“Case-Shiller Home Prices Decline Only 18%” reads the headline. And then we discover that “the latest Standard & Poor’s/Case-Shiller housing index numbers out today show the market falling less dramatically than it had been earlier in the year. The 10 and 20 city indices were both down 18% in April, versus the same month in 2008. But that decline was less severe than it had been in January, February and March.”

Really? A consistent decline of only 18 percent is good news? You’re kidding.

“The pace of decline in residential real estate slowed in April,– says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “In addition to the 10-City and 20-City Composites, 13 of the 20 metro areas also saw improvement in their annual return compared to that of March. Furthermore, every metro area, except for Charlotte, recorded an improvement in monthly returns over March. While one month’s data cannot determine if a turnaround has begun; it seems that some stabilization may be appearing in some of the regions. We are entering the seasonally strong period in the housing market, so it will take some time to determine if a recovery is really here.”

Looming Home Price Concerns

Before we start talking about the light at the end of the tunnel and green shoots emerging from foul fields, let’s look at some realities:

First, unemployment levels are awful and getting worse. They are a precursor of foreclosures to come.

Second, many states have foreclosure moratoriums (moratoria?) in place, programs which knock down foreclosure statistics and help maintain home prices.

Third, a huge number of foreclosed homes that are now owned by lenders are not on the market. Instead, lenders are waiting for prices to firm. However, if so many homes were instantly made available for sale they would push down prices.

The Case-Shiller index shows what it shows, but it certainly does not explain the dynamics which impact the marketplace.

For the full story, see: Case-Shiller Home Prices Decline Only 18%.

Should We Cheer An 18-Percent Drop in Home Prices? is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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The chart above depicts the annual returns of the 10-City Composite and the 20-City Composite Home Price Indices. The 10-City and 20-City Composites recorded annual declines of 18.8% and 18.6%, respectively. This is a slight improvement from their returns reported for January, where they fell by 19.4% and 19.0%, respectively.

“While the declines in residential real estate continued into February, we witnessed some deceleration in the rate of decline in some of the markets,– says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “All 20 metro areas recorded a monthly decline in February, but 16 of the 20 metro areas saw an improvement in their monthly returns compared to January. Nine of the 20 metro areas showed improvement in their annual returns compared to their returns in January. Furthermore, this is the first month since October 2007 where the 10- and 20-City Composites did not post a record annual decline. We will certainly need a few more months of data before we can determine if home prices are finally turning around.–

Back to 2003

As of February 2009, average home prices across the United States are at similar levels to where they were in the third quarter of 2003. From the peak in mid 2006, the 10-City Composite is down 31.6% and the 20-City Composite is down 30.7%.

All 20 metro areas reported negative monthly and annual rates of change in average home prices in February. In January’s report, seven metro areas and the 20-City Composite posted record monthly declines. In February, Cleveland was the only metro area having a record monthly decline, returning -5.0%. Cleveland, Charlotte, New York and Washington were the only MSA’s showing larger declines in home prices in February compared to January’s report.

Annual Declines

In terms of annual declines, the three worst performing cities continue to be from the Sunbelt, each reporting negative returns in excess of 30%. Phoenix was down 35.2%, Las Vegas declined 31.7% and San Francisco fell 31.0%. Dallas, Denver and Boston faired the best in terms of annual declines down 4.5%, 5.7% and 7.2%, respectively. Dallas also had the distinction of being the best performer for the month, returning -0.3%.

Looking at the data from peak-thru-February 2009, Dallas has suffered the least, down 11.1% from its peak in June 2007; while Phoenix is down 50.8% from its peak in June of 2006. The rates of decline from the respective peak of each market are evidence of how much each market has given back from the gains earned in the past 10-15 years. All of the 20 metro areas are in double digit declines from their peaks, with ten of the MSA’s posting declines of greater than 30% and seven of those — Detroit, Las Vegas, Los Angeles, Miami, Phoenix, San Francisco and San Diego — in excess of 40%.

Home Price Declines Continue, Says New Report is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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For many years the myth was that having a home office was a sure way to invite an IRS audit. The myth was never true, but the old tax rules severely limited the ability to write-off home office costs.

To deduct a home office under the rules in effect until this year there was a “focal point” test: an area of the home had to be used “exclusively” and “regularly” for business purposes such as generating income and seeing clients. Also, there was the matter of money. There had to be an effort to generate a profit.

But what about the Virginia anesthesiologist, Nader E. Soliman, who worked with surgeons at several hospitals yet did the books and made appointments from a home office: Could he get a deduction even though he was not providing medical services or seeing patients at home? The government said “no.” His place of work, it claimed, was actually the hospitals where he delivered services.

This question went to the Supreme Court — which ruled for the IRS. But while the good doctor lost, the Soliman case set in motion new thinking about how home offices should be treated in an evolving business environment.

Under the Taxpayer Relief Act of 1997 passed by Congress, the requirements for a deductible home office have evolved, standards that take effect this year. Now the doctor can get his write-off — and so will a lot of other people.

According to the IRS, you may be able to obtain a home office deduction if a portion of your house is used, “exclusively and regularly for administrative or management activities of your trade or business” and “you have no other fixed location where you conduct substantial administrative or management activities of your trade or business.”

“You still must use the business part of your home both exclusively and regularly for your trade or business,” under the new rules, says the IRS.

“If you are an employee, the business use of your home must be for the convenience of your employer. In addition, your deduction may be limited if your gross income from the business use of your home is less than your total business expenses.”

What are substantial “administrative” and “managerial” tasks? The IRS gives these examples:

*Billing customers, clients or patients.
*Keeping books and records.
*Ordering supplies.
*Setting up appointments.
*Forwarding orders or writing reports.

Amazingly enough, it gets better.

“Under the new rules,” says the IRS, “the following activities will not disqualify your home office as your principal place of business.”

• You have others conduct your administrative or management activities at locations other than your home. (For example, another company does your billing from its place of business.)
• You conduct administrative or management activities at places that are not fixed locations of your business, such as in a car or a hotel room.
• You occasionally conduct minimal administrative or management activities at a fixed location outside your home.
• You conduct substantial nonadministrative or nonmanagement business activities at a fixed location outside your home. (For example, you meet with or provide services to customers, clients, or patients at a fixed location of the business outside your home.)
• You have suitable space to conduct administrative or management activities outside your home, but choose to use your home office for those activities instead.

Thanks to the questions raised by the Soliman case you may be able to obtain a home office deduction today with far greater ease than in the past. For specifics, speak with a tax professional to see how you fare under the new guidelines. In addition, see IRS Publication 587, Business Use of Your Home.

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Published originally by Realty Times on February 9, 1999 and posted with permission.

Home Offices Gain Under Tax Rules is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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