Provisions Most Detrimental to Home Ownership Aren’t in the Final Tax Bill

Real_Estate_Today_bylineIn my Dec. 7th column, I sounded the alarm about certain provisions of the House and Senate tax bills which were particularly detrimental to the real estate market. Well, lobbyists from the National Association of Realtors (NAR) swung into action, and the worst of those provisions are not in the final conference committee bill — even though some of them were in both the Senate and House versions.

The greatest sigh of relief was heard when the exemption from capital gains on the sale of one’s primary residence (up to $500,000) was retained for sellers who have lived in their homes more than two but less than five years prior to selling their home.  Both versions of the tax bill had increased the qualifying period to five of the past eight years, negatively impacting nearly 20% of potential sellers. Implementation would have only further exacerbated the current shortage of active listings.

Despite the fact that both the House and Senate versions included that provision, the conference committee, whose job it is to reconcile different provisions, got rid of this one. We can probably credit the lobbying by NAR, reinforced by over 300,000 emails and phone calls made by NAR members like myself. There is no better example of the way NAR serves not only its members but also the industry as a whole and the general public in the protection of property rights. Those real estate agents who have chosen not to join a brokerage firm like Golden Real Estate, where every agent is a Realtor, should consider that NAR is serving their interests, too. Indeed, those non-Realtors benefit from the dues paid by us Realtors. This is another reason you should ask if your agent is a Realtor.

The mortgage interest tax deduction was saved entirely, unless your mortgage is in excess of $750,000. The prior limit was $1 million. This change won’t affect taxpayers in the metro area to the degree it will, say, in Aspen. Mortgage interest is also deductible on second-home mortgages up to the same limit — of particular interest to upper-income taxpayers.

The deductibility of state income taxes and local property taxes is another matter. The limit is $10,000 on those taxes combined. (This is one provision that disproportionately impacts the wealthy.) Thus, if you owe $10,000 in income taxes and $5,000 in property taxes (which includes, I believe, the ownership tax on your cars), only $10,000 of that $15,000 will be deductible for tax year 2018, compared to all of it being deductible for 2017. Don’t forget that the limit applies to all taxes paid during 2018, so if you make estimated tax payments during 2018, those are added to what you pay with your 2017 state return in April. The combination could easily push you beyond the $10,000 limit on deductibility.

For this reason, it may make sense for you to pre-pay your state income tax (postmarked by Dec. 31st), in excess of what you’ll owe in April. Then on your 2017 return have the excess applied to your 2018 taxes instead of being refunded to you.

Mind you, I am speaking as a layman, not as any kind of tax advisor, based solely on my understanding of what I have read in the coverage of the tax bill and what my tax accountant has told me.

I heard on National Public Radio that, according to the Washington Post, 83% of the tax benefits will go to the top 1%, and only 17% of the tax benefits will go to the rest of us.  It’s hard to escape the conclusion that the tax cuts for the bottom 99% were merely window dressing — in effect, the price paid for passing a tax bill whose real purpose was to benefit the millionaire and billionaire class of which virtually every Congressman and Senator — and the President — is a member. As an aspiring member of that class myself, I find the process and the final bill offensive. Judging from the unpopularity of the final tax bill among voters, that ruse is not working as well as it could. When, if ever, has a tax cut been disliked by two-thirds of the voters? The GOP’s hope is that when the new withholding tables take effect in February, voters will forget that they were manipulated in this manner.  We’ll see!

One way the top 1% will benefit from the new tax bill is from an all-new tax deduction of 20% of “pass-through income” from certain entities, including S corporations and LLCs. I’m told, however, that middle class people can also take advantage of that deduction to save a significant amount on their taxes.

I’m advising my broker associates to create such entities instead of being paid directly by Golden Real Estate.  And, because our brokerage is an S Corporation, our tax accountant is telling Rita and me that we can expect to have over $50,000 of next year’s income go un-taxed — money that would have been taxable under 2017’s tax provisions.

In other news for real estate owners, the 1031 tax deferral program for investment properties was not eliminated.

Again, this is all second-hand information from a layman (me), and it is certainly possible that it is not entirely accurate or may not apply to you. Therefore, I encourage you to consult your own tax advisor to see what specific tax strategies you should consider.

The only action you might want to take today, as mentioned above, is the pre-payment of state income tax, and also property tax, if it is not escrowed and paid by your mortgage lender.

Mortgage Credit Certificate Program Saved

Two other real estate programs killed in the House version of the tax bill but revived by the conference committee are the private activity tax-exempt bonds, including single-family and multifamily Housing Bonds, and the Low Income Housing Tax Credit. The Mortgage Credit Certificate program, administered by the Colorado Housing Finance Authority, depends on the issuance of such bonds.

