Tax Credit for Homebuyers
First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.
The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.
Additional Housing-Related Provisions
Tax Incentives to Spur Energy Savings and Green Jobs — This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.
Landmark Energy Savings — This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.
Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing—This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs. Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.
Thursday, February 19, 2009
More Listings Coming Soon…..
Looking for a new home in Baltimore? I have listings coming up within the next month both in Roland Park and in the Hampden neighborhoods.
Give me a call if you are in the market for a new home since I can get you into my listings as well as homes that aren't even on the market and just before the spring market arrives!
Give me a call if you are in the market for a new home since I can get you into my listings as well as homes that aren't even on the market and just before the spring market arrives!
I Just Saved My Client $4,500!
My client was working with a mortgage broker and had received their pre-approval letter and were ready to buy. Before we got started I asked that they speak with a direct lender whom I have had excellent dealings with in the past in order to compare rates etc. My buyers agreed and boy were they glad they did...
It turned out that the mortgage broker had charged them $4,500 in lender fees. THIS IS INSANE! Now my buyers can breathe easier when it comes to their upcoming closing costs and now we are “Under Contract” with the home of their dreams!
I’m so glad they took the time to shop around & I’m certainly glad to have such an honest and competitive contact in the mortgage industry. Next time you are looking into a loan, remember to watch those fees!
It turned out that the mortgage broker had charged them $4,500 in lender fees. THIS IS INSANE! Now my buyers can breathe easier when it comes to their upcoming closing costs and now we are “Under Contract” with the home of their dreams!
I’m so glad they took the time to shop around & I’m certainly glad to have such an honest and competitive contact in the mortgage industry. Next time you are looking into a loan, remember to watch those fees!
Short Sale Quick Facts
Chances are in today's market you are hearing a lot about short sales since they seem to be popping up everywhere. Is it a good deal for the buyer & seller?
A short sale contract is between a buyer and a seller where a buyer gets a clear title and the lender agrees to accept less money than what is owed on the house.
· Contacting your attorney & tax advisor is a MUST before entering into a short sale contract.
· Takes approximately 4-8 weeks for an approval/denial on an offer
· The new owner must use as added income on the income tax (Phantom Tax)
· Lender can sue seller for remainder owed after short sale
Keep in mind that short sale properties are listed in the MLS and must be stated that the home is subject to lender approval. This can be a very timely process to both list and sell but if you have the time or are looking for an alternative to foreclosure, a short sale may be your best option.
A short sale contract is between a buyer and a seller where a buyer gets a clear title and the lender agrees to accept less money than what is owed on the house.
· Contacting your attorney & tax advisor is a MUST before entering into a short sale contract.
· Takes approximately 4-8 weeks for an approval/denial on an offer
· The new owner must use as added income on the income tax (Phantom Tax)
· Lender can sue seller for remainder owed after short sale
Keep in mind that short sale properties are listed in the MLS and must be stated that the home is subject to lender approval. This can be a very timely process to both list and sell but if you have the time or are looking for an alternative to foreclosure, a short sale may be your best option.
Sunday, February 15, 2009
The "Wait Until Spring" Fallacy
Real estate legend has convinced many people who need to sell their house to "wait until spring" to put it on the market. One of the reasons given is that the exterior of the house shows better. So does every other house, which negates any competitive advantage for spring showings. Another reason is the thought that buyers with school age children would not buy until it's near the end of a school year. However, there is a very large segment of the population that does not have school age children living with them. In addition, relocating families move all times of the year. The two major reasons given for waiting are not significant factors.
The real issue for not waiting for spring is how the real estate market works. With real estate as a commodity, when inventory rises, a downward pressure on prices arises. Belief in the fallacy of waiting until spring causes an influx of homes on the market at one time. With more inventory of homes in the spring, buyers have more choices and offer lower prices than they would when inventory was lower.
For buyers, now is the time to act with the combination of incredibly low interest rates and government incentives. If you or anyone you know would like to discuss the realities of the real estate market with me, please contact me.
