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July, 2009 - Newsletter for the Maui Market
Aloha! Here is your eNewsletter for the Maui Market from Jim Foster
Hot Buys for July - Jim@JamesBFoster.com Two premier properties – On Kaanapali Beach - The Whaler Top Floor Penthouse originally priced at $8,188,000 and now $3,987,000 with all new interiors in 2007 and the original developer’s personal penthouse with unpatrolled 180 degree view. The Kaanapali Alii with a spectacular direct oceanfront corner location. An impressive, luxury condo which features a dual master-suite layout and priced at $4,000,000. For complete details and photos email Jim@JamesBFoster.com
Estate property in Napili on the lower road, sleeps 18 was priced at $2,825,000 and now $1,600,000. Lot is 14,562 SF and 4,000 SF house with 6 bedrooms & 5 bathrooms – this is a Short Sale. At Lahaina Roads on Front Street there is one short sale and one REO. Kapalua Ridge 1 bedroom unit Short Sale. Vacant Lot at the Summit Short Sale. A great buy coming up in the next two to four weeks in Kaanapali Hillside neighborhood, single family residence, a bank reo and if you want to be notified send me an email for this property
There are a substantial number of Short Sales and REO properties for sale in the Maui Realtors Association Multiple Listing Service (MLS) and the number is increasing and if you would like to have a list or are interest in these types of properties send an email to Jim@JamesBFoster.com
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Make sure you check out the Useful Internet Sites and Real Estate Tips at the end of this newsletter which includes some valuable information on Tax Deferred Exchanges, both the standard and reverse tax deferred exchange and Deferred Sales Trust™. (DST) which can save a seller thousands of dollars with advanced planning.
Don't forget! We provide a free Automatic E-mail Notification Service that goes out to recipients whenever a new listing becomes available for a particular condominium complex. Each of these notifications includes a link to view the details of the brand new listing in the MLS. We DO NOT SHARE YOUR EMAIL ADDRESS or your contact information with anyone. To subscribe to our Automatic E-mail Notification Service, please send Won an email at Won@JamesBFoster.com with your first and last name, your email address, and the condominium property you wish to be notified of.
Maui Real Estate - The real estate inventory is gradually decreasing with a high of 805 condominiums for sale in April and we have now worked our way down to 696 condominiums. We anticipate the real estate market will continue to soften on Maui for the next 12 to 18 months and gradually stabilize and reverse its trend. There are many buyers waiting on the sidelines to estimate when the bottom has been reached. Many offers being made are low ball offers and often multiple offers are made by the same buyer. Some sellers dropped their sale prices significantly anticipating offers without any response. Maui had a period of about six years where it was a spectacular rising market that peaked in 2006 and is now in a period of correction. Many factors are contributing to a slow recovery of the national real estate market and our Maui market with occupancy drops in the Hospitality Industry and vacation rental industry. This is a Buyer’s Market now after having been a very strong Seller’s Market and this will eventually even out. Prices are low and financing is still attractive and interest rates will continue increase so buyers should not wait too long.
To view the 2007 & 2008 Year End Statistics go to http://www.jamesbfoster.com/condosales.php and click on Maui MLS Statistics 2007 & 2008.
The West Maui real estate market continues to favor Buyers with Sellers willing to negotiate their prices. The current inventory of West Maui condominiums for sale is now at 696 (at 7/3/09) and on the same month in 2007 it was 475. Properties are requiring more time to sell such as five to six months and Buyers have a much larger inventory of properties for sale to choose from. If you’re curious about current trends in Maui real estate and where the market is headed, the answer is - it depends on Location - it depends on if it is condominium or single-family residential - it depends on whether you look at volume, average or median prices. In the current Maui real estate market, the for sale inventory continues to increase and prices are typically flat or have decreased.
Condominiums for Sale
2007 - In the West Maui real estate market, at the beginning of January, 2007 there were 410 condominiums listed for sale with the total value of $372,238,031.00; February, 2007 - 431 condominiums with the total value of $393,681,669.00; March, 2007 - 458 condos with the total value of $420,941,268.00; April, 2007 - 479 condos with the total value of $429,708,159.00; May, 2007 - 472 condos with the total value of $424,095,260.00; June, 2007 - 455 condos with the total value of $415,187,129.00; July, 2007 - 475 condos with the total value of $432,797,008.00; August, 2007 - 469 condos with the total value of $420,479,301.00; September, 2007 - 474 condos with the total value of $430,914,408.00; October, 2007 - 471 condos with the total value of $423,631,002.00; November, 2007 - 466 condos with the total value of $416,008,907.00; and December, 2007 - 485 condos with the total value of $421,080,117.00. The average number of condominiums for sale on West Maui for 2007 was 462 and the average total value was $416,730,118.25.