Federal Tax Credit for EV’s Also Saved

In an earlier column I reported that the $7,500 tax credit for purchasing electric vehicles was killed in both the House and Senate versions of the tax bill, but, lo and behold, the conference committee deleted all mention of that tax credit in the final tax bill, meaning that it remains in place. It has been speculated that the big automobile companies like GM, which are just now getting into making electric cars, are probably responsible for preserving the credit. The tax credit applies only to the first 200,000 EVs sold by a manufacturer, so its retention is less significant for Tesla and Nissan, which are already approaching that limit.


Why Do Colorado Property Taxes Vary So Much?

A reader recently asked why property taxes vary so much, particularly since the state constitution requires that all property taxes be based on full valuation based on actual sales of comparable properties.

The biggest discrepancy arises from the taxing of non-residential property at four times the rate of residential property.

Let’s say you buy a vacant lot valued by the assessor at $200,000. Until that lot has a house on it, the assessed (i.e., taxable) valuation is 29% of $200,000, or $58,000. At 100 mills, (a typical mill levy), the annual tax on that vacant land would be $5,800.

Now let’s say you build a house on the lot, increasing the market value by an additional $200,000, for a total of $400,000. Because it’s now considered a residential parcel, the assessed valuation is only 7.2% of $400,000, or  $28,800. At 100 mills, the annual tax on that residential parcel would now be only $2,880.

The other big discrepancy is in new subdivisions where the developer creates a “metropolitan tax district” which issues bonds to pay for infrastructure work – sewers, sidewalks, streets, gutters, etc.  To pay off those bonds, a mill levy, typically about 50 mills, is assessed on all the parcels in that subdivision.  If the usual tax is 100 mills, that’s a 50% increase in property taxes compared to homes not in that tax district.

Many Buyers of New Homes Shortchange Themselves By Not Having an Agent

Real_Estate_Today_bylineYou’re probably aware that buyers typically pay nothing to be represented by a Realtor in a real estate transaction, because in virtually all transactions the listing agent splits his or her listing commission with the buyer’s agent.  It’s called a “co-op commission” because the buyer’s agent (also known as the “selling” agent) is cooperating with the listing agent in the sale of his or her listing. My own analysis reveals that 95% of residential transactions involve both a listing and selling agent.

Builders of new homes also offer a co-op commission when a buyer has an agent, yet in too many cases, buyers deal directly with the builder’s salesperson and do not take advantage of the opportunity to have an agent on their side. It’s similar to buying an automobile from a dealer — the salesperson isn’t your friend.

This is particularly unfortunate when you realize that you pay just as much for the house when the builder doesn’t have to compensate your agent. You gain nothing and lose a lot when you buy a new home without professional representation.

I did a survey of 45 builder salespersons and the Realtors who put builders’ homes on the MLS, and learned that as few as half their transactions are with buyers who have an agent representing them.

In case it’s not obvious that you’re better off having your own agent when buying a home from a builder, let me point out some ways that having an agent on your side can benefit you.

First of all, your agent can tell you whether the builder is using the buyer-friendly state purchase contract or – as is usually the case – a contract prepared by the builder’s attorney. Any contract prepared by a builder’s attorney is written to protect the builder, not you. Although a real estate agent is allowed to interpret the state contract to buyers, only a lawyer can explain or interpret a builder’s contract. Your agent can refer you to a trusted real estate attorney who will help you understand the contract before you sign it.

It’s fair to say that a builder’s sales representative will not give as much weight as your agent would to the importance of consulting a real estate attorney. That salesperson also may not stress the importance of hiring a professional home inspector to make sure the home is well built and built to code.

Just because a home is new does not guarantee that it was properly built, or even built to code.  I always recommend having a home inspector make three visits when you buy a new home — once after framing is complete but before the drywall is installed, and a second time prior to closing. You’d be surprised what these inspections can uncover. I also recommend a third visit a year later, before the builder’s warranty expires.

One thing your agent can tell you is whether the deposit money you provide at contract time is non-refundable (as is usually the case) and whether you’ll be spending thousands of dollars, not only for design-center upgrades but also for window coverings and landscaping, including a sprinkler system.

Your agent can also tell you whether the builder has created a “metropolitan tax district,” which means that you, not the builder, will be paying hundreds or thousands of dollars in extra property taxes for up to 30 years to cover the community’s infrastructure costs, including streets, sidewalks, and sewers.

