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Posts Tagged ‘tax credit’
Buyer’s Credit — Eight Weeks Left
The revised and extended Home Buyer’s Credit has eight weeks left. You need to enter into contract to buy the home by April 30th, and close by the end of May, if you want to take advantage of this program.
First time buyers, or buyers who have not owned a home in the past three years, can claim $8,000 for the purchase of a home. Current home owners can claim $6,500. This is a tax credit, meaning that the amount is applied to your 2010 taxes, either reducing the total amount you owe or increasing the amount of your refund. There are income limits, $125,000 for singles or $225,000 for couples. The amount you receive is determined by the price of the home; homes over $800,000 are not eligible. There are bridge loans available for this credit, allowing you to put the money towards your down payment, although you will probably still need to pay for a portion of the down payment on your own.
If you want to take advantage of the buyer’s tax credit, and you haven’t started your search for a new home yet, it’s time to contact a Syracuse real estate agent to get the process started. Don’t wait until the last minute, and then rush to find the perfect home with only a few weeks left. Give yourself the time you need to find the property that best fits your needs. Remember that you also need to have your offer accepted and an initial contract for the purchase of the home signed before time runs out.
This isn’t the only government refund you can take advantage of as a new, or soon to be new, home owner. New York’s Great Appliance Swap-Out, designed to replace older appliances with more efficient models, is still going. This program started a few weeks ago, and offers significant rebates for the purchase of new washers, refrigerators, freezers and dishwashers. The rebate amount for each appliance varies, and dishwashers are only available for a rebate when purchased with other appliances. If you pay to have your current appliances removed and recycled, you can qualify for a larger rebate. This program lasts until the funding runs out. For more information, visit New York’s Great Appliance Swap-Out.
A lot of appliance stores are offering their own discounts or rebates on appliances, further reducing their cost. If you take advantage of both programs, you could be in a new home, with brand new appliances, with a discount worth nearly $10,000.
Home Sales Rising Due to Ending Tax Credit
Due to first time home buyers tax credit ending by April 30th instead of November 30th, home sales are rising as home owners rush to sign a purchase agreement by the end of April in order to qualify for the tax credit. Sales are expected to rise 1.4 percent which means an annual rate of 5.65 million which is up from September which was only 5.57 million. Even though sales are expected to drop in the winter months because the tax credit is not running out until later, this means an expected sales increase in the spring, which is also in most areas a better time for selling homes due to warmer weather.
Even though this is some good news for the housing market, there are still many people facing foreclosures. Fourteen percent of homeowners are either getting behind on their mortgage payments or were in foreclosure state by the end of September. Also, if unemployment keeps rising, than the housing market will continue to suffer. There are some plans to lower mortgage rates next year but the government is limited in being able to help the housing market.
The best thing that can be taken away from this news is that there is hope for the housing market because sales are expected to rise in the Spring, so even if things may seem slow this winter, don’t give up on getting that perfect house you want in the spring and if you are person selling your home, push more to sell in the Spring, when more homebuyers will be rushing to beat that tax credit deadline.
For more information, contact your real estate agent or visit: http://news.yahoo.com/s/ap/20091123/ap_on_bi_ge/us_home_sales
Exciting News In Real Estate
There were two huge announcements made Thursday that are going to have a tremendous impact on the real estate market.
Fannie Mae announced a new program to slow down home foreclosures. Owners facing foreclosure will be able to turn their deed over to Fannie Mae, and then rent back the home for a year. After the year is up, owners will be able to rent on a month to month basis. The program was created to help owners that do not qualify for other loan workout programs. This “Deed for Lease” program is meant to help ease the transition for homeowners, giving them time to seek other housing. It also lessens the impact on neighborhoods.
There are a lot of questions still to be answered with the new Fannie Mae plan. For starters, will residents have the opportunity to buy the property back once they are back on their feet? It would make sense if they could, as it would keep the resident committed to the care of the property, but nothing really specifies that right now. Also, if the water heater breaks, or there is some other maintenance needed, who is responsible? Fannie Mae would own the property, which should put them in charge of repairs, but, again, there aren’t enough details provided about the new program.
The second big announcement is that, pending President Obama’s signature, the First Time Buyer Tax Credit is going to be extended through April 30, 2010. By that time, buyers need to have a signed sales agreement in hand for their home purchase. The home doesn’t actually have to be closed on until June 30th. Military personnel who have been deployed for at least 90 days in 2008 or 2009 will have until April 30, 2011.
The maximum income levels for qualifying for the tax credit have also been changed. The limit is now $125,000 for single buyers and $220,000 for couples, up from $75,000 and $150,000, respectively. It is hoped that this expansion will put an end to the latest dip in home sales, which fell again in September and October, with the end of the tax credit looming.
