ISLAND PROPERTIES

 

 
Lisa Mascaro's Blog
Why does staging help sellers sell properties.
June 04, 2020
      

Why does staging help the seller and the listing agent sell properties?

First of all, being a buyers agent for the last seven years, I have experienced it first hand that most average buyers have no sense of design. This is not a bad thing, however it makes it difficult for the listing agent to sell a vacant property.

In walks the buyer to a vacant property, and he has no imagination on how to set up the property. Where does the couch go? How should I set up the dining room...again with no imagination. In walks the buyer into a property that is fully staged. Voila, the buyers imagination is sparked with all sorts of idea of how they could set up the property for themselves....

Which property do you think will be more appealing?

Statics from the national association of realtors show that staged properties sell 78% faster. This being true, it is a wise listing agent who shares this with their sellers so they can sell the property faster and at a better price.

However, the price and location do also determine the quicker sale. If the price is set correctly, and the location is good, you will find staged properties will give the seller a better price, and give buyers an idea what to dream about when selecting the home for themselves.

Stage the property! You will be delighted that you did!

Best Hiking Trails on Maui
Brought to you by Hawaii Magazine
August 12, 2019
      

https://www.hawaiimagazine.com/blog-series/best-best/best-hiking-trails-beginners-hawaii

Check these out! 

Morgtage Rates July 2019
Brought to you by Dan Bardenhagen of Wells Fargo
July 06, 2019
      

Conforming

Loan Type      MI Type      Interest Rate      APR
7/1 ARM      Conforming           3.625%        4.120%
10/1 ARM Conforming              3.875%        4.137%
30-yr fixed    Conforming          4.000%        4.026%
VA                30-yr fixed            3.500%        3.617%
15-yr fixed Conforming             3.375%        3.406%

Jumbo

Loan Type MI Type   Interest Rate     APR
7/1 ARM       Jumbo       2.875%      3.747%
10/1 ARM     Jumbo       3.000%      3.592%
30-yr fixed     Jumbo      3.750%      3.765%
15-yr fixed     Jumbo      3.375%     3 .402%
Information displayed is accurate as of 7/26/2019 6:15:24 PM (CT) and is subject to change without notice.

For information on the many other loan options we have available, please contact me. I look forward to hearing from you.


Dan Bardenhagen

Private Mortgage Banker
Private Mortgage Banking
NMLSR ID 653667

Wells Fargo Home Mortgage | 34 WAILEA GATEWAY PLACE, A205 | KIHEI, HI 96753
MAC E3627-021
Tel 808-891-6075 | Cell 808-280-6168

Daniel.Bardenhagen@wellsfargo.com | www.DanBardenhagen.com

Information on Harpta every buyer and seller in Hawaii should know
January 24, 2019
      

