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What the New Tax Law Means for Agriculture & Rural Landowners

by Linda Pillard
image of farmer standing in field

The largest overhaul of the U.S. tax code in three decades went into effect this year, impacting farmers, ranchers and other rural landowners in a variety of ways. For the most part, financial experts anticipate benefits for these groups.

“The 2018 tax law changes include several items that I feel will be beneficial to agricultural producers,” says Burl Lowery, a Brownwood, Texas, certified public accountant and director of Central Texas Farm Credit. “The increase in the exemption in estate and generation-skipping taxes to $11.2 million in 2018 will allow more farmland to be passed to future generations with less or no estate tax.” 

The increase in the exemption in estate and generation-skipping taxes to $11.2 million in 2018 will allow more farmland to be passed to future generations with less or no estate tax.

Other positives for farmers, according to Lowery and fellow CPA John Adams of Decatur, Alabama, are the immediate expensing of new and used equipment purchases, the overall reduction in tax rates, a new flat rate for corporations and the 20 percent deduction for pass-through income.

But while the tax reform movement promised to simplify the tax reform, much complexity remains.

“For that reason, it is imperative that producers begin the planning process now with their tax advisors,” says Adams, who serves on the Alabama Farm Credit Board of Directors.

Following are some of the tax law provisions that will affect agricultural producers in 2018.

Individual Tax Brackets

The new federal tax law was expected to change some of the individual tax rate brackets and adjust the bracket amounts. While the total number of brackets remains at seven, the top rate will fall from 39.6 percent to 37 percent, and the amount of income covered by the lower brackets has been adjusted.

Section 179 Depreciation Deduction

Beginning with the 2018 tax year, farmers will be allowed to write off capital purchases, including breeding livestock, farm equipment and single-purpose structures, such as milking parlors, up to $1 million dollars. The phase-out of this expensing provision does not kick in until a farm reaches $2.5 million in purchases.

Bonus Depreciation

Farmers will now be able to write off 100 percent of qualified property purchased after September 27, 2017, through the year 2022, at which time a phase-down occurs. In the past, many farms used bonus depreciation on general-purpose barns to receive an additional deduction of 50 percent, since they are classified as “20-year property” and are ineligible for Section 179.

The new law expands bonus depreciation to include both new and used property that is purchased or constructed. Related party restrictions will limit this provision based on the technical definitions of “related parties” in the tax code. The 100 percent deduction also applies to fruit- and nut-bearing plants that are planted during the year.

It is important to note that many states do not conform exactly to the federal bonus and Section 179 depreciation provisions. For example, a farmer expensing 100 percent of a $3 million capital purchase with bonus depreciation may not receive that $3 million deduction at the state level.

Farm Equipment

Farm machinery and equipment (other than grain bins, fences or other land improvements) will be eligible for depreciation over five years, as long as the original use of the asset begins with the taxpayer.

Like-Kind Exchanges

Like-kind exchanges are limited to real property. For example, farmers can still swap land for other land tax-free, but equipment trade-ins will no longer be tax-free.

$25 Million Interest Deduction Limitation

Businesses, including farms, will now be limited on interest expense deductions when their taxable income exceeds $25 million. Taxable income is computed without regard to certain adjustments, such as business interest expense and net operating losses. If applicable, the interest deduction cannot be more than the business interest income plus 30 percent of adjusted taxable income.

There is an election farmers may consider in order to avoid the limitation. The only catch, however, is that a slower alternative depreciation system will have to be used on farm property with a recovery period of 10 years or more, such as greenhouses, barns, etc. Farmers will be permitted to carry interest forward indefinitely, subject to some pass-through limitations for partnerships.

Corporate Tax Rate

Although the new flat rate will benefit most farmers by decreasing their tax rate, some farming corporations that fall within a 15 percent tax bracket may actually see a tax rate increase. Those business owners may want to visit with their accountants about advantages to modifying their corporate structure.

Cash Method Accounting

Farmers with average gross receipts (more than three years) under $25 million will be permitted to use the cash method of accounting. Additionally, these taxpayers will not be required to account for inventories under Section 471. (However, cash-basis taxpayers will not be able to deduct inventory until sold.) The uniform capitalization rules are also removed for taxpayers under the $25 million threshold.

Net Operating Losses

The law limits Net Operating Losses (NOLs) to 80 percent of taxable income. Farmers are permitted a two-year NOL carryback.

