Santa Cruz Real Estate  Digest,  Ed. 20

April, 2017 - In This Issue:
In This Month's Issue
In this month's Digest you will find national and local news as well as informational pieces on topics that we have found to be increasingly important in the real estate industry. 

Before shopping for homes, it's important to consider how you will hold title on the property that you purchase. To help you understand your options, we've summarized the five most common ways to hold title.

It's tax season! Be sure and read about the most common tax benefits of owning a home!

Did you know that downpayment assistance is available in Santa Cruz County's unincorporated areas, as well as  Watsonville   and  Capitola? Read more in A rticle  Two. 

Do you have a furry friend in the family? Read Article Three to learn how you can use your home's pet-friendly features to sell your home . We also discuss what to consider when buying a home with a pet in the family. 

Finally, read Christine's Corner if you're finding that this rainy season is bringing musty smells into your home.
Real Estate Market Statistics 
For Santa Cruz, Santa Clara, and  Monterey

The reports contain median home prices, real estate price statistics, valuable information about mortgage rates and much more.

How Will You Hold Title?
5 Common Title Options

Before shopping for homes, it is important to consider how you will hold title on the property you purchase. Various title options have differing legal and tax implications that will affect you and future generations.

The five most common ways to hold title are sole ownership, tenants in common, joint tenancy with right of survivorship, community property (in applicable states such as California), and in a living trust. Each option is summarized below:


  • Sole ownership means that the home is in one person's name, alone. He or she can bequeath the property to whoever he/she chooses and upon death. Before 2016, those who held their property as a sole owner had to go through probate. However on January 1st of 2016, the the Revocable Transfer on Death Deed (TOD Deed) came into law and is now a viable way for sole owners to bequest property and avoid the costs of setting up a living trust and probate. 
  •  Tenants in common is the most conventional way for unmarried people to hold title. This choice allows those who hold title to hold different interests. For example, one person may own 40%, while the other owns 60% of the home. Alternatively, each tenant in common can hold equal interest in the entire property. Each tenant can will their interest in the property to whoever they choose and upon said tenant's death his/her interest must go through probate. Tenants in common is a popular choice for those in second marriages who wish to will their interest in the property to a child from an earlier marriage.
  • Joint tenants with right of survivorship have equal interest in the property and must take title at the same time. Upon death of one tenant, the other tenant obtains the deceased tenant's share without passing through probate. Either tenant can sell or give away their share of the property to whoever they choose, and upon such a conveyance, the new and existing owners will hold the property as tenants in common.
  • Community property states such as California allow married couples to take title as community property. This title option gives both spouses fifty percent interest in the property, and the right to will his/her interest to the surviving spouse, or someone else.  If community property is taken with a right of survivorship, meaning all remaining interest goes to the remaining spouse, then probate can be avoided.
  • As this article explains, a living trust has the advantage of avoiding probate no matter to whom you bequest the property. In fact, you can set up a trust for nearly any asset you own, including bank accounts and vehicles. As   this article explains, to take advantage of this title option, you must create a trust document and name someone to take over as a trustee after your death (successor trustee). Then, you must transfer ownership of your property to yourself as the trustee of the trust. Finally, the property will be controlled by the terms of the trust and carried out by the successor trustee. The property can then be transferred to your beneficiaries without going through probate.

All of these title options have pros and cons, and the best title choice for you depends on your unique situation. We have provided the following definitions of common vestings as an informational overview only. Readers should not rely on these as legal definitions. Schneider Estates, Inc. urges real property purchasers to consider their titling decision prior to closing, and to seek legal counsel should they be unfamiliar with the most suitable ownership choice for their particular situation.

Tax Breaks for Homeowners

It's tax season, and if you haven't filed your taxes yet, take a look at these homeowner exemptions to take advantage of tax savings for 2016.

Your biggest tax break will likely be your deduction for interest paid on your mortgage. This tax break extends to other equity debts such as a home equity loans or lines of credit. According to  this article , generally equity debts of $100,000 or less are fully deductible.

Points that you paid to get a better rate on your mortgage are deductible in the year you paid them. If you paid points on a refinanced loan, you can still deduct the points, but most likely will have to deduct them over the life of the loan.

If you pay private mortgage insurance, this is fully deductible. An interesting note: this tax break is about to expire. As a result, it will not be available for borrowers during 2017 and beyond unless reauthorized through congressional action.Read more about the expiration of the current law, and likelihood of renewal  here .  

Any money that you paid for property taxes is deductible.

If you've sold your home this year, after living in it for at least 2 years within 5 years before the sales date, $250,000 of the gain from your sale is tax-free if you are single, and $500,000 is not taxed if you are married.

Read the IRS's 2016 Tax Information for Homeowners guide  here .

