In a recent report by the Department of the Treasury's Inspector General for Tax Administration it was determined the increasingly popular "like-kind" exchanges referred to as 1031 Exchanges require greater oversight to ensure taxpayer compliance.

Section 1031 of the Internal Revenue Code as been part of the Internal Revenue code for over 5o years but was little used until the 1970's when real estate investors began to take advantage of its provision allowing "like-kind" exchanges to defer (not avoid) payment of taxes on capital gains. By its own admission the Treasury's report indicates deferring capital gains through the exchange of like-kind property is growing in popularity.

The synopsys of the Treasury report states, "In a recent report, the Government Accountability Office (GAO) stated that, in reviewing securities reporting compliance, it found taxpayers had misreported 'capital gains for other assets,' including residential rental property, business personal property and real estate. The report identified 'capital gains for assets other than securities' as an area of individual taxpayer noncompliance that is a promising target for additional research to improve reporting compliance. We agree with the GAO that this area poses risks that need to be addressed."

The report goes on to state "the dollar amounts deferred have more than tripled from approximately $22.8 billion in 1998 to more than $73.6 billion in 2004...with individual taxpayers accounting for 39 percent of gains (or losses) deferred." Rest assured if the IRS feels there is under reporting or non-compliance with reporting requirements this will become an audit area.

You heard it hear first! So, do the right thing. If you have exchanged or plan on doing an exchange by all means do so. BUT, please make sure to use a reputable qualified intermediary and along a certified public accountant to ensure you are fully compliant in the transaction.

To read the full report visit the Treasury Inspector General's Audit Report - Reference 2007-30-174.

California's elected Insurance Commissioner Steve Poizner and the California Land Title Association announced today the introduction of a first-in-the-nation website for consumers to shop online for title insurance. The new web portal is called Title Wizard. It can be found at the following websites: CA Department of Insurance, CA Land Title Association, and the author's blog under favorite links.

This new web portal enables consumers to shop for rates. According to Commissioner Poizner, "The CLTA has answered the call to develop a high-tech solution in a first step to infuse competition into the Title Insurance industry" because "too often, consumers have to rely on a middle man to select their Title Insurance. Now, consumers will be empowered to compare prices and services online with the touch of a button."

Along with offering consumers the ability to compare rates on nearly 100 title companies, Title Wizard also offers a consumer education center to inform homeowners on the closing process.

Congratulations California! First in the nation again!

 A sign of the season

We are quickly moving into winter from fall.  The air is getting chillier and the leaves have mostly dropped.  Here in Sacramento - the city of trees - the fall is both a lovely time and a time spent raking, blowing and sweeping up leaves.  All this leaf business got me thinking about mulching and laying down bark around the garden.

I did a quick search and found out through the Sacramento Tree Foundation that our very own utility, the Sacramento Municipal Utility District or SMUD, provides FREE wood chips for customers to use around our trees.  Free pick up of wood chips is available weekdays from 9:00am to 2:30pm at the SMUD yard in East Sacramento on 59th Street between Folsom Blvd. and the Light Rail. 

To pick up you free mulch all you need to do is:

• Bring your own tools to load the mulch
• Bring bags or a tarp to fill or cover a load
• Apply mulch to an area around your trees or shrubs at least 4' in diameter and 4"-6" deep, keeping it a few inches from the trunk

If you do this you will be helping utilize the green waste and helping your garden all at the same time.  And for FREE!  Sounds like a bargain to me. 

Oh yeah, don't forget about SMUD's FREE SHADE TREE program in conjunction with the Sacramento Tree Foundation. Now is a great time to plant one in your yard. Trees are a great way to let nature help keep you cool and lower your energy bills in the summer.

Looking for something special to do this weekend?  Well, if you're not out shopping for holiday gifts you should definitely plan to attend the 33rd Annual Sacred Heart Holiday Home Tour. The tour runs this Friday through Sunday in Sacramento's "Fabulous 40's" neighborhood in East Sacramento.  

Each year several of the incredible homes in East Sacramento are staged and decorated for the holidays.  These spectacularly decorated homes are in one of Sacramento's most desireable neighborhoods and not to be missed.

This terrific event is organized annually by the parents of the Sacred Heart Parrish School located at 39th and H Street as a benefit for the school.   Tickets are available online and are $20 through November 30 and $30 during the event. 

The tour begins at 1209 47th Street between J and M Streets and winds its way through East Sacramento ending at 1513 39th Street.  You may start at either end for an enjoyable, self-guided walking tour that will take about two hours to complete. You may use your ticket for a one-time admittance to each house any time during the tour weekend.

Check it out.  You will be glad you did.

