most educated price analysis. This in turn offers a buyer the opportunity to look at properties that are priced correctly for the market. We have incredible tools for both Buyers and Sellers as too how the real estate process works in Jackson Hole.

The statistics uphold our thoughts above. In October alone, Sotheby’s was involved with 23 transaction sides (a transaction = 2 sides a buyer and a seller). This equaled a 62% market share. Year to date Sotheby’s has sold 72 properties and has assisted 61 buyers complete a transaction. This equals 133 transaction sides or 55% market share. These are fantastic numbers.

As for Christy and Garth Gillespie – we continue to work extremely hard to produce results for our sellers. We have sold 8 listings so far in 2009 and have been involved in 14 transaction sides. When compared to years past we are lagging our average but we are proud of our efforts and continue to learn more about our market every day.

If you would like additional information, please feel free to call us at 307-413-5243 or email me at garth.gillespie@sothebyshomes.com. Thanks for visiting our site and we hope you stop by again real soon.

Spring Creek Ranch – New Listings Worth Taking a Look At…

The Jackson Hole Experts – Garth and Christy Gillespie and sales associate Don Alsted are excited about our real estate inventory at Spring Creek Ranch this summer. We have the pleasure of marketing 2 fabulous custom homes and one beautiful estate lot all with stunning views of Grand Teton.

Perched nearly 1,000 feet above the Town of Jackson on East Gros Ventre Butte, Spring Creek Ranch offers incomparable views of the Teton and Snake River ranges and Spring Gulch.

Once a part of the ranch operated by former Wyoming Governor and Senator Cliff Hansen, Spring Creek Ranch today is a popular resort community that provides a real sense of getting away from it all Western style. It’s a testament to the beauty of the location that Aman Resorts chose it for the company’s first property in North America, the Amangani.

Jackson, Teton Village and skiing at the Jackson Hole Mountain Resort are all within a quick drive from Spring Creek Ranch. But there are a variety of on-site resort activities to enjoy. The resort offers concierge services to homeowners, as well as tennis, swimming and a full-service spa. The activity that sets it apart from other resorts in the area is horseback riding, which is geared to people of all skill levels and ages. And with nearly 700 out of the property’s 1,000 acres preserved as open space, Spring Creek is a lovely place to hike and look for wildlife. The Granary restaurant is popular with locals as well as out-of-towners, as is the restaurant’s lounge, which offers jazz and piano music on some nights.

Spring Creek Ranch is one of the favorite view-oriented developments in the valley where short-term rentals are permitted, which makes it highly desirable for investment property.

The three listings we would like to feature are beloe with links. Please visit:

1996 Spirit Dance – Amazing setting at Spring Creek Ranch. Located on a large lot of 1.14 acres and bordering open space with obvious views of Tetons. The home is located on lot 11 of the Elk Dance Estates area of Spring Creek Ranch.

Overall description of the home: Sqaure footage is on two levels for a total of 3,956 square feet. The main floor (2,782 sq. ft.) includes 3 bedrooms – one of which is considered a junior suite, an office, dining room, living room, kitchen, entry, mudroom and storage. The 2nd floor includes the master bedroom and a media room. From the master you have one of the best views of the Tetons available in Jackson Hole. The master bedroom has a stacked stone natural gas fireplace. The master is complete with a comfortable master bathroom with jetted tub and rain shower, marble slab counter top and flooring and custom alder cabinets. The master closet – over 200 square feet – with washer and dryer setup.

The Alsted Home — Featured on the cover of Mountain Home Magazine, this luxurious 7,323 sq. ft. home located on Spring Creek Ranch exudes the warmth and richness of natural wood and stone. Its unique, long, angular design and placement of large windows allows spectacular views of the Grand Teton Mountain Range from all living spaces.

285 Calliope – Lot 47! This secluded 4.67 acre lot is one of Spring Creek’s best parcels. It features a large building envelope which has open, gentle sloping, undisturbed terrain. This parcel boasts views of the Grand Teton, a large aspen grove and the high rolling ridges of West Gros Ventre butte. This land has personality and is waiting for you to create your masterpiece.

