The baby boomer generation is aging, with the oldest members turning 73 this year. And they’re having a significant impact on the housing market.

Between 2012 and 2017, the number of households headed by individuals over age 65 increased from 27 million to 31 million. Seniors make up a large portion of today’s homeowners, and so agents must be thoughtful about the elderly when providing services. A new report by the Joint Center for Housing Studies of Harvard University (JCHS), Housing America’s Older Adults 2019, highlights the current state of the aging demographic, giving real estate professionals a look at the challenges and opportunities for best serving this segment of the market.

The Demographics
Between 2018 and 2028, JCHS predicts that the number of households aged 75-79 will go up by 49 percent, and by another 20 percent between 2028 and 2038. The future could also see increased diversity in this age group, with Hispanic households rising from 7 percent in 2018 to 12 percent in 2038. And black households are predicted to increase 10 percent to 12 percent, with Asian/other households increasing from 5 percent to 7 percent.

Living arrangements are also shifting. Most adults who are retirement-aged are living in small households, with 35 million living either alone or with a spouse or partner in 2017. And as this segment gets older, their chances of living alone increase. Those in their 80s and over make up 57 percent of elderly homeowners who live on their own. This increase in a population that brings in lower incomes than couples, as well as higher disability rates, puts added stress on the market for affordable housing, especially units that offer supportive amenities.

Housing Needs
Mobility is one of the biggest challenges for the elderly population, but there’s a lack of amenities catered to assisting in this respect. In terms of inventory, there’s not enough housing for this segment of the market, the JCHS reports. In 2011, only 3.5 percent of all U.S. homes had accessibility features such as grab bars or handrails in the bathroom, extra-wide hallways and doors, and a bedroom on the main level.

For those interested in aging in place, renovations are a must. In 2017, 10 percent of individuals aged 65-79 and 14 percent aged 80 and over took on at least one home renovation project to help with accessibility issues. But for much of the population, there’s simply not enough money for that.

“Commitments to create age-friendly communities and some recent funding for affordable housing construction for older adults are promising starts,” said Chris Herbert, managing director of the JCHS, in a statement. “But the time for innovation—in the design, finance, construction and regulation of housing—is now. The quality of life and well-being of over a quarter of the U.S. population will depend on it.”

Income Challenges
The number of cost-burdened individuals over the age of 65 is rising. From 2016 to 2017, this number increased by over 200,000 to almost 10 million, states the report. Increased debt levels are putting pressure on dwindling retirement funds. In 2016, 46 percent of homeowners between the ages of 65-79 carried mortgage debt, with a median balance of $77,000. This is a drastic increase from just three decades ago when only 24 percent of homeowners in that age range still had mortgage debt.

“The falloff in homeownership rates among those approaching retirement, and the elevated levels of mortgage debt among those who do own, is concerning,” said Herbert.

Read more

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When the time comes to sell your home, you can maximize your selling price and even make the sale happen sooner by doing some things to make you home show better.

Sellers need to determine the cost effectiveness of each planned improvement. One must judge the potential return based upon what they need to do to add value. Not all home improvements add enough value to justify doing them. Ask your real estate agent if you are unsure.

Here are some projects that can add value to your home:

• Paint the interior
• Paint the exterior or pressure wash if the paint is good
• Remove any popcorn ceilings
• Upgrade or paint the garage door and make sure it works nicely
• Fix the driveway
• Trim and groom your landscaping. Fertilize your lawn and foliage.
• Clean in and around the home thoroughly including windows and frames
• New exterior and/or interior lighting
• Replace or thoroughly clean carpet if it is still in good condition
• Remove carpeting and refinish any existing hardwood floors
• Update kitchen – new appliances and/or sink if it’s in bad shape
• Refinish kitchen cabinetry
• Rejuvenate your bathroom
• Do any necessary electrical work to avoid home inspection problems
• Clean your swimming pool and make the water crystal clear
• Stage with attractive furnishings

The list above includes most of the important facets of home preparation for sale. Some of these items may not apply to your situation. Other items may not be deemed cost effective. Only you and your real estate agent can determine what is best in your situation.

First Impressions

Nothing is more important than the first impression and that starts with curb appeal. When a prospective buyer arrives at the house you want them to love what they see upon first look. That means landscaping, driveway, garage door and the home’s exterior.

When they enter the home they should already have a good feeling about what they saw while walking up to the door. You must create an attractive look throughout the home so when they enter they get that warm and fuzzy feeling.