The real issue for not waiting for spring is how the real estate market works. With real estate as a commodity, when inventory rises, a downward pressure on prices arises. Belief in the fallacy of waiting until spring causes an influx of homes on the market at one time. With more inventory of homes in the spring, buyers have more choices and offer lower prices than they would when inventory was lower.
For buyers, now is the time to act with the combination of incredibly low interest rates and government incentives. If you or anyone you know would like to discuss the realities of the real estate market with me, please contact me.
Friday, January 30, 2009
A True Tax Credit for 1st Time Home Buyers!
Homebuyers get a bonus in the stimulus bill
First time buyers could receive a $7,500 tax credit if they purchase soon.
By Les Christie, CNNMoney.com staff writer
Last Updated: January 29, 2009: 5:18 PM ET
NEW YORK (CNNMoney.com) -- If you're thinking of buying a home, there could be a big bonus for you in the economic stimulus bill that's now before Congress.
Among its many provisions is a $7,500 tax credit for first time home buyers. The House passed the $819 billion stimulus plan, including this tax credit, in a vote late Wednesday. The Senate may vote on its version of the bill some time next week.
Technically, the stimulus bill is actually changing the terms of the $7,500 tax credit that was issued as a part of the Housing Recovery Act, which Congress passed last summer. That legislation required that the tax credit be repaid over 15 years, making it more of a no-interest loan. Not surprisingly, the measure had little impact on the market. The stimulus bill now under consideration would make that tax credit a true credit that doesn't need to be repaid.
Many in the housing industry believe this credit could do a lot to jump start the moribund housing market.
"Our economists have studied the effect [of the credit] and they say there could be a 10% increase in home sales if it's implemented," said Mary Trupo, a spokeswoman for the National Association of Realtors. "It gives people who are sitting on the fence or who have inadequate funds for closing costs an incentive to act now."
A 10% increase would yield an extra half million sales this year.
Who qualifies
To be eligible, buyers cannot have owned a home for the past three years, and the new home has to be used as a primary residence. The credit phases out as income rises above $75,000 for singles and $150,000 for couples, and disappears entirely at $95,000 and $170,000, respectively.
Applying for it is easy, or at least as easy as doing your income taxes. Just claim it on your return. That's it. No other forms or papers have to be filed.
Both the Senate and the House versions of the new act remove the requirement that buyers repay the credit. The Senate bill applies retroactively to any purchase completed between January 1, 2009 and the end of August. The House version is also retroactive to the start of the year, and expires at the end of June. As long as buyers don't sell for at least 36 months, they keep the money.
And the credit is refundable, meaning that it can be claimed even if the amount of the credit earned exceeds the buyer's tax liability.So even if your total tax bill comes to just $5,000, you can still qualify for a full $7,500 refund.
The housing industry has been pushing this idea for many months, arguing that first-time homebuyers are the key to boosting home sales. First time buyers who purchase from existing homeowners free those sellers to trade up to bigger, better houses.
Buyers beware
But the credit has its drawbacks, according to Bob Williams, a spokesman for the Tax Policy Center, which gave it a mediocre C+ grade in its Tax Stimulus Report Card.
Williams argues that the credit is poorly targeted because it goes to every first-time buyer, not just the ones who wouldn't buy without it. So, it merely provides a windfall for many people who would have purchased anyway. (See correction, below).
And in the end, a $7,500 tax credit, regardless of the details, does nothing to address the issue that's holding most buyers back - the suspicion that prices are going to keep falling.
"As long as people are uncertain about what markets are going to do, this won't help much," said Williams. "It's not enough to change that."
The industry would like to make the tax credit stronger by making it available to all homebuyers, not just first-timers. And it's pushing to have the credit last through the end of the year, at least.
"By the time it's implemented," said Trupo, "there could be very few months left to act."
An earlier version of this story incorrectly stated that the tax credit for a home purchased in 2009 could only be taken off of 2009 taxes. However, homebuyers can choose to take the credit for 2008, according to the IRS. Even if they buy a home after they've filed their 2008 taxes, they can file an amended return.
