Gain Exclusion Qualification Rules     If you're unmarried, you can potentially sell your principal residence for a gain of up to $250,000 without owing anything to the U.S. Treasury. If you're married and file jointly, you can potentially exclude up to $500,000 of home sale gain. To qualify, you generally must pass both of the following tests:     1. You must have owned the property for at least two years during the five-year period ending on the sale date (the ownership test).     2. You must have used the property as a principal residence for at least two years during the same five-year period (the use test).     To be eligible for the $500,000 joint-filer exclusion, at least one spouse must pass the ownership test, and both spouses must pass the use test.     If you excluded a gain from an earlier principal residence sale under these rules, you generally must wait at least two years before taking advantage of the break again. For joint filers, the $500,000 exclusion is only available when both you and your spouse have not claimed an exclusion for an earlier sale within two years of the sale date in question.     Capital gains in excess of your exclusion are generally taxed at a maximum federal rate of no more than 15 percent. State tax may also apply.

• The land must be adjacent to the parcel that contains your house, and it must be used as part of your principal residence (as opposed to being used for business or rental purposes).
• The house must also be used as your principal residence.
• The adjacent land must be sold within two years before or after the sale of the parcel that contains your house, and you must meet certain timing requirements for both the sale of the house and the sale, or sales, of the land. (See right-hand box for timing qualifications.)

Your tax adviser can help you take advantage of the home sale gain exclusion for sales of land next to your house. Advance planning may be necessary to maximize your tax savings.

 

 

What If You Could Have Fun, Eat Pizza and Improve Your Skills?
We do that when we play Cash Flow learning the risk/reward relationship in investing successfully and profitably. We play the Robert Kiyosaki inspired board game that employs real life strategies while risking only play money. It helps to develop confidence in decision making and deal analysis and IT WORKS! Join us and have some fun while improving your skills. It's all done at the monthly Cash Flow Follies and Casino Night.  Pizza and beverages are provided, and there is a cash payout to winners at the end of the night to add a little something extra to the drama of the evening.  Please comment with ideas about the game or questions about it.

Time to vent (express my personal viewpoint) on something I consider one of the most basic of business (or personal) practices.

Simple professional courtesy dictates that we respond appropriately when contacted by whatever means, i.e. phone, email, etc. I don't mean unsolicited junk mail, intrusive "robo phone calls" et al, but contacts from our known friends and associates.

Everyone is busy, that's pretty much a given, but it goes for the person who contacts us as well, and I think it is a good practice to assume that they have a reason for trying to contact us, right?

If you don't want to have communications with someone, that's okay, but have the courtesy to say so in a reply.  Then future lack or response is justified.

Meanwhile, practice good and courteous business relations by returning calls or emails in a timely manner. It's the professional thing to do.

That's how I see it.  How about you?

"Ability is important in our quest for success, but dependability is critical." 

-Zig Ziglar
 

Some more retrospective on the "melt down" in real estate.  Back in 2006 this article appeared in Fortune.

NEW YORK (FORTUNE) - The lesson that equity can evaporate quickly is something Brooks and Judy Butler of Coral Springs, Fla., learned the hard way.

In 1989, Brooks, a sales executive for software company DataCore and a former IBMer, bought a condo in Hartford, right around the corner from the Mark Twain and Harriet Beecher Stowe homesteads. Housing prices had soared by more than 90 percent in the previous four years, and a few weeks after he plunked down $98,000, a similar condo sold for $125,000, which made him feel pretty good.

But then the insurance industry went into a slump, and Hartford's population declined. As the years went on, units in his building started to change hands for less and less.

Brooks thought about selling when he was $4,000 down, but he couldn't afford to lose that kind of money. The next time he thought about it, he was $25,000 in the hole.

When he finally cashed out in 1998, he had to bring a $40,000 check to the table. "It was awful," he says. (The condo, he heard, sold two years ago for $82,000 -- still short of its 1989 level.)