Domestic Production Activities Deduction

The Section 199 Domestic Production Activities Deduction (DPAD) has been repealed. As a result, some cooperatives may accelerate that pass-through deduction to patrons before year end.

Estate Tax

The federal estate tax exemption rate will double to approximately $11.2 million per individual, and $22.4 million for married couples in 2018. These increased amounts will sunset on January 1, 2026.

Non-Corporate Taxpayers

Like cooperatives, non-corporate taxpayers will also get a 20 percent deduction that may be used to offset ordinary income.

Of concern, much like the DPAD that is being repealed, there are limitations associated with the non-corporate taxpayers’ 20 percent deduction, such as the amount of wages and unadjusted tax basis the businesses have. The cooperative members’ deduction has limitations as well. These limitations are somewhat complicated, and certain provisions remain unclear as to their mechanics. Additionally, the deduction only offsets income tax, not self-employment tax.

Breweries, Distilleries and Wineries

Alcohol manufacturers will enjoy a reduction in excise tax for the next two years. The new legislation also excludes the aging periods for beer, wine and spirits from the production period with regard to the Uniform Capitalization (UNICAP) rules, thereby allowing deductions over a quicker timeframe. The credit against the wine excise tax was also expanded.

The Affordable Care Act

The Affordable Care Act was not repealed with the new tax provisions. While the individual health insurance mandate technically remains, the penalty has been reduced to $0, effectively rendering it moot.


Adapted from an article titled “What the New Tax Law Means for Northeast Agriculture,” published by Farm Credit East, December 2017. Contributors: Dario Arezzo, Joseph Baldwin, Paul VanDenburgh, Christopher Laughton, Kristine Tidgren and Tiffany Dowell Lashmet.

Disclaimer: The information in this report has been compiled from sources believed to be reliable. This is provided for general information purposes only and is not market advice. Farm Credit Bank of Texas makes no representation or warranty regarding the content presented.

Why Didn't My House Sell?

by Linda Pillard

Why didn't my house sell?  Is a question I hear quite frequently when I go on listing appointments. Okay here is the truth...

Nothing is more frustrating to a home seller than to have their home sit on the market without an offer. Selling a home is a big decision, and an emotional one. By the time a home owner determines the time is right to sell, they are ready to move. In addition, keeping a home show-ready is exhausting, so a home that just sits is frustrating. 

The truth is there is only one reason why your home doesn’t sell and eventually expires…price. It’s always price. There is a price at which any, and all, homes will garner offers. Even the most run-down foreclosure will receive offers when priced low enough.

Home sellers naturally want to get the best possible sales price for their home, but it’s important to be realistic. Present the home in the best possible light and offer it at a reasonable list price. There is nothing to be gained by holding out hope for a higher offer and sellers lose valuable time by trying to do this. A listing will always get the most attention when it’s new on the market. This is the time to get create excitement and get offers. When the house is over-priced it will also be over-looked and eventually, the listing expires and your home will not be sold. That answer your question... Why didn't my house sell?

 

Planning on Visiting in The Capay Valley?

by Linda Pillard

Planning on Visiting in The Capay Valley? 

By Linda Pillard

Typically deer fawns are born sometime between late April and early July. What's important about that for you?

Does birth one, two, or sometimes three fawns, and there’s nothing more wonderful than seeing deer in the Capay Valley, but the sad thing is that these deer don’t often have to contend with hunters, deer in this part of Northern California often lose their lives due to the carelessness of drivers.

Please SLOW DOWN When You Visit the Capay Valley

Sadly, it’s not uncommon to see baby deer (fawns) wandering the roadsides of the Capay Valley during this time of year because their mothers were killed by careless drivers on Highway 16.

What’s even more heartbreaking than seeing an orphan deer is watching one of these babies try to nurse from their dead mothers and the reality is that the senseless death of another deer could have been avoided had a driver just taken the time to slow down while driving in this area.

If a mother deer is killed by a driver and that mother hasn’t had time to teach her baby how to survive, it’s most likely that the fawn will not survive. So the best thing that every driver can do is slow down, avoid distractions, and take the time to enjoy the journey through the Capay Valley and please respect their home, and be mindful of deer and wildlife. 

Learn More About The Capay Valley

Want to learn more about the Capay Valley or search for homes in the area?