2008 - At the beginning of January, 2008 there were 511 condominiums listed for sale with the total value of $445,656,447.00; February, 2008 there were 559 condos with the total value of $500,946,603.00; March, 2008 - 595 condos with the total value of $529,779,322.00; April, 2008 - 647 condos with the total value of $606,635,687.00; May, 2008 - 634 condos with the total value of $583,391,821.00; June, 2008 - 644 condos with the total value of $590,736,279.00; July, 2008 - 680 condos with the total value of $662,919,268.00; August, 2008 - 703 condos with the total value of $693,069,348.00; September, 2008 - 693 condos with the total value of $654,411,079.00; October, 2008 - 673 condos with the total value of $620,032,454.00; November, 2008 - 715 condos with the total value of $652,379,032.00; and December, 2008 - 729 condos with the total value of $660,335,998.00. The average number of condominiums for sale on West Maui for 2008 was 648 and the average total value was $604,191,111.50.
2009 - At the beginning of January, 2009 there were 742 condominiums listed for sale with the total value of $693,143,047.00; February, 2009 there were 757 Condos with the total value of $709,234,346; March, 2009 there were 787 Condos with the total value of $681,864,289; April, 2009 there were 805 Condos with the total value of $693,368,793; May, 2009 there were 717 Condos with the total value of $629,812,465; June, 2009 there were 691 Condos with the total value of $591,075,527; and in July, 2009 there are 692 Condos with the total value of $588,385,017. The average number of condominiums for sale on West Maui from January 2009 to July 2009 is 742 and the average total value is $655,269,069.14.
The condominium for sale inventory since July, 2005 has been as low as 165 and is up to 692 for July 1, 2009. The “for sale” inventory on West Maui continues to increase.
Condominium Sales
2006 - The total condominium sales on West Maui during the month of January, 2006 there were 42 sales and the total value was $28,574,643.00; February, 2006, there were 48 sales with total value of $32,995,078.00; March, 2006 - 40 sales with total value of $32,199,584.00; April, 2006 - 43 sales with total value of $41,898,525.00; May, 2006 - 51 sales with total value of $39,644,886.00; June, 2006 - 40 sales with total value of $32,533,500.00; July, 2006 - 30 sales with total value of $26,212,000.00; August, 2006 - 28 sales with total value of $31,885,500.00; September, 2006 - 30 sales with total value of $24,770,000.00; October, 2006 - 29 sales with total value of $23,359,299.00; November, 2006 - 22 sales with total value of $13,414,600.00; and December, 2006 there were 30 sales with total value of $23,169,999.00. For 2006, the monthly average sales were 36 sales per month with the average sales value of $29,221,467.83 per month.
2007 - The total condominium sales for West Maui during the month of January, 2007 there were 37 sales and the total value was $33,091,000.00; February, 2007 there were 26 sales with total value of $16,330,000.00; March, 2007 - 32 sales with total value of $24,121,000.00; April, 2007 - 27 sales with total value of $16,766,000.00; May, 2007 - 28 sales with total value of $30,774,929.00; June, 2007 - 28 sales with total value of $18,917,000.00; July, 2007 - 21 sales with total value of $13,314,200.00; August, 2007 - 32 sales with total value of $33,258,999.00; September, 2007 - 23 sales with total value of $24,701,900.00; October, 2007 - 42 sales with total value of $28,159,900.00, however this included a packaged sale of 19 units at Aina Nalu in Lahaina; November, 2007 - 15 sales with total value of $15,930,000.00; and December, 2007 there were 13 sales with total value of $13,335,500.00. For 2007, the Month of December saw the lowest number of sales in 2007. The monthly average sales were 27 sales per month with the average sales value of $22,391,702.33 per month.
