HomeOwnership the American Dream

How will Tax Reform affect real estate taxes?

How will Tax Reform affect my real estate taxes?

Published: October 20, 2017
Updated: 11/6/17 and 12/2/17

Updated December 2, 2017

Early Saturday morning, the U.S. Senate passed their version of the tax bill by a vote of 51-49. The House version of tax reform passed on November 16. This epic bill was to address disparity for corporations but also has other effects on homeowners and tax payers across the board. It officially will change the face of homeownership in this country for decades to come and you’ll see how will Tax Reform affect my real estate taxes.

A last-minute change to the Senate version would make up to $10,000 in property taxes deductible for the small number of homeowners who would still be itemizing. This change specifically aligns with the property tax cap set in the House bill.

The main difference for homeowners is that the Senate version retains the deductibility of mortgage interest payments on up to $1 million of indebtedness; the House version caps indebtedness at $500,000 for those who would be itemizing their taxes.

Now, members of the House and Senate must meet to agree on a final bill. However, it’s not too late to make your voice heard by telling members of Congress that incentives for homeownership and the capital gains tax exclusion on the sale of a home MUST be protected.

Published October 20, 2017

With all the recent news surrounding the current administrations desires to spur tax reform for all US taxpayers, we felt it would be helpful to describe what COULD happen as the result of certain reform and explain how will Tax Reform affect real estate taxes and homeownership, the American Dream.

HOMEOWNERSHIP IMPACT BY TAX REFORM

It has been reported by REALTORS throughout the country, including NAR (National Association of REALTORS) that the recent discussions around simplifying the tax code will

HomeOwnership the American Dream

in fact have an immediate impact on those who own homes. Many homeowners may actually lose their ability for federal income tax deductions – IF – the proposed legislation in Congress is passed in its current form (as of October 2017).

Over the past several decades, homeownership has decreased. While it’s currently moving upward, this increase in home owners may peak as a new tax code is embraced by Congress. The homeownership rate reached a peak of 69.2 percent in June 2004. A few years later, the housing crash caused credit to tighten and resulted in millions of Americans losing their properties to foreclosure. While the recent news of tax reform may have a negative impact on homeownership, it certainly is becoming more stable and healthy again just ten years after the major crash. Any tax reform affect real estate taxes in the way of changing deductions. Here’s a current look at the movement toward owning a home again.

HomeOwnership Rates 2016-2017

The number of those who own their home (legally known as real property) do so using a mortgage to help split up their payments. In addition, one of the benefits today is the home owner can also write off the amount paid in interest on these loans and the real estate taxes paid while living in the home. This can add up to substantial amount of savings to the owner versus the one renting a property.

CURRENT TAX PROPOSAL

So with a current proposal by President Donald Trump to raise the standard tax deduction, those who bought with the hope of these dedications may find out that they disappear in favor of broad tax reform. The long tail analysis may actually help increase homeownership in the long run because it will put more money into the pockets of Americans and give renters more incentive to save a down payment.

The current plan is expected to double the standard deduction and eliminate all personal deductions. The exceptions in the bill being proposed and discussed would be the deductions currently enjoyed by home owners for the Mortgage Interest Deduction and the deduction for charitable contributions. What it eliminated is the state deduction for state and local taxes.

While it sound promising that the mortgage interest can still be deducted, by doubling the standard deduction, they’ve also lowered the number of people who would be eligible to claim the Mortgage Interest Deduction with a proposed number shrinking to just the top 5 percent of all taxpayers.

As a REALTOR and PA real estate brokerage, we are alerting our local and state representatives that we are opposed to attempts to limit or eliminate tax incentives for homeownership and real estate investment. We know how tax reform affect real estate taxes in more ways than just a tax break.

