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Portland Oregon Buyer's Agent
Mary Anne Lehouiller
Principal Broker
REALTOR®, ABR®
Accredited Buyer Representative
Oregon License 200505214
Mobile/Text:    541-435-0000
MaryAnne@OregonChoiceGroup.com

Portland Oregon Buyers Agents
Eric A. Lehouiller

Broker - Manager 
REALTOR®
Choice Listing Agent
Oregon License 201215375
Mobile/Text: 503-957-7497
Lehouiller.Eric@gmail.com

Oregon Choice Group
Office: 503-388-6848
Fax:     844-388-6848
OregonChoiceGroup.com
Facebook.com/OregonChoice
Office Email: oregonchoice@gmail.com

Office Address  - By Appointment Only 
1800 Blankenship Rd., Suite 206
West Linn, OR 97068

Mail/Courier Address 
10117 SE Sunnyside Rd., Suite F-540 
Clackamas, OR 97015

Real Estate News!

Latest Realty News from NAR

Boom or Bust for Spring Homebuying?

Home prices reached an all-time high in most markets in 2018. Homeowners benefited greatly as a result, with their overall net wealth rising by a cool $1 trillion. A typical homeowner’s wealth is estimated to have reached $254,000 while that of a typical renter stood at only $5,000.  Looking ahead, home values are poised to advance further in 2019, albeit more modestly.  However, home sales slumped badly in the closing months of last year. Persistent sales declines are nearly always associated with dampening home prices and homes sitting on the market for a lengthier time.

Read the full article at Forbes >

State and Local Tax Deduction (SALT): The Impact by State

The state and local tax (SALT) deduction allows taxpayers to deduct state and local tax payments on their federal tax returns. The new tax law, called the Tax Cuts and Jobs Act, instituted a cap on the SALT deduction. Starting from the 2018 tax year, the maximum SALT deduction that taxpayers are able to claim is up to $10,000. In contrast, before the new tax law, there was no limit. This blog focuses on what the reduced deduction means for taxpayers, especially in high-tax states like California, New York and New Jersey. However, let’s first understand how the state and local tax deduction works.

What is the state and local tax deduction?

Taxpayers who itemize their deductions, and therefore don’t take the standard deduction, can deduct what they’ve paid in certain state and local taxes. The SALT deduction includes property, income and sales taxes. To be more specific, a taxpayer who itemizes can deduct property taxes but the taxpayer needs to choose between deducting income and sales taxes. Taxpayers of states with high income taxes typically opt to deduct their state and local income taxes while taxpayers of states with high sales taxes typically deduct their sales taxes. Generally, taxpayers deduct property and income taxes using the SALT deduction.

Nationwide, 30 percent of the taxpayers used the SALT deduction, while the average SALT deduction was $12,540 in the 2016 tax year.

How will the reduced SALT affect taxpayers by each state?

Starting with the 2018 tax year, taxpayers’ SALT deductions are limited to $10,000. However, especially in high-tax states, itemizing taxpayers typically pay an amount higher than this limit. Let’s take a closer look at where most taxpayers claim the SALT deduction and how much they deduct on average.

NAR calculated the percentage of taxpayers that used the SALT deduction and the average deduction for 50 states and DC. In the 2016 tax year, the states with the highest percentage of taxpayers using the SALT deduction are in the Northeast and West regions. The percentage claiming the deduction ranged from 17 percent in West Virginia to 46 percent in Maryland in 2016. In the meantime, the average deduction ranged from $5,130 in Alaska to $21,780 in New York.

For instance, more than 40 percent of the taxpayers claimed the SALT deduction in California, New York and New Jersey while the average deductions in these three states were all over $18,000.

SALT deduction by income level

While the SALT deduction is used across all income levels, the amount of SALT deductions by lower, middle, and upper income taxpayers provides insight into how those taxpayers benefit. Nationwide, almost 40 percent of taxpayers earning between $50,000 to $75,000 per year and more than 70 percent of taxpayers earning $100,000 to $200,000 per year used the SALT deduction. For income brackets above $200,000, almost all of those upper income taxpayers claimed the deduction.

When looking at the total amount deducted by income bracket, it is clear that the SALT deduction benefits taxpayers across all brackets. Specifically, taxpayers earning more than $100,000 deducted above $10,000 (the new limit) on average. These taxpayers represent 14 percent of all taxpayers nationwide.

