BY HOLLY NICHOLSON

Tags: business

Q. I received an email that is making me think seriously about selling my house either this year or next. I’d planned to sell once I retire in five years anyway. Does it make sense to sell now to avoid this future 3.8 percent sales tax and rent until retirement?

A. Over the past few months, I’ve seen several versions of this email and have had several clients ask about the tax implications on the sale of their primary residence in 2013 and after, so your question is timely. I had to clean up the email because of its extreme political bias, inappropriate language and references to an organization, but the main message follows: Did you know that if you sell your house after 2012 you will pay a 3.8% sales tax on the proceeds? That’s $3,800 on a $100,000 home, etc. When did this happen? It’s in the health care bill, and the sales tax goes into effect in 2013. Under the new health care bill, all real estate transactions will be subject to a 3.8% sales tax. This bill will greatly affect the retiring generation, who often sell their homes and downsize.

The 3.8 percent tax is not a sales tax; it is a Medicare tax on investment income starting in 2013. It is a provision of the Patient Protection Affordable Care Act, health care legislation. Congress passed the legislation, and this new tax is seen as a way to help fund President Obama’s health care and Medicare plans. The health care plan could be repealed or changed, but even if this happens, some experts expect a similar tax to take its place because of the budget deficit.

The 3.8 percent tax on investment income will apply only to those single taxpayers with modified adjusted gross incomes above $200,000, married taxpayers filing jointly with MAGI above $250,000, and taxpayers married filing separately with MAGI above $125,000. This is in addition to the new increase in the hospital insurance, commonly referred to as the Medicare payroll tax, for these same taxpayers. The hospital insurance tax is equal to 1.45 percent of covered wages with no wage cap. Beginning in 2013, an additional 0.9 percent will be added to any covered wages exceeding $250,000 for those married filing jointly, $200,000 for single filers, and $125,000 for those married filing separately.

For primary home sales, the entire exemption on capital gains remains intact for all taxpayers. As with all legislation, this could change, but right now the $250,000 capital gains exclusion for single taxpayers and the $500,000 for those married filing jointly remains and can be claimed every two years. The 3.8 percent Medicare tax is on the lesser of net investment income or MAGI that exceeds $200,000 if single, $250,000 married filing jointly and $125,000 married filing separately.

The Scottsdale City Council this week narrowly approved the design-review application for Blue Sky, a $135 million, 13-story apartment complex to be built east of Scottsdale Fashion Square.

Last April, the council approved amended development standards and a site plan to allow Gray Development Group to develop the three-building complex north of the northeastern corner of Scottsdale and Camelback roads.

This week’s request passed 4-3. Council members Bob Littlefield,Ron McCullagh and Lisa Borowsky voted against the design-review application.

One of the conditions included last April was that the council has final approval of Gray’s design plan. The Development Review Board approved the application on Jan. 19 with various stipulations pertaining to the location of stone and paint colors on the exterior, as well as the addition of a canopy on the north side of the north building.

Brian Kearney, Gray’s chief operating officer, said the site plan is identical to the one approved by the council, which included a maximum building height of 128 feet. It will include 749 apartment units and about 69,000 square feet of commercial and retail space. It also will include more than 1,400 underground parking spaces.

“We’ve stuck to every commitment we made,” he said.

Gray will install canal frontage improvements from the Blue Sky property line to the intersection of Scottsdale and Camelback roads, according to the design plan.

The complex will be built in two phases, with the first phase to include two buildings along Scottsdale Road, landscaping along the canal and all underground parking; the second phase will include the building closest to the canal and ground-level pool.

Kearney said plans call for multiple setbacks and building heights. Also, the complex now includes new public spaces.

Councilman Dennis Robbins said the complex looks “a lot better than before.”

McCullagh didn’t like how the building setback has been reduced near the canal, and questioned Gray’s commitment to a public-art benefit in exchange for amended development standards.