UPDATE (November 6, 2017 after the proposal was made public with revisions)

“By eliminating or nullifying the incentive for homeownership, Realtors® are concerned that homeownership’s wealth-building potential could be pushed out of reach. The proposed tax reform caps the mortgage interest deduction at $500,000 for newly purchased homes. The legislation also eliminates state income tax deductions altogether, while installing a new cap on property taxes. At the same time, the proposal puts new restrictions on the capital gains exemption homeowners utilize today when they sell their home. The exemption is vital to allowing homeowners to use their equity to pay for retirement and other long-term needs. Tax hikes and falling home prices are a one-two punch that homeowners simply can’t afford.”
Kathy McQuilkin, CRS, GRI, SRES, CRP, CSP, ALHS
2017 Pennsylvania Association of Realtors® President

HOMEOWNERSHIP TAX FACTS

HOMEOWNERSHIP TAX FACTS
Homeowners already pay 83 percent of all federal income taxes.
Analysis shows that homeowners with incomes of $50,000 to $200,000 would face average tax hikes of $815 in the year after enactment (PricewaterhouseCoopers).
Non-homeowners in the same income range would enjoy average annual tax cuts of $515.

Since current homeownership is at an all-time low, we desire to see everyone who can afford the opportunity to afford a home be able to participate in the real estate market. With this new plan, it appears that fewer consumers will realize a financial benefit from owning a home. Sure renters will have more money in their pocket to possibly apply toward a down payment. But current homeowners will likely see a hike in their taxes.

Tax Reform affect real estate taxes

TAX REFORM AFFECT REAL ESTATE TAXES.
TAX REFORM ALSO LOWERS HOME VALUES!

And as a result of this tax reform, PwC predicts home values will fall, in the short run, by more than 10 percent. The drop could be even larger in high-cost areas and it could take years for home values to rebound from this significant decrease. When you reduce the deduction, you reduce home affordability since you remove the extra deductions currently available.

Any reform of this type has an immediate and long term impact on the real estate market. Most people will not see this type of impact immediately, but once it works itself through a few years of tax returns and home buying seasons, the market will respond. It always does.

So before the real estate market corrects itself in response to a new tax code, pick up the phone and respond direct to your local and state representatives in congress today. Make sure they keep these deductions and other real estate vehicles currently available including Like-Kind exchanges. The Section 1031 provision encourages growth by permitting real estate held for investment to be exchanged for property of a like kind on a tax-deferred basis. These exchanges are essential to the commercial real estate sector and to the economy.

Thanks for participating in the conversation – homeownership and home prices may depend on it.

Real Estate Title Deed

Pennsylvania Real Estate Title Deed

What is a Pennsylvania Real Estate Title Deed?

Published: August 8, 2017
Part of our Real Estate Law Series

Pennsylvania Real Estate Title DeedA Pennsylvania Real Estate Title Deed is considered documented proof of ownership of real property in the state of PA. The real estate title to real property is conveyed by a deed. It can also be an interest in real property that is provided through the Commonwealth of Pennsylvania or your current State.

A title will include the following:
– details the person(s) in whom title is vested
– how that person(s) interest is evidenced

Since a title conveys ownership or interest in real property, it is also subject to all taxes, assessments, covenants, conditions, restrictions, easements, limitations, reservations, rights, obligations, powers, rights of way, liens, and charges of record.

PA Real Estate Title Deed for Buyer

A potential buyer is encouraged to investigate the title report when buying a property. This is often performed by a title company in Pennsylvania. Other states utilize closing companies and attorneys. A title search will show what past liens have been satisfied and what other matters may have on the use of the land.

Interests in Land

The following are ways that various types of interest are conveyed, liened or associated with real property.

1. A mortgage on real property is a lien on the property, and is classified as intangible personal property.

2. A contract to convey real property constitutes an equitable conversion. If the decedent was the seller, the decedent’s interest is classified as intangible personal property. If the decedent was the buyer, the decedent’s interest is classified as real property.