Well, it is a good news/bad news situation for home buyers and sellers in our local housing market.  The good news is Sacramento County is one of the most affordable areas of the 58 counties in the state for first-time homebuyers.  The California Association of Realtors reported yesterday that 38% of potential home buyers locally can afford to buy a home.

Sacramento County's 38% compares very favorably to just 24% statewide, 25% in the SF Bay Area, and just 14% in Santa Barbara County.  The same survey said that 35% of first-time buyers in the state were able to afford condos.

CAR's "affordability index" assumes a 10% down payment with adjustable rate financing at 6.58%.  Using that formula in Sacramento  County means that it takes a household income of $65,910 and monthly payments of $2,200 (including taxes and insurance) to buy the median-priced home of $319,060.

Even better for buyers is the amount of inventory currently on the market.  With the flood of homes out there homes are staying on the market three to four times longer than just nine months to a year ago causing sellers to become more realistic in order to sell their homes. 

So, where's the bad news?  The bad news is for the sellers who are still holding onto to expectations based on the hot go-go market of the past few years.  That just is not happening.  The key for sellers to price their home to sell today - not trying to get what they might have gotten had they tried to sell a year or more ago. 

Again, this does provide some upside for sellers assuming they are going to purchase another home.  Why?  Well, because the home they are buying will likely be priced lower as well.  In fact, it is conceivable that someone selling today can get more home for less money than they could have a year ago. 

My take on this is the market is transitioning back to equilbrium and will ultimately benefit both buyers and sellers.  Though for the time being it appears that buyers are in the driver's seat.

TOWER IS GOING, GOING...

[Above - Tower Records at Broadway and Land Park Dr. across the street from its beginnings.]

Earlier this year I wrote a brief article on the Tower Theater, Tower Records and Sacramento history.  At the time I wrote the piece Tower Records was in bankruptcy for the third time in recent years.  Unfortunately, the empire Russ Solomon built just couldn't survive in the age of iPods and internet downloads.

Russ Solomon began Tower Records in his father's pharmacy in the Tower Theater building.  Back then Russ was on the cutting edge and through the years the culture of Tower Records was known for being edgy and at the forefront of the music business locally and, as it grew, nationally and internationally.  Musicians, disc jockeys, and ordinary folks flocked to Tower in Sacramento and beyond.  I recall that a trip to Tower as a kid and young adult was as much about the "experience" as it was a place to buy a 45, an LP, 8track, cassette, and eventually CDs.  Yes, I owned an 8track player as a kid.

Tower employees considered their stores an experience as well.  Several former employees recently began a website to stay connected.  They call it TowerReunion.com.  The purpose is to keep their unique sense of community together as the company slips away quietly into the night. 

Tower Records like other industries before it didn't change enough with the times to keep the business going.  A large liquidator purchased Tower through bankruptcy court ordered auction in October and is in the process of liquidating the merchandise and closing down all the stores.  To complete the process all of the properties owned by Tower are being sold as well.  It is projected that by mid December Tower will close for good.  Ending just as it began - humbly.  

Thanks Russ.  It was a great ride.

CA HOUSING PRICES STILL GOING UP

But Increases Are Not At the Heated Pace Seen In Recent Years

View of California's most expense real estate - the Santa Barbara Pier and Coastline

Affordability continues to present a challenge for buyers (and REALTORS®) in California.  Recent statistics provided by the California Association of REALTORS® bear this out.  In spite of the increasing in prices paid for homes sellers (and REALTORS®) are feeling a slowdown in sales due to the more than doubling of homes on the market year over year in most areas of the state. 

While this should bode well for buyers they appear to be holding back despite the fact interest rates are extremely favorable the choice of homes is so much greater.  Makes me think that too much choice may simply make it too difficult for some buyers to decide to act.  When the supply was limited buyers were gobbling up homes like relatives fighting for the last piece of pie at Thanksgiving dinner.  But that is not the case today.

The CAR survey  determined the median home price in California during September 2006 rose to $553,050.  The median is the point at which half of the homes sold for more than a specific amount and the remaining half sold for less than the amount.

The highest median home price during the same period was found in Santa Barbara County's South Coast where the median home was selling for $1,025,000.  The High Desert region was once again the lowest median home price in the statewide survey.  In that area the median price increased to $329,040 from $321,500 in January 2006.

As the colors outside our homes begin changing this fall and we begin to spend more time indoors the fall is a great time to make some changes inside our homes as well.  Whether you are thinking of putting your home on the market or simply sprucing it up for yourself painting can be a fun and rewarding project indoors as the days become cooler.