Make it Clean

Your home should be spotless inside and out. Hide all personal items and store them neatly away. Everything should be clean and in place as you might find in a nice hotel room. The kitchen should be spotless with all appliances wiped and shiny and everything put away. The windows should be crystal clear, and you might consider refraining from cooking food that leaves smells in the house for prolonged periods of time.

Be sure to dispose of any odds and ends that you may have stored around the exterior of the house.

Ambience

Ambiance in the home is important. You might open windows if the weather is nice. Clean your skylights and remove any old curtains that might block light and look unattractive. Replace any old ceiling lighting fixtures. Some are not expensive and will look a lot better than some legacy chandeliers. Remove all eyesores and maybe add a modern ceiling fan. Your agent will know best how to spend money toward a faster sale and better outcome.

Landscaping

Always remember that curb appeal starts with your landscaping and garden and improvements there will benefit you over the long term. Maintain your yard by:
• Watering regularly
• Using fertilizer to make growth vital and colorful
• Brush off cobwebs everywhere
• Rake leaves
• Remove weeds
• Trim trees and foliage

If you don’t have a regular gardener, consider hiring one for the duration of the sale, especially during seasons when leaves are dropping regularly and your grass is growing quickly.

Think green when it comes to your landscaping. Plant low-maintenance landscaping and native drought-tolerant plants. Buyers look for these details.

Uncover Hardwood Floors

Hardwood floors are very popular now and many homes have them. Often, they were covered up by a prior owner or by you. Tear out that old wall-to-wall carpeting and let the hardwood floors shine through. Sometimes they need refinishing which might look a whole lot nicer than a re-cleaned carpet. Often, in older homes, the hardwood used decades ago is nicer than almost anything you can buy now.

If you don’t know what you have, you can pull up a corner of the existing carpet to determine what is under there and its condition. If you are handy and willing you might do this yourself, but it is not for the faint of heart. The result will surely help the value of your home while helping it sell fast.

Paint

There is nothing like fresh paint. It covers dirt, stains and cracks and adds tremendously to the curb appeal. It goes a long way when getting your home ready to sell. It is one of the most cost-effective home improvements and a fresh coat of paint, both inside and out, will add value to your home by providing a clean and updated look. Consider a neutral color so it will appeal to a larger number of buyers.

If your existing paint is in good shape, then you might want to pressure wash the house to make it like new. Pressure washer rentals can be found in most cities and towns.

Update Your Kitchen

Nothing adds more value than an attractive, well-equipped kitchen. This can get pricey so you must use a value equation to determine how to go about this. Upgraded dishwashers, microwaves, refrigerators and stoves will increase the value of your home. Stainless steel is very popular now and is a neutral color for potential paint color changes by the buyer.

Electrical Work

Don’t overlook your home’s electrical wiring and outlets when thinking of selling. A healthy home electrical system is crucial in order to pass a home inspection. If you suspect something out of the ordinary, it’s often less expensive, and wiser, to have your own electrician do the work. This will avoid any bad marks on the home inspection that can slow down the sale. Check your appliances, your sprinkler system, doorbell and exterior lights. Fix any non-performing item. Some repairs can be done yourself.

Bathrooms

Nice bathrooms are a close second to a nice kitchen in adding value and speeding sales. Buyers adore clean, bright bathrooms.

Outdated, dull and leaky bathroom fixtures can really detract from the overall look, style and feel. A bathroom refresh is often something you may do yourself. But no matter who does it, be sure your bathrooms are as fabulous as you can make them. Change fixtures, knobs and pulls, fix leaky faucets, poor drainage and corroded drains and chrome. Consider re-finishing cabinet doors and fronts as well as re-grouting your shower or installing a tile backsplash. These fixes always add value to your home.

Remove Popcorn Ceilings

Who invented these? Popcorn ceilings are universally disliked. They may not ruin your sale, but they tend to date and devalue a house. You can do it yourself with online videos to watch or have a pro do it.

Caution should be taken if the ceiling contains asbestos. Have a professional take a look before you begin any removal.

Stage

Home staging is more and more popular because it can increase the value of your home and help it sell faster. Your agent can help you with this. Your home will be more appealing to a wide range of buyers. A staged home can make a big difference in how much a buyer will offer. Do it yourself or have a professional take care of it. It often pays off in the end.

Removing personal items, rearrange furniture to open up a room, hanging neutral-looking artwork and bring in some flowers.