Which is why, as a matter of family philosophy, Brooks and Judy refuse to believe their current house in Florida is worth a single penny more than $210,000 -- the price they paid five years ago -- even though comparable dwellings on the street are going for close to $500,000.

Their rule: Never allow outstanding loans against the house to surpass the purchase price. In fact, their mortgage and the $9,000 they took out on a home-equity line of credit are considerably less, they say.

And where did they put that $9,000? Back into the house. They refurbished the deck and the driveway and purchased hurricane shutters. "That's a conservative approach," says Brooks. "If we stick to it, we'll be safe."

Americans have increased their home equity in the past five years by 60 percent, or more than $3.6 trillion. They have also tapped it -- to the tune of $600 billion in 2004 alone.

Some of this cash has been spent wisely: to put the kids through college, for instance. But plenty has gone toward vacations and new wheels. Great for the economy; bad for many personal balance sheets.

"A new kitchen is fine because it adds real value to your home," says Leamer. "But to buy an SUV and go out to fancy meals with expensive wines, that's spending money you may never have."

Clearly, the message of the forecast is that appreciation may not always support such spending. Some 60 percent of homeowners, according to one recent survey, expect at least 5 percent annual price growth during the next several years.

That may not sound extreme, but in dollar terms, on today's already hefty home prices, it certainly adds up.

And -- surprise -- it's way out of touch with historical norms: Home prices have risen slightly more than 1 percent annually after inflation. Chances are, appreciation in the future will look more like that, at best, than like the heady figures we've seen in recent years.

The takeaway: "Your home isn't worth as much as you think it is," says Economy.com's Zandi. "So borrow as if it were worth measurably less, because it is."

Sometimes it is useful, or at least interesting, to look back at what was foretold versus what actually happened as we now know it. This is an article from FORTUNE back in 2005.

Real Estate: Is the party over?
Exclusive forecasts for the 100 largest markets.
December 16, 2005
By Ellen Florian Kratz, FORTUNE

NEW YORK (FORTUNE) -- Everybody from Los Angeles to Boston -- your mom, your doctor, your dry cleaner -- is puzzling over which way the nation's real estate market is headed. Up or down? Bubble or not?

It's a debate that's been raging for years, and recently that there have been clear signs of a slowdown. It's unlikely, however, that the housing market will come to a screeching halt.

To get a clearer picture of how things may play out, FORTUNE turned to Moody's Economy.com and home property-valuation service Fiserv CSW.

The researchers crunched numbers on the 100 largest metropolitan regions in the country, and the results of their analysis appear in the table below.

Nationally, the overall outlook seems reasonable: 7 percent appreciation for 2006 and flat for 2007. But markets that have seen the greatest appreciation over the past five years appear to be vulnerable.

Indeed, at some point in the next two years, according to the forecast, a third of the nation's 100 largest metro areas (accounting for 60 percent of the U.S. population) are expected to see modestly falling house prices.

Real estate bear markets often come in the form of steady declines over many years, rather than sudden sharp drops.

As inflation gradually gnaws away at the value of nominal home prices, regular folks might not take much notice. But in the long run the loss of wealth becomes all too real. From 1989 to 1997, for instance, Los Angeles residential real estate dropped more than 40 percent in inflation-adjusted terms.

The nation's most perilous regional market, according to the forecast data: Las Vegas, a speculator-infested hot spot. Prices there are projected to deflate by 7.9 percent next year, the year after by another 5 percent. For newcomers to the market and those with low-money-down deals who may have overleveraged themselves with adjustable-rate mortgages, even a modest downturn could mean financial jeopardy.

Click on column headings to re-sort. Click on city name for in-depth statistics.