If you hire an agent from Golden Real Estate, you’ll also get assistance with your moving costs, including use of our moving trucks, moving boxes, packing materials and labor. Don’t shortchange yourself by not engaging one of us in the purchase of your new home.  Call us at 303-302-3636.


Now for a Brief Lesson on Type Fonts and Readability…

As with most Realtors, real estate was not my first career. I started out as a newspaper reporter/editor/publisher, then transitioned to typography, using the typesetting equipment I had purchased for my newspapers.

Just as I’ve never let go of my love of journalism, I’ve never let go of my love of typography. I design and compose this full page ad myself every week, and I take pleasure in making it as well written and readable as possible. The choice of typefaces for headlines and text is a big part of that.

If I had my choice, the text typeface in my newspaper ads would not be 10 point Arial Narrow but a serif typeface like Times Roman. “Serifs” are those subtle accents at the bottoms, tops and ends of letters, but they play a huge role in readability.  Sans-serif typefaces like Arial or Helvetica don’t have those accents.  [This blog post is in Times Roman.]

Serif_vs_Sans-SerifAt right is a Times Roman letter with serifs next to an Arial letter without serifs. Can you see how much those little serifs improve readability, especially for smaller type sizes?

As a typographer, I learned that serif typefaces should be used for text, and that sans-serif typefaces should be used only for headlines, subheads, captions, and other limited-text applications.

You’ll notice that most newspapers, magazines and books — but not most websites — follow this rule, with Times Roman the most common text typeface. The Denver Post doesn’t let me use Times Roman lest my ad be mistaken for editorial content. Compare my Arial Narrow text with the same size type in that newspaper’s news stories, and you’ll probably agree that those little serifs make text more readable. Also notice that sans-serif headlines and sub-heads work really well when combined with serif body text.

Unfortunately, Microsoft, seemingly unaware of these typographic principles, has from the beginning made sans serif typefaces like Calibri the default typefaces for Outlook, also making the default size fairly small. Given that space is not a limitation in emails or websites, it’s sad that this has become the standard. Note: You can change the default font and type size for outgoing emails in Outlook and other applications.  I use 12 pt. Georgia, a particularly readable serif typeface.

Another annoyance, especially for us older Americans, is the use of thin, gray sans-serif type instead of black serif typefaces in so many websites.  Don’t webmasters value readability?


Central Arvada Condo Just Listed by Carrie Lovingier

6310 Oak St #107This spacious 2-bedroom, 2-bath ranch-style condo at 6310 Oak Street (Unit 107) is within central Arvada’s Grace Place subdivision, built in 1999. The master bedroom features a huge walk-in closet with built-in shelving, and the kitchen has a bar/counter overlooking the living room. Being a garden-level unit, this condo has a private patio. It has a full size washer & newer dryer, a newer range and newer hot water heater. The building has a brand new roof. The complex is adjacent to Allendale Park, close to Ralston Recreation Area & near bus & light rail. The HOA fee is only $145 per month, and there’s plenty of guest parking. You’ll be only 15 minutes from downtown Denver or downtown Golden, and 36 minutes from DIA.  Casinos are 45 minutes away, and skiing is just an hour away. View a narrated video tour at, then call listing agent Carrie Lovingier at 303-907-1278 for a private showing.


Real Estate Related Email Scams Are Proliferating

Judging from my own email, there has been a huge spike recently in email scams targeting real estate agents and their clients. For several months I have been getting Real_Estate_Today_bylineemails with subject lines such as “Clear to Close” or “Document Delivery Notice,” with links to “View Documents.”

Many of the emails appear to have a PDF attachment, but when you click on the attachment, then you see a link to “open” that PDF.  I worry that some of my colleagues or their clients might fall prey to this or similar scams.

DocuSign is a well-known software for signing real estate documents, and often the email asks me to click on a link to view a DocuSign contract or settlement statement for some transaction it doesn’t identify and that I wasn’t expecting. One should never click on that link. This can be tempting to an unaware agent.

I can’t tell you what exactly the scam is because I haven’t clicked on any of those links. If any of you readers have clicked on such links, I’d like you to share your experience with me.

Another popular scam involves sending an email giving buyers wiring instructions for their down payment. In many cases buyers’ money was lost forever.  These emails might appear to be from your agent or title company, but they aren’t.  Always call your agent or title company to verify any such email.

Our office has a business subscription to Microsoft Office 365, and often my agents and I receive emails aimed at compromising our Office 365 accounts. The subject line is often “Account Login Attempt,” and the text claims that someone knows my login details and has used it to access my email account. The text of the email contains my email address to make it seem authentic. It goes on to say that a lock has been placed on my email account and that I need to click on a link to restore access. Of course I ignore and delete these messages. How many of my colleagues (and readers of this column) have fallen victim to such emails?  I’d like to hear from them/you.