“You have an attractive architectural project; I just happen to think it’s in the wrong place,” he said.

Also during the meeting, the council discussed, but took no action regarding citizens’ requests to address parking problems involving downtown’s Galleria Corporate Centre. The council is expected to negotiate an amended parking agreement with JEMB Scottsdale, the Galleria’s owner, at some point.

In the meantime, JEMB is taking “immediate, concrete steps” to address nighttime and daytime parking problems in the area, said Lynne Lagarde, the company’s attorney.

JEMB will be freeing up more on-site parking spaces for Galleria tenants to prevent them from using unrestricted parking spaces in the surrounding area, she said. It is building a 107-space parking lot north of the main building to be used by Galleria tenants during the day, and by the public on Thursday through Saturday nights at no charge and not operated by valet.

It also will be working with tenants to provide access to 90 underused parking spaces on the upper level of the garage for contract employees.

Valentine’s Day Dinner
February 14, 2012

An a la carte menu is offered and features items like a cranberry-kiss martini and an appetizer of Maine lobster bisque and butter-poached snow crab. The entree is a 4-ounce mesquite wood-grilled filet and two pan-seared diver scallops with accompaniments like risotto and asparagus spears. Dessert is a “cupid’s heart” petite-shape red velvet cake with raspberry cream-cheese icing served with a trio of chocolate-caramel truffles and vanilla anglaise. Reservations recommended. Click here for menu.

Tonto Bar & Grill
5736 E. Rancho Mañana Blvd. | Cave Creek, AZ 85331
480-488-0698
www.tontobarandgrill.com

Carefree Native American Market

February 17-19, 2012 | 10am-5pm

Spend a truly “carefree” and relaxing day enjoying this new Native American Market. You’ll want to spend the entire day taking in the casual, lively, atmosphere that this event will create in downtown Carefree, Arizona. Enjoy a unique shopping experience in the shadows of the cactus studded foothills, while visiting the many boutiques, galleries and outdoor café’s that downtown Carefree offers. Free Admission & Free Parking

Downtown
Town of Carefree, AZ 85377
480.488.3686
www.carefree.org

Design for a Living World

Daily through April 1, 2012 | 10am-6pm

This winter at the Desert Botanical Garden an exhibition about design and sustainability will be on display in Dorrance Hall. The exhibit titled, Design for a Living World, connects the natural world around the globe with people, plants, and places. Developed by The Nature Conservancy the exhibit tells the story about the life-cycle of materials and the importance of considering conservation when designing new products, buildings, or landscapes. The exhibit includes works by ten prominent designers that used sustainable materials from around the world to recreate everyday objects, video interviews with the designers, sketches, models, and large-scale photography by acclaimed photojournalist Ami Vitale.

Desert Botanical Garden | Dorrance Hall & Ottosen Gallery
1201 N. Galvin Parkway | Phoenix, AZ 85008
480.941.1225
Desert Botanical Garden

Statistics Prove Home Staging Works

Barb Schwarz, ASP, ASPM, AB, IAHSP
styledstagedsold.blogs.realtor.org

Many years ago, Barb Schwarz coined the saying “The investment IN staging your home will always be less than a price reduction ON your home!” And that statement is as true today as it was all the way back in 1973, when I developed the concept of staging.

The math is pretty simple. Imagine a $300,000 home that’s been on the market for six months without selling. The seller is becoming more and more frustrated and considers a price decrease of 5 percent. That’s $15,000. Now imagine investing only a fraction of that sum in staging and selling the home much faster.

That’s what staging will do, and the numbers are in to prove it – time and time again.

Recent statistics gathered by Stagedhomes.com shows that 94 percent of homes staged by an Accredited Staging Professional sold in 29 days or less, compared to an average of 145 days for homes that were not staged. What’s more, homes staged by Accredited Staging Professionals stay on the market 83 percent less than a home that has not been staged.