Contact me, Linda Pillard, Realtor® with (530) 713-6121 or connect with me through my website.

 

 

Do you reall want a fixer upper

by Linda Pillard

Do You Really Want a Fixer Upper

by Bella Scotton

If you are going to invest in property you really need to have a very good reason for doing so. You need to consider the benefits of doing this now as well as what rewards it will bring you in the future.

One type of property that some will consider investing in is a fixer upper. This means buying property that has a houseon it that really needs a lot of work to make it at least comfortable to live in. Or, for some they look at this as being something that they can fix and flip for profit.

It may also be that you enjoy the challenge and your circumstances are as such that you can afford to live in a house that is in need of repair, and you happen to be a handy person who can do most of the work.

Buying with Caution

If you are going to go this route then you will definitely have the advantage of being able to buy at a lower price. However, you will have to allot money for the repairs. So you want to do some price comparisons here. Even if you are going to do the work yourself, you should still consider labor costs to get a true picture of what you are putting into this fixer upper.

Also, keep in mind that there may be some hidden flaws in the house that are so serious that you cannot fix yourself. It could be a flaw in the foundation which would be beyond the average handyman’s skills. Then again you could invest in a house that is basically a shell but you at least can see many of its components that you would not normally see in a house that is finished but in very poor condition.

Know What the Pros and Cons Are

You may have a general idea of what buying a fixer upper is going to entail, but you really need to know all of the pros and cons of the specific property that you are considering. If the pros outweigh the cons then it may be a viable option for you.

Keep it or Flip It

It is not unusual for a couple to buy a house and go through all the repairs till finally it is exactly what they want. They then realize what the value that the home has become and it may be that the money that could be generated from the sale may now become very appealing. The dream home is now turned into a potential profit maker.

Plan Realistically

If the fixer upper seems to be appealing to you then make sure that you are realistic about your planning for it. What often becomes difficult for many that have gone this route is not so much the money that they have to spend but the time that needs to be invested in it. There are a lot of additional steps that need to be taken and these have to be planned for.

What Do the Experts Say?

Many have become favorites of the TV show HGTV Fixer Upper. There is no doubt that it seems like miracles have taken a place with some of the fixer uppers that have aired on this show. Keep in mind there may only be one or two of you to accomplish all of the tasks that come with fixing up these types of homes. Yet, what has been accomplished on this show is nothing short of amazing.

This Old House experts believe there can be a lot of merit in a fixer upper, but the advice they offer leads off with knowing what you are getting into.

Bob Villa known as another house guru has some experts share their opinion as to whether a fixer upper is the way to go.

It all comes down to what do you want? A fixer upper can be an ideal choice for the right people, at the right time, and in the right location.

Sources:

http://www.businessinsider.com/the-pros-and-cons-of-buying-a-fixer-upper-2012-8
http://www.dailymail.co.uk/news/article-4648268/Fixer-Upper-tiny-home-sale-950-000.html
http://homeownership.ca/homeownership/ten-ways-to-make-buying-a-fixer-upper-worth-it/
https://www.thisoldhouse.com/ideas/should-you-buy-fixer-upper

If a fixer-upper is right for you. Call Linda Pillard.  She will send you the best buys available for sale to fix up and flip.  Linda Pillard, Yolo County Realtor with United Country Real Estate - California Properties.  She can be reached at (530) 713.6121.

Housing Predictions for 2018

by Linda Pillard

Housing Predictions for 2018

New homes are expected to be a “primary driver of sales in 2018,” as 1.33 million housing starts are predicted next year—up from 1.22 million in 2017, according to Freddie Mac’s September Outlook report, which gauges future real estate activity. Total home sales are expected to increase about 2 percent from 2017 to 2018, according to the report.

Economists also predict that the uptick in housing starts, coupled with a moderate increase in mortgage rates, will help slow the run-up in home prices next year. Freddie Mac forecasts a 4.9 percent increase in home prices in 2018, lower than the 6.3 percent growth seen so far this year. Mortgage rates also are up from near-record lows in 2016, prompting predictions that refinancings will fall to 25 percent of mortgage activity in 2018—the lowest share since 1990, according to Fannie Mae.

Still, homeowners likely will continue building equity next year. In the second quarter of 2017, the dollar volume of equity cashed out was $15 million, up $1.2 million from the first quarter. As home prices rise, cash-out activity has been rising, too.