TAX FACTS
From the
State of Hawaii, Department of Taxation
October, 2010 UNDERSTANDING HARPTA 2010-1
Note: All references to the IRC are to the Internal Revenue Code of 1986, as amended. All quoted IRC sections have been made
operative for Hawaii income tax purposes.
The purpose of this Tax Facts is to provide guidance on the Department of Taxation's (Department) interpretation of Section 235-
68, Hawaii Revised Statutes (HRS) entitled "Withholding of tax on the disposition of real property by nonresident persons" and which is
commonly referred to as "HARPTA". As used herein, the person disposing of the real property interest is referred to as the
"Transferor/seller" and the purchaser of the Hawaii real property interest is referred to as the "Transferee/buyer".
1. What is HARPTA?
HARPTA is patterned after the federal Foreign Investment
in Real Property Tax Act of 1980 (FIRPTA). Like FIRPTA, the
intent of HARPTA is to insure compliance with Income Tax law
by nonresidents. It does so by requiring the purchaser of real
property in Hawaii to withhold up to 5% of the amount realized
on the disposition of the real property by a nonresident person,
and forwarding this amount (using Form N-288 "Hawaii
Withholding Tax Return for Dispositions by Nonresident
Persons of Hawaii Real Property Interests" and Form N-288A
"Statement of Withholding on Dispositions by Nonresident
Persons of Hawaii Real Property Interests") to the Department.
2. When does HARPTA apply?
HARPTA applies whenever real property located in Hawaii
is transferred. A common misperception is that HARPTA does
not apply under certain conditions, such as when the seller is a
resident of Hawaii. In fact, HARPTA does apply, but the
Transferee/buyer may be exempt from the withholding
requirements of HARPTA. See Question No. 28 below.
HARPTA requires that the Transferee/buyer obtain Form N-289
("Certificate for Exemption from the Withholding Tax on the
Dispositions by Nonresident Persons of Hawaii Real Property
Interests") from the Transferor/seller attesting to such residency.
If the Transferor/seller refuses to provide such certificate, the
Transferee/buyer is required to withhold, even if the
Transferee/buyer has personal knowledge that the seller is a
Hawaii resident. If a certificate is provided but the
Transferee/buyer knows that it is false, the Transferee/buyer is
obligated to withhold.
Example 1:
Transferor/seller is a Hawaii resident but does not believe that
he is obligated to file and pay Hawaii income taxes.
Transferor/seller enters into a sales agreement to sell real
property located in Hawaii to his brother, who knows that the
Transferor/seller is a Hawaii resident, Transferor/seller refuses
to provide the certificate required. The Transferee/buyer is
required to withhold 5% of the amount realized, and if he fails to
do so, is liable for the amount that should have been withheld,
even though he knows that the Transferor/seller is a Hawaii
resident. See also Question 8 below.
Example 2:
Transferor/seller is not a Hawaii resident but provides to the
Transferee/buyer a certificate stating that he is a Hawaii
resident, which the Transferee/buyer knows to be false. The
Transferee/buyer is required to withhold 5% of the amount
realized in spite of the fact that an affidavit has been provided,
and failing to do so, is liable for the amount that should have
been withheld.
3. What constitutes "real property"?
"Real property" is defined in HRS §231-1 and "includes all
land and appurtenances thereof and the buildings, structures,
fences, and improvements erected on or affixed to the land, and
any fixture which is erected on or affixed to the land, buildings,
structures, fences, and improvements, including all machinery
and other mechanical or other allied equipment and the
foundations thereof, whose use is necessary to the utility of the
land, buildings, structures, fences, and improvements, or whose
removal therefrom cannot be accomplished without substantial
damage to the land, buildings, structures, fences, and
improvements, excluding, however, any growing crops."
Department of Taxation Tax Facts 2010-1
October, 2010
Page 2
Example 1:
Owner purchases a central air conditioner and installs the unit in
his personal residence. The unit cannot be removed without
substantial damage to the home. The unit is considered to be
part of the real property.
Example 2:
Owner purchases a window air conditioner and installs the unit
in his personal residence. The unit can be removed without
substantial damage to the home. The unit is not considered to
be part of the real property, even if it is being sold as part of the
transaction. See also Question 18 below.
4. Who is a "nonresident"?
A nonresident is any person (or entity) other than a resident
person. A resident person is defined as:
(1) Individual domiciled in the State or who resides in the
State for other than a temporary or transitory
purpose. Domicile is the place of the individual's
true, fixed, permanent home (for more information
on domicile and residency, see Tax Information
Release No. 97-1, "Determination of Residence
Status");
(2) Corporation incorporated or granted a certificate of
authority under chapter 414, 414D, or 415A;
(3) Partnership formed or registered under chapter 425 or
425E;
(4) Foreign partnership qualified to transact business
pursuant to chapter 425 or 425E;
(5) Limited liability company formed under chapter 428 or
any foreign limited liability company registered
under chapter 428, other than a single member
limited liability company that has not elected to be
taxed as a corporation;
(6) Limited liability partnership formed under chapter 425;
(7) Foreign limited liability partnership qualified to transact
business under chapter 425;
(8) Trust where the trustee, or other fiduciary, is a resident
of Hawaii or the administration of the trust is
carried on in Hawaii; or
(9) Estate of a resident decedent if a Hawaii court
appoints a personal representative or
administrator to carry on the administration of the
estate.
Thus, a nonresident is a person not domiciled in Hawaii
and who has only a transitory presence in Hawaii, as well as
any entity such as a corporation, partnership, limited liability
company, trust or estate that is not domiciled in Hawaii and
which is not qualified to transact business in Hawaii.
5. Is HARPTA a tax?
HARPTA is not a tax per se. Rather, the amount paid to
the Department by the Transferee/buyer is an estimated tax
payment made for the benefit of the Transferor/seller, taken out
of monies otherwise due to the Transferor/seller. The
Transferee/buyer is acting as a withholding agent. When the
Transferor/seller files its Hawaii income tax return showing the
amount of tax due as a result of the sale (as well as any other
Hawaii sourced income), the amount of any taxes due is
reduced by the amount of the HARPTA payment, as well as
any other estimated tax payments made and amounts withheld
at the source. In addition, any State tax credits that the
Transferor/seller is entitled to may be applied to the outstanding
tax due. If the amount paid (including allowable credits)
exceeds the amount of the tax liability, the taxpayer/
Transferor/seller is entitled to a refund of the overpaid amount,
unless the Transferor/seller chooses to apply some or all of the
refund to future estimated tax payments. If a balance remains
due, the Transferor/seller is responsible for paying the balance.
6. How much is collected under the HARPTA law?
If the Transferor/seller provides an exemption certificate to
the Transferee/buyer, no amount is required to be withheld.
Otherwise, the amount collected under the HARPTA law is a
flat 5% of the amount realized, unless a withholding certificate
has been obtained by the Transferor/seller which allows the
Transferee/buyer to withhold a reduced amount.
7. The amount that was withheld on the sale is
excessive. How can I pursue a refund earlier if I have
no other Hawaii income items to report?
In the event the withholding under HARPTA is excessive,
the Transferor/seller may apply for a tentative refund using
Form N-288C "Application for Tentative Refund of Withholding
of Tax on Dispositions by Nonresident Persons of Hawaii Real
Property Interests". Even though the State approves and pays
a tentative refund request, the Transferor/seller must still file a
Hawaii income tax return for the year of transfer. Even if a
tentative refund has been approved and paid, if the return as
filed shows a tax due, the Transferor/seller must pay the tax.
8. Who is responsible for withholding the amounts, if
required?
Generally, the Transferee/buyer must determine if the seller
is a non-resident and is responsible for withholding the required
amounts from the amounts to be paid over to the
Transferor/seller. The Transferor/seller may provide to the
Transferee/buyer a withholding certificate (Form N-288B
"Application for Withholding Certificate for Dispositions by
Nonresident Persons of Hawaii Real Property Interests") or an
Department of Taxation Tax Facts 2010-1
October, 2010
Page 3
exemption certificate (Form N-289 "Certificate for Exemption
from the Withholding Tax on the Dispositions by Nonresident
Persons of Hawaii Real Property Interests") which may reduce
or eliminate the amounts required to be withheld. See
Questions 14 and 28 below for further information. The
Transferee/buyer may be held liable for the tax that should have
been withheld on the purchase if it fails to withhold required
amounts.
9. When is the HARPTA payment due?
The Transferee/buyer must submit Forms N-288 and N-
288A together with the withheld amounts to the Department not
more than twenty days following the transfer date. Failure to file
the return or to timely pay the amount due may result in the
imposition of penalties and/or interest.
10. What is the transfer date?
The transfer date is the date on which the sale closes and
title to the property passes from the Transferor/seller to the
Transferee/buyer.
11. What is the "amount realized” and how is that different
than the sales price?
Normally, the amount realized is the purchase/sales price
of the Hawaii real property interest. However, the amount
realized also includes the fair market value of property received
(or to be received) by the Transferor/seller plus the amount of
any liability assumed by the Transferee/buyer or to which the
property is subject to, immediately before and after the transfer.
Example 1:
Seller and Buyer enter into a sales and purchase agreement,
whereby Buyer purchases Seller's apartment building for
$3,000 cash plus an assumption of a non-recourse mortgage
secured by the apartment building in the amount of $1,500,000.
The amount realized is $1,503,000.
Example 2:
Seller and Buyer enter into a sales and purchase agreement,
whereby Buyer purchases Seller's home for $100,000 cash. In
addition, the Buyer will transfer to Seller free and clear title in
Buyer's property located in Austin, Texas having a fair market
value of $200,000. The amount realized is $300,000.
12. What is a disposition?
A disposition means “disposition” for any purpose of the
IRC. Most often, this is simply the normal sale/purchase
agreements for real estate. However, many other transactions
may also qualify as dispositions, including exchanges,
liquidations, redemptions, gifts, transfers, capital contributions,
etc. A disposition may occur even if the transaction results in no
current recognition of gain or loss. For further information,
please see Internal Revenue Service (IRS) Publication 544
("Sales and Other Disposition of Assets").
13. Does HARPTA apply to "short sales" or to
foreclosures?
HARPTA applies to all dispositions of real property located
in Hawaii, regardless of how the transfer occurs. Dispositions
can occur voluntarily through a warranty deed or grant deed (as
when sold on the open marketplace), by consent (as through a
short sale), or involuntarily (as through a foreclosure).
A short sale occurs when a lien holder and property owner
agree to a transaction whereby the property is sold (whether to
the lien holder or to a third party) for a price that is less than the
outstanding mortgage balance. The excess of the mortgage
balance over the sales price may or may not be forgiven
depending on the agreement. If some or all of the deficiency is
forgiven, the Transferor/seller may have cancellation of debt
income, depending on the circumstances. See Question 25
below.
While HARPTA applies, there may be no withholding
requirement under a foreclosure or a short sale, if the proceeds
of sale are insufficient to pay all costs of sale and the lien
holders in full. See Question 20 below. The Transferor/seller
remains obligated to file a Hawaii income tax return for the year
of disposition.
14. What if the Transferor/seller will not realize a gain on
the disposition of the property?
If the Transferor/seller will not realize a gain on the transfer