With these two programs in place, there is a better chance of the real estate market getting back on its feet without another major decline. With less foreclosures on the market, there will be a smaller backlog of inventory (homes) waiting to be sold. The buyer credit will encourage more people to become home owners for the first time, making a (hopefully) major dent in the current inventory. And, if Fannie Mae will allow Deed for Lease participants to buy back their homes, that will prevent thousands of homes from ever entering the market, which will help to keep the number of homes for sale at a lower amount and help to turn everything back around.
Homebuyer Credit Gets New Life
Key lawmakers in the Senate have tentatively agreed to extend the existing $8,000 tax credit for first-time home buyers and also offer a new $6,500 credit for existing homeowners who have lived in their current residence for a consecutive five-year period in the past eight years.
Home buyers must be under contract by April 30, 2010, and close before July 1. House Democrats have expressed concern about the cost of the tax credit for the government, and allegations of abuse have resulted in an IRS probe of the program.
Source: Wall Street Journal, Corey Boles and John D. McKinnon (10/29/09)
Senators agree to extend homebuyer tax credit
Set to expire at end of November, plan will remain until end of April
WASHINGTON – Senators agreed Wednesday to extend a popular tax credit for first-time homebuyers and to offer a reduced credit to some repeat buyers.
The tax credit provides up to $8,000 to first-time homebuyers but is set to expire at the end of November.
Senators agreed to extend the existing tax credit for first-time homebuyers while offering a reduced credit of up to $6,500 to repeat buyers who have owned their current homes for at least five years, said Regan Lachapelle, a spokeswoman for Senate Majority Leader Harry Reid, D-Nev.
The tax credits would be available to homebuyers who sign sales agreements by the end of April. They would have until the end of June to close on their new homes, said a congressional aide, who spoke on condition of anonymity because he was not authorized to publicly discuss the deal.
Senators were still negotiating the expansion of a separate tax credit that lets money-losing businesses get refunds for taxes paid in previous years, providing them with an immediate source of cash.
Senators in both political parties were hoping to add both tax provisions to a bill that would give people running out of unemployment insurance benefits up to 20 more weeks of federal aid. The Senate could vote on the overall bill as early as Thursday, but lawmakers were still haggling over several unrelated amendments Wednesday evening.
Source: Associated Press 10/28/09
Tax Credit Extension Seems Likely
It seems likely that the U.S. Senate will approve a deal to extend the First-Time Homebuyer Tax Credit, but the devil is in the details.
Florida Democrat Sen. Bill Nelson told reporters traveling to Florida with President Obama on Monday that he thought that the extension would be approved, but both senators and representatives are among those who think that there should be some fiscal offset for the cost of the extension. Spending any more money on the stimulus effort also could stir up a hornets’ nest in some circles.
The proposal in the Senate that appears to have the most likelihood of passage would extend the $8,000 credit through March 31, then its value would drop by $2,000 for each of the subsequent three quarters of 2010. This plan was offered by Senate Majority Leader Harry Reid of Nevada and Senate Finance Committee Chairman Max Baucus, a Montana Democrat.
Source: Associated Press, Andrew Taylor (10/26/2009) and The Wall Street Journal, John D. McKinnon (10/27/2009)
NAR: Housing Tax Credit Is Working
Consumers are just starting to see the first glimmers of a bright future for the housing market and the overall economy. It’s up to Congress to make that glimmer a reality by building on the momentum created by the $8,000 home buyer tax credit. That’s what National Association of REALTORS® First Vice President Ron Phipps, told the Senate Banking, Housing and Urban Affairs Committee Tuesday during a hearing on “The State of the Nation’s Housing Market.”
One of the key ways to do that is for Congress to extend the home buyer tax credit, “The data on the present home buyer tax credit show that the credit has had its intended impact—sales have jumped in recent months to a projected 5.1 million for the year and housing inventory has been trimmed, thus stabilizing home prices noticeably,” Phipps said. He also pointed out that each home sale generates approximately $63,000 in additional economic activity, providing a tremendous economic boost to the national economy.
“But it is a fragile recovery, and now is the time to build on home sales momentum by extending the tax credit throughout 2010 and expanding it to all home buyers,” he said. The present credit, due to expire on November 30, cannot help new purchasers now who write a contract today—they won’t be able to close before the deadline, and will lose out on the credit, said Phipps. “Without congressional action now, the market and our national economy may freeze again—possibly as soon as this month.”
