The Bani Group Inc.

In 2009, rates jumped about .250% leading into Memorial Day and then they jumped an additional .500% the week of Memorial Day. Last year rates jumped from 3.5ish in May to 4.00% in June and then 4.50% in July. OK so we have skated through most of May and rates have held in so I am happy! Today, rates are exactly where they were on Friday. An FHA 30 Year fixed rate with no points is at 3.750% (5.690APR) and a conventional loan with 20% down and no points is currently at 4.125% (4.198APR) assuming your buyer has a 740 credit score.

We touched a little on Capital Gains last week and I wanted to go a little more into depth on this. I will start with some basic stuff and work my way into the more complicated information a little later. If a person purchases a property and then sells it for a profit this could constitute a capital gain. If they lived in that house for two of the past 5 years and the gain was less than $250,000.00 for a single person or $500,000.00 for a couple then they would be exempt from taxes. Pretty simple stuff. The end!! Not so fast! About 80% of our clients will fit into that mold. While 20% will make over the exemption, or sell before the two years. So let's look at those clients a little more carefully and how can they get out of their house before two years and minimize the gains.

• So if a client buys for $400K and sells for 500K is the gain $100K? The answer to that is no.
• We need to ask what their expenses were going in? Closing costs, escrow title, loan fees...
• What was the cost of the improvements they did? Kitchen, bath, roof, landscape...
• What are the selling costs to sell the property?

Depending on improvements, those fees may or may not add up to 100K, but all of the money they spent will be deducted from their profits and they would only pay taxes on the remaining profit. We always have our clients consult with their tax person when they are looking to sell. It is imperative that they know what the real cost is to sell a property before they sell it.
Please let me know if you have any questions or if you have any clients that have any questions on loans or anything to do with Real Estate.
Thank you for your time and remember to always align yourself with the best in the business! That will make your business the best!

Sincerely,

Mike Meena

Augusta Financial