3. A lease of real property is an interest in land, and is classified as real property.

4. A decedent’s beneficial interest under a land trust agreement is classified in accordance with the provisions of the trust agreement. If the agreement provides that the beneficial interest consists of an undivided interest in the land, the interest is classified as real property. If the agreement provides that the beneficial interest consists of an interest in the earnings or proceeds, with no right, title, or interest in any portion of the land, the interest is classified as intangible personal property.

Pennsylvania Real Estate Title Deed Encumbrance

An encumbrance is a charge, claim, or liability on real estate. An encumbrance may reduce a property’s value or place restrictions on how it can be used; however, it does not necessarily prevent title to the property from transferring to someone else.

There are two types of encumbrances:
1. Encumbrances that affect only title, such as liens and deed restrictions
2. Encumbrances that affect both the title and the physical condition of the property, such as easements and encroachments

Next Steps:

If you have questions about real property, personal property & land use, contact an attorney. Remember it’s always Buyer Beware when you considering real property, especially when reviewing your new Pennsylvania real estate title conveyed by deed.

If you’re looking to Buy or Sell real estate, you’ve got our number: call us today @ 866-502-5478.

Real Property or Persoanl Property

Real Property, Personal Property & Land Use

Real Property, Personal Property & Land Use

Published: August 2, 2017
Part of our Real Estate Law Series

It’s not only real estate agents who confuse what the legal issues surrounding land use, land rights and real property, but anyone who owns a home, parcel, lot or land. As licensed PA real estate agents, we are required to study how these definitions and regulations relate to land us, air use and mineral rights in relation to real property. We plan to address the issues relating to land, air and mineral rights, real and personal property. Here’s some general terms and definitions you too may find helpful about real property, personal property & land use (and various land rights).

Real Property or Personal Property

Real Property or Persoanl Property1) Real Property

Real property is defined as land and improvements permanently attached to the land. It is also known as real estate, or realty. There are several issues related to the ownership of real property and may be discussed in future posts. It generally falls under the section of law called property law. Here’s a list of real property.

Homes – real property.
Buildings – real property (attached to the land).
Land – real property (other rights like air rights or mineral rights can be separate agreements).

2) Personal Property

What you own is your personal property, right? The Pennsylvania Secretary of State’s office defines personal property as “any property that is not real property” which sends us back to the prior definition of real property. The reason for a distinction is simple: taxes. For property tax purposes, your personal property is defined as “all types of property except land, buildings, or other real property improvements” and by excluding real property, it creates the ability to tax each separately. You taxable personal property includes all assets used in the operation of a business, farm, or ranch, etc. Here’s a list of real property.

Tractor – personal property.
Silo – personal property, even though it’s on your property.
Manufactured homes (a mobile home) – personal property
Note: An owner can file an affidavit affixing the unit to their real estate.

Land Use and Land Rights

Land, air and mineral rights are used in the appraisal of real property. Both land and air rights are defined by counties, municipalities and sometimes individual towns. They are able to create land us restrictions within the power given by the State to them to enforce. Land Rights means a fee interest in bounded land or real property.

Land Use & Land Rights Example:

If there was an easement to permit certain access and foot traffic across a plot, it may limit the kinds of improvements that may be placed on that lot, and thus reduce the value.

Air Rights

Air Rights means a fee interest in a three-dimensional air space in relation to specified real property as outlined appropriately by Cornell School of Law.

In most cases, appraisals over a parcel of land include the valuation of all the rights associated with ownership. However, if a property has multiple owners, that information will be important in efforts to assess and collect taxes. If certain rights have been sold or assigned to others, the remaining value of the property may be reduced.

Air Rights Example:

In terms of a lease, they may allow development of mineral or air rights and may effectively prevent other uses during the lease period therefore resulting in a reduced appraisal from a lower property value.

MINERAL RIGHTS

Finally, ownership of land and mineral rights and its related mineral entry status is complex. It is impossible to make a general statement that will provide a key to the surface and subsurface status of lands. The legal nature of land and mineral entry status is further intensified by the fact that in many areas the surface and mineral rights are under separate ownership.