2008 - The total condominium sales for West Maui during the month of January, 2008 there were 20 sales and the total value was $16,184,800.00; February, 2008 there were 20 sales and the total value was $14,414,584.00; March, 2008 - 26 sales and the total value was $20,079,000.00; April 2008 - 28 sales and the total value was $20,488,500.00; May 2008 - 22 sales and the total value was $20,055,000; June 2008 - 14 sales and the total value was $11,957,000; July 2008 - 10 sales and the total value was $6,955,999; August 2008 - 13 sales and the total value was $8,055,000; September 2008 - 12 sales and the total value was $6,707,122; October 2008 - 12 sales and the total value was $8,042,500; November 2008 - 10 sales and the total value was $8,444,000; and December 2008 there were 6 sales and the total value was $6,265,000. For 2008, the average monthly sales were 16 sales per month with the average sales value of $12,304,042.08 per month.
Condominium Sales in 2009 - The total condominium sales for West Maui during the month of January, 2009 there were 23 sales and the total value was $18,305,000.00; February, 2009 there were 18 sales and the total value was $26,880,650; March, 2009 there were 20 sales and the total value was $13,653,500; April, 2009 there were 12 sales and the total value was $4,044,872; and May, 2009 there were 6 sales and the total value was $4,520,500; and June, 2009 there were 11 sales and the total value was $7,581,000. From January 1, 2009 to July 1, 2009, the average monthly sales were 15 sales per month with the average sales value of $12,497,587 per month.
We have gone in to the Maui MLS database and pulled information for 2000 through 2008. In 2000 - 654 condominium units sold in the West Maui area for a total value of $209,064,010; in 2001 - 605 condominium units sold for a total value of $271,681,337; in 2002 - 730 condominiums sold for a total value of $240,178,915; in 2003 - 737 condominiums sold for a total value of $319,748,466; In 2004 - 700 condominiums sold for a total value of $375,033,467; in 2005 - 682 condominiums for a total value of $408,582,315; in 2006 - 435 condominiums for a total value of $351,782,614; in 2007 - 327 condominiums for a total value of $271,290,428; in 2008, - 193 condominium units sold for a total value of $147,648,505; and from January 1, 2009 to July 1, 2009, - 90 condominium units sold in the West Maui area for a total sales value of $74,985,522.
For previous condo sale details, go to our web site, http://www.jamesbfoster.com/condosales.php then scroll down to your choice and click to open the ADOBE pdf. For the time period of 1/1/2009 to 5/31/2009 the average price for a home on Maui was $748,436 which is down 19% for the time period of 1/1/08 to 5/31/08 when the average price was $921,135. For the same time period the average price for a Fee Simple condo on Maui was $686,901 which is down 31% for the same time period when the average price was $997,852 according to the RAM (Realtor Assoc. of Maui) statistics. Condo sales in Wailea, Makena, Kapalua and Kaanapali are having an impact on the Fee Simple Condo average price by increasing it.
Mortgage Rates for week of July 1, 2009 - from First Hawaiian Mortgage - Rates: Houses & Condos Full docs: 5.125% 30yr fixed 1.750 pts (5.366 APR) 5.250% 30yr fixed 1.375 pts (5.458 APR) 5.625% 30yr fixed -0- pts (5.629 APR) Stated Income - No longer available: Interest Only: 6.000% 30 yr fixed .875 pts (6.160 APR) To $1M: No longer available 6.50% 30 yr fixed 1.625 points for condotels.(6.749 APR) (Points include origination fee)
Mortgage Rates for week of June 2, 2009 - from First Hawaiian Mortgage - Rates: Houses & Condos Full docs: 5.000% 30yr fixed 2.25 pts (5.265 APR) 5.250% 30yr fixed 1.250 pts (5.426 APR) 5.6250% 30yr fixed -0- pts (5.629 APR) Stated Income - No longer available: Interest Only: 6.125% 30 yr fixed 1.50 pts (6.293 APR) To $1M: No longer available 6.50% 30 yr fixed 2.25 points for condotels.(6.393 APR) (Points include origination fee)
Mortgage Rates for week of May 1, 2009 - from First Hawaiian Mortgage - Rates: Houses & Condos Full docs: 4.500% 30yr fixed 2.125 pts (4.765 APR) 4.7500% 30yr fixed 1.250 pts (4.941 APR) 5.250% 30yr fixed -0- pts (5.332 APR) Stated Income - No longer available: Interest Only: 5.625% 30yr fixed 1.375 pts (5.786 APR) To $1M: No longer available 6.125% 30 yr fixed 1.875 points for condotels.(6.393 APR) (Points include origination fee)