For home stagers and real estate agents alike, it’s imperative to showcase the positive impact of home staging, both visually by showing examples of past staging projects AND by sharing statistical evidence that home staging works and that the investment is worth it many times over.

So next time a seller brings up the subject of a price reduction, make sure to share the positive impact of home staging. The investment will be less and the impact most likely more.

Copyright National Association of REALTORS®. Reprinted with permission.
Photo Credit: Barb Schwarz, Stagedhomes.com

Ways to Go Green and Save Green

www.worldwatch.org

Save energy to save money.

• Set your thermostat a few degrees lower in the winter and a few degrees higher in the summer to save on heating and cooling costs.
• Install compact fluorescent light bulbs (CFLs) when your older incandescent bulbs burn out.
• Unplug appliances when you’re not using them.
• Or, use a “smart” power strip that senses when appliances are off and cuts “phantom” or “vampire” energy use.
• Wash clothes in cold water whenever possible. As much as 85 percent of the energy used to machine-wash clothes goes to heating the water.
• Use a drying rack or clothesline to save the energy otherwise used during machine drying.

Save water to save money.

• Take shorter showers to reduce water use. This will lower your water and heating bills too.
• Install a low-flow showerhead. They don’t cost much, and the water and energy savings can quickly pay back your investment.
• Make sure you have a faucet aerator on each faucet. These inexpensive appliances conserve heat and water, while keeping water pressure high.
• Plant drought-tolerant native plants in your garden. Many plants need minimal watering. Find out which occur naturally in your area. Continue Reading »

President Barack Obama is proposing new legislation that would change the way houses are bought, sold and refinanced as an effort to stabilize the nation’s ailing housing system.

One immediate goal of the so-called Homeowner Bill of Rights is to enable more borrowers to refinance, reduce their monthly payments or pay off their loans sooner, rebuilding equity lost in the housing crash.

The legislation announced Wednesday also would create a standardized system for mortgage applications and would expand bulk sales of government-owned foreclosure homes to investors, with the goal of decreasing the number of empty homes.

The bill would expand on a refinancing plan announced in October. That plan directed federal mortgage giants Fannie Mae and Freddie Mac to allow refinancing for mortgage-holders even if their homes are underwater by any amount. But the plan could not be offered to homeowners with mortgages privately held by banks. The new legislation would allow those homeowners to refinance as well, with the associated costs covered by a fee on major lenders.

Nearly 3.5 million U.S. homeowners with private mortgages, who owe more than their houses are now worth, could be eligible if the legislation passes.

However, the proposal is expected to meet strong opposition from Republicans. The program would cost between $5 billion and $10 billion.

“Millions of families who did the right and responsible thing, folks who shopped for a home that they could afford, secured a mortgage, made their payments each month — they were hurt badly by the irresponsible actions of other people who weren’t playing by the same rules,” Obama said Wednesday.

“It is wrong for anybody to suggest that the only option for struggling, responsible homeowners is to sit and wait for the housing market to hit bottom,” he said.

Political analysts see the new Obama plan as a direct response to Republican presidential candidate Mitt Romney’s recent comments in Las Vegas.

Romney said the government shouldn’t try to help homeowners by stopping foreclosures, instead suggesting letting the market hit bottom so investors buy the houses and rent them out until the housing turns around.

“This plan is a win-win for the president. He is clearly responding to the Romney statement that the best way to handle the housing crisis is ride it out,” said Bruce Merrill, political-science analyst and pollster with the Phoenix-based Morrison Institute. “The battleground for the presidential race is the middle class, and there is clearly nothing more important to that group than homeownership.”

Merrill said the housing issues shouldn’t be a political one because helping homeowners is clearly what is good for the country.

House Speaker Republican John Boehner was critical of the plan Wednesday, saying none of the president’s previous proposals to help the housing market has worked.

Many metro Phoenix homeowners have already started to apply for the refinancing program available for loans backed by Fannie and Freddie. Those refinanced loans are expected to be available in March. The program allows homeowners, no matter how underwater they are, to refinance to current low interest rates, as long as they haven’t missed more than one payment in the past six months.