This is a standard procedure by which the ownership and mineral entry status of any particular land may be determined. Again, this may slightly vary by location and local laws. However, no procedure can guarantee the exact location, presence, absence or validity of unpatented mining claims on Federal land open to mineral entry. Actual determination of the presence and validity of mining claims require both a detailed search of the records and on the ground. Further, even though procedures to prevent errors in official records are adhered to by all agencies involved, occasionally errors are discovered.

Next Steps:

If you have questions about real property, personal property & land use, contact an attorney. Remember it’s always Buyer Beware when you considering real property.

If you’re looking to Buy or Sell real estate, you’ve got our number: call us today @ 866-502-5478.

DiNardo family property

Cosmo DiNardo family property and real estate

DiNardo Family property and real estate
in New Hope, Bucks County, PA

Published: July 16, 2017

Earlier this month, family and friends became concerned when four young men, nearly-twenty somethings, went missing in Bucks County, PA. The local authorities began searching for at first one, then two, three and four of these young men within hours of their missing appearances. What no one expected was the worst news a family could hear that they were victims to gruesome murders and their remains would be buried across a local farm in Solebury Township, Bucks County PA. In order for the authorities to conduct their search, they began scouring through the DiNardo family property and real estate in Bucks County.

While the local news channels, newspapers and bloggers alongside national news outlets will cover the full story, as local Bucks County real estate agents serving local communities in Solebury Township, New Hope and surrounding central Bucks region, we outlined the specific DiNardo Family properties first reported on NBC10. This article further outlines the DiNardo Family Real Estate in Delaware Valley and Bucks County, PA.

As soon as Cosmo DiNardo became the suspect in the matter, before understanding the full motive and circumstances surrounding the murders (drugs, gun sales, mental conditions, accomplices, etc), the Dinadro family farm in Solebury Township became the target of their investigation. Since Cosmo DiNardo was heir-apparent to the family real estate holdings, we have received questions about what farm, farm houses, properties and homes are in question in this case which likely will not be brought to trial until the local authorities conduct their full investigation.

DiNardo family property and real estate in Bucks County

We’ve put together a history of purchases and acquisitions which consist of the DiNardo family property and real estate today.

DiNardo family property and real estate holdings

DateNameBuy / SellAddressCityPrice
1979Cosmo DiNardo SrBuyer1016 Cottman AvenuePhiladelphia$67,500
2004Antonio DiNardoSeller1016 Cottman AvenuePhiladelphia425,000
1981Cosmo DiNardo SrBuyer3159 Summerdale AvenuePhiladelphiaUndisclosed
1986Cosmo DiNardo SrBuyer10 Shady LnRockledge$95,000
1989Cosmo Sr & AntonioBuyerLongmead LanePhiladelphia$50,000
1991Cosmo Sr & AntonioSellerLongmead LanePhiladelphia$210,000
1998Antonio DiNardoBuyer4455-65 Castor AvePhiladelphia$94,000
2001Antonio DiNardoBuyerAdams AvenueBensalem$140,000
2004Antonio DiNardoBuyer3636 & 3648 Hulmeville RoadBensalem$450,000
2005Antonio DiNardoBuyer4325 Factory StPhiladelphia$20,000
2005Antonio DiNardoBuyer4317 Factory StPhiladelphia$20,000
2005Antonio DiNardoBuyer1407 Rising Sun AveLanghorne$164,900
2005Antonio DiNardoBuyer6071 Lower York RdNew Hope$5,450,000
2006Antonio & Sandra DinardoBuyer920 Wayland CirBensalemUndisclosed
2006Sandra DiNardoBuyer2827 Aquetong RdNew Hope$450,000
2008Sandra DiNardoBuyer5995 Lower York RdNew Hope$500,000

DiNardo Family Real Estate Transactions

Between 1979 and 1989, Cosmo DiNardo Sr. purchased three commercial properties and a Jenkintown apartment house. Later his son Antonio DiNardo would begin selling some properties and acquiring others. Anotonio’s son Cosmo, is the suspect in the current investigation around the murder of four men at the family farm in Solebury Township, Bucks County.