Mortgage Rates for week of April 6, 2009 - from First Hawaiian Mortgage - Rates: Houses & Condos Full docs: 4.375% 30yr fixed 2.125 pts (4.571 APR) 4.625% 30yr fixed 1.00 pt (4.725 APR) 5.00% 30yr fixed -0- pts (5.013 APR) Stated Income - No longer available: Interest Only: 5.625% 30yr fixed 1.25 pts (5.74 APR) To $1M: No longer available 6.00% 30 yr fixed 1.875 points for condotels.(6.192 APR) (Points include origination fee)
Mortgage Rates for week of March 1, 2009 - from First Hawaiian Mortgage - Rates: Houses & Condos Full docs: 4.875% 30yr fixed 1.75 pts (5.112 APR) 5.125% 30yr fixed 1.00 pt (5.320 APR) 5.50% 30yr fixed -0- pts (5.529 APR) Stated Income - No longer available: Interest Only: 6.125% 30yr fixed 1.25 pts (6.259 APR) To $1M: 7.375% 30yr fixed 1.75 pt (7.571 APR) 6.75% 30 yr fixed 1.25 points for condotels.(6.905 APR) (Points include origination fee)
Mortgage Rates for week of February 5, 2009 - from First Hawaiian Mortgage - Rates: Houses & Condos Full docs: 4.875% 30yr fixed 1.75 pts (5.112 APR) 5.125% 30yr fixed 1.25 pt (5.320 APR) 5.375% 30yr fixed 1.00 pts (5.550 APR) Stated Income - No longer available: Interest Only: 6.375% 30yr fixed 1.125 pts (6.554 APR) To $1M: 7.375% 30yr fixed 1.00 pt (7.487 APR) 6.50% 30 yr fixed 1.50 points for condotels.(6.737 APR) (Points include origination fee)
If you would like to view the most current sales statistics for Maui or West Maui Condominiums, you can go to my web site www.JamesBFoster.com and click on Condo Sales in the upper left corner of the home page or go to www.JamesBFoster.com/condosales.php.
Some recent and past news about what is going on in Maui & Hawaii
Weather - As I am writing this newsletter today, July 4, 2009, it is about 81 degrees and light winds with a few clouds, a Maui day. Over the next ten days we are expecting increasing winds and the possibility of rain through July 11th. Perfect weather for the fireworks show in Lahaina Harbor tonight.
Maui Prince Hotel and Makena Resort – A new two year contract extension was signed with ILWU Local 142 in June but it included a furlough of 49 bargaining unit workers - about one quarter of the staff. In April, hotel occupancies hit an all-time low of 59 percent on Maui, according to the Flash Report of Hospitality Advisors. Resorts are struggling to get the numbers up, and most have cut staff or are likely to be forced to.
At Kapalua Resort, John Durkin, chief financial officer at Maui Land & Pineapple Co., said a push is on to create "genki" - Japanese for energy or liveliness - by getting more visitors into the resort. The Villas at Kapalua are being offered at $199 a night, with as much golf as you can play for $399 for five days; or $499 for persons not staying at resort-managed rooms. A round at the Plantation Course cost around $250 when the economy was better. Now the two Kapalua courses are under capacity, so the resort can enhance revenue at little cost to itself. "Instead of getting $250, we get $400," said Durkin, and "get people shopping in the shops, tipping the caddies and eating in the restaurants." And also, he hopes, create a sense of life and activity around the resort.
Aina Gourmet Market at Honua Kai - The Aina Gourmet Market is part of a collection of boutique Maui establishments and had its grand opening the end of May. The culinary crew is behind Lahaina’s popular Pacific’O and I’o restaurants at 505 Front Street opened ‘Aina Gourmet Market, a fine foods store and cafe. Local products and Maui produce are used first, preferably from smaller farms and island-based businesses. The market offers fresh eggs, organic produce, meats, wines, chocolates, coffee, smoothies, gelato, panini, specialty gifts and customized gift baskets. Some of the vendors include Olowalu Farms, Ono Farms, Maui Cattle Company, Anahola Granola, Oils of Aloha, Maui Brewing Co. and the market’s own O‘o Farm. Market hours are 7 a.m. to 9 p.m. daily. For more information, contact Green at 662-2832 or visit www.ainagourmet.com They are located on the ground floor in the Hoku Lani building at the Honua Kai Resort which is the completed building and the Konea is the building that is still under construction.