“The economic environment remains favorable for housing and mortgage markets,” says Freddie Mac chief economist Sean Becketti. “For several years, we have had moderate economic growth of about two percent a year, solid job gains, and low mortgage interest rates. We forecast those conditions to persist into next year.”

 

To contact me for help with selling a home in Yolo County or Northern California,  or speak with me about selling your home or property , contact me today by calling or text me at 530.713.6121. 



 

https://goo.gl/86mqFL

https://goo.gl/86mqFL

Should You Hire a Real Estate Agent Who Charges the Lowest Commission?

 

By Linda Pillared

 

If you’re thinking about buying or selling a home you most likely have encountered a real estate agent who has offered their services to you for the lowest commission possible.

 

The big question that you should have is if you should hire this agent because they charge a lower commission than another real estate agent?

 

Although the answer to this question may be simple for some people because they think that lowest commission means that they're saving money, the reality is that hiring a real estate agent because they charge the lowest commission possible isn't always the best idea, especially for these reasons:

 

Reason #1 - They May Not Work With A Team

 

Regardless If you're buying or selling a home, one of the harsh realities about hiring a real estate agent who charges the lowest commission possible is that they most likely are not working with a team. This means that they may not always be available to help you because they are helping their other clients and they don’t have the experience and the cliental and may be desperate for business.

 

Reason #2 - Their Marketing Will Not Be the Best

 

Another consequence of choosing an agent who charges the lowest commission is that their marketing may not always be the best quality possible.

 

Instead of receiving a crafted and personalized marketing plan, you may receive a template-based approach to marketing your home online and the results will be obvious when it comes to less interest and fewer offers for your home if any.

 

Reason #3 - An Agent Who Charges the Lowest Commission May Not Have Your Best Interest at Heart

 

Last of all, but most important, a real estate agent who charges the lowest commission possible may not always have your best interest at heart. The truth is if they are giving away their own money how can they protect yours.

 

Expert Negotiations is crucial for you to receive the highest profit possible.  You need someone that is skilled and has the experience under their belt and the proven track record of success. The truth is if you hire the right agent and you pay the standard commission chances are you will have a higher profit than the agent that “cut” their commission just to get the deal.

 

Hire an Experienced Real Estate Agent

 

To learn more reasons why you should not hire a real estate agent who charges the lowest commission possible or to view homes for sale, contacts me today by calling or texting (530) 713- 6121 or connect with me online.

Hire an Agent Who Really KNOWS the Process of Selling a Home

by Linda Pillard

Hire an Agent Who Really KNOWS the Process of Selling a Home

By Linda Pillared

 

Are you planning on selling your home? If so, the most important thing that you should do is hire a real estate agent who knows the process of selling a home.

 

The reason why I mentioned this is because in 2017 some people are eager to sell their homes as quickly as possible and they neglect the process that they should be following when it comes to selling their homes.

 

In this article, I will break down a few key tips that all homeowners should follow which will help them to sell their homes for the most money possible.

 

Tip #1 - Declutter Your Home

 

It doesn’t matter how long you been living in your home, the reality is that if you've been living in your house for any length of time you most likely will have accumulated clutter.

 

Clutter of any amount will make the rooms inside of the home look smaller than they actually are.

 

To get started with decluttering your home, start with one room at a time, preferably the living room, creating piles for things that you want to keep, donate, and throw away. This will make getting rid of things a whole lot easier and ensure that you don't take everything with you when you move to your next home.

 

Tip #2 - Clean Your Home Thoroughly

 

As funny as it sounds, many homeowners think that they are cleaning their homes thoroughly before listing them but the reality is that most people, regardless of their age, always miss certain areas in the home and those areas remain glaringly obvious, especially when it comes time for pictures or open houses.

 

Is house cleaning something that you absolutely dislike? If so, to ensure that your house is cleaned thoroughly, and in Tip-Top condition for showing, I recommend that you hire a professional house cleaner to come in and clean your home because, this will ensure that every area of your home is clean, including those areas which you may not see or use on a regular basis.

 

Tip #3 - Stage Your Home

 

Last of all, but most important, one of the top things that many homeowners don't do well enough when selling their homes is to stage their homes for sale.

 

Staging a home is actually very simple, it involves following steps 1 and 2 in this article to get the home ready for staging and then using a few pieces of furniture in each room of the home to make the home look lived-in while emphasizing the space that the house has to offer.