In the Phoenix area, where home values have plummeted 60 percent since the boom of 2006, almost half of all homeowners owe more than their homes are worth.

Details of Obama’s proposed legislation include:

Allowing eligible, underwater homeowners with private mortgages to refinance.

Banks would potentially pay to finance part of the program.

Standardizing the loan application and borrowing process.

This is a move to cut down on mortgage fraud and protect borrowers from being overcharged or placed in risky loans they don’t understand. The federal government’s new consumer-protection group would oversee this process.

Allowing Fannie and Freddie to sell foreclosure homes in bulk.

The sales would run through a new auction process instead of happening one at a time. This would draw more big investors to buy the houses and turn them into rentals. The goal is for fewer foreclosure homes to sit vacant for long periods of time. However, such bulk purchases could drive down an area’s home prices.

Separately, Obama said Wednesday that the Home Affordable Modification Program he announced in Mesa three years ago hasn’t been nearly as successful as he hoped. That program encouraged lenders to modify loans, decreasing interest rates or extending the repayment terms to help struggling borrowers lower their payments.

But banks have made far fewer modifications than expected. So, the president said, the loan-modification program is being extended by a year — it will expire at the end of 2013 — and expanded to help more borrowers who didn’t meet the income requirements before.

But most importantly, Fannie and Freddie will be given more incentives to begin reducing the principal on loans they own through loan modifications.

Fannie and Freddie have had a policy of not allowing principal reductions.

“I have no idea whether the legislation has a chance to pass,” said Mike Orr, director of the Center for Real Estate Theory and Practice at Arizona State University’s W.P. Carey School and publisher of the Cromford Report.

“However, I would say that helping underwater homeowners, who are still current on their payments, refinance into lower interest-rate loans is the best thing the government could do for the market.”

A four-story, 274-unit apartment complex would replace Plaza 777 on the southern edge of downtown Scottsdale under plans recently submitted.

The proposed Bauhaus Flats & Studios would be built on 4.4 acres northeast of Scottsdale and Thomas roads and an adjacent three-quarter-acre parcel on 73rd Street. It would include about 10,000 square feet of commercial space.

The shopping plaza, built in 1960, includes a florist, locksmith, rental-car agency, restaurant, hobby shop and Plato’s Closet clothing store. More than half of the 40,251-square-foot plaza is vacant.

Architect Kristjan Sigurdsson of K&I Homes LLC said there is high demand for apartments in the area since virtually no units have been built downtown in the last decade.

“This would be a nice addition to that whole housing market,” he said, adding that the Bauhuas apartments would be within walking distance of neighborhood commercial services.

The area has a diverse mix that includes a supermarket, hardware store, coffee shop, bowling alley, adult bookstore, car wash, bail bondsman and pawnshops.

The Sphinx Ranch Gourmet Gift Market that has operated in the Northeast Valley for 61 years is two doors to the north.

Area needs revival

Jason Heetland, Sphinx Ranch owner, said it’s time for something to be done to update the area.

“I would hope that the current tenants would have a first right of refusal to lease space” in the Bauhaus’ shops, Heetland said.

Area business owners have struggled for nearly a year with Scottsdale Road streetscape improvements, he said.

The developers are seeking a rezoning for the Plaza 777 site from commercial to planned-unit development.

The development team includes architect Sigurdsson, Tom Frankel and Keith Nygren. KT777 LLC bought the plaza in October for $2.58 million.

This latest proposal is among a dozen Scottsdale apartment projects that would add a combined 5,000 units to the city. That includes Gray Development’s 749-unit project northeast of Scottsdale and Camelback roads and Optima Sonora Village’s latest plan to build 781 units southeast of 68th Street and Camelback Road.

No date has been set for the rezoning hearings.

A four-story, 274-unit apartment complex would replace Plaza 777 on the southern edge of downtown Scottsdale under plans recently submitted.