Bed & Breakfast (B&B) Vacation Rental Tax bill goes forward - Maui County Council Members voted to forward to the entire County Council a bill that would establish a "commercialized residential" real property tax classification for both bed-and-breakfasts and transient vacation rentals. The bill that passed technically will put transient vacation rentals and bed-and-breakfasts at the same tax rate, which is $8.20 per $1,000 of assessed value. By comparison, a homeowner's tax rate is $2 per $1,000.
If it becomes law as is, the measure means vacation rentals and bed-and-breakfasts would pay the same rate as hotels. In the meantime, bed-and-breakfast owners have recently started getting approved. But anyone operating either kind of establishment without a permit remains illegal in Maui County and is subject to fines.
New Restaurant in Lahaina - Chef David Paul Johnson has been away for seven years but is back with his new restaurant, David Paul’s Island Grill, on Front Street just down from the Hardrock Café and Ruth’s Chris Steakhouse at 900 Front Street. Referred to as “High End Comfort Food”, they are serving slow-braised roasts, seared fresh fish, macadamia nut smoked and fire-grilled meats, brick pressed chicken, and olive oil-poached Keahole lobster all find their way onto the menu. The offerings are market-based and seasonal. Island-fresh, natural and sustainable local products figure prominently. A nine-course, chef’s tasting menu starting at just $45 per person is a highlight. The entire menu is priced to be affordable, especially for families and especially in these times. Most entrees are $30 or less, and many choices in every menu category are offered in “full” or “small” portions. Dinner is served Sundays through Tuesdays (closed Mondays) from 5 to 10 p.m. A weekend late-night menu is offered Fridays and Saturdays until midnight. For Reservation all 662-3000 or visit www.davidpaulsislandgrill.com
Maui Earthquake strongest to hit in years - The earthquake that shook Maui on Sunday night, June 28th, was the most powerful to originate under the island in more than five years, but no damage was reported, according to the Hawaiian Volcano Observatory. The quake's magnitude was 3.5. For eruption updates and other information, visit the Hawaiian Volcano Observatory Web site at hvo.wr.usgs.gov
Another Fire on Honoapiilani Highway burns homes, closes road – Tourists arriving later in the day had to spend the night on the other side and could not get through to West Maui on Sunday, June 21st. The fire was driven by howling winds, a brush fire destroyed at least two homes and shut down Honoapiilani Highway in the Maalaea area on Sunday afternoon, stranding motorists trying to get between West and Central Maui, as well as flight crews upon whom hundreds of tourists were depending for trips home.
Economic Forecast Gloomy & Gloomier – Tighten your seat belts and work hard and be conservative with you finances. The swine flu and the inability of the state to collect enough revenue to cover its bills has put an additional damper on the forecasts and the state fiscal crisis is of greatest concern. There is steady contraction in the visitor industry and in construction. Total visitor arrivals are expected to drop 6.8 percent this year (from 6.7 million visitors in 2008 to 6.25 million this year). Some economists expect a recovery to begin in the national economy and believe the country is approaching the trough of a business cycle. They expect national economic growth to resume during the rest of this year and predict that Japan's economy will resume growing. It is expected that Hawaii's visitor industry will lag any national recovery. It is expected that the Hawaii economy will stabilized by the end of the year and a slower than expected recovery.
Ultraluxury unveiled with new Ritz-Carlton Club and Residences – The 146-unit Ritz-Carlton Club and Residences, Kapalua Bay and about one third have been sold. If you would like additional information email me at Jim@JamesBFoster.com Design and construction began about four years ago on the $355 million project which joins the $175 million renovation of the nearby The Ritz-Carlton. The new 146 unit development is on the site of the former Kapalua Bay Hotel, is divided into two distinct private ownership entities: the club and the residences. They share accouterments, such as private chefs, concierges, restaurants, indoor and outdoor pools, special golf course privileges, a 6,100-square-foot beach club and a 30,000-square-foot spa, with message therapy rooms and an oceanfront yoga studio. Of the 84 full-time homes, they've sold 32 so far, she said. The residences, which are up to 4,271 square feet spread between four buildings and each come with a private elevator, cost between $3.9 million and $9.8 million.
