A Day (NOT) at the Spa

Fab Fever performing at our home wedding, 2010
Spa [spah] noun: a hot tub or similar warm-water hydromassage facility, usually for more than one person.

My husband’s recent quest to have a lonely, neglected spa removed from our back deck as part of ongoing home improvement and maintenance met me with equal parts nostalgia, relief and sadness. Over eight years ago after first buying the home, I remember sitting in the spa with my mom, looking up at the house with its warm lights shining through the windows down to where we were floating. The words from my mouth in that moment came from a sense of comfort and relief: “I feel rich” is what I remember saying to my mom as we sat there enjoying the hot, bubbling water.
Now, the empty void where the spa once sat reminded me of the Dr. Suess book titled The Lorax, where the Onceler sadly told the story of the way things were. During my time in this home, there have been numerous memorable events that took place around the spa, especially in the warmer months when anyone dared venture outside to enjoy it. There was the party when wine glasses were found at the bottom of the hot tub with countless wine bottles strewn about in the dark the night prior, the party guest who looked down at an inebriated guest thinking he jumped in fully clothed (when in reality, he was just a hairy guy)…and our own home wedding two years ago when the band used the hot tub cover for their equipment and staging area.
To deal with the loss of the spa, I’ve taken it upon myself to see it as a “mind-clearing” and “decluttering” event in my life. Being that the previous owners of our home had the darn thing hoisted over the neighbor’s property with a crane to get it to where it sat for many years, the relatively simple process of having it sawed into pieces and hauled off was quite liberating…

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Why a Short Sale? (Tax Relief!)

SB 931 Deficiency Waiver on First Mortgage

When the first mortgage holder of your loan accepts full payment and satisfaction of all your outstanding first loan from the successful completion of the sale of your home, your lender is prevented from pursuing a deficiency against you even after a short sale. This is great news! What this means to you as a homeowner in California is that this releases you from further liability (deficiency) when the bank accepts and approves your short sale. Click here to read information on SB 931 and see how this may apply to your individual situation. At any rate, whenever you are negotiating a short sale, it would still be beneficial to have your real estate agent ask for the lender to issue a short sale approval letter with the verbiage indicating a waiver of future deficiency and no promissory note.

SB 458 Second Mortgages- Release of Liability after completing a Short Sale in California by 2012

Effective as of July 15, 2011, California homeowners who sell their homes through a short sale and who have subordinate loans such as home equity line of credit (heloc) or fixed secondary mortgages, are now extended the protection against deficiency. This means that if your second lender agrees to the short sale, your lender must accept the proceeds from the short sale as a payment in full of the outstanding balance of the loans. This means that if you are a homeowner in California who sells your home in a short sale that the bank has approved, you will be released from liability (deficiency) not only on your first mortgage (SB 931) but also on your second mortgage under SB 458 in the event that the bank accepts and approves the short sale event.  Receiving short sale approval is not enough, you would have to complete the short sale. Click here to read information on SB 458 and  consult a real estate attorney see how these short sale related laws may apply to your individual situation.

Short Sale Income Tax Relief from Federal Income Tax thru 2012

Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, short sale, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief. This applies to loans that were used to acquire, build, or improve upon on the home. Consult your tax advisor regarding how this tax relief may apply to your individual situation. If the loans forgiven were loans that you used to purchase the home (purchase money loan) or loans used to build or improve the home, most likely you would not have to pay taxes if you complete a short sale before December 31, 2012. A portion or all of the forgiven amount would be considered taxable income if the forgiven amount, or if portions of the loans forgiven were used for other purposes- i.e. cash out refinance used to payoff i.e. car loans, credit cards to pay vacation expenses, or cash to fund a new business, etc. Please consult a tax advisor. Click here to read more information on the Mortgage Forgiveness Debt Relief Act of 2007.

Short Sale Income Tax Relief from California State Income Tax until 2012

In California, homeowners who sell their home through a short sale may qualify for the California Mortgage Forgiveness Debt Relief under SB 401, which was enacted on April 12, 2010. This mortgage forgiveness debt relief act allows taxpayers who have had all or part of their loan balance on their principal residence forgiven by their lender to exclude the forgiven debt from California gross income. This tax relief for those who short sell their homes in California apply to discharges of qualified residence indebtedness on or after January 1, 2009 and before January 1, 2013 (Think until 2012). Read more about this from the California Franchise Tax Board website under SB 401.
The California Tax Relief limits the amount of qualified principal indebtedness up to $800,000 for those who file as married, joint, head of household and up to $400,000 for those who file as married/RDP filing separately. See State of California Franchise Tax Board for more details. In order to claim tax relief, you would need to file Form 540 or Form 540X for a previously filed tax return.
Consult your tax advisor regarding how this tax relief may apply to your individual situation.
Clock is Ticking. Unless, laws are extended, you only have until December 31, 2012 to complete a Short Sale and enjoy these benefits!
A lot of the laws that favor selling your home through a short sale in California expire by December 31, 2012. This means that if you desire to short sell your home and qualify to avoid deficiency and not pay taxes on mortgage forgiven debt associated with a short sale, now would be the time in order to close escrow on a short sale by 2012.
Please note there are exceptions to the law that you need to be made aware of. Consult with your advisors to discuss your own individual situation.
(This message is provided as a courtesy from Marcos Rios of EverBank. Contact Marcos at 510-755-4055.)

Choosing Appliances = Choosing a Mate

1) Make sure the appliance and plug is age-appropriate for the home.
(Make sure your partner is age-appropriate for you! The photo is an example of what happens when a new appliance is purchased for an old home. Our home was built in 1926, so you can only imagine that this new-fangled plug didn’t work in our wall outlet!)
2) Make sure the door opens on the proper side.
(Left or right or straight down the middle, make sure your politics match!)
3) Always make sure that whoever uses the appliances most is the one who has a say in what’s purchased.
(I do the laundry so my say in picking the dryer was needed and my more masculine half likes working in the kitchen (yes, I’m a lucky girl!), so it made sense for him to pick the dishwasher…I only wish I knew he was picking out a dryer that opened on the wrong side!)
4) Flashy house = flashy appliances!
(We bought a stainless steel-front dishwasher because it’s the focal point of the kitchen.)
5) Not beautiful but utilitarian? Make sure the ugly but useful appliances are hidden!
(Our dryer is in the laundry room where the walls are unfinished and nobody sees it. So, we bought an ugly one.)
Any other great ideas on anniversary gifts for your spouse?