of the Hawaii property, the Transferor/seller may apply to the
Department, using Form N-288B, for a withholding certificate
that reduces or eliminates the amount to be withheld by the
Transferee/buyer. The Transferor/seller should submit
supporting documentation to show that there will be no realized
gain. Such documentation may include:
 Closing statement when the property was purchased
showing the purchase price;
 Documentation showing the depreciation allowed or
allowable, if any;
 Documentation for any capital improvements and
other increases in basis; and
 Documentation showing decreases to basis, including
any deferred gain from any prior sale(s).
Form N-288B must be filed with the Department at least
ten (10) working days prior to the date of transfer or it will not be
approved. Although a withholding certificate may be granted by
Department of Taxation Tax Facts 2010-1
October, 2010
Page 4
the Department based upon no realized gain on the transfer,
the Transferor/seller is not relieved of the duty of filing a Hawaii
income tax return for the year of disposition.
15. What kind of documentation is acceptable?
The best documentation the Transferor/seller can provide
to the Department is copies of the original closing statements,
contracts, purchase orders, and the like. For purposes of Form
N-288B and N-288C, oral statements or evidence based upon
memory without further substantiation is not acceptable.
16. What do you mean by depreciation "allowed or
allowable"?
The IRC allows a taxpayer to depreciate any property
having a limited useful life if the property is used in a trade or
business. Renting a property for income is a trade or business.
For purposes of calculating gain or loss on the disposition of a
trade or business asset, the basis of property is reduced by the
depreciation allowed or allowable, whichever is greater.
Depreciation allowed is depreciation actually deducted and for
which a tax benefit was received, unless the claimed amount
was reduced by the Department. Depreciation allowable is
depreciation that could have been taken on your tax return.
The basis of the property is still reduced by the full amount of
depreciation that could have been taken, even if you did not
claim depreciation that you were entitled to deduct. For further
information on depreciation, please see IRS Publication 946
("How to Depreciate Property").
17. What is a "capital improvement"?
Capital improvements add value to the property and have a
useful life in excess of one year, prolong the property's life, or
adapts it to new uses. This should not be confused with a noneligible
repair, which just returns something to its original
condition. Capital improvements can include everything from a
new bathroom or deck to a new water heater or furnace.
However, the improvements must still be evident when you sell.
For further information, please refer to IRS Publication 551
("Basis of Assets").
Example 1:
In Year 1, Transferor/seller purchases a home for his residence.
He replaces the wall-to-wall carpet with new carpeting. In Year
10, Transferor/seller sells the residence. The carpeting is still
installed. The cost of the carpet may be added to the cost of the
residence in determining the amount of any gain.
Example 2:
Same facts as Example 1, except that the Transferor/seller
replaced the carpet in Year 5 with hardwood floors. The cost of
the carpeting is not a capital improvement and does not
increase the basis since it is no longer evident in the home.
However, the cost of the hardwood floors may be added to the
basis.
Example 3:
Same facts as Example 2, except that the Transferor/seller in
Year 6 had to repair a portion of the hardwood floor due to a
water leak. The cost of the repairing the hardwood floor does
not increase the basis as it was done to maintain the home’s
good condition and does not add value or prolong its life
18. I am selling my home along with the furnishings. Does
the cost of the furnishings increase the basis of the
home?
If the furnishings are removable without incurring
substantial damage to the unit, the cost of the furnishings does
not increase the basis. For example, the cost of a stand alone
refrigerator or drapes cannot be added to the basis of the home,
even though the refrigerator and drapes are included in the
sales contract. Generally speaking, a sale of real property and
its furnishings are really two sales: a sale of the real property
and a sale of the furnishings. However, unless the
Transferor/seller can document the value of the furnishings and
unless the sales agreement apportions the sales price between
the real property and the furnishings, the amount of the sales
price assigned to the furnishings is zero. Unless the furnishings
were used in a trade or business, any loss resulting from the
sale of the furnishings is a personal loss and is therefore nondeductible.
See also IRS Publication 523 ("Selling Your
Home").
Example 1:
In year 1, Transferor/seller buys a condominium for her
personal summer residence. She purchases new appliances,
including a washer/dryer combination, range, refrigerator, and
air conditioner. These may be removed without damaging the
unit. In Year 5, Transferor/seller sells the condominium,
including the aforementioned items. The cost of the appliances
does not increase the basis in the condominium, and the
amount of the sales/purchase price assigned to the appliances
is zero. Transferor/seller may have a loss with respect to the
appliances, but the loss is personal and does not reduce the
amount of gain on the sale of the condominium.
Example 2:
In year 1, Transferor/seller buys a condominium for her
personal summer residence. She also purchases a Picasso
painting for $500,000 for display in the residence. The painting
may be removed without damaging the unit. In Year 5,
Transferor/seller sells the condominium, including the Picasso.
Department of Taxation Tax Facts 2010-1
October, 2010
Page 5
The purchase/sales agreement establishes a value of $1 million
for the Picasso, which is corroborated by expert appraisals.
The cost of the Picasso does not increase the basis in the
condominium. However, the portion of the purchase/sales price
assigned to the Picasso is not included in determining the
amount that is required to be withheld. There are two
purchase/sales agreements that are operative simultaneously:
one for the purchase of the real property and one for the
purchase of the Picasso. The purchase/sale of the real property
is subject to the provisions of HARPTA, but the purchase/sale
of the Picasso is not. However, the Transferor/seller is
obligated to file a Hawaii tax return for the year of disposition
reporting the gain or loss from all activities, including from the
sale of the Picasso, as well as any other Hawaii sourced
income.
19. Has the State adopted IRC Section 121, as modified by
the Taxpayer Relief Act of 1997?
The State has adopted IRC 121 as modified, which allows
a Transferor/seller who has used the property being sold as
his/her primary residence to exclude up to $250,000 ($500,000
if married and filing a joint return) of the gain on the sale. To be
eligible, the taxpayer must both own and use the home as a
principal residence for two of the five years before the sale. The
ownership and use periods need not be concurrent. The two
years may consist of 24 full months or 730 days. Short
absences, such as for a summer vacation, count as periods of
use, but longer breaks, such as a one-year sabbatical, do not.
The taxpayer also must not have excluded gain on another
home sold during the two years before the current sale.
The $500,000 exclusion applies only if all of the following
occur: (a) they are married and file a joint return for the year of
sale, (b either (or both) the taxpayer or his/her spouse meet the
ownership test, (c) both the taxpayer and his/her spouse meet
the use test, and (d) neither the taxpayer nor his/her spouse
excluded gain from the sale of a principal residence during the
prior two years.
A reduced exclusion is available, even if the taxpayer lived
in the home less than 24 months, if the sale of the home
occurred because the location of the taxpayer's job changed,
because of health concerns, or for certain other unforeseen
circumstance. Please see IRS Publication 523 ("Selling Your
Home") for further information.
A Transferor/seller seeking to eliminate the amount of
withholding required because of the gain exclusion should
submit Form N-288B along with required documentation. As
noted above, the issuance of a withholding certificate does not
relieve the Transferor/seller of the duty of filing a Hawaii income
tax return for the year of transfer.
Example 1:
Husband and Wife purchase a home in 1947. In 2008,
Husband and Wife decide to retire in Arizona and permanently
move there. Because of conditions in the real estate market,
they decided not to sell their home immediately and left it vacant
in care of relatives. In Year 2010, they sell their home when
market conditions had improved. The sales price was
$600,000 and the basis in the home at the time of sale was
$100,000. They are married at the time of sale and have not
previously had gain excluded from the sale of a principal
residence. Since Husband and Wife are entitled to the Section
121 exclusion, the amount required to be withheld under
HARPTA may be eliminated if they provide the
Transferee/buyer an approved Form N-288B. Husband and
Wife must still file a Hawaii income tax return for the year of
sale.
20. What happens if there are insufficient funds from the
sale to pay all outstanding mortgages and the costs of
sale?
HARPTA withholding may be reduced or eliminated if
there will be insufficient proceeds from the sale to pay the
HARPTA withholding in full. In such situations, Form N-288B
along with a good faith estimate of the closing statement should
be submitted to the Department at least ten days prior to
closing. The issuance of a withholding certificate does not
relieve the Transferor/seller of the duty of filing a Hawaii income
tax return for the year of transfer
21. My house is in foreclosure, and a commissioner has
been appointed by the court to sell it. Can the
commissioner submit a Form N-288B showing that the
proceeds of sale are insufficient to pay the costs of
sale and all liens and other encumbrances?
A commissioner or other duly appointed fiduciary, acting
within the scope of his/her authority, has the power to submit a
Form N-288B showing that the proceeds of sale are insufficient
to pay the costs of sale and all liens and other encumbrances,
provided that he/she has personal knowledge of the situation.
A commissioner in a foreclosure or similar sale is an agent for
the Transferor/seller. However, the commissioner's authority is
limited to selling the property and the acts associated with such
sale. A commissioner does not have the authority to file Form
N-288C seeking a tentative refund, since the commissioner's
authority is limited in scope. It is also important to remember
that a commissioner or similar agent appointed to act on behalf
of the Transferor/seller is not the owner of the real property
being sold and title to the property does not transfer from the
Transferor/seller to the commissioner or other similar agent
when the commissioner or other similar agent is appointed.
The Transferor/seller remains the owner of the property until it is
sold, and is responsible for filing tax returns reporting the sale
Department of Taxation Tax Facts 2010-1
October, 2010
Page 6
(along with any other Hawaii sourced income), and to pay any
tax due.
22. At the foreclosure sale, the lender was the high bidder
and the sale was confirmed by the court. The lender
is now selling the property to me for more than the
amount paid at auction, but less than the amount that
was owed by the defaulting borrower. Must I withhold
5% of the purchase price?
It is important to remember that there are two separate
sales occurring in these situations. The first sale occurs when
the lender purchases the property from the defaulting borrower,
and the second is when the lender sells the property. Each sale
must be analyzed independently to determine if HARPTA
withholding is required. It is likely that no withholding would be
required in the sale from the defaulting borrower to the lender,
but withholding may be required upon the sale from the lender
to the new purchaser, unless some exception applies, such as
the lender/seller being registered to do business in Hawaii.
Unless the lender/seller provides a Form N-288B or Form N-
289, the Transferee/buyer must withhold.
23. The escrow company made a miscalculation and
erroneously paid to the Department a withholding
amount. May escrow apply for a refund of the
overpayment?
As noted in Question No. 5 above, payment made to the
Department under HARPTA is an estimated tax payment and
credited to the account of the taxpayer-Transferor/seller. Once