The first purchase was a strip of storefronts at 1016 Cottman Avenue for $67,500 in 1979. Later the property on Cotton Ave was by his son Antonio for $425,000 in 2004.

Next, Cosmo Sr purchased 3159 Summerdale Avenue (unknown amount) in 1981. He bought a third commercial property in 1986 for $95,000 on 10 Shady Lane, Rockledge, Montgomery County which is currently leased as a dentist’s office.

In 1989, both Cosmo Sr and his son Antonio purchased a property on Longmead Lane together and flipped it two years later for a $160,000 gross profit.

During the 90’s, Cosmo Sr and Gina bought parcels in Bensalem and began developing them selling the first home in 1996 for $225,000 as Lot #1 of the “DiNardo PLAN” where they developed and sold a total of 8 properties. Later, his son and his wife Sandra would buy their current home from this subdivision plan.

Over the next twenty years, Antonio would begin buying several properties himself buying four properties: two in Philadelphia and two in Bensalem. The property on 4455-65 Castor Avenue was purchased for $94,000 in 1998 and would become home to their family concrete business: Metro Ready Mix and Supply.

Next, Antonio purchased a property on Adams Avenue for $140,000 in 2001. According to property records, it is leased through 2032 to a health care non-profit called The Bridge.

In 2004, Antonio bought 3636-3649 Hulmeville Road Bensalem, PA for $450,000. This is currently the home to the other family business: Bella Trucking.

Additional properties purchased by Antonio include two properties on Factory St Philadelphia. Another commercial property was purchased in 2012 as a separate company of the DiNardo family known as Cosan Llc with a property on 4453 Castor Ave for and undisclosed amount.

Antonio and his wife Sandra bought their current home from the “DiNardo Plan” properties in Bensalem on Wayland Circle in 2006 where they currently reside.

DiNardo Family Property and Real Estate in New Hope, Bucks County, PA.

In 2005, the DiNardo family began acquiring farmland in Bucks County. The following properties make up the current Cosmo DiNardo family property consisting of family properties likley being formalized in a family trust as a result of allegations, charges pending and to be levied against their son Cosmo DiNardo who appears to be heir-apparent to the family business, family estate and real estate properties.

#1 Lower York Road Farm

6071 Lower York Rd, New Hope, PA 18938
$5,450,000
09/27/05
MLS# 4650440

Three tracts of 18+ acres each for a total property of 60 acres located near Rt202. Parcels: 41-008-034, 41-008-035, 41-008-036

Note: All properties part of Act-319 which allows them to benefit from reduced property taxes.

#2 Aquetong Rd Farmhouse

In 2006, Sandra DiNardo began purchasing property under her name. The first one was on 2827 Aquetong Rd, New Hope, PA for $450,000. She did try to later sell this property, but still remains in their name today. Sandra later bought an adjacent property at 5995 Lower York Rd for $500,000 in 2008. She put it under both Antonio and Sandra’s interest in 2015.

2827 Aquetong Rd, New Hope, PA 18938
Sandra (Antonio’s Wife) bought the farmhouse.
$450,000
08/25/06
MLS# 4570184

#3 5995 Lower York Rd

The last purchase on record completing the Lower York Road New Hope, PA family compound was made in 2008 under Sandra’s name on 5995 Lower York Rd for $500,000.

5995 Lower York Rd, New Hope, PA 18938
Sandra (Antonio’s Wife) bought the farmhouse.
500,000
12/11/2008
MLS# 5347289

Whether other properties have been purchased in New Hope, Solebury Township or nearby locations in Bucks County may be difficult to track down if they were purcahsed under other names or companies. Yet the total value of the farms in Bucks County is estatimated to be well over $7 million.