The proposed Bauhaus Flats & Studios would be built on 4.4 acres northeast of Scottsdale and Thomas roads and an adjacent three-quarter-acre parcel on 73rd Street. It would include about 10,000 square feet of commercial space.

The shopping plaza, built in 1960, includes a florist, locksmith, rental-car agency, restaurant, hobby shop and Plato’s Closet clothing store. More than half of the 40,251-square-foot plaza is vacant.

Architect Kristjan Sigurdsson of K&I Homes LLC said there is high demand for apartments in the area since virtually no units have been built downtown in the last decade.

“This would be a nice addition to that whole housing market,” he said, adding that the Bauhuas apartments would be within walking distance of neighborhood commercial services.

The area has a diverse mix that includes a supermarket, hardware store, coffee shop, bowling alley, adult bookstore, car wash, bail bondsman and pawnshops.

The Sphinx Ranch Gourmet Gift Market that has operated in the Northeast Valley for 61 years is two doors to the north.

Area needs revival

Jason Heetland, Sphinx Ranch owner, said it’s time for something to be done to update the area.

“I would hope that the current tenants would have a first right of refusal to lease space” in the Bauhaus’ shops, Heetland said.

Area business owners have struggled for nearly a year with Scottsdale Road streetscape improvements, he said.

The developers are seeking a rezoning for the Plaza 777 site from commercial to planned-unit development.

The development team includes architect Sigurdsson, Tom Frankel and Keith Nygren. KT777 LLC bought the plaza in October for $2.58 million.

This latest proposal is among a dozen Scottsdale apartment projects that would add a combined 5,000 units to the city. That includes Gray Development’s 749-unit project northeast of Scottsdale and Camelback roads and Optima Sonora Village’s latest plan to build 781 units southeast of 68th Street and Camelback Road.

No date has been set for the rezoning hearings.

** Not sure why this wasn’t posted last month.  Anyway here you go..

Under a licensing agreement, Prudential real estate brokerage franchisees will be able to continue to use the Prudential brand based on the terms of their franchise agreements.

Prudential Financial, Inc. (NYSE: PRU), a financial services leader, has operations in the United States, Asia, Europe, and Latin America. Prudential’s diverse and talented employees are committed to helping individual and institutional customers meet their financial challenges through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds, and investment management. In the U.S., Prudential’s iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit http://www.news.prudential.com/.

Yet, with all the alluring demographics, vacant retail spaces abound on many street corners as a lingering impact of the nation’s second-worst economic downturn that ended in mid-2009.

A significant sign that business is bouncing back has emerged with the $1.45 million purchase of a shopping center at the southeastern corner of Brown and Recker roads.

The new owners have made a commitment to invest $1 million or more to reinvigorate it.

“We have a full marketing and renovation plan for the center,” said Jeff Hawke, an owner of Kinetic Companies, a Phoenix company that specializes in real estate investment, retail shopping center development and management.

Among the company hallmarks is engaging neighborhoods affected by Kinetic’s redevelopment of property like the 53,267-square-foot Recker Brown Center, said Hawke, and the company’s co-owner, Joel Moyes.

“We spend a lot of time going to neighborhood meetings and listening to the needs of the community as we assess what we will do,” Hawke said.

A statement from Moyes on the company’s website said its subsidiary, Kinetic Investment Holdings, has a $500 million targeted private-equity placement within the next 18 to 24 months throughout the southwestern U.S.

He said Kinetic does all of its work in-house and company executives often visit the company’s commercial property.

“We are not absentee landlords,” Moyes told the Mesa Republic.

“We’re very bullish on that area and the center.

“We love the demographics. … We are proud to be a part of the neighborhood.”

Despite the proximity of the center and nearby retail property to some of the city’s highest household incomes, Hawke said, “there is no question that the area has been undervalued in buying capacity.”

The center was built in 1992 on almost five acres .