There’s a simple way to identify links you should not click on. Float your cursor over the link (don’t click!) to display the true link address. What you saw in the message is likely not what you would get if you click on it! Often it will be for a web address from a foreign country, whose 2-letter initials take the place of .com.

2017 Home Sales Will Hit Record Again, Despite Reported ‘Low Inventory’

One of the most persistent myths about our real estate market is that not enough people are putting their homes on the market, resulting in “record low inventory.”


How, then, since there are so few homes on the market, does one explain that the number of homes sold has set a record every year since 2013? In the chart above, 2017 is shown slightly lower than 2016, but that doesn’t include the 1,387 that closed since the end of November. Also, there are 2,400 listings that have been under contract for more than 30 days, the majority of which are bound to close before Dec. 31st. Another 3,000 listings have been under contract less than 30 days, and many of those will close by Dec. 31st, too.  So, the number of 2017 sold listings will probably end up over 65,000.

Active listings and DOM      How to explain the record number of sales when there are so few active listings? It’s really quite simple. As shown in the table at left, the median days on market (“DOM”) for new listings is less than half what it was five years ago and is showing no signs of rising, which explains why the number of active listings keep declining. What about December? The numbers aren’t in yet, but, judging from the last three years, when median days on market was 16 and 17, you could speculate that half the homes put on the market this week will also be under contract before the end of the 2017.

The statistics I’ve been quoting are for the total metro MLS (, but Denver and Jefferson County are as hot or hotter.  Denver’s median days on market for November was 14, and Jeffco’s median days on market was 12.


One Month Left to Sell Before Possible Tax Hike

Real_Estate_Today_byline    If either version of the GOP tax bills is enacted, nearly 20% of Colorado homeowners who sell their home would be subject to capital gains tax next year who are not subject to it this year. That’s how many of us have lived in our homes more than two but less than five years.

Currently, you only need to have lived in your home for 2 of the 5 years preceding a sale to enjoy a $250,000 (single) or $500,000 (if married) exemption on capital gains. That changes to 5 of the past 8 years under both bills. For a typical $100,000 gain in value, that computes to nearly a $20,000 tax hike. (The Senate version only requires you to be under contract by Dec. 31, whereas the House version requires that you close.)

So, if you are planning to sell before you’ve lived in your current home for at least 5 years, it would be a good idea to put it on the market immediately. Fortunately, as I’ve demonstrated in previous columns, December is a pretty good month for putting a home on the market.  We know how to make it happen, so call us.

Also at risk: the deductibility of property taxes, state income tax, and the mortgage interest deduction. The estate tax, which only applies to the top 0.2%, would be cut in both versions and eliminated by 2024 if the House version prevails — a billion-dollar windfall to heirs of the top 0.1%.

If you’re thinking of buying an electric or hybrid vehicle, you should do that before year end, too, because the $2,500 to $7,500 tax credit (based on battery size) is also being eliminated. It’s not too late to take delivery of a new Tesla Model S or Model X, or Chevy Volt by year’s end and get that full tax credit plus Colorado’s $5,000 credit (which does not go away in 2018). I can secure you an additional $1,000 on either Tesla model, plus free supercharging.  Call me at 303-525-1851.

Just Listed: 4-Bedroom Townhome Near Downtown Golden

1060 Cottonwood     This 4-bedroom, 3½-bath home at 1060 Cottonwood Circle with main-floor master was just listed by Andrew Lesko. Adjacent to the Harmony Village co-housing community and a stone’s throw from Fossil Trace golf course, this is a high-end home with hardwood and tile floors, a gourmet kitchen, and more. Just listed at $675,000. Find more pictures and a narrated video tour at, then come to Andrew’s open house, Saturday, Dec. 9th, 1-4 pm, or call him at 720-550-2064 for a private showing.


Golden Real Estate Has a Record of Success in Jefferson County & Denver

Our Agents Sold 49 Listings in 2017 through November.  53% of our listings sold above their listing prices. Only 31% had to settle for less than the listing price. Our median days on market (DOM) was 6.

GRE's 2017 Listing stats

We Also Closed 36 Buyer Sides. 64% of our buyers were able to buy their homes for less than asking price. Only 25% of them paid above the listing price.

GRE's 2017 Buyer Stats

Wouldn’t You Like  Us on Your Side?  Call 303-525-1851 for a free in-home consultation!