Your attention to these details will have a great impact in your home’s sale and price. e time of selling your home. If you must move fast, choose time-effective items. If you have a few months, do all you can to maximize your selling price.

Call Mary Beth to learn more. 310-571-1358

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October 9, 2019 — A measure by Santa Monica Assemblymenber Richard Bloom that reduces barriers to building accessory dwelling units (ADU), or “granny flats,” was signed into law by Governor Gavin Newsom on Wednesday.

AB 881 — which updates a law Bloom authored in 2016 — clarifies the definition of public transit and an ADU’s distance from it, as well as the types of existing structures that can be converted.

“Accessory dwelling units have ignited interest from residents throughout the state due to the affordability and flexibility these units give homeowners,” Bloom said in a statement Wednesday.

“In order to continue the progress we have made, ADU regulations need to be relaxed in order to make ADU development easier and, thus, more likely to happen.”

Since the passage of the 2016 law, thousands of ADUs have been built around the state, with more than 10,000 applications approved in Los Angeles alone, Bloom’s office said.

But there are still barriers to building so-called “granny flats,” which are often used by college students, elderly parents or disabled individuals who need to live close to their families.

“In some instances, cities have rejected garages as existing, convertible structures, citing the lack of explicit reference to these structures in code,” Bloom’s staff said.

“Other cities have imposed burdensome owner occupancy requirements that have created uncertainty, making lenders wary of approving financing.”

Bloom’s measure also removes provisions that have given cities “unreasonably broad discretion for denying ADU permits,” as well as an owner occupancy requirement that “unfairly subjects ADUs to a requirement not in existence for any other kind of housing.”

Continue Reading

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Many folks are surprised when they take a good look at their financial situation as they approach retirement. Many seniors have neglected their financial planning, don’t have defined pension plans and have not put enough money into other retirement funds, such as IRA and 401(k). To maximize your outcome here are some senior tax breaks that may help you or yours.

• Standard deductions

The standard deduction is available to you if you do not itemize your deductions. The standard deduction increases if you attain the age of 65 during the tax year. You may be able to claim a higher standard deduction if you are blind (corrected vision less than 20 20 or have an extreme limitation in your field of vision).

If you are age 65 or older, you may increase your standard deduction by $1,600 if you file Single or Head of Household. If you are Married filing jointly and you or your spouse is 65 or older, you may increase your standard deduction by $1,300.

The IRS offers some tax breaks that may save a senior citizen some money. These tax breaks are designed to stimulate investment, encourage certain purchases (like electric vehicles through rebates), and save seniors money. If you have questions about ways for seniors to save taxes talk to an accountant or attorney.

• Sell Your Home

There are so many reasons seniors might consider selling their home. Downsizing empty nests, generating retirement funds, heading to a different climate or moving to be near children and grandchildren are examples.

Your home is probably worth a lot more now than when purchased and you likely to have build up a good deal or equity. If you have lived in your home for at least two of the five years prior to selling it, you may not have to pay taxes on any profit from its sale. Tax laws allow a single filer to claim up to $250,000 in profit on a home sale with no taxes, and up to $500,000 for a married couple filing together.

• Retirement Account Contributions

You may continue to make contributions to your retirement accounts, like IRA and 401(k), even if you are retired or semi-retired. This may be one of the best senior tax breaks available, especially if you plan to use these accounts to fund your retirement.

The tax laws are such that people aged 50, and over, have higher limits on what they can contribute to retirement accounts.

The annual contribution limit for 2019 is $6,000, or $7,000 if you’re age 50 or older. The annual contribution limit for 2015, 2016, 2017 and 2018 is $5,500, or $6,500 if you’re age 50 or older. Your Roth IRA contributions may also be limited based on your filing status and income.

You cannot make regular contributions to a traditional IRA in the year you reach 70½ and older. However, you can still contribute to a Roth IRA and make rollover contributions to a Roth or traditional IRA regardless of your age.

If you file a joint return, you may be able to contribute to an IRA even if you did not have taxable compensation, provided your spouse did. The amount of your combined contributions cannot be more than the taxable compensation reported on your joint return.

In addition to contributions to IRA accounts, you may also make contributions to Roth IRA accounts. You will pay taxes on the money you contribute to such an account, but you will not pay taxes on the money that you withdraw. This means that interest on gains during its time in the Roth IRA account is tax-free.

• Business Expenses Incurred

You may be able to write off business expenses as one of your senior tax benefits if you own a business when you retire, or plan on starting a business of your own. The expenses must be necessary and reasonable. Typical business expenses include travel, business-related equipment, office rent (home or office building), supplies and more.