payment is made to the Department, only the taxpayer-
Transferor/seller is entitled to seek a refund of the withheld
amount, even if the amount paid to the Department was due to
an error made by the escrow company. The taxpayer-
Transferor/seller may be entitled to a tentative refund (See
Question No. 7 above), but it is incumbent upon the taxpayer-
Transferor/seller to seek such refund. The Department is
unable to process any refund request submitted by any other
party, including the escrow company or mortgage company.
24. The amount of the secured indebtedness exceeds the
sales price. How can I still owe taxes?
Many taxpayers mistakenly use "gain" and "equity"
interchangeably. However, these concepts are different. Gain
is the excess of net sales proceeds over the adjusted basis of
the property being transferred, and is the base upon which
capital gains tax is calculated. Equity is the amount of value
remaining after paying off all mortgages and any other liens
encumbering the property. You could have a taxable gain even
if you have no equity in the property. This commonly occurs
when properties are refinanced or equity lines of credit are
taken out, but no capital improvements are made to the
property. Under certain conditions, a cancellation of debt may
also result in taxable income.
Example 1:
Taxpayer purchases a condominium for investment and rents it
out. The purchase price was $100,000. Three years after
purchasing the property, the value of the condominium has
increased to $400,000. The taxpayer refinances the property
by encumbering the property with a new first mortgage of
$300,000. Taxpayer uses the proceeds of the new loan to pay
off the original first mortgage and the balance of the monies for
personal and other expenses unrelated to the condominium.
Five years later, the taxpayer sells the condominium for
$300,000. At that time, the mortgage balance is $295,000,
costs associated with the sale is $15,000, and depreciation
allowed or allowable is $18,182. The taxpayer made no other
improvements to the condominium in the period of ownership.
Taxpayer has no equity in the property, but does have a capital
gain as follows:
Sales price $300,000
-Cost of sale (15,000)
Adjusted sales price $285,000
-Basis:
Original Cost $100,000
-Depreciation (18,182) (81,818)
Gain on Sale $203,182
The taxpayer-Transferor/seller is required to file a Hawaii
income tax return for the year of transfer and to pay the tax due,
even though he/she did not receive any proceeds of the sale.
HARPTA still applies, but exempts the Transferee/buyer from
any withholding requirements if the Transferor/seller provides a
withholding certificate from the Department. The
Transferee/buyer must comply with the withholding requirement
if the Transferor/seller does not provide a certificate.
25. What is Cancellation of Debt income?
If you borrow money and the lender later cancels or
forgives the debt, you may have to include the cancelled
amount in income for tax purposes, depending on the
circumstances. When you borrowed the money you were not
required to include the loan proceeds in income because you
had an obligation to repay the lender. When that obligation is
subsequently forgiven, the amount you received as loan
proceeds is reportable as income because you no longer have
an obligation to repay the lender. The lender is usually required
to report the amount of the canceled debt to you and the IRS on
a Form1099-C, Cancellation of Debt. For further information,
please refer to IRS Publication 4681 ("Canceled Debts,
Foreclosures, Repossessions, and Abandonments").
Department of Taxation Tax Facts 2010-1
October, 2010
Page 7
Example 1:
Taxpayer purchases for $300,000 a condominium as his/her
personal residence, paying $15,000 down and the balance
through a new first mortgage loan of $285,000. The loan is
recourse, meaning that the taxpayer is personally liable for the
mortgage. When the remaining balance of the loan is $280,000,
taxpayer loses his/her job and cannot pay the mortgage,
thereby defaulting. The lender bank accepts his/her voluntary
conveyance of the unit in exchange for canceling the loan.
Similar units are selling at $230,000 at the time the conveyance
to the bank is executed.
The transaction is a disposition and is treated as a sale.
Taxpayer has a loss of $70,000 (adjusted basis of $300,000
minus the fair market value of $230,000), which is
nondeductible because it is a personal loss. The taxpayer may
also have cancellation of debt income of $50,000 (the
outstanding amount of the debt ($280,000) less the fair market
value of the property surrendered ($230,000)) when the loan is
forgiven.
26. Is Cancellation of Debt income always taxable?
Certain situations may reduce or eliminate the taxable
amount on the cancellation of debt income. The most common
situations when cancellation of debt income is not taxable are:
Bankruptcy: Debts discharged through bankruptcy
are not considered taxable income;
Insolvency: If you are insolvent when the debt is
cancelled, some or all of the cancelled debt may not be
taxable to you. You are insolvent when your total debts
are more than the fair market value of your total
assets. Insolvency can be fairly complex to determine
and the assistance of a tax professional is
recommended if you believe you qualify for this
exception.
In addition, the Mortgage Forgiveness Debt Relief Act of
2007 (Public Law 110-142, HR 3648), provides relief from
cancellation of debt income for certain homeowner-occupants
until December 31, 2012. It is limited to debts of $2 million or
less and does not apply to rental properties or other nonprimary
residences. It also applies only to forgiven or cancelled
debt used to buy, build or substantially improve the principal
residence, or to refinance debt incurred for those purposes.
Refinanced debt qualifies for this exclusion, but only up to the
extent that the principal balance of the old mortgage,
immediately before the refinancing, would have qualified. It is
important to note that cancellation of debt income is treated as
ordinary income and not as capital gains.
27. What if I have a non-recourse loan?
A non-recourse loan is a loan for which the lender’s only
remedy in case of default is to repossess the property being
financed or used as collateral. That is, the lender cannot pursue
you personally in case of default. Transferors that are not
personally liable for a debt realize an amount that includes the
full amount of the canceled debt, even if the value of the
property that is security for the debt is less, and as such, there is
generally no cancellation of debt income.
Example 1:
Taxpayer purchases for $300,000 a condominium as his/her
personal residence, paying $15,000 down and the balance
through a new first mortgage loan of $285,000. The loan is nonrecourse,
meaning that the taxpayer is not personally liable for
the mortgage. When the remaining balance of the loan is
$280,000, taxpayer loses his/her job and cannot pay the
mortgage, thereby defaulting. The lender bank accepts his/her
voluntary conveyance of the unit in exchange for canceling the
loan. Similar units are selling at $230,000 at the time the
conveyance to the bank is executed.
The transaction is a disposition and is treated as a sale. The
amount received is deemed to be the amount of the cancelled
debt. Thus, the taxpayer has a loss of $20,000 (adjusted basis
of $300,000 minus the amount received through cancellation of
debt of $280,000), which is nondeductible because it is a
personal loss. There is no cancellation of debt income even
though the fair market value of the property surrendered is less
than the loan forgiven because the loan was non-recourse.
28. Are there any exceptions to the withholding
requirements of HARPTA?
Yes. No withholding is required if the Transferor/seller
furnishes to the Transferee/buyer an affidavit stating the
Transferor/seller's taxpayer identification number and
a. The Transferor/seller is a Hawaii resident person; OR
b. That by reason of a nonrecognition provision of the
Internal Revenue Code (which is also operative for the
State), or if the provisions of any United States treaty
prohibits the imposition of State taxes upon the
disposition, the Transferor/seller is not required to
recognize any gain or loss with respect to the transfer.
The Transferor/seller must provide a summary of the
law and facts which support the claim of
nonrecognition.
No withholding is also required if the amount realized for
the property does not exceed $300,000 and one or more
individual transferors provide an affidavit to the
Transferee/buyer stating the Transferor/seller's taxpayer
Department of Taxation Tax Facts 2010-1
October, 2010
Page 8
identification number and also stating that for the year preceding
the date of the transfer, the property has been used by the
Transferor/seller as a principal residence. This exception
applies only to individuals and not to artificial entities. NOTE:
This differs from FIRPTA, which exempts a transaction if the
Transferee/buyer purchases real estate which will be used as
his/her personal residence and the purchase price is not more
than $300,000.
To claim an exemption from the withholding requirements
of HARPTA under any of these exceptions, the Transferor/seller
must provide to the Transferee/buyer (or escrow) Form N-289.
Form N-289 may be used only if the Transferor/seller is a
Hawaii resident person or if none of the gain is taxable because
of a United States treaty or because of a nonrecognition
provision of the IRC.
29. What are some of the nonrecognition of gain or loss
provisions that are operative for the State?
The most commonly encountered provision in real estate is
the section 1031 exchange, which is governed by section 1031
of the IRC. A section 1031 exchange allows the
Transferor/seller to reduce or to defer capital gains taxes on the
sale of investment real estate when it is exchanged for other
investment real estate within a prescribed period of time. For
purposes of the HARPTA exemption from withholding, the
Transferor/seller does not need to replace the property with
another property in Hawaii. Form N-289 is only applicable if
none of the gain is taxable. If you receive cash, property that is
not like-kind, or are relieved of debt, some taxable gain may be
recognized in the year of the exchange. Likewise, there can be
both deferred and recognized gain in the same transaction
when a taxpayer exchanges for like-kind property of lesser
value. If any amount of gain is recognized in a 1031 exchange,
Form N-289 cannot be used to eliminate the withholding
requirements of HARPTA.
Example 1:
Investor purchases an apartment building for $250,000. Five
years later, in a qualified 1031 transaction, Investor exchanges
the apartment building for another apartment building worth
$400,000 and stock worth $50,000. Although a portion of the
transaction qualifies for deferral of gain, the receipt of the stock
causes an immediate recognition of gain up to the value of the
stock, and as such, Form N-289 cannot be used to eliminate
the withholding requirement of HARPTA. Transferee/buyer is
required to withhold the full 5% of the amount realized, which
includes the value of the stock received.
Some other common nonrecognition events are transfers
by gift, transfers incident to a divorce, and transfers received by
bequest. While no gain or loss is reported at the time of these
transfers, it is still necessary to provide the Transferee/buyer
Form N-289
For additional information regarding this Tax Facts, please see Tax Information Release 2002-2 or call (808) 587-1577. Forms and
publications referenced in this Tax Facts are available at our website at www.hawaii.gov or at any of our district tax offices listed below.
Forms and publications can be mailed to you by calling 587-4242 or toll-free at 1-800-222-3229.
STATE DISTRICT TAX OFFICE ADDRESSES & TELEPHONE NUMBERS
Website (Forms & Information)
www.hawaii.gov/tax
Forms & Information
808-587-4242
Toll-Free: 1-800-222-3229
Telephone Devices for the Deaf (TDD)
Tax Service & Processing
808-587-1418
Toll-Free: 1-800-887-8974
Oahu District Tax Office
830 Punchbowl Street
P. O. Box 259
Honolulu, HI 96809-0259
Telephone No.: 808-587-4242
Toll-Free: 1-800-222-3229
Fax No.: 808-587-1488
Maui District Tax Office
54 South High Street #208
Wailuku, HI 96793-2198
Telephone No.: 808-984-8500
Fax No.: 808-984-8522
Hawaii District Tax Office
75 Aupuni Street #101
Hilo, HI 96720-4245
Telephone No.: 808-974-6321
Fax No.: 808-974-6300
Kauai District Tax Office
3060 Eiwa Street #105
Lihue, HI 96766-1889
Telephone No.: 808-274-3456
Fax No.: 808-274-3461
Tax Facts is a publication of the Department of Taxation on tax subjects of current interest and is not intended to be a complete statement of the law.
Subsequent developments in the law (legislation, rules, cases, etc.) should be consulted.