 

Learn More About the Process of Selling Your Home

 

Are you interested in learning more about the process of selling your home? If so contact me today by calling or texting (530) 713- 6121 or connect with me online.

Hire an Agent Who Really KNOWS the Process of Selling a Home

by Linda Pillard

Hire an Agent Who Really KNOWS the Process of Selling a Home

By Linda Pillared

 

Are you planning on selling your home? If so, the most important thing that you should do is hire a real estate agent who knows the process of selling a home.

 

The reason why I mentioned this is because in 2017 some people are eager to sell their homes as quickly as possible and they neglect the process that they should be following when it comes to selling their homes.

 

In this article, I will break down a few key tips that all homeowners should follow which will help them to sell their homes for the most money possible.

 

Tip #1 - Declutter Your Home

 

It doesn’t matter how long you been living in your home, the reality is that if you've been living in your house for any length of time you most likely will have accumulated clutter.

 

Clutter of any amount will make the rooms inside of the home look smaller than they actually are.

 

To get started with decluttering your home, start with one room at a time, preferably the living room, creating piles for things that you want to keep, donate, and throw away. This will make getting rid of things a whole lot easier and ensure that you don't take everything with you when you move to your next home.

 

Tip #2 - Clean Your Home Thoroughly

 

As funny as it sounds, many homeowners think that they are cleaning their homes thoroughly before listing them but the reality is that most people, regardless of their age, always miss certain areas in the home and those areas remain glaringly obvious, especially when it comes time for pictures or open houses.

 

Is house cleaning something that you absolutely dislike? If so, to ensure that your house is cleaned thoroughly, and in Tip-Top condition for showing, I recommend that you hire a professional house cleaner to come in and clean your home because, this will ensure that every area of your home is clean, including those areas which you may not see or use on a regular basis.

 

Tip #3 - Stage Your Home

 

Last of all, but most important, one of the top things that many homeowners don't do well enough when selling their homes is to stage their homes for sale.

 

Staging a home is actually very simple, it involves following steps 1 and 2 in this article to get the home ready for staging and then using a few pieces of furniture in each room of the home to make the home look lived-in while emphasizing the space that the house has to offer.

 

Learn More About the Process of Selling Your Home

 

Are you interested in learning more about the process of selling your home? If so contact me today by calling or texting (530) 713- 6121 or connect with me online.

324 Messina Terrace, Davis CA

by Linda Pillard

324 Messina Terrace – Don’t Miss This Davis California Home!

By Linda Pillard

Are you searching for the perfect home in Davis California?  If so, you don't want to miss out on this lovely contemporary home located at 324 Messina Terrace.

About 324 Messina Terrace

Built in 2007, this 3 bedroom, 2.5-bathroom home offers you many wonderful features that you have been searching for including a downstairs office with a French door, stainless steel appliances, tile flooring, and new paint throughout the home.

Pride of ownership really shows in this $495,000 home, you will also find an open concept floor plan, large closets, granite countertops, tiled baths and a charming private backyard with patio which will make it perfect for you to come home and relax after a long day at work.

What’s even better about 324 Messina Terrace is that this 1,498-square foot home also offers easy access to the freeway, it's close to Davis swim and fitness, within walking distance to shopping malls, parks, and is conveniently 26 minutes away from downtown Sacramento.

 

Don’t Miss Out On This Davis CA Home

 

Right now, the Sacramento real estate market is one of the hottest markets in the United States and properties in surrounding areas like 324 Messina Terrace are sure to go fast!

 

If you’ve been pre-approved for a mortgage loan and are ready to buy your dream home in Northern California, contact me today calling or texting (530) 713- 6121 or connect with me online.

 

Displaying blog entries 1-10 of 80

Contact Information

Photo of Ken and Linda Pillard, ABR,CDPE,CNE,CRS,PCN,RLI,FS Real Estate
Ken and Linda Pillard, ABR,CDPE,CNE,CRS,PCN,RLI,FS
United Country - California Properties
(530) 713-6121
Fax: 530-658-5277

United Country Real Estate-Northern California, Specialty Property Groups:  Residential Homes, Country Homes,  Farm & Ranch, Horse Properties, Golf Properties, Mountain Properties, Victorians, Land. Also sell organic farms, conventional farms, land brokerage, Yolo County Horse Properties

      

Cal BRE #01208519