• Make Charitable Contributions

You may deduct charitable contributions of money or property made to qualified organizations if you itemize your deductions. Generally, you may deduct up to 50 percent of your adjusted gross income, but 20% and 30% percent limitations apply in some cases.

You may deduct a charitable contribution made to, or for the use of, any of the following organizations that otherwise are qualified under section 170(c) of the Internal Revenue Code:

1. A state or United States possession (or political subdivision thereof), or the United States or the District of Columbia, if made exclusively for public purposes;
2. A community chest, corporation, trust, fund, or foundation, organized or created in the United States or its possessions, or under the laws of the United States, any state, the District of Columbia or any possession of the United States, and organized and operated exclusively for charitable, religious, educational, scientific, or literary purposes, or for the prevention of cruelty to children or animals;
3. A church, synagogue, or other religious organization;
4. A war veterans’ organization or its post, auxiliary, trust, or foundation organized in the United States or its possessions;
5. A nonprofit volunteer fire company;
6. A civil defense organization created under federal, state, or local law (this includes un-reimbursed expenses of civil defense volunteers that are directly connected with and solely attributable to their volunteer services);
7. A domestic fraternal society, operating under the lodge system, but only if the contribution is to be used exclusively for charitable purposes;
8. A nonprofit cemetery company if the funds are irrevocably dedicated to the perpetual care of the cemetery as a whole and not a particular lot or mausoleum crypt.

Contributions must actually be paid in cash or other property before the close of your tax year to be deductible, whether you use the cash or accrual method.

If you donate property other than cash to a qualified organization, you may generally deduct the fair market value of the property.  If the property has appreciated in value some adjustments may have to be made.

In general, contributions to charitable organizations may be deducted up to 50% of adjusted gross income computed without regard to net operating loss carrybacks.  Contributions to certain private foundations, veteran’s organizations, fraternal societies, and cemetery organizations are limited to 30% of adjusted gross income (computed without regard to net operating loss carrybacks).

The 50% limitation applies to all public charities, all private operating foundations, certain private foundations that distribute the contributions they receive to public charities and private operating foundations within 2 1/2 months following the year of receipt, and certain private foundations the contributions to which are pooled in a common fund and the income and corpus of which are paid to public charities.

The 30% limitation applies to private foundations other than those previously mentioned that qualify for a 50% limitation, and to other organizations described in section 170(c) that do not qualify for the 50% limitation, such as domestic fraternal societies.

A special limitation applies to certain gifts of long-term capital gain property.  A discussion of that special limitation may be found in Publication 526, Charitable Contributions.

• Medical and Dental Expenses

Healthcare and the associated costs are growing concerns for seniors and retirees over the age of 50. Some sources estimate these costs could be as much as 30 percent of income and will encompass healthcare insurance premiums, prescription drugs and other health related expenses. For some, many of these expenses are tax deductible.

According to IRS Publication 502 (for 2018): Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and for the purpose of affecting any part or function of the body. These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. They include the costs of equipment, supplies, and diagnostic devices needed for these purposes.

Medical care expenses must be primarily to alleviate or prevent a physical or mental disability or illness. They don’t include expenses that are merely beneficial to general health, such as vitamins or a vacation.

Medical expenses include the premiums you pay for insurance that covers the expenses of medical care, and the amounts you pay for transportation to get medical care. Medical expenses also include amounts paid for qualified long-term care services and limited amount

If you itemize your tax deductions, rather than taking the standard deduction, you may be able to deduct your out-of-pocket medical expenses on your income taxes on a Schedule A. You are allowed to deduct any expenses that exceed 7.5% of your adjusted gross income.

• Investment Expenses

Probably the most common way for seniors to make money is in the form of interest, dividends or capital gains on investments. This income is taxed at a much lower rate and is not subject to taxes for Social Security or Medicare.

Deductions may be made for expenses related to your investments, such as costs related to investment advice. If these costs exceed 2% of your adjusted gross income you may be able to include these costs in your itemized deductions. These expenses could include things like:Safe deposit box fees

1. Accounting fees
2. Attorney fees
3. Fees for subscriptions to investment newsletters
4. Fees for online brokers
5. Cost of home computers and/or equipment for investment needs
6. Fees paid to financial planners

You may not include the commission fees you pay to brokers or agents to acquire investment property in your deduction. This cost is part of the cost-basis of the property.

