The end of the year rush is turning into a frenzy for real estate agents.
With the uncertainty over the nation’s tax landscape, some home sellers are frantic about closing the sales of their homes on a date that begins with “December.”
Kim Ogilvie of Michael Saunders & Company calls them “turbo closings.”
“People are worried about changes in the long-term capital-gains rate,” she said. “A higher rate could be made retroactive to the first of next year, so sellers want to close now.”
Deborah Beacham, another Saunders agent, is working three sales, all priced at more than $3 million, and the sellers want to close now.
"Because of the uncertainty with what is going to happen with the capital-gains rate, it’s an attitude of, ‘Let’s do it now, before it potentially changes,’ ” said Beacham. “They want to go with what they know rather than what they don’t. That is more of a seller benefit than a buyer benefit — if the seller has a gain. A lot of them have a loss.“
Investor sellers are anxious to close to avoid an increase in the capital-gains tax,” said Realtor Steve DuToit of Keller Williams. (That is not a certainty.)
“Also, new homeowners would like to have the homestead exemption, so they need to close by the end of the year so they occupy the property by Jan. 1.”
A bigger issue for some sellers, especially if they sold short and had a big chunk of mortgage debt forgiven by a lender, is the end-of-the-year expiration of the Mortgage Forgiveness Debt Relief Act.
Said Sarasota real estate attorney and CPA Jo Ann Koontz, “Even if it is not practical or probable or realistic, it is definitely motivating people to try to close by the end of the year.”
She said that historically, if a seller sold short and the lender forgave the unpaid mortgage balance, that amount would be taxable as income. The debt-relief act exempted forgiven mortgage balances from taxation as long as the loan was used to buy, build or substantially improve a primary residence — a home that the taxpayer occupied for at least two of the previous five years.
“What I have found is that even folks who don’t qualify for that law are feeling an urge to close by year-end,” said Koontz, “because they know it is out there, but they don’t know what it means.
“So it is kind of like the new thing: ‘Yeah, we have to close by the end of the year,’ and I am like, ‘Sir, that law doesn’t even apply to you.’ It is the phantom thing that is motivating everyone.”
Like the Realtors, Koontz is busy dealing with the rush of “turbo closings,” too.
But in her case, “I am just the bad-news bear. No one likes to call me.”