First time buyers could receive a $7,500 tax credit if they purchase soon.
By Les Christie, CNNMoney.com staff writer
Last Updated: January 29, 2009: 5:18 PM ET
NEW YORK (CNNMoney.com) -- If you're thinking of buying a home, there could be a big bonus for you in the economic stimulus bill that's now before Congress.
Among its many provisions is a $7,500 tax credit for first time home buyers. The House passed the $819 billion stimulus plan, including this tax credit, in a vote late Wednesday. The Senate may vote on its version of the bill some time next week.
Technically, the stimulus bill is actually changing the terms of the $7,500 tax credit that was issued as a part of the Housing Recovery Act, which Congress passed last summer. That legislation required that the tax credit be repaid over 15 years, making it more of a no-interest loan. Not surprisingly, the measure had little impact on the market. The stimulus bill now under consideration would make that tax credit a true credit that doesn't need to be repaid.
Many in the housing industry believe this credit could do a lot to jump start the moribund housing market.
"Our economists have studied the effect [of the credit] and they say there could be a 10% increase in home sales if it's implemented," said Mary Trupo, a spokeswoman for the National Association of Realtors. "It gives people who are sitting on the fence or who have inadequate funds for closing costs an incentive to act now."
A 10% increase would yield an extra half million sales this year.
Who qualifies
To be eligible, buyers cannot have owned a home for the past three years, and the new home has to be used as a primary residence. The credit phases out as income rises above $75,000 for singles and $150,000 for couples, and disappears entirely at $95,000 and $170,000, respectively.
Applying for it is easy, or at least as easy as doing your income taxes. Just claim it on your return. That's it. No other forms or papers have to be filed.
Both the Senate and the House versions of the new act remove the requirement that buyers repay the credit. The Senate bill applies retroactively to any purchase completed between January 1, 2009 and the end of August. The House version is also retroactive to the start of the year, and expires at the end of June. As long as buyers don't sell for at least 36 months, they keep the money.
And the credit is refundable, meaning that it can be claimed even if the amount of the credit earned exceeds the buyer's tax liability.So even if your total tax bill comes to just $5,000, you can still qualify for a full $7,500 refund.
The housing industry has been pushing this idea for many months, arguing that first-time homebuyers are the key to boosting home sales. First time buyers who purchase from existing homeowners free those sellers to trade up to bigger, better houses.
Buyers beware
But the credit has its drawbacks, according to Bob Williams, a spokesman for the Tax Policy Center, which gave it a mediocre C+ grade in its Tax Stimulus Report Card.
Williams argues that the credit is poorly targeted because it goes to every first-time buyer, not just the ones who wouldn't buy without it. So, it merely provides a windfall for many people who would have purchased anyway. (See correction, below).
And in the end, a $7,500 tax credit, regardless of the details, does nothing to address the issue that's holding most buyers back - the suspicion that prices are going to keep falling.
"As long as people are uncertain about what markets are going to do, this won't help much," said Williams. "It's not enough to change that."
The industry would like to make the tax credit stronger by making it available to all homebuyers, not just first-timers. And it's pushing to have the credit last through the end of the year, at least.
"By the time it's implemented," said Trupo, "there could be very few months left to act."
An earlier version of this story incorrectly stated that the tax credit for a home purchased in 2009 could only be taken off of 2009 taxes. However, homebuyers can choose to take the credit for 2008, according to the IRS. Even if they buy a home after they've filed their 2008 taxes, they can file an amended return.
Sunday, January 25, 2009
The Home Warranty Benefit
This is a great article I just read in the Baltimore Sun and thought I would share since I am a huge advocate of purchasing a home warranty whether you are a buyer, seller, or simply a homeowner. I hope you find this information helpful!
http://http//www.baltimoresun.com/business/realestate/bal-re.warranty25jan25,0,6481572.story?page=1
http://http//www.baltimoresun.com/business/realestate/bal-re.warranty25jan25,0,6481572.story?page=1
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