Note: The information in this article was taken from sources deemed reliable and should not be used as a final source for information. We recommend you consult with a lawyer or tax accountant to determine what is best and legal for you.

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We all know that California is a beautiful place to live but taxes are high and property taxes can be a challenge to some residents, especially seniors.

Fortunately, the state offers a variety of property tax exemptions for individuals 55 and older.

The problem is complicated because many homeowners are not aware of property exemption rules in their area. Each county in California can levy its own special taxes and assessments so that it is easy for many homeowners to get confused and even easier to miss out on tax breaks on their property taxes.

If you are a senior or are caring for one who is incapable of filing their own taxes, for whatever reason, you will want to know which deductions and credits might save you thousands in taxes.

Here are some of the most common property tax exemptions for seniors and how to determine whether you’re eligible for them.

California Propositions 60 and 90

Propositions 60 and 90 are laws that allow homeowners 55, or older, to move into a new home without substantially increasing their property tax obligation.

How?

Because of Proposition 13, your home’s appraised value is determined at the time you buy it and raises to that value are limited to a maximum of 2% through that same proposition. Through Propositions 60 and 90, you can transfer that same valued tax obligation so long as your new property is of equal or lesser value than the original property sold.

Here is an example

If you bought a home 10 years ago for $300,000 its current assessed value is about $365,698 now. If we assume your tax rate is around 1.25% you are paying $4,571 in taxes yearly. If you sell that home for $700,000 and move into a new place valued at, say, $650,000, you would still only pay the tax obligation for a $365,698 house (and 2% more each year).

If Propositions 60 and 90 were not in force, you would be paying $8,125 each year in taxes instead of $4,571. This allows seniors to move and be much cheaper and more feasible, especially for those who are on fixed income, such as Social Security or income off an investment portfolio.

What is the difference between Prop 60 and Prop 90?

Proposition 60 allows you to transfer the property value and the associated tax burden only within the same county. Proposition 90 allows you to do this in different counties, but only if those counties have opted into the program.

Counties where Proposition 90 is available (as of this writing):

Alameda, El Dorado, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, Santa Clara, Tuolumne, and Ventura. The county of El Dorado will stop taking property tax transfers through Proposition 90 on December 12th, 2018.

How do I file?

After you’ve finalized the sale of your old home and the purchase of your new one, fill out the claim form BOE-60-AH, Claim of Person(s) at Least 55 Years of Age for Transfer of Base Year Value to Replacement Dwelling, which you can obtain from your local County Assessor’s office. Here is more information from the LA County Assessor’s office.

Limitation

An individual may only use Proposition 60 or 90 once in a lifetime, unless the individual claims disability as the reason for the relocation. An individual may not use Proposition 60 or 90 a second time if disability was cited for the first use and may never be used a third time.

Parcel tax exemptions

It is not uncommon for California counties to levy parcel taxes on homeowners to pay for public services such as education and public utilities. To gain support for these taxes, counties usually allow homeowners 65 or older to file for exemptions.

The exemptions, and the procedure for filing for them, vary by county. Some require homeowners to file for the exemptions every year while others automatically apply the exemptions after the first filing. Check with your county to be sure.

How do I file?

The forms are here and there is more information here.

Check with your local tax collector’s office to find out how to apply for exemptions in your area.

Disabled Veterans

The State of California offers a tax exemption for veterans who were disabled through military service. According to the California Board of Equalization, the basic exemption for disabled veterans starts at $100,000, while low-income disabled veterans can qualify for an exemption of around $150,000 (this changes yearly according to the cost-of-living index).

For example, if the taxable value of your home is $300,000, the exemption will reduce the taxable value to around $200,000, or more, if you qualify for low-income status. This could save you hundreds of dollars in taxes over the course of a year.

How to qualify:

The person filing must meet one of the following criteria:

• Blind in both eyes
• Lost the use of two or more limbs
• Is totally disabled according to the United States Department of Veteran Affairs.

If the individual owner is deceased due to service-related injuries, the exemption is then available to the unmarried surviving spouse, even if the veteran wasn’t eligible while he/she was alive.

Fine print

The homeowner can only apply one exemption to the property. If you have the option between the homeowner’s exemption or the disabled veteran exemption, you will want to choose the later because your benefit will be greater.

Note: The information in this article was taken from sources deemed reliable and should not be used as a final source for information. We recommend you consult with a lawyer or tax accountant to determine what is right and legal for you.

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