Luxury Home Magazine

SINGLE FAMILY RESIDENCE CONDOMINIUM 2013 Median Price 2014 Median Price Median Price % CHANGE 2013 Median Price 2014 Median Price Median Price % CHANGE Aina Haina - Kuliouou $1,019,000 $1,240,000 22% $650,000 - - Ala Moana - Kakaako $690,000 $1,015,000 47% $420,500 $530,000 26% Downtown - Nuuanu $700,000 $1,010,000 44% $450,000 $432,500 -4% Ewa Plain $487,000 $513,500 5% $330,250 $365,000 11% Hawaii Kai $874,075 $1,101,000 26% $527,000 $629,000 19% Kailua - Waimanalo $865,500 $975,500 13% $400,000 $430,000 8% Kalihi - Palama $515,000 $695,000 35% $347,000 $359,000 3% Kaneohe $676,250 $700,000 4% $405,000 $447,500 10% Kapahulu - Diamond Head $795,000 $820,000 3% $517,500 $517,500 - Makaha - Nanakuli $360,000 $388,750 8% $113,750 $110,475 -3% Makakilo $565,000 $625,000 11% $234,000 $282,500 21% Makiki - Moiliili $905,000 $1,015,000 12% $320,000 $332,500 4% Mililani $616,000 $655,000 6% $291,000 $267,500 -8% Moanalua - Salt Lake $815,000 $825,000 1% $278,000 $280,000 1% North Shore $599,999 $855,000 43% $220,000 $316,750 44% Pearl City - Aiea $565,000 $635,000 12% $262,500 $300,000 14% Wahiawa $391,050 $463,750 19% $153,000 $154,500 1% Waialae - Kahala $1,520,000 $2,025,000 33% $410,000 $462,500 13% Waikiki - - - $315,550 $296,500 -6% Waipahu $530,000 $560,000 6% $249,000 $307,000 23% Windward Coast $550,500 $668,325 21% $193,000 $210,000 9% OAHU SUMMARY $600,000 $655,000 9.2% $340,000 $345,000 1.5% SINGLE FAMILY RESIDENCE CONDOMINIUM 2013 Median Price 2014 Median Price Median Price % CHANGE 2013 Median Price 2014 Median Price Median Price % CHANGE Waimea $335,000 $319,900 -5% - - - Koloa $495,000 $635,000 28% $430,000 $475,000 11% Lihue $409,000 $425,000 4% $180,000 $161,250 -10% Kawaihau $455,000 $510,000 12% $155,000 $255,000 65% Hanalei $852,500 $987,500 16% $537,000 $442,500 -18% KAUAI SUMMARY $495,000 $522,500 6% $325,000 $336,000 3% Year to Date Median Sales Prices By Island Ashley Seeger | Business Development | 808.222.3021 | aseeger@ortc.com Jim Green | Account Executive | 808.343.0741 | jgreen@ortc.com Catherine Pennell | Account Executive | 808.285.4593 | cpennell@ortc.com KAUAI as of APRIL 2014 Kelly Veniegas | Account Executive | 808.224.5355 | kveniegas@ortc.com Sonja Gonzaga | Account Executive | 808.499.4355 | sgonzaga@ortc.com OAHU as of MARCH 2014* *April data unavailable at time of printing Julie Tumbaga, VP Hawaii Regional Manager 900 Fort Street Mall, Suite 1900 Honolulu, Hawaii 96813 (808) 524-6737 (877) 591-1031 Toll Free Jtumbaga@orexco1031.com www.orexco1031.com www.ortc.com Our Promise "We increase the value of real estate transactions for all participants by identifying, underwriting and managing each transaction with the highest standards of technical skill, client service and professional integrity" All information taken from Kauai Board of Realtors, MLS Sales Data information shown herein, while not guaranteed, is derived from sources deemed reliable. All information taken from the Honolulu Board of Realtors. MLS Sales Data information shown herein, while not guaranteed, is derived from sources deemed reliable. Taxpayers Beware: Zero Profit Doesn’t Mean Zero Capital Gains Taxes In this difficult market, many taxpayers are selling property in short sales or other transactions with no profit. Unfortunately, what many taxpayers do not understand is that property may be sold with no profit, but still be subject to significant taxable capital gain. How is this possible? It is possible simply because gain results not just from appreciation in value, but also results from depreciation deductions taken during ownership of the property, gain deferred from previous transactions, and from borrowing against appreciated equity in a declining market. These adverse tax consequences can be avoided by engaging in a Section 1031 tax deferred exchange. How to Determine Gain The formula to determine taxable gain is: Sales price less adjusted basis = taxable gain Three Situations Resulting In No Profit, But Taxable Gain 1. Depreciation Recapture If a taxpayer takes depreciation deductions, those deductions reduce the taxpayer’s basis, thereby resulting in gain. Example: Taxpayer acquires investment property A for $200,000. Taxpayer’s basis is therefore $200,000. During taxpayer’s ownership, taxpayer takes $138,500 of depreciation deductions, thereby reducing taxpayer’s basis to $61,500. Taxpayer sells Property A for $180,000.00. Even though taxpayer sells the property for $20,000 less than what he originally purchased it for, he still has a taxable gain of $118,500 ($180,000-$61,500=$118,500) which will result in approximately $41,500 in federal and state taxes. This adverse tax result can be avoided by exchanging the property in a tax deferred exchange rather than selling the property. 2. Carryover Gain If a taxpayer sells property previously acquired in an exchange – at no profit or even at a loss – the taxpayer may still be faced with significant taxable gain. (continue on page 62)