The Gate Arty Blog - Tax Issues Archive

The Effect of the $8000 Tax Credit

Friday, September 18, 2009 - By Gate Arty

Has the $8000 home-buyer tax credit increased real estate activity? Well, based on a report from the Internal Revenue Service, over 1.4 million buyers have already claimed the new tax credit. The $8000 tax credit is available to home buyers that purchase a home between January thru December 1st, 2009 and you could not have owned a home for the three consecutive years prior to the purchase. .  Unlike the $7,500 first-time homebuyer tax credit that could be applied to sales made between April 2008 and July 1 2009, this refund actually puts money DIRECTLY into consumers' pockets. 1.8 million people are expected to participate in the program by the time it lapses on 11/30/09.

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Sale Increase 4 Straight Months!

Monday, August 24, 2009 - By Gate Arty

Existing home sales rose a whopping 7.2% in July to 5.24 million units. In June, there were 4.89 million units sold. This increase was the largest month-to-month gain in over 2 years! The percentage increase was the largest since 1999. This also marks 4 straight months that we have seen sales increases. Lawrence Yun, NAR chief economist, said, “The housing market has decisively turned for the better. A combination of first-time buyers taking advantage of the housing stimulus tax credit and greatly improved affordability conditions are contributing to higher sales.” Remember that the $8000 stimulus tax credit runs through November so act NOW!

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Foreclosure News - 2nd Quarter 2009

Thursday, August 13, 2009 - By Gate Arty

Foreclosures continue to be the driving force in today’s real estate market. In the 2nd quarter, foreclosures & distressed sales accounted for over a third of all sales! According to recent statistics, the rate of foreclosures jumped another 7% in July from June. This also represents a 32% increase from the same time period last year. More than 360,000 homes with mortgages received foreclosure filings in July. This was the highest point since January 2005. California, Florida, Arizona, & Nevada accounted for an astounding 57% of July foreclosures nationwide! Many factors contribute to the tidal wave of foreclosures like: tighter lending guidelines & unemployment, but chiefly responsible is the negative home equity that many homeowners now have. Many homeowners are finding it “easier” to go into foreclosure than ride out the market waiting for values to rebound or restructure the loan.

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Homes Sales Increase Again

Thursday, August 13, 2009 - By Gate Arty

Homes sales increased 3.8% in the 2nd quarter of 2009 from the 1st quarter. The annual adjusted rate was 4.76 million in the 2nd quarter & 4.58 million in the first quarter. What is accounting for this rise in activity? No doubt, the great values in the housing market are beginning to capture the attention of prospective home buyers. The $8000 tax credit that will expire on November 30th is also a major motivation. The median sales price in the first quarter was $174,100, which represents a decrease of 16% below this time one year ago. “With low interest rates, lower home prices and a first-time buyer tax credit, we’ve been seeing healthy increases in home sales, which are a hopeful sign for the economy,” said Lawrence Yun, NAR’s chief economist.

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Momentum for Home Sales

Tuesday, August 04, 2009 - By Gate Arty

The Natiional Association of Realtors has reported that the pending home sales index rose again for the fifth consecutive month. It rose 3.6% (94.6 from 91.3) in June from May. The pending home sales index tracks signed home purchase contracts and is considered a leading indicator of activity. What is driving this upward momentum? Simply put, distress sales (like short-sales) & foreclosures continue to drive real estate prices downward to levels where buyers can no longer ignore the values. Most people consider this a "once in a lifetime" buyer's market. Let's look at some of the positives: record low interest rates, $8000 tax government credit, large selection of properties available for sale, & discounted property values. The time to buy is NOW!

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Houses More Affordable Than Ever

Wednesday, March 04, 2009 - By Gate Arty

The National Association of Realtors has reported that the Housing Affordability Index jumped 13.6% in January to a record high of 166.8. Another sign that buyers bold enough to jump into the market will be rewarded. Not to mention the tax benefit they will receive for doing so prior to the end of the year! The aforementioned index measures the relationship between home prices, income, & mortgage interest rates. The index is the best it has ever been since monitoring of this relationship began back in 1970.