Why Staging will help you sell your home
Brought to you by the Daily News Scott Wolf 9/14/2017
November 12, 2018
      

The truth behind staging: will it help you sell your house faster, at a better price? – Daily News

Join the Conversation
“We lived in a Texas tract home and I went to see the model home for that tract. I copied what they did,” she said. “I’ve always liked interior
decorating and now I enjoy the best of both worlds, staging and decorating. Very few people live in their house the way they would have to
do to show it. I tell people what they might not want to hear, but need to hear.”
Selling a house involves marketing, merchandising, psychology and design, she said.
A house that “shows” well and is priced well will sell, and sell quickly, according to the experts. And timing can be everything. First
impressions count, even from the moment a potential buyer drives up to a house. When a house first goes on the market, it usually receives
a lot of interest from real estate agents and the buying public. That’s the time to strike. Once that first wave of interest passes, time can
become an enemy for a seller.
Homeowner Kathy Hoffman-Crudge said staging has been a dream, which she hopes will translate to a quick and profitable sale for her
1,000-square-foot home in Monrovia. The asking price for the three-bedroom, one-bathroom Craftsman bungalow is $569,000. The house
has been on the market for a couple weeks, but Hoffman-Crudge said she’s still glad it was staged.
“In putting our home up for sale, we were looking for ways to enhance the potential out of our little house,” said Hoffman-Crudge. “It is a
cozy home built in 1896 with little rooms and a slightly awkward floor plan. We have rented it over the last eight years and have found that
tenants fall in love with the place. We hoped that staging the home would help others see how cozy the house can be.”
She hired Lassetter to work her magic in the vacant house.
“Vacant houses take twice as long to sell,” Lassetter said. “Many people think that an empty room lets potential buyers see what the room
could look like, but empty rooms actually make the space look smaller.”
She brought in room furniture to match the charm of the home.
“What you want to do is eliminate as many of the negatives as possible and point out all the good things, all the possibilities, about a house,”
she said.
Within a matter of days, Hoffman-Crudge said Lassetter was able to work her magic on the unique house.
“She filled each room in the house with comfort and style,” Hoffman-Crudge said. “Besides the beautiful furniture, she added many special
touches like books, candles and pictures on the walls. We are very happy with the result.”

Scott Wolf

Rates
Brought to you by Dan Bardenhagen of Wells Fargo
September 28, 2018
      

Current Mortgage Rates for MAUI COUNTY, HI
Check out our rates. I've included below a selection of current rates for a few of our many products. I'd be happy to discuss options with you and your client based on their particular needs.

Conforming

Loan Type MI Type Interest Rate APR
5/1 ARM Conforming  4.250% 4.836%
7/1 ARM Conforming  4.375% 4.786%
10/1 ARM Conforming  4.500% 4.756%
30-yr fixed Conforming  4.750% 4.787%
VA 30-yr fixed  4.625% 4.749%

Jumbo

Loan Type MI Type Interest Rate APR
7/1 ARM Jumbo  3.750% 4.479%
10/1 ARM Jumbo  4.000% 4.436%
30-yr fixed Jumbo  4.500% 4.525%
15-yr fixed Jumbo  4.250% 4.277%
Information displayed is accurate as of 9/28/2018 3:50:15 PM (CT) and is subject to change without notice.

For information on the many other loan options we have available, please contact me. I look forward to hearing from you.


