Many California homeowners routinely deduct their entire property tax bill on Federal and State tax returns. Those homeowners are in for a surprise. Federal law prohibits deducting certain taxes and fees. Taking the full deduction reduces state and federal taxes and guess what; they want every cent they can get. To be deductible, a property tax must be a percentage of the home’s assessed value. Any tax that is a flat fee or an itemized charge for services assessed against specific property is not deductible. Nondeductible items are things such as Mello-Roos or Community Facilities districts, 1915 assessment district bonds, schools or college bonds, water, sewer, police, fire, libraries and a few more. The franchise tax board is making every effort to educate California homeowners to follow the law and stop deducting the entire amount of their property tax payment. The Franchise tax board had planed to change the 2011 tax returns by adding 3 lines asking homeowners for their parcel number, the amount of property taxes paid and the nondeductible amount. They had a change of heart and decided to make an all out effort to get property owners to understand what is deductible and not deductible. Below is a link to lean more.

What property taxes are deductible and what are not.

Ok, now you have chosen your home inspector, the inspection has been completed and escrow has closed. Now you find something wrong with the home, and you feel the inspector should have caught it so you could have negotiated with the seller before the close of escrow. Well, you really have 2 issues. First, is the issue something that the seller should have disclosed? Remember selling a home in an “as is” condition does not relieve the seller from disclosing material issues. Secondly the home inspector can be held liable depending on the situation. When property defects are not reported during the home inspection, the inspector probably can be held liable if the defects were within the scope of the inspection, and were visible and accessible at the time of the inspection. Most inspectors will itemize items that were either inaccessible or not within the scope of the report. If they were inaccessible and within the scope of the report, most should state that they recommend that they be inspected prior to the close of escrow. If you do have an issue with the report, call the inspector and have them come out to discuss the situation. If they are at fault, they should be given the opportunity to hire a repair contractor or simply pay for repairs themselves. Don’t rush to repair the problem yourself. See what the inspector has to say. Most inspection contacts will limit the liability of the inspector to either mediation, arbitration or put limits on the dollar amount of the liability. Many limit the liability to the cost of the report. If there is no resolution with the inspector, it just may come to the fact you are going to have to hire an attorney. Look, everyone that hires a home inspector wants to believe that the final report is the gospel. You are buying a perfect home. Well you are not. There is no such thing as a perfect home. In this writer’s experience, most home inspectors make a real effort to do a good job and most do. Most buyers do not have problems with the report after the close of escrow. But things happen and that is why it is of great importance on which one you choose to do the inspection. Choosing someone from the trade association such as ASHI, CREIA or the like is a good start. This writer is just giving you things to think about if there are issues with a home inspector. However an attorney is the only one that can give you legal advice.

American Society of Home Inspectors

California Real Estate Inspection Association

When buying a home a physical inspection of the property is imperative. A physical inspector can be recommended by your agent, but even if they do, talk directly with the inspector and find out as much as you can about their qualifications. You should be the one to place the order. It is wise to choose one that belongs to a trade association like ASHI (American Society of Home Inspectors or CREIA (California Real Estate Inspection association). Home inspectors are not licensed in the State of California. Many have chosen to be members of an association like CREIA. In order to belong to such an association the inspector must demonstrate technical proficiency, report writing skills and complete yearly continuing education. They must also be committed to conducting inspections in accordance with the organizations standards of practice and code of ethics. Many buyers unfortunately choose their inspector based on price alone. The lowest fee gets the job. That is not to say that an inspector that charges a lower fee than most is incompetent. Conversely paying a high fee does not insure that you are going to get the best report. You have to spend some time talking to more than one inspector and only then can you make more of an informed decision on who to choose. Choose wisely. The physical inspection of your next home is right at the top of importance. Making an offer on a home and getting it accepted is the easy part. Once you get into escrow, the physical inspection can make or break the deal.

American Society of Home Inspectors

California Real Estate Inspection Association

C.A.R. stands for California Association of Realtors. Most, but certainly not all, agents and brokers belong to this association that are licensed in the state of California. Agents and brokers pay dues to belong to this association. C.A.R provides many resources to agents and brokers. One very important benefit is providing contract forms to its members. Undoubtedly if you have purchased or sold a home in the state of California, you have become familiar with these contracts. There are many different contracts depending on the situation. For example there is the listing contract and there is the purchase offer contract. Most sellers and buyers may look at these contracts as, well, just contracts, but they are very important. These contracts are reviewed by C.A.R. real estate attorneys 4 times a year. Changes are constantly being made, all for the benefit of sellers and buyers. New contracts are also created. Just a few years ago there weren’t too many contracts devoted to Short Sales and Real Estate Owned properties. Now there are many. It is important to note that these contracts protect sellers and buyers. Badly worded contracts are the cause of lawsuits. Every once in a while agents and brokers find clients that want to change some of the language of these contracts. Not saying it can’t be done, because it can, but caution is advised. Agents and Brokers are taught from the beginning of their careers, not to ever act as an attorney or give legal advice. Making requested changes to contracts can force agents and brokers to do just that. It is dangerous not only for them, but also heir clients. If a seller or buyer wants to make changes to preexisting C.A.R. real estate contracts they should seek the advice of a real estate attorney. These C.A.R. contracts are well thought out by C.A.R. attorneys. One of the benefits of sellers and buyers using agents and brokers that are members of C.A.R. is being able to use these contracts. It is a good idea to become familiar with these contracts. Read them and understand them. Use C.A.R. contracts when selling or buying your next home.

See Contracts part 1 here

See Contracts part 2 here

If you are buying a home in San Diego, chances are very good that you will make a decision about getting a home warranty policy. Home warranties have been around for a long time, and buyers and sellers are subject to making the decision on whether to buy one or not every time an offer to purchase a property is presented. Why is that so? Because in the CAR (California Association of Realtors) purchase agreement there is a line item expense that asks if a Home Warranty Policy is to be purchase and whether the buyer or the seller will pay for it.

First of all what are home warranties? They are like an insurance policy that covers certain items within the home for repair or replacement. If you are a buyer, a seller may offer it from the beginning, but if they don’t you can ask for it yourself when making the offer. Generally home warranties cost $350-$500. A lot depends on what is covered. There are many people either in the real estate profession or home owners that say it is not worth the cost. However if you are a buyer you really have nothing to loose if the seller offers it or you ask for one because they are paying for it. But here is the deal. As a buyer make sure you get the policy and then actually read it. So if something goes wrong you will have a good idea what the costs to you will be and if the repair is even covered. Below is a link that reviews home warranty companies. Reading through many of the reviews, it will give you an idea on other homeowner’s experiences. It may help you decide to get a policy or not. But always keep in mind when reading these reviews that there are always people that will find a fault. It is like reading Yelp on a restaurant review. It may be a good restaurant, but there is always someone that will give it a bad review. Consistency of the reviews is the key.

Home Warranty Company Reviews