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The "NEW" housing tax CREDIT

Tuesday, February 17, 2009 - By Gate Arty

The American Recovery and Reinvestment Act of 2009 is now in effect. A tax credit of up to $8,000 is now available for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009. Unlike the tax credit enacted in 2008, that offered a $7500 deduction that had to be repaid, the new $8000 figure credit does NOT have to be repaid. The high points of the tax credit are as follows:

• It is for first-time home buyers only. A first-time home buyer is defined as as a buyer who has not owned a principal residence during the three-year period prior to the purchase.
• This is a tax credit & does not have to be repaid. For example, If you owe $5,000 in taxes & qualify for the $8,000 credit, then you would get a REFUND of $3,000!  A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. Windfall!
• The duration of this program is only for homes purchased between January 1st, 2009 to December 1st, 2009. Act NOW!
• There is an income imit. It is $75,000 for singles & $150,000 for married couple's combined incomes.

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Housing Stimulis Tax Credit

Wednesday, August 06, 2008 - By Gate Arty

A major component of the recent housing stimulis legislation was the temporary first-time home buyer tax credit. According to Census data, first-time home buyers constitute about 40 percent of all buyers. It is thought that the tax credit will stimulate home buying & selling, reduce the amount of inventory in the housing market, and as a result bolster the economy. This incentive is temporary, however. The temporary tax credit is good for a home purchased on or after April 9, 2008 and before July 1, 2009. Buyers can take the tax credit in their 2008 or 2009 tax return. If you purchased the home in 2008, the tax credit is taken on your 2008 tax return. If you buy in 2009, you have the option of taking the credit on your 2008 or 2009 tax returns.

For details, click HERE.

Here's how it works:

• The new law authorizes a temporary $7,500 tax credit for qualified first-time home buyers for the purchase of any home.
• A first-time home buyer is defined as a buyer who has not owned a home during the past three years.
• Single taxpayers with modified adjusted gross incomes of up to $75,000 are eligible to take the full credit. For married couples filing a joint return, the income limit doubles to $150,000.
• Single taxpayers earning between $75,000 and $95,000 can claim a partial credit of less than $7,500 while the phase-out for married couples ends for those earning above $170,000.
• Since the tax credit is refundable, it means that the home buyer can claim the credit even if they owe little or no federal income taxes. In other words, the government would write you a check. For example, if a home buyer owes the federal government $2,500 in federal taxes and qualifies for the $7,500 home buyer tax credit, the taxpayer would receive a $5,000 refund check from the IRS ($7,500 minus the $2,500 owed).
• To reduce the cost to the federal Treasury, Congress has mandated that the tax credit essentially serves as an interest-free loan to be repaid over 15 years. For example, a home buyer claiming a $7,500 credit would repay the credit at $500 per year. If the home owner sold the home, then the remaining credit amount would be due from the profit on the home sale. If there was insufficient profit, then the remaining credit payback would be forgiven.

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What about taxes?

Saturday, April 19, 2008 - By Gate Arty

Those of you that like to do your research on-line know that you can look up real estate tax information at the Polk County Property Appraiser website. Were you also aware that you could estimate taxes? For example, if you were considering purchasing a home for a value in excess of its current "tax accessed value," you could input the property location & new price & thus arrive at an approximate tax range. This would be extremely helpful for those trying to stay on a tight budget. Knowing what taxes will be, will give you an idea of what to expect come tax time, or what you will need to escrow (along with insurance) in your mortgage. Also consider that you may also file for exemptions that will reduce your tax liability. For a list of these exemptions go to this site: Exemption Eligibility

Here are some additional links that will assist you in the area of real estate taxes:

Save our Homes

Glossary

Tangible Tax

Assessment

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Debt Forgiveness

Friday, April 11, 2008 - By Gate Arty

In my last post, I described the short sale process. Some have expressed concerns about the effect the resulting debt-forgiveness of a short sale has on your tax situation. In prior years, any form of debt-forgiveness on a mortgage was considered earned income. Now, however, the Mortgage Forgiveness Debt Relief Act of 2007 allows a 3-year window for homeowners to refinance their mortgage with no tax penalty on any debt relief that is received. This act will increase the incentive for borrowers & lenders to work together to refinance loans , and realtors to negotiate short sales to avoid foreclosure.  This act only applies to principal (homestead) property.

Click here for more information on the Mortgage Forgiveness Debt Relief Act.

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