Furniture Refinishing - Kim Scott aka the Stripper, has been refinishing furniture for vacation rentals in West Maui for over 11yrs. Her shop located at 278 Wili Ko Place #12 in Lahaina features a NIOSH approved open face spray booth for a professional finish. They specialize in faux finishing, painting, powder coating, repairs and restoration of Rattan and hard wood furniture, Kitchen & Bath cabinets, Air conditioning vents & more. Some of their clients include Mind's Eye Interiors, Napili Surf Resort, Chase N Rainbows, Ritz Carlton Club and Marriott Vacation Club. When considering replacing your used furniture this is an alternative to consider. To contact Kim call (808) 283-9664 or you can email her at scottk003@hawaii.rr.com
Remodeling or Upgrading condominium or house - It is critical to have a licensed contractor and subcontractors with excellent references and experience working with Maui properties if you will be Remodeling or Upgrading a condominium or house Should you need assistance or referrals for a property you own or need an estimate for property you are contemplating purchasing, all Jim Foster on his toll free number 1-888-661-7994 or send him an email to Jim@JamesBFoster.com and we can provide names and contact information as we have contact information for several reputable contractors for both remodeling and new construction.
Medical Facilities on Maui - The Association for Improved Healthcare on Maui (AIHM) www.aihm-maui.org whose mission is to serve as an advocate for the creation of a system that will provide improved healthcare services to all of the citizens and visitors of Maui County has been making some excellent progress. For more information on making a contribution to this great cause, please visit the web site for AIHM at www.aihm-maui.org The new organization that is proceeding with Dr. Ron Kwon dream of a new hospital in Kihei is www.MalulaniFoundation.org To stay informed of what is transpiring with future approvals of either the Kihei or West Maui hospital, you can send me an email and request a subscription to the “Coconut Wireless” to either my email at Jim@JameBFoster.com or Jan@SunshineRainbows.com The West Maui Hospital is expected to announce the architect it has selected for the West Maui Hospital and construction is approximately 12 to 16 months away, with completion approximately 24 months from that date or 2012 – 2013. The construction permit will not be applied for until the architect completes the construction plans.
Real Estate & Financial Planning Tips:
Transient Accommodations Tax (TAT) – If you own a condominium or property that is rented on a transient basis the TAT applies to you. The TAT goes up from 7.25% to 8.25% on July 1, 2009 and to 9.25% on July 1, 2010. Monthly and Calendar Year Quarterly or Semi-annual TAT filers may continue to use the forms in their TAT booklets by simply multiplying by .0825, instead of .0725, in the "Rate" column. Fiscal Year Quarterly and Semi-annual filers must use the revised TA-1 form (Periodic Transient Accommodations Tax Return) that will be available on the DOTAX website in the summer of 2009. The website address is www.hawaii.gov/tax
Electricity Cost Disclosure Requirement – This Disclosure requirement goes into Effect July 1, 2009 under Hawaii House Bill 1464. The bill, passed by the 2009 Legislature in May, was designed to add or clarify a number of statutory provisions to encourage energy efficiency and the development of renewable energy resources. It includes a provision that states: "Prior to the sale of residential real property, the property owner shall make a good faith declaration of electricity cost based on the most recent three-month period in which the property was occupied prior to the date of the seller's disclosure, pursuant to chapter 508D. This declaration shall only apply where the owner directly pays the electrical utility bills, and shall not apply in the case of a foreclosure of residential real property or where there are no electric utility accounts associated with the property."
Tax Planning For The Sale of Real Estate - When selling real estate, an owner can save thousands of dollars with advanced planning relating to both Federal and State Capital Gains tax. The two most effective methods utilized are 1) IRC Section 1031 Tax Deferred Exchanges both the standard and reverse tax deferred exchange and 2) Deferred Sales Trust™. (DST).
Those of us who own businesses, corporations, and commercial or residential investment real estate assets are often reluctant to sell because of capital gains taxes associated with the sale. But what other choice do we have other than a property exchange directed by a Qualified Intermediary? Is there another way to deal with the capital gains tax deficits that so many investors experience when they sell their real estate assets? The answer may lie in the Deferred Sales Trust™.
This capital gains tax deferral tool could save you thousands of dollars, and at the same time, you would then have the opportunity to potentially make a profit on the money you would have paid to Uncle Sam in the year of the sale. Obviously, this strategy is gaining popularity among those who have highly appreciated assets that are marked for sale. You too can potentially take advantage of this program once you understand how it works.