Dan Bardenhagen

Private Mortgage Banker
Private Mortgage Banking
NMLSR ID 653667

Wells Fargo Home Mortgage | 34 WAILEA GATEWAY PLACE, A205 | KIHEI, HI 96753
MAC E3627-021
Tel 808-891-6075 | Cell 808-280-6168

Staging and its benefits
July 30, 2018
      

 Staged And Sold: Sell Your Home Like A Pro

The real estate market has undergone signiácant rebound in recent times. Just like many people whose houses have been in
the market for months, you feel this is the right time to sell off your property. Well, your time might be right, but you will face
stiff competition from thousands of home sellers.
Dedication and Hardwork

Selling your property in today’s tough real-estate market requires a lot of hard work and dedication. With the tough competition
from thousands of other property sellers, you have to ánd a way to stand out from the competition. Anything that will give you
an edge over the competition should be a plus to you when you are trying to sell your home.
Setting Yourself Apart
You should make your home look best to distinguish it from that of your competition. This is where staging can be very useful.
Staging your home will enable your home to attract top dollars from homebuyers. So, what is staging?
Barb Schwarz, president of the International Association of Home Staging Professionals, deáned home staging as “the
preparation of the home for sale so that buyers can mentally move in.” By staging your home, you will make it look appealing
and attractive to buyers.
Top 4 Reasons to Stage Your Home
1. You Will Make More Money: A survey conducted by Coldwell Banker Real Estate Corp. discovered that staged homes are
usually sold 6% above the asking price and spent less time in the market when compared to unstaged homes.
2. Your House Will Sell Faster: Well, according to a survey conducted by the National Association Realtors (NAR), the longer a
property stays in the market, the lower the price it will attract.
3. You Will Get a Good Return on Your Investment: Another NAR survey reveals that a 1 – 3% investment on home staging
yields 8 – 10% return, which is a good deal.
4. Your Online Photos Will Stand Out: A recently conducted NAR poll found out that 90% of potential home buyers start their
property search on the internet. Staging your home increase the visibility of your property to potential buyers.
Does Staging Really Works? The answer to this question can be found in the 2011 RESA survey. This survey discovered that on
the average, a staged home sells faster than an unstaged home.
The 5 Keys to Staging Like a Pro
1. Color: Use warm and soothing colors to paint your home. Lighter shades are more attractive to the eyes and helps buyers to
visualize their household items in the house.
2. Maintenance: Make your house look clean and smell nicely. In addition, try to complete any home improvement project you
are carrying out on your property.
3. Depersonalization and De-cluttering: Take out your personal stuffs from your house. They distract home buyers during the
inspection of your property.
4. Emotional Cues: Help buyers to emotionally connect with your home by decorating it with candles and âowers.
5. Furniture Placement: Place minimal furniture in your home in order to showcase the large space to potential buyers.

Moving Checklist for Buyers
by Daniel Bortz
July 01, 2018
      

1. Turn on utilities
Electric, gas, water—don't assume they'll be on and operational when you arrive. Instead, get all your utilities set up ahead of time.

“Chances are the seller will be turning them off as of the closing date,” says Greg Beckman, an Annapolis, MD, real estate agent.

2. Set up internet and cable service
Plan on having a “Property Brothers” marathon while you’re unpacking? Have your home wired for service before you arrive, advises Julie McDonough, a real estate agent in Southern California.

3. Order an energy audit
One of the best ways to cut your energy bill is to order a home energy audit, says Rachel Foy, a real estate agent in Newton, MA.

An energy audit is a professional assessment of your new home’s overall energy performance. This will show you how to make your house more energy-efficient (think insulating the attic, weatherstripping windows, sealing air leaks in crawl spaces), so it's best to have one done and make related repairs before moving in.

A home energy audit costs, on average, about $215 to $600, but some utility companies will do them for free.

4. Do a deep clean
"It's never easier to do a deep clean than when the house is empty,” Beckman says. A cleaning service costs around $150. Don’t mind cleaning the home yourself? Check out our House Cleaning Guide, with tips on how to clean a kitchen, bedroom, bathroom, and beyond.

5. Change the locks
This is a basic safety measure; however, “it can’t be done until after closing,” says Chris Dossman, a real estate agent in Indianapolis.

6. Test smoke and carbon monoxide detectors
Make sure these are functioning properly to protect your new home from fires and other emergencies. Also, read our recommendation of the best type of smoke detector.

7. Set up the alarm system
If the home already has a security system installed, call the provider to confirm that service is set up, says Jennifer Baxter, associate broker at Re/Max Regency in Suwanee, GA.

8. Tackle major home renovations
The last thing you want to do is have to tiptoe around a construction zone after you move in. So, if you want to repaint the home, resand floors, or make any other renovations, do them in advance.

“These projects are best done when the house is empty and usually don’t happen once the furniture shows up,” says Foy.

One caveat: “You have the right to bring in vendors for quotes, but work cannot start until you own the home,” she adds.

9. Make repairs
Before moving in, Baxter recommends hiring a handyman to do any repairs that the seller didn’t agree to make. Check out our tips on how to hire a great handyman (or woman).

10. Get a home warranty
Imagine waking up one morning to a busted boiler or leaking washer in your brand-new home. A home warranty covers the cost of repairing many home appliances—and basic coverage starts at only about $300, says Shawna Bell of Landmark Home Warranty.

11. Buy fire extinguishers
Get one for every level of your home, make sure you know how to use it, and plan an escape route in the event of a fire.

12. Get to know your new house
Figure out where the circuit breaker box and main water shut-off valve are before moving in, so you know how to turn off the electricity or water in an emergency. Also, consider labeling your home’s electrical panel.

13. Childproof the home
Have kids? Every year, millions of children are hospitalized because of accidents around the home, according to Safe Kids Worldwide. So, before your bundle of joy starts toddling around the house, take steps to fully childproof your new home.

14. Forward your mail
Don’t forget to update your address with the United States Postal Service. (Visit the Official Postal Service Change of Address website.) The postal service charges a $1 fee to verify your identity when changing your address online, so you'll need a credit or debit card.

Note: The postal service will stop forwarding periodicals to your new address 60 days after you move, so alert magazines and newspapers that you’ve moved.

15. Update your billing address
Alert your credit card companies, banks, or any other financial institutions of your new address. Also, if you frequently buy anything from a website, you can avoid a future headache by updating your profile with your new address.

Daniel Bortz is a Realtor in Maryland, Virginia, and Washington, DC. He has written for Money magazine, Entrepreneur magazine, CNNMoney, and more.

The Home Inspection
Brought to you by Brady Spangler of Axia Home Loans
April 12, 2018
      

The Ins and Outs of the Home Inspection.


Here's what you should know about home inspections:

What it is: A home inspection is an independent, third-party evaluation of a home's structure, systems and features. The inspector will look for potential problems or deficiencies on the property.
Why you need it: A proper inspection ensures the home is safe to live in and a good long-term investment for your household.
When it happens: Home inspections generally occur after the seller has accepted your bid but before closing day. This gives you the opportunity to withdraw your offer, should there be any major issues with the property.
What's covered: A home inspection includes the roof, foundation, insulation, appliances, HVAC systems, plumbing, electrical systems and more.
How you're involved: You are not required to be on-site, but it's in your best interest to be there. The inspector can walk you through any defects he or she finds.
The home inspection is designed to protect you, your family and your investment, so choose your inspector carefully. Make sure the home inspector is experienced and licensed and insured where required. And don't forgo an inspection just to save a little cash. If anything, a home inspection report can give you extra leverage in negotiations.

Current Mortgage Rates for Maui County
Brought to you by Dan Bardenhagen of Wells Fargo
April 06, 2018
      

Current Mortgage Rates for MAUI COUNTY, HI
Check out our rates. I've included below a selection of current rates for a few of our many products. I'd be happy to discuss options with you and your client based on their particular needs.

Conforming

Loan Type MI Type Interest Rate APR
5/1 ARM Conforming  4.125% 4.713%
7/1 ARM Conforming  4.250% 4.662%
30-yr fixed Conforming  4.500% 4.518%
VA 30-yr fixed  4.375% 4.497%
15-yr fixed Conforming  4.000% 4.063%

Jumbo

Loan Type MI Type Interest Rate APR
7/1 ARM Jumbo  3.750% 4.411%
30-yr fixed Jumbo  4.250% 4.268%
15-yr fixed Jumbo  4.000% 4.031%
Information displayed is accurate as of 4/6/2018 6:59:44 PM (CT) and is subject to change without notice.

For information on the many other loan options we have available, please contact me. I look forward to hearing from you.