But before you begin a project there are five steps that when taken will end with a successful painting result.  They are:

1. PREPARATION:  Like most things in life proper preparation is 70% and always gets the best results.   Whatever you are painting be sure the surface is clean and smooth.  Wash the surface to remove fingerprints, marks and scuffs.  Then spackle any voids in the surface such as dings or gouges from the normal wear and tear of life.  Of course, use a pimer over spackle and over very old and hard to cover colors.
2. THE PAINT:  With paint you get what you pay for.  Saving $10-$15 a gallon usually doesn't save you money in either the short or long term.  My personal experience I have found Pratt & Lambert to be an outstanding paint.  It doesn't splatter and applies and cleans up easily. 
3. APPLICATORS:  Again, like paint you want to use good rollers and brushes.  After all, once you've gone through all the prep work you will want your results to look smooth and well covered.  Substandard brushes and rollers can leave fibers on your walls and trim.
4. THE SHEEN:  No, I'm not talking about Martin or Charlie, but the correct finish on your painted surfaces.  Rule of thumb is the higher the sheen the great the durability.  For example in kitchen, bathroom, or heavily traveled hallways you will want to use a semi-gloss or satin finish because they hold up better and are easier to keep clean than flat paint.  Personally, we don't use flat paint any longer because my wife and I like a bit of sheen on our walls.  It makes the room look crisper. 
5. EXTERIOR SURFACES:  If you are planning to paint the exterior the fall may not be the best time.  Paint is very weather sensitive.  If it is too cold or damp the paint may not properly dry and will not adhere properly. Similarly, if the weather is too hot or humid in the summer it may dry too quickly and it can fail from that as well.

So, now that you know the basics of painting go visit your local paint store and grab a bunch of color chips.  Bring them home and see what they might look like in the light of your home.  Then you might want to get a quart of the color you chose and try it on a wall and really see how it will look before purchasing all you will need.  It is always best to get the color adjusted to what you want before you order 5-10 gallons of it!  Finally, don't be afraid to go bold with your color choices. 

Well there you have it.  A primer on painting.  If you get started now you can enjoy your new look during the holidays! 

Well, it seems the mainstream media just may be beginning to understand the purpose and power of blogs.  Today's Sacramento Bee Business Section carried an article entitled "Going to the Blogs" by Bee staff writer Mehul Srivastava.  While it doesn't say business is using the medium to its potential it does recognize the potential impact it will have on commerce in the future.

Once again, it appears REALTORS® are taking the lead in incorporating this new medium into their businesses.  The lead example in the article was about Jonathon Lockwood a real estate agent in the community of Cameron Park about 45 minutes east of downtown Sacramento.  Jonathon said he began blogging back in 2003 and has found the medium a great source of cultivating prospects and a productive source of leads. 

The Bee article stated that a survey done by the Pew Internet & American Life Project indicated only 5% of the 25-30 million blogs out there currently are used for business.  What the Bee article points out is that while many of the bloggers who are using the medium for personal communication will eventually be the prospects, buyers and clients of businesses as they mature.  Those who live for instant communication via instant messaging are more inclined to the blog form of information gathering.

For those who have been reading blogs from the sideline I would encourage you to jump and give it a try.  Blogging can be as simple or difficult as you like because it is what you make of it. The great folks at Internet Crusade have established a blogging program called RealTownBlogs that is a truly exceptional (and FREE!) resource for REALTORS® who want to try the new medium.  So, don't be bashful.  Jump right in and give a try.  You will be glad you did.

BUILDING PERMITS

  WHEN DO YOU NEED ONE?

 Wednesday, September 27th the Development Services Department of the City of Sacramento is offering another in its "Lunch & Learn" series.  The primary purpose for these monthly programs is to provide continuous education to the citizens regarding the development review process. The presenters are experts in the field of the topic being presented. 

September's program will be an evening event from 6:00pm-7:00pm in the Training Conference Room of the City's North Natomas Permit Center located at 2101 Arena Blvd.   The topic covered is entitled "Homeowner's Guide to Permits."  

Areas covered in the program will be:

• When you need a building permit
• Minor repairs
• Other improvements
• Tips

For anyone interested in doing work around their home beyond basic maintainence, particularly if you are a do-it-yourselfer this is an informative and valuable opportunity to learn about the permit process .  As a homeowner it is important to know these rules and guidelines because when you go to sell your home or rental property the buyers will get a home inspection and having work done with a permit will ensure it is done correctly and up to code which can save you time and money as well as help get your property to "closed"  quicker.

So, take an hour this Wednesday the 27th and learn when, or if, you will need to get a permit for your next project around the house.  You will be glad you did.  For more information or to attend please contact Gloria Bacani in the Development Services Office at 916-808-7467 or by email at gbacani@CityofSacrament.org.