Downpayment Assistance Programs

Did you know that Santa Cruz County has a down payment loan assistance program for first time homebuyers? If you have a household income that is 80% or less than the area's median income (adjusted for household size), then you may qualify for a down payment loan of up to $56,400. This program restricts the type of mortgage that you can obtain and is limited to homes with a purchase price of $425,000 or less. The program only serves for purchases in unincorporated areas of Santa Cruz County. See income limits and program details  here .

Two of the four incorporated cities of Santa Cruz County, Watsonville and Capitola, also have homebuyer assistance programs.

Watsonville has a First Time Homebuyer Program through which eligible parties buying in the city of Watsonville have access to second mortgage loans not to exceed the lesser of:
  • 25% of the purchase price + closing costs
  • Program subsidy limits
  • The Affordability Gap (the difference between the cost of the home and the buyer's available funds)
To apply for the program:
  • The home must be in Watsonville.
  • The purchase price cannot exceed the maximum allowed sales price (determined by county median sales price).
  • The house must be on a permanent foundation.
  • The property must be vacant or owner occupied 6 months prior to the sale.
  • The house must pass an inspection.

To be considered a first time homebuyer, you cannot have owned a home within the past three years. Read more about program qualification requirements and details  here and  here .

Capitola provides down payment assistance loans to eligible purchasers of a residential property in the city of Capitola. The City will loan up to $100,000 on the purchase of a home for prices at or below $475,000. This loan program also has income requirement restrictions. These, along with additional program details, can be found  here .

Your lender should know about these programs. If you believe you qualify for one, be sure and bring it up when discussing your loan options.

Buying and Selling Pet-Friendly Real Estate

Throughout our time in the real estate business, the rule of thumb has been to keep your pets away from the real estate transaction. However, agents are starting to challenge this tradition and use pets in creative and adorable ways in the home selling process. Just take a look at this "Corgi Realtor" Video . Additionally, 65% percent of U.S. households own a pet, making it clear that pet-knowledgeable realtors and pet-friendly homes are important commodities in today's market.

Selling A Pet-Friendly Home
Does your home have an ideal pet-nook? Do you have a nice sized coat room to wipe off your furry friend's paws? These kinds of amenities are attractive to pet owning home buyers, and showcasing them is a good idea. The key to including pet related items in the staging of your property is to ensure the presentation is attractive, and that muddy or roughly used items are out of site. Also, all pet related smells should be completely eliminated. Bad smells in the home can be a big turn off for buyers.

Prime pet locations can be highlighted in lifestyle highlights, such as living near a  dog friendly beach or a  dog friendly park  in town. If you live in a townhouse or condo that is pet friendly, this can be emphasized in your home's marketing. Finally, when it comes to the photography and marketing video of your property, the smart placement of pets may result in more views and help your property stand out above the crowd.

Buying A Home With A Pet In Mind

If you have a pet in the family, there is a lot to consider when buying a home. Before writing an offer, it is important to ask the HOA or condo board if they are pet friendly, and if so, if there are weight or breed restrictions in the by-laws. If you have a pet that likes the outdoors, inquire about outdoor green spaces. Additionally, when you see neighbors walking a dog near the home you are interested in buying, ask them about pet-friendly venues nearby.

If you are moving into Santa Cruz from another county, take a look at legal requirements associated with animals found  here . For example, if you have a noisy pet, it's important to know this part of the code,

"It is unlawful for any person to keep or harbor any dog, cat or other animal, whether licensed or not, which by habitual howling, yelping, barking or other noise unreasonably disturbs or annoys any person with ordinary sensitivities. When determining if there has been a violation
of this section, the use and character of the property where the animal is located as well as the neighboring properties shall be taken into consideration"

and to search for properties near dog friendly neighbors, or in more secluded areas of town.

Finally, make sure that your Realtor knows you have a pet or have hopes of getting one so that he/she can help you to search for your home with this consideration in mind.

Christine's Corner

While April showers bring May flowers, they can also bring musty, damp smells indoors. A damp house is not only unpleasant, but also can lead to health hazards such as mold, bacteria, and dust mites.

First and foremost, if your house is becoming or remaining damp, this indicates that water or moisture is getting in where it should not be. The exterior walls, foundation, windows, and roof of your property, when properly maintained, should prevent against dampness and mold. The first course of action should be checking these features and eliminating the source of the problem with proper insulation. If your house is simply damp from internal moisture, such as taking hot showers without turning on the fan, using household sprays regularly, etc., here are a few tips to reduce indoor moisture:  

  1. Ventilate, especially in the areas that create moisture such as the kitchen and bathroom.
  2. Buy indoor plants that may reduce moisture. See 5 such plants here .
  3. Invest in a dehumidifier.
  4. Visit this site for an extensive list of actions you can take.

By being mindful of your home's humidity level, and making changes as needed, it will be much easier to enjoy this beautiful April rain!

Christine Schneider, Broker
(831) 600-6550