Dan Bardenhagen

Economic Roundup 2018
Brought to you by Rebecca Ross of Elite Mortgage
January 17, 2018
      



INVISIBLE INFLATION

The number of times the Fed boosts rates a quarter-point in 2018 will depend entirely on GDP growth and inflation. If both perk up, expect four hikes, if they both remain weak, expect two. The low and falling unemployment rate suggests that inflationary pressures should build. However, researchers find that declines in the unemployment rate today have only 30% as much influence on inflation rates as they did decades ago.


HALTING HOUSING

While housing starts in October rose 13.7% compared to September, they remain 2.9% below the level of 10/16, and are up just 5.8% YTD. Technically, it's because multifamily activity is down roughly 10% YTD. That's because multifamily activity has returned to its pre-recession level of roughly 400,000 units/year and is very volatile from month-to-month. The key, the continued painfully slow recovery in single-family activity, barely above historical recessionary lows.


LOTSA LABOR

Employment growth was 228,000 in November and is averaging 170,000 jobs since August. The key takeaways: the job market is very strong, and growth is well distributed with solid gains across all education levels! The hurricanes have left no traces, and while wage growth is hardly Bitcoin-esque at just 2.5% Y-o-Y, an increase in the average work week has boosted total wages by a respectable rate of 4.75% since August.


YUCKY YIELDS

The yield spread between 10-yr and 1-yr Treasuries has shrunk from a post-recession peak of 3.4 percentage points to just 0.70 percentage points. The problem is in prior Fed rate rising cycles, the yield on the 10-yr rose as faster growth was expected; now the 10-yr yield is trendless. Moreover, Treasury is exacerbating this by shortening the duration of US debt, and long-term rates in Europe and Japan are microscopic.


SICKLY SAVINGS

The personal savings rate fell to just 3.1% in September, its lowest level since 12/07, the start of the Great Recession. The decline is undoubtedly being caused by record gains in household net worth. As a percent of disposable income, it's 670%, well above the Housing Boom high of 650%. Ever higher bond, equity, housing, and real estate prices are feeding wealth. Should they weaken, growth will, at best, stall.


MARRIAGE MODIFICATION

In 1960, in 14.6% of marriages husbands had more education than wives. The reverse was the case 7.1% of the time. The remaining 78.3% of marriages had spouses of equal education. This imbalance peaked in 1980 when in 23% of marriages husbands were better educated while in 11% the wife was. Now, in 25.3% of marriages the wife is best educated while the reverse occurs 24.5% of the time.

Source: Elliot Eisenberg, PhD., Chief Economist for GraphsandLaughs, LLC, an economic consulting firm serving a variety of clients across the United States. All rights reserved..

Rebecca Ross  President Elite Lending NMLS # 242063

Economic Roundup
Brought to you by Rebecca Ross of Elite Mortgage
December 12, 2017
      

GOOD GDP

The US economy easily shook off the effects of recent hurricanes and GDP in 17Q3 rose by 3.1% following a 3% rise in 17Q2, the best two-quarter performance since mid-2014. That said, Y-o-Y GDP growth is still just 2.3% and inflation remained weak, with the Fed’s preferred measure rising at a rate of just 1.5% in the quarter, while core inflation was up just 1.3%. Good news but no champag

NEBULOUS NUMBERS

October’s 261,000 net new jobs was good, as were upward revisions to August and September totaling 90,000. Unemployment fell to 4.1%, its lowest level since 12/00, the broadest measure of unemployment fell to 7.9%, tops since 12/06, and job growth over the past three months has averaged a solid 162,000. But, wage growth was zero and Y-o-Y wages increases are an anemic 2.4%. Nonetheless, expect a Fed rate increase in December.


LIMITED LABOR

While our economy is humming with 3.1% GDP growth in 17Q2 and 3% growth in 17Q3, these rates are unsustainable. That’s because these rates have required such large increases in employment that the unemployment rate declined from a low 4.5% at the end of March to a staggeringly low 4.2% by the end of September. We could run out of workers without a significant boost in labor productivity.


CONSUMER CONFIDENCE

As Measured by the Conference Board, October consumer confidence came in at 125.9, the highest reading since 12/00. This elevated level is a result of rising equity and home prices and an unemployment rate of just 4.2%, its best level since 2/01. A similar measure put out by the University of Michigan is at its best level since early 2004, and Bloomberg’s Consumer Comfort index is near its post-recession high.


FED FIGURE

For the first time since 1978, a first-term president hasn’t reappointed the incumbent Fed chair. Instead, President Trump will appoint existing Fed governor Powell. He will continue the process of gradual rate rises established by outgoing chair Yellen, but offer a lighter regulatory touch.


CORDRAY QUITS

The first-ever director of the Consumer Finance Protection Bureau (CFPB) Richard Cordray announced he will be leaving the Dodd-Frank Wall Street Reform Act-mandated agency by the end of November. Cordray’s exit opens the door for restructuring to the bureau’s power structure, perhaps allowing Congress to shift power to a commission rather than a single, presidentially-appointed individual. The CFPB has made news with multi-million dollar fines against Wells Fargo, Bank of America and credit reporting agencies TransUnion, Experian and others.


DA VINCI DOLLARS

Last month, the “Salvator Mundi” by Da Vinci sold at auction for $400 million, $450 million including fees. This shatters the prior auction price high of $179 million set in 2015 for Picaso’s “Les Femmes d’Alger”, and the alltime high of $300 million for works by Cezanne at private sales. In 1958, “Salvator Mundi” sold for $125 before it was determined to be a Da Vinci.

Sources: Elliot Eisenberg, PhD., Chief Economist for GraphsandLaughs, LLC, an economic consulting firm serving a
variety of clients across the United States. All rights reserved., Consumer Finance Protection Bureau.

Economic Advisor
Brought to you by Brady Spangler of Axia Home Loans
November 23, 2016
      

Last Week's Economic News in Review
November 23, 2016
Housing starts rocketed to a nine-year high, while retail sales exceeded market expectations and layoffs dropped to their lowest point in 43 years.

Housing Starts

Starts on new housing construction hit their highest point since the height of the housing boom in 2007. Starts on private housing in October shot up 25.5 percent, to reach an annual rate of 1.32 million, according to last week’s joint release from the Census Bureau and the Department of Housing and Urban Development.

Compared to the same period last year, October’s rate for overall housing starts was 23.3 percent higher than October 2015’s rate of 1.07 million. Starts on single-family homes grew 10.7 percent to hit a rate of 869,000.

“Housing starts are being driven higher by improved household growth as the economy promotes further job and income gains,” Nationwide Mutual Insurance Co. Chief Economist David Berson told U.S. News & World Report. “With improved employment and income prospects, millennials are an expanding portion of housing demand as they move out of their parents’ homes — increasingly to form families.”

Construction permits issued for private housing ticked up 0.3 percent in October to an annual rate of 1.22 million, which was 4.6 percent over October 2015’s rate of 1.17 million. Permits for single-family homes grew 2.7 percent in October to a rate of 762,000, which was 2.7 percent higher than September’s 742,000 permits.

Retail Sales

Retail sales for October grew 0.8 percent to hit $465.9 billion, beating marketing expectations of 0.6 percent, and sales for the August-through-October period increased 3.3 percent, the Census Bureau reported last week. Compared annually, October’s sales were 4.3 percent higher than October 2015’s and notably sales in October for non-store retailers (such as online businesses or kiosks) jumped up 12.9 percent over their October 2015 sales.

Key performers were sales for gasoline stations, which grew 2.2 percent; sporting goods, hobby, book and music stores, which increased 1.3 percent; building material and garden stores, which gained 1.1 percent; and food and beverage retailers, which enjoyed a 0.9 percent gain.

“The consumer is in very good shape and is poised to continue to lead the economy forward based on rising wages, low unemployment and clean balance sheets,” Amherst Pierpont Chief Economist Stephen Stanley told the Wall Street Journal.