Rank	Metro Area	State	Median home price	Projected growth 2006	Projected growth 2007
1	San Antonio	TX	$129,900	8.30%	7.00%
2	Jacksonville	FL	$164,700	8.10%	2.50%
3	El Paso	TX	$107,100	8.10%	7.10%
4	Little Rock-North Little Rock	AR	$115,700	7.80%	7.20%
5	Baton Rouge	LA	$133,800	7.60%	3.80%
6	Richmond	VA	$191,800	7.40%	3.30%
7	Virginia Beach-Norfolk-Newport News	VA	$193,100	7.30%	1.00%
8	Nashville-Davidson-Newport News	TN	$157,300	7.10%	6.70%
9	Houston-Sugar Land-Baytown	TX	$139,800	7.00%	6.60%
10	Memphis	TN	$147,600	7.00%	6.50%
11	Allentown-Bethlehem-Easton	PA	$247,400	6.90%	1.20%
12	Oklahoma City	OK	$116,900	6.90%	6.00%
13	Birmingham-Hoover	AL	$152,500	6.90%	5.40%
14	Albuquerque	NM	$166,700	6.50%	6.10%
15	Columbia	SC	$133,200	6.40%	5.40%
16	Fort Worth-Arlington	TX	$125,700	6.30%	5.00%
17	Syracuse	NY	$109,400	6.20%	5.40%
18	Dayton	OH	$116,500	6.10%	5.60%
19	McAllen-Edinburg-Mission	TX	$71,000	6.10%	6.20%
20	Salt Lake City	UT	$165,700	6.10%	3.40%
21	Austin-Round Rock	TX	$161,800	6.10%	5.00%
22	Tulsa	OK	$116,600	6.10%	6.20%
23	Pittsburgh	PA	$113,000	6.00%	5.00%
24	Cincinnati-Middletown	OH	$146,200	6.00%	6.60%
25	Albany-Schenectady-Troy	NY	$176,700	6.00%	4.50%
26	Dallas-Plano-Irving	TX	$155,500	5.90%	6.30%
27	St. Louis	MO	$134,900	5.80%	4.10%
28	Toledo	OH	$116,400	5.70%	5.00%
29	Greenville	SC	$141,300	5.70%	5.00%
30	Sarasota-Bradenton-Venice	FL	$314,300	5.60%	-3.60%
31	Indianapolis	IN	$121,700	5.60%	5.40%
32	Wichita	KS	$107,200	5.50%	4.80%
33	Columbus	OH	$150,700	5.50%	6.00%
34	Akron	OH	$117,600	5.40%	5.30%
35	Buffalo-Niagara Falls	NY	$96,400	5.40%	5.30%
36	Knoxville	TN	$140,100	5.40%	5.20%
37	New Orleans-Metairie-Kenner	LA	$149,100	5.40%	6.60%
38	Rochester	NY	$111,200	5.30%	6.80%
39	Raleigh-Cary	NC	$183,100	5.20%	5.10%
40	Philadelphia	PA	$199,400	5.10%	0.50%
41	Charlotte-Gastonia-Concord	NC	$172,800	5.10%	5.50%
42	Louisville	KY	$134,800	5.00%	4.60%
43	Milwaukee-Waukesha-West Allis	WI	$210,900	4.80%	2.50%
44	Tampa-St. Petersburg-Clearwater	FL	$193,700	4.80%	-0.50%
45	Greensboro-High Point	NC	$145,100	4.80%	5.50%
46	Kansas City	MO/KS	$154,600	4.70%	4.10%
47	Poughkeepsie-Newburgh-Middletown	NY	$265,000	4.60%	0.80%
48	Youngstown-Warren-Boardman	OH	$83,400	4.50%	5.30%
49	Gary	IN	$127,300	4.40%	3.40%
50	Cleveland-Elyria-Mentor	OH	$142,800	4.30%	5.10%
51	Omaha-Council Bluffs	NE	$136,100	4.30%	4.10%
52	Lake County, Kenosha County	IL/WI	$259,100	4.20%	1.90%
53	Atlanta-Sandy Springs-Marietta	GA	$165,300	4.20%	4.00%