For more detail information and to scroll across the various parts of the U.S., see below:

 

Wealth Gains from Homeownership across Metro Areas in 2018

Homeownership has been associated with positive social outcomes[1], and is also the largest source of wealth among homeowning households. In 2016, the median net worth among homeowners was $231,400, with housing wealth making up 85 percent of wealth (average net housing wealth was $197,500).[2]

Housing wealth contributes positively to the homeowner’s and children’s economic condition, because home equity can be tapped for expenditures such as investing in another property (which can generate rental income), home renovation (which further increases the home value), a child’s college education, emergency or major life events, or expenses in retirement.[3]

Housing wealth (or net worth or equity) is built up over time via the home price appreciation and the principal payments that the homeowner makes on the loan.[4]  The chart shows the change in housing wealth (equity) as of 2018 for a home buyer who purchased a typical single-family existing home in the United States 5, 10, 15, or 30 years ago. Over these holding periods, most of the wealth gains are from the appreciation in home values. For example, if one purchased a home five year ago (2013), a home buyer would have typically gained $79,488 in wealth (equity), of which $64,200, or 81 percent is from the home price appreciation ($197,400 in 2013 to $261,600 in 2018).  Homeowners who move typically do so in 10 years, so a homeowner who bought a home 10 years ago (2008) would have $91,081 in home equity gains as of 2018).[5] The longer the holding period, the larger the increase in wealth due to home price appreciation and the cumulative principal payments, which reduce the loan balance.

If you had purchased a home just five years ago in these metro areas, here are the typical gains in home equity that you have due to home price appreciation and the principal payments you’ve made[6]:

Metro areas with home equity gains of $200,000 or over for a home purchased 5 years ago:

  • San Jose-Sunnyvale-Sta. Clara: $620, 410
  • San Francisco-Oakland-Hayward: $393,561
  • Boulder, CO:  $264,395
  • Anaheim-Sta. Ana-Irvine, CA: $218,773
  • Los Angeles-Long Beach-Glendale, CA: $216,613
  • San Diego-Carlsbad, CA: $205,659

 

Metro areas with lowest equity gains (loss) for a home purchased 5 years ago:

  • Atlantic City-Hammonton, NJ: ($8,593)
  • New Jersey City-White Plains, NJ-NY: $3,336
  • Cumberland, MB-WV: $6,215
  • Trenton, NJ: $7943
  • Elmira, NY: $8,705

Use this data visualization to explore the typical increase in housing wealth across metro areas as of 2018 if you purchase a home 5, 10, 15, 30 years ago. These are typical gains and are illustrative of the magnitude of the wealth gains over time. Actual wealth gains will vary by property:


[1] Lawrence Yun and Nadia Evangelou, Social Benefits of Homeownership and Stable Housing, Realtor® University The Journal of the Center for Real Estate Studies; https://realtoru.edu/real-estate-studies/journal/

[2] Federal Reserve Board, 2016 Survey of Consumer Finances

[3] Brad Finkelstein, 7 reasons why consumers are tapping into home equity, The American Banker, June 26, 2018; https://www.americanbanker.com/7-reasons-why-homeowners-are-tapping-into-their-home-equity

[4] The price appreciation can be thought of as ‘capital gains’ while the principal payments can be thought of as a conversion from liquid asset (cash) to an illiquid asset (house).

[5] To be clear, these are changes in wealth or home equity between two time period or over n holding periods. If one wants the level of the home equity at a point in time, one has to add the down payment.

[6] These calculations are illustrative of the magnitude of the housing wealth gains; actual change in home equity will vary by home.

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Federal Fair Housing Act

We all lose when potential homebuyers or renters are turned away, not because of their ability to pay, but because of their race, national origin, skin color, sex, religion, familial status or because of a disability. Learn more about Fair Housing and Equal Opportunity

The information included is made available with the understanding that Oregon Choice Group is a Real Estate Agency and is not engaged in rendering legal, accounting, or other professional advice or services. If legal advice or accounting services or other expert assistance is required, the services of a competent professional person should be sought. The material contained herein is not a substitute for the advice of an attorney or other professional person(s). All information deemed reliable but not guaranteed. Listings are subject to errors, omissions, changes in price, prior sale, rental, and withdrawal without notice. All data and information set forth on this website regarding real property, for sale, purchase, rental and/or financing, are from sources regarded as reliable. No warranties are made as to the accuracy of any descriptions and/or other details and such information is subject to errors, omissions, changes of price, tenancies, commissions, prior sales, leases or financing, or withdrawal without notice. Square footages are approximate and may be verified by consulting a professional architect or engineer.

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