Latest Update on the DiNardo Family Property and Real Estate and case

These Bucks County properties surrounding this case will likely be memorialized for the four boys who lost their lives at the hand of a mentally unstable young man of the DiNardo family.

Our heart and prayers go out to the families of these boys and understand this is an ongoing investigation. This article is only to discuss the real estate amassed by the family and how it came into the family possession through purposeful estate planning.

Note: all property details were pulled from public records. If you have questions surrounding farms in Bucks County, please contact us.

Updated: July 21, 2018 @ 10:30am

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Homestead Exclusion & Farmstead Exclusion

Pennsylvania Homestead Exclusion & PA Farmstead Exclusion

Pennsylvania Homestead Exclusion & PA Farmstead Exclusion

Published: July 6, 2017
Part of our Real Estate Law Series

There is a little known exception waiting for Pennsylvania residents who own consider their home in PA a primary residence It’s the Pennsylvania Homestead Exclusion & PA Farmstead Exclusion. How it works: most owner occupied homes and farms are eligible for property tax reduction through this program. In order to benefit, you must simply apply. A little background about homestead exclusions and farmstead exclusions.

Pennsylvania Homestead Exclusion

Pennsylvania Homestead ExclusionHomestead is real estate occupied by a person as his or her home or dwelling place. They are often a house, especially a farmhouse and outbuildings. It’s also a person’s or family’s residence. This includes land + home + outbuilding. In most states, a homestead is exempt from a foreclosure or forced sale for collection of debt because homesteads are often exempt from levy or liens, at least to a certain extent. This is referred to as the “homestead exemption” and vary by state.

In Pennsylvania, a homestead exclusion or often called homestead exemption lowers property taxes by reducing the assessed value of the home. See also the PA Taxpayer Relief Act. This act provided for “property tax reduction allocations to be distributed by the Commonwealth to each school district. Property tax reduction will be through a homestead or farmstead exclusion.”

EXAMPLE:
The home is assessed at $150,000 and the homestead exclusion is $15,000, the homeowner only pays taxes on an assessed value of $135,000. The lower assessed value isn’t zero but it’s also not the full assessed value that would otherwise require a higher tax payment.

NOTE: In PA, the homestead MUST be the owners permanent and primary residence on which property taxes are paid.

Pennsylvania Homestead Exclusion & PA Farmstead Exclusion

The Pennsylvania Homestead Exclusion & PA Farmstead Exclusion allows homeowners to benefit from a lower taxable assessment on their real estate and property. It’s a benefit many overlook.

PA Farmstead Exclusion

In PA, the term “homestead exclusion” is also use in conjunction with the “farmstead exclusion” principle. The Pennsylvania farmstead exclusion provides property tax relief to those who farm their land. These farmers are given an exclusion when applied to their buildings used for agricultural purposes on a farm that is at least 10 contiguous acres (another tax principle called Act 319 – “Clean & Green” status which also lowers your taxes). The farmstead exclusion is applied when it’s also the primary residence of its owner.

Pennsylvanians in 66 counties can receive property tax relief through homestead and PA farmstead exclusions. If you’re a farmer and need to apply for this exclusion, you may fall under both SS1 and Act 72. Homestead and farmstead exclusions that were approved under Act 72 remain valid under SS Act 1. However, taxpayers may still be required to reapply for an exclusion every three years. SS Act 1 only applies to residential property owners.

Next Steps:

If you have questions about the Pennsylvania homestand exemption & PA farmstead exemption, we’d always advise you contact a real estate attorney. Remember it’s always Buyer Beware when you considering real property, especially when reviewing your ability to claim either homestand or farmstand exclusions.

If you’re looking to Buy or Sell real estate, you’ve got our number: call us today @ 866-502-5478.