54	Honolulu	HI	$570,400	4.00%	-1.00%
55	Orlando-Kissimmee	FL	$226,400	3.80%	-0.50%
56	Grand Rapids	MI	$137,300	3.60%	2.90%
57	Fort Lauderdale-Pompano Beach-Deerfield Beach	FL	$356,600	3.10%	-4.50%
58	Springfield	MA	$197,900	3.00%	1.20%
59	Portland-Beaverton-Vancouver	OR/WA	$234,600	3.00%	-0.70%
60	Baltimore-Towson	MD	$249,100	2.90%	-0.80%
61	Tucson	AZ	$220,900	2.90%	-4.00%
62	Camden	NJ	$210,800	2.70%	0.80%
63	Denver-Aurora	CO	$244,800	2.60%	2.50%
64	Wilmington	DE	$231,000	2.50%	1.70%
65	Seattle-Bellevue-Everett	WA	$335,500	2.50%	1.00%
66	Tacoma	WA	$222,700	2.30%	0.60%
67	W. Palm Beach-Boca Raton-Boynton Beach	FL	$386,200	2.10%	-3.90%
68	Phoenix-Mesa-Scottsdale	AZ	$238,100	2.00%	-3.70%
69	Warren-Farmington Hills-Troy	MI	$196,000	1.90%	0.80%
70	Washington-Arlington-Alexandria	DC/VA	$404,900	1.80%	-3.40%
71	Hartford-West Hartford-East Hartford	CT	$257,600	1.80%	0.60%
72	Miami-Miami Beach-Kendall	FL	$343,700	1.80%	-5.50%
73	Detroit-Livonia-Dearborn	MI	$120,100	1.60%	2.00%
74	Newark-Union	NJ	$407,000	1.50%	-1.80%
75	New Haven-Milford	CT	$280,300	1.40%	0.60%
76	Worcester	MA	$287,800	1.30%	-0.30%
77	Edison	NJ	$387,900	1.20%	-2.90%
78	Chicago-Naperville-Joliet	IL	$264,900	1.10%	0.20%
79	Cambridge-Newton-Framingham	MA	$448,800	0.80%	0.00%
80	Minneapolis-St. Paul-Bloomington	MN	$234,600	0.70%	0.70%
81	Bridgeport-Stamford-Norwalk	CT	$472,500	0.40%	-1.30%
82	New York City-White Plains-Wayne	NY/NJ	$504,800	0.10%	-3.50%
83	San Francisco-San Mateo-Redwood City	CA	$766,000	0.10%	-2.90%
84	Bethesda-Gaithersburg-Frederick	MD	$444,500	0.00%	-0.50%
85	Boston-Quincy	MA	$422,900	-0.10%	-1.40%
86	Essex County	MA	$380,600	-0.20%	-0.70%
87	Stockton	CA	$423,100	-0.30%	-5.90%
88	San Jose-Sunnyvale-Santa Clara	CA	$720,900	-0.40%	-3.90%
89	Oxnard-Thousand Oaks-Ventura	CA	$480,300	-0.70%	-5.00%
90	Oakland-Fremont-Hayward	CA	$651,300	-0.70%	-4.40%
91	Fresno	CA	$340,800	-0.80%	-2.80%
92	Bakersfield	CA	$286,300	-0.80%	-3.00%
93	Providence-Fall River-New Bedford	RI/MA	$292,800	-1.10%	-2.20%
94	Sacramento-Arden-Arcade-Roseville	CA	$372,900	-1.20%	-5.10%
95	Los Angeles-Long Beach-Glendale	CA	$412,900	-1.60%	-6.30%
96	Nassau-Suffolk counties	NY	$461,300	-2.00%	-4.20%
97	Riverside-San Bernardino-Ontario	CA	$362,800	-2.60%	-6.80%
98	Santa Ana-Anaheim-Irvine	CA	$682,300	-3.10%	-6.10%
99	San Diego-Carlsbad-San Marcos	CA	$598,700	-3.40%	-5.70%
100	Las Vegas-Paradise	NV	$296,000	-7.90%	-5.00%