It sold for $9 million in 2005 to a previous owner, Moyes said.

When Kinetic purchased it in December from Arizona Investment Funds, LLC, a firm registered to San Jose, Calif., manager, 20 percent of the center was occupied, by two tenants.

The center’s tenants were Club Tan, a tanning salon, and Tuesday Morning, a chain retailer that sells closeout merchandise, such as home decor, bedding and collectibles.

It was the third shopping center acquisition for Kinetic Companies in 2011 in the Valley.

Tom Semancik of Commercial Properties, Inc., Tempe, represented the seller, and Nick Miner of the same firm, represented the buyer.

Hawke and Moyes said Kinetic is looking to buy more structurally sound property with good potential from “distressed buyers.”

“We believe in Phoenix and its outlying cities,” Hawke said.

“Both Joel and I are ASU grads.

“We believe cities in the Phoenix area will be at the top of the list once again for growth and we are actively pursuing more projects like Brown and Recker.”

He said Kinetic also recently purchased Kiowa Village, a strip center near the southeastern corner of Baseline and Power roads.

“Now is a good time for Mesa,” he said.

“There is reason for people to have optimism.”

The conversion project should be completed by October, a company representative said.

The 119-room Hotel Highland, 2310 E. Highland Avenue, will undergo a variety of modifications to meet the Hampton Hotel system’s standards.

Enhancements to the interior of the hotel will be made to provide guests with free amenities and services including free, hot breakfast, high-speed internet access in all guest rooms, wireless Internet access in the lobby and meeting spaces.

MIG Real Estate acquired the Hotel Highland property in 2010. Hampton Hotels is part of Hilton Worldwide, one of the world’s largest hospitality companies.

 As one might imagine, the cost of that view and a 10,800-square-foot home that goes with it is within reach of a narrow pool of buyers. It was listed Jan. 4 by the Moen Group for $10.5 million, more than 30 times higher than Scottsdale’s median home price.

Designed by architect Bing Hu, the Spanish-style, two-story home with a guest house and five-car garage sits on 2.8 acres near the top of the Upper Canyon at an elevation of about 2,240 feet. That is 730 feet above the runways at Scottsdale Airport, which look like twin drag strips to the southwest, 8 miles away.

With six bedrooms, nine bathrooms, three fireplaces, a wine room and a home theater with a killer sound system this house has all the typical amenities of luxury living.

“They just didn’t cut corners anywhere,” Todd Moen said of the development partners.

 The partnership chose to wait until the home was done last year before putting it up for sale, said Moen, a Moen Group partner.

 He is relying heavily on digital marketing to attract a buyer. That includes the Moen Group’s You Tube channel at youtube.com/themoengroup and an upcoming segment later this month or early February on the Home and Garden Network.

 Entering the home, visitors will be greeted by a big-wow view across marble floors to an arched, two-story window, framing a zero-edge pool.

 The home’s second level, with dark wooden floors, includes an office, game room, bedrooms and a mezzanine overlooking the great room.

 The first-level master suite includes its own fireplace, two spacious walk-in closets and a walk-through shower with two shower heads and two doors.

 ”It’s like a car wash,” Moen joked. “You walk in one end and out the other side.”

 Arcadia doors in the suite slide into the walls to transform the room into a covered patio and a zero-edge spa.

 The spa, pool, fireplaces and many of the home’s features can be controlled at the touch of a button with a Creston home-management system. It can dial in the view from security cameras, adjust the indoor temperature or dim the lights, Moen said.

 Luxury market picks up

 A Valley Realtor for 13 years, Moen said the top of the luxury-home market is starting to get more active.

 ”It’s just talking longer to sell,” he said.

 The Moen Group is casting a wide net nationally and internationally for a buyer.

 Silverleaf at DC Ranch is a 2,000-acre community of estate homes that DMB Associates has been developing for a decade. It is 2 miles east of Pima Road and Thompson Peak Parkway.