Initial Jobless Claims

First-time claims filed for unemployment benefits by the recently laid off during the week ending November 12 tumbled to 235,000, a decline of 19,000 claims from the preceding week’s total of 254,000, the Employment and Training Administration reported last week. This is the lowest level for lay-offs since November 24, 1973’s total of 233,000.

The four-week moving average — considered a more stable measure of layoffs — fell to 253,500, a drop of 6,500 claims from the prior week’s average of 260,000.

This marked the 89th straight week of initial jobless claims below 300,000 — a level that economists say indicates a growing job market — and the longest streak since 1970.

Economic Advisor
Brought to you by Brady Spangler of Axia Home Loans
November 09, 2016
      

Last Week's Economic News in Review
November 9, 2016
New home construction bucked a downturn in overall construction, while the monthly unemployment rate was essentially unchanged and layoffs saw a small spike.

Construction

Construction spending in September dipped to an annual rate of $1.15 trillion, which was 0.4 percent below August’s pace of $1.154 trillion, according to the Census Bureau. Compared annually, September’s rate was 0.2 percent below September 2015’s estimate of $1,152.1 billion, marking the first year-over-year drop in five years.

Spending on private construction dipped to an annual rate of $879.7 billion, which was 0.2 percent below the revised August estimate of $881.6 billion. But, residential construction rose to an annual rate of $453.7 billion in September, which was 0.5 percent over the August pace of $451.3 billion. Nonresidential private construction was dropped 1 percent to an annual rate of $426 billion.

So what was the key driver for the overall downward trend? Public construction spending fell 0.9 percent to an annual rate of $270.3 billion.

“There is still plenty of oomph in private demand for construction and growing support for school construction, but public infrastructure investment is crumbling just when it is needed most,” Associated General Contractors of America Chief Economist Ken Simonson told National Mortgage Professional Magazine. “These conflicting trends have left total construction spending nearly flat for the past 15 months.”

Unemployment

The U.S. economy added 161,000 non-farm jobs in October, which kept the unemployment rate at 4.9 percent, with 7.8 Million people out of work, the Bureau of Labor Statistics reported last week. Key sectors that added jobs were healthcare, professional and business services, and financial activities.

The number of Americans involuntarily employed on a part-time basis for economic reasons, such as their hours getting cut or that being the only work they could find, essentially hovered at 5.9 million. The number of people without a job for 27 weeks or longer, referred to as the long-term unemployed, was unchanged at 2 million in October, which represented 25.2 percent of the unemployed population.

Average hourly earnings for all employees on non-farm payrolls grew by 10 cents in October to $25.92, following an 8 cent increase in September. Compared to October 2015, average hourly earnings rose by 2.8 percent.

“We’re increasingly seeing evidence that the labor market is tight enough to put some upward pressure on wages and inflation generally as well,” High Frequency Economics’ Chief U.S. Economist Jim O'Sullivan told the Washington Post. “The message generally from this is that the Fed probably won’t want the unemployment rate to go a lot lower.”

Initial Jobless Claims

First-time claims for unemployment benefits filed during the week ending October 29 hit their highest point in three months, according to last week’s report from the Employment and Training Administration. Initial jobless claims filed during that week hit 265,000, a gain of 7,000 claims from the preceding week’s total of 258,000.

Most economists chalked up the surge partially to Hurricane Matthew, which allowed some employees eligible to claim unemployment benefits after the storm temporarily closed some businesses starting October 8. State-level data did indicate upswings in those states. Others said the rise was a bit of a statistical “reset.”

“The snapback in the number of new filers may be a garden variety makeup for two readings below 250,000, rather than a result driven specifically by the storm,” Amherst Pierpont Securities Economist Stephen Stanley told the Wall Street Journal.

The four-week moving average — considered a more stable measure of layoffs — notched up to 257,750, an upturn of 4,750 claims from the prior week’s average of 253,000. The week was the 87th consecutive week of first-time claims under 300,000, which is a level economists consider indicative of a growing job market. This is the longest such streak since 1970.

Wells Fargo Mortgage rate
Brought to by by Dan Bardenhagen of Wells Fargo Home Loans
November 04, 2016
      

Current Mortgage Rates for MAUI COUNTY, HI
I hope you are having a great day! I've included below a selection of current rates for a few of our many products. I'd be happy to discuss options with you and your client based on their particular needs.

Conforming
Loan Type MI Type Interest Rate APR
5/1 ARM Conforming  2.875% 3.477%
7/1 ARM Conforming  3.000% 3.436%
30-yr fixed Conforming  3.500% 3.525%
VA 30-yr fixed  3.250% 3.348%

Non-Conforming
Loan Type MI Type Interest Rate APR
5/1 ARM Non-Conforming  2.750% 3.410%
7/1 ARM Non-Conforming  2.875% 3.355%
30-yr fixed Non-Conforming  3.500% 3.503%
Information displayed is accurate as of 11/4/2016 5:42:57 PM (CT) and is subject to change without notice.
For information on the many other loan options we have available, please contact me. I look forward to hearing from you.


Dan Bardenhagen

Private Mortgage Banker
Private Mortgage Banking
NMLSR ID 653667

Housing market looks strong thru 2016
November 03, 2016
      

http://www.realtor.com/news/trends/housing-market-chugs-on-after-a-strong-first-half-of-2016/

The Weekly Brief
Brought to you by Brady Spangler of Axia Home Loans
October 19, 2016
      

Things are relatively quiet this morning as markets in China and Germany were closed for national holidays, and many traders in the US are out for Rosh Hashanah. The economic calendar is quite full this week with many key economic releases, capped off by Friday's closely watched non-farm payrolls report.  Don't let the quiet opening to the week fool you, because mortgage pricing is likely to be very volatile this week!

SOURCE: CMPS Institute

Current Mortgage Rates
Brought to by by Dan Bardenhagen of Wells Fargo Home Loans
October 07, 2016
      

Current Mortgage Rates for MAUI COUNTY, HI
I hope you are having a great day! I've included below a selection of current rates for a few of our many products. I'd be happy to discuss options with you and your client based on their particular needs.

Conforming
Loan Type MI Type Interest Rate APR
5/1 ARM Conforming  3.125% 3.626%
7/1 ARM Conforming  3.250% 3.600%
30-yr fixed Conforming  3.500% 3.517%
VA 30-yr fixed  3.250% 3.289%

Non-Conforming
Loan Type MI Type Interest Rate APR
5/1 ARM Non-Conforming  2.750% 3.490%
7/1 ARM Non-Conforming  2.750% 3.371%
30-yr fixed Non-Conforming  3.375% 3.386%
Information displayed is accurate as of 10/7/2016 5:37:04 PM (CT) and is subject to change without notice.
For information on the many other loan options we have available, please contact me. I look forward to hearing from you.


Dan Bardenhagen

Private Mortgage Banker
Private Mortgage Banking
NMLSR ID 653667

Wells Fargo Home Mortgage | 34 WAILEA GATEWAY PLACE, A205 | KIHEI, HI 96753
MAC E3627-021
Tel 808-891-6075 | Cell 808-280-6168

5 Things You Should Know About Interest Rates Now
September 23, 2016
      

Informative article

5 Things you should know about interest rates now

1031 Exchange
September 20, 2016
      

A 1031 exchange is a way to buy and sell investment properties that are of "like-kind" and defer any capital gains for tax purposes.  Below is a list of things that can often go wrong in a 1031 exchange.

1. Failure to get a replacement property with equal or more debt.

2. The term, "like-kind" is rather vague.  You do not need to replace a condo with another condo, you can exchange your condo for a single family home or vacant lot if you wish.

3. Exchanges were created for investment properties so do not move right into your newly exchanged property, be patient and let it build up a rental history. 

4. The most important thing is to always consult with your CPA and attorney to see if using an exchange will even make sense for you.

5. Do not wait until after closing to call IPX 1031 Exchange Services or it will be too late for them to assist you with the exchange.  They are full service and will help you throughout the exchange process.

6.  There are 2 important deadlines not to be missed when doing an exchange.  You have 45 days after closing to identify the new property you would like to use for the exchange.  Then after that you have 135 days to close on that property.

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