Shuttle Endeavour

Lots of people turned out today in San Francisco to see the last flight of the shuttle Endeavour.  After a low level tour of the Bay area Endeavour, mounted on top of her 747 carrier headed for a final landing in Los Angeles where she will go on display at the California Science Center.

NASA wisely delayed the flight by an hour to give any of our notorious fog time to burn off but it turned out to be an unnecessary precaution.  We had beautiful weather from early in the morning providing for stunning photo opportunities.

As can be seen in some of the photos, people lined the Marin Headlands, all the vantage points along the north edge of the Presidio, as well as Crissy Field, Marina Green and many other locations around the Bay.

Tax Relief on Short Sales Expires in December ...

... unless, of course, Congress and our state legislature both take action.  Here's the situation as summarized recently by the California Association of Realtors in a recent newsletter:

Tax relief on forgiven debt set to expire Dec. 31, 2012
Unless Congress and the California State legislature take action, a break for mortgage principal forgiven in loan modifications or short sales will expire at year’s end.

The mortgage debt forgiveness issue is only one of approximately 60 expiring tax provisions that Congress appears unable to extend prior to its recess for the November elections.  Congress is pushing the extension of any expiring tax provision to the lame duck session, along with any increase in the debt ceiling, and any serious attempts to prevent the mandatory budget cuts agreed to during last year’s debt ceiling deal.

California's tax treatment of mortgage debt relief income generally aligns with federal law, and both the California and federal laws are set to expire at the end of 2012. For debt forgiven on a loan secured by a "qualified principal residence," borrowers are exempt from both federal and state income tax consequences, but only until Dec. 31, 2012.  The existing federal exemption is for indebtedness up to $2 million, whereas the new California exemption is for indebtedness up to $800,000 and forgiven debt up to $500,000.

"Qualified principal residence" indebtedness is defined as debt incurred in acquiring, constructing, or substantially improving a principal residence.  It includes both first and second trust deeds.  It also includes a refinance loan to the extent the funds were used to pay off a previous loan that would have qualified.

However, these tax breaks apply only to debts discharged from 2009 through 2012. It may be that Congress will take action to extend the federal exemption before year-end, but we will have to wait and see. If the federal law is extended, it is likely that California would follow in due course, as in the past, but it is not guaranteed.  The last time the federal tax exemption was extended, California did not conform its tax law until well into the next year.

Sellers who have transactions closing after Dec. 31, 2012, need to speak to their own legal counsel or tax advisors about the impact of the expiration of these laws and their potential tax liabilities, including the applicability of other exemptions from debt relief income tax.

Department of Good News

A couple of recent reports are bolstering the anecdotal stories that the San Francisco Bay area real estate market is improving:

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According to a report from Chapman University's Anderson Center for Economic Research, the consumer confidence level of Californians is the highest it's been since before the beginning of the recession in late 2007:

Chapman University, California Consumer Sentiment, 9/10/12

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Foreclosure Radar reports that foreclosure filings (notices of default and notices of sale) were down sharply in August.  This continues a mostly downward trend over the last year.

06075 - Foreclosure Filings

The same trend, although not as dramatic, is seen in the statewide numbers as well as the surrounding counties (Marin, Contra Costa, Alameda, San Mateo and Santa Clara).

Proposed Kaiser Development for Potrero Hill

As with almost any proposed development, there's controversy in our neighborhood over a new Kaiser complex targeted for 16th St. and Mississippi.  On our neighborhood web site as well as other such as www.socketsite.com and http://savelowerpotrerohill.com/ you can find most of the pro/con arguments.  One of the posts included a rendering and asked:  "Another view, for our discussion. Is it better than what we have now?"

I've taken a Street View from Google Maps of 16th & Mississippi and overlayed the appropriate rendering in Photoshop.  I can't guarantee the perspective is perfect but it will give you an idea: (Click for larger views.)