The process starts when a property owner sells its property to a trust owned by a third party company. The trust sells the property or stock. Next, the trust "pays" you. The payment isn't in cash, but with a payment contract called an "installment contract." The contract promises to make payments to you over an agreed period of time. There are zero taxes to the trust on the sale since the trust "purchased" the property from you for what it sold it for. The payment is made with an installment contract which makes payments to you over an agreed period of time.
The options on when and how payments can be made are flexible. You may have other income and don't need the payments right away. The tax code doesn't require payment of the capital gains until you start receiving installment payments. The capital gains tax is paid to the IRS with an "installment plan" since only that portion of capital gains is due in proportion to the number of years established in the term of the installment agreement.
The Deferred Sales Trust™ has the potential to generate more money over the long run than a direct and taxed sale.
There may be a more suitable or appropriate tax structure depending on your circumstance. Contact me at Jim@JamesBFoster.com to discuss your specific circumstances and goals with you or call my toll free number 1-888-661-7994.
We have also assisted sellers (for sale by owners) who had buyers but needed someone to facilitate the sale and guide them through the process and assure them they were asking a current market value price for their properties.
In past newsletters, I have mentioned that the easiest way to minimize the tax impact when selling is a tax deferred exchange. If you are considering selling your property in Hawaii, a tax deferred exchange will exempt you from the 5% HARPTA withholding and also the Federal Capital Gains Tax. Planning in advance for the disposition or acquisition of assets is always a wise decision. Another invaluable tool for sellers in doing a tax deferred exchange is having the option of using tenant-in-common (TICs) that qualify for replacement properties.
Many property owners who currently own underperforming assets can sell those assets and take advantage of tax deferred exchanges, turning an underperforming asset such as land into an income producing asset. Call me or send me an email if you would like additional information at 808-661-7994 or email Jim@JamesBFoster.com
If you are contemplating selling highly appreciated real estate during 2009 and would like for us to provide an analysis of how to best structure your transaction, please call us at 1-888-661-7994 or send us and email at Jim@JamesBFoster.com
Useful Internet Sites & Interesting DVDs:
Recommended DVDs - 1) Defiance - Stars Daniel Craig and Liev Schreiber as Jewish brothers who escape the Nazis during World War II from Poland into the forests of Belarus during World War II to lead a band of resistance fighters and create a safe haven for Jewish refugees. Based on a true story. 2) Taken – Stars Liam Neeson and Maggie Grace. A relentless action thriller if you enjoy this type of movie. 3) How About You - When the manager of a retirement home in the Irish countryside asks her younger sister, Ellie (Hayley Atwell), to run the facility during the holidays, four mischievous residents take advantage of the power vacuum and turn the place upside down. As Ellie learns to take charge, the residents also come to terms with their own troubles. Anthony Byrne directs this heartwarming comedy-drama co-starring Joss Ackland and Vanessa Redgrave.
www.yelp.com On this web site you can check on Restaurants, Shopping, Food, Health and Medical, Nightlife, Home Services plus dozens of additional categories. There is additional information including reviews, maps, directions, special offers and a spectacular application for iPhone users that gives all of this great information for most major cities right on your phone screen.
www.warningsigngenerator.com Have fun making very official looking warning signs in three quick steps to cover any real or imagined potential disaster. Then save the sign and use it at will. There are additional functions allowing you to make warning labels, street signs and even tombstones.
www.behindthename.com Would you like to know where your first name came from?
This site has over 15,000 names in the database and contains given names from all cultures and periods. Just type a name in the site search box and get a wealth of information on its usage and historical significance.
www.myebook.com This is a great web site for aspiring authors who want to create, publish and share their writings in e-book format with this powerful, browser-based, builder software. You can publish your book with a single button and release it to the world before the (virtual) ink is dry! You can create as many publications as you want and it is free.
www.audible.com If you own an IPod or MP3 player and want a good selection of audio books this is a great web site for a wide selection of fiction and non-fiction. I recently purchased an IPod Touch and the new technology is WOW!
Kindest Regards, Jim Foster
Chase 'N Rainbows Real Estate, Inc.
Toll Free 888-661-7994
Direct Line 808-661-7994
Cell 808-870-5858
Fax 808-667-2957
Real Estate for Sale www.JamesBFoster.com
Vacation Rental www.ChaseNRainbows.com
Email Jim@JamesBFoster.com
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