Jackson Hole Bank Update – Mortgage Rates for March 27, 2009

One of the finest loan representatives in the Jackson Hole area is T.R. Pierce from the Bank of Jackson Hole. T.R. Pierce is the senior vice president loan officer at the largest “local” bank in Jackson Hole and for the past few years has been educating the Jackson Hole real estate agents on the current local mortgage rates. As part of our weekly updates we will be posting T.R.’s report about once a week. This should give readers a good idea of local rates. We of course recommend calling T.R. Pierce, SVP Residential Loans, 307.734.8111 for an appointment if you would like additional information on mortgages. Today’s report is below:

Conforming interest rates are down this morning after consumer spending rose in February… rebounding for the second straight month! The Commerce Department reported that spending by individuals rose 0.2% last month after a revised increase of 1.0% in January. Some economists feel that “the majority of the declines in consumer consumption are behind us” and another indication that the economy may be improving is the 20% gain in stocks Wall Street has enjoyed in last three weeks!

Residential Mortgage Rates for March 27, 2009

The following rates are thirty (30) day quotes for fully documented, owner-occupied and/or second home loans for borrowers with a minimum credit score of 700 which feature a one (1%) percent loan origination fee and the escrow of taxes & insurance.

PLEASE NOTE THAT CONFORMING LOAN AMOUNTS OVER $417,000 TO $625,500
ARE AVAILABLE AT HIGHER INTEREST RATES THAN INDICATED BELOW.

PROGRAM CONFORMING

(Loans to $417,000)
JUMBO
(Loans over 417,000)

30 Year Fixed
4.500%
7.875%

15 Year Fixed
4.500%
6.875%

10/1 ARM
5.250%
7.875%

7/1 ARM
4.625%
5.000%

5/1 ARM
4.125%
4.750%

3/1 ARM
5.250%
6.625%

30 YEAR FIXED RATE FHA LOANS TO $693,750: 5.000%
PRIME RATE: 3.250%
ONE YEAR LIBOR RATE: 2.010%

Thanks T.R. for the report. We appreciate the updates. Christy and I are excited about those 4.5% rates on conforming 30 year fixed! This should motivate all of you first time home buyers or owners that want to move up or around in Jackson. Guess what? This weeks movement in the stock market motivated a few buyers. We saw a piece of vacant land go under contract! We also heard of a contemporary townhome that went under contract! Great news…

If you would like additional information on the Jackson Hole Real Estate market please contact us – the Jackson Hole Experts – Garth and Christy Gillespie. Feel free to call us toll free at 877-739-8056.

Jackson Hole Real Estate Hotsheet Highlights for 12.31.08

Holiday lull; more REJH fallout; looking ahead to 2009

The Web is crawling with ways to search for real estate listings. In this region, the best way to get started is at Jackson Hole Experts.com. But for when you want to know what Realtors know … you need the Hotsheet!

New listings: Activity has been light during the holiday period, with many “new listings” representing extensions of listing contracts that often expire at the end of the year. For example, Garth and Christy Gillespie extended their listing for a beautiful home in 3 Creek Ranch listed at $3M. There are now 8 homes available in this private development just south of Jackson listed between $2.695M and $5.295M.

Real Estate of Jackson Hole: Also notable in the last week under new listings are all the properties formerly listed with Real Estate of Jackson Hole, which completed a nearly yearlong demise earlier this month when they announced on Dec. 22 they would be closing their doors. As the approximately 70 agents resurface at other valley brokerages, their listings are steadily reappearing. An article written in the Jackson Hole News and Guide is published here – http://www.jacksonholenews.com/article.php?art_id=4045

One other note on REJH: Sotheby’s agents were provided a good bit of information in this week’s sales meeting that was not available in the extensive newspaper coverage of REJH’s demise. I would be glad to help anyone better understand this complex story, to the best of my ability, or refer them to someone even closer to the facts.

Outlook for 2009: What will next year bring in the Jackson Hole real estate world? From my perspective — opportunity. As a buyer’s agent, I am working with several people very interested in entering the Jackson market in 2009. With sales prices generally regressing to years past, market watchers are well aware this will be one of the best times to buy into Jackson in the last 20-25 years. And with current interest rates near historic lows, the question becomes: Even if prices have not reached bottom, will an increase in the cost of credit in the coming months offset any future price reductions?

My advice is to identify a specific area or neighborhood and a price range and make an offer on available properties based on what you are willing to pay, regardless of the listing price. Many sellers today do not have the luxury of being “insulted” by offers much lower than asking price – in fact, my inbox is filled daily with e-mails from agents saying their sellers are willing to look at any and all offers. In other words, ask today for next summer’s price reduction, and you might get it. And if the market rebounds before that, your deal will look even better.

For details about any property mentioned in this blog post or a FREE PERSONALIZED Jackson Hole real estate market analysis, please call Brian Siegfried [my name should be a link to my bio page] at 690-9346 or e-mail him at Brian.Siegfried@sothebysrealty.com.