Make Loan Limits Permanent
Phipps called upon Congress to take action on a number of additional fronts to strengthen the recovery. First, make the FHA and Fannie Mae/Freddie Mac loan limits permanent; these are set to expire on December 31. “Maintaining current loan limits would ensure that families have access to low-cost financing to purchase homes and can refinance problematic loans into safer, more affordable mortgages,” Phipps said.
Secondary Mortgage Markets
In addition, Congress should continue the federal government’s involvement in the secondary mortgage market. “Without the government’s involvement in the secondary mortgage market, market participants will have no incentive to reach out to lower-income, creditworthy consumers. We must ensure that the housing market works in all markets and at all times, and that mortgage capital is provided to all potential and qualified purchasers in a way that promotes sustainable homeownership,” said Phipps.
—NAR
Congress Debating the Tax Credit
Congress is considering expanding and extending the $8,000 first-time homebuyer tax credit, which expires Nov. 30.
More than 1.8 million home buyers will have used the credit by the end of November, including an estimated 355,000 who wouldn’t have bought a home without it, according to the National Association of REALTORS® and other analysts.
Mark Zandi, chief economist for MoodysEconomy.com, is among those in favor of extending the credit. Zandi would also make it available to all homebuyers. “The most fundamental argument for the credit is that nothing works in the economy if housing is falling,” Zandi said. “[The credit] is a good insurance policy. It’s vital to stem the housing price declines.”
Opponents argue that the tax credit is too expensive and doesn’t help enough people.
Extending the credit through the end of 2010 and making it available to single filers earning up to $150,000 and joint filers earning up to $300,000 would cost an estimated $16.7 million. Some in Congress propose using unspent money from the $787 billion stimulus bill to pay for it.
Source: CNNMoney.com, Les Christie (10/14/2009)
The First Time Home Buyer Tax Credit
Are you looking to move into your first home? Thanks to an $8,000 tax refund credit being offered to first time home buyers, this is a great time to consider making that move.
If you close on a home between January 1st and November 30th this year, you may be eligible for the tax credit when you file your taxes in 2010. This refund, offered by the federal government, will give qualifying buyers 10% , or up to $8,000 back as a tax refund credit. The requirements to claim this credit make it easy for most people to get qualify. You must be a US citizen or legal alien, the home must be closed on before the deadline, and you must make less than $75,000 ($150,000 for couples) a year.
This credit is only for first time home buyers. This includes those who have not owned their own home for three or more years. This incentive is meant to put more people into homes this year, and start an economic turn-around. And, unlike last years tax credit, offering new home owners $7,500, this amount does not have to be repaid. The only exception to that is if the new home owner moves out of the home within three years of when the home was purchased.
This all sounds great, right? But it would be a lot more helpful to many home buyers if the $8,000 was available now. Well, thanks to HUD (the US Department of Housing and Urban Development) you can take an advance on the $8,000 tax credit, and apply it towards your down payment or closing costs.
Here’s how it works: Your lender will purchase the tax credits from you, and then collect the money in your place during the 2010 tax season. You can then apply that money towards buying your new home. You will still need to provide the 3.5% mandatory down payment on your own, but the extra $8,000 can be used to pay down the amount you still owe, lowering your monthly payments. This is called a bridge loan.
The big downside to using the money right away is that you have to put it towards closing costs or the money you owe on the home. This isn’t a bad thing, as it makes the repayment of your mortgage a little easier, but it doesn’t help you if your home needs renovations. It cannot be put towards fixing up the house you just bought. If you can wait on the money until January, you will have the money to put towards painting, building a new deck, fixing the roof, or any other home improvements you might want. The money is yours to do what you want with.
If you are choosing to wait until tax time to get your refund credit, all you need to do is fill out an extra form. If you would rather apply the money to the amount owed on your home right away, talk to your lender when you are approved for a loan. Your lender can walk you through the paperwork and explain, in detail, how the bridge loan will work for you.
If you are considering entering the market for your first home, is this tax refund credit enough to encourage you to buy now, instead of waiting another year?
Existing-Home Sale Continue to Rise
Sales of existing homes showed another gain in May, benefiting from favorable affordability conditions and a first-time buyer tax credit, according to the NATIONAL ASSOCIATION OF REALTORS ®. May’s increase was the first back-to-back monthly gain since September 2005.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 2.4 percent to a seasonally adjusted annual rate of 4.77 million units in May from a downwardly revised level of 4.66 million units in April. Sales remained 3.6 percent below the 4.95 million-unit pace in May 2008.
Lawrence Yun, NAR chief economist, expected an improvement in sales.
“Historically low mortgage interest rates clearly drew buyers into the market, and housing remains very affordable even with a recent uptick in rates,” Yun says. “First-time buyers also are being drawn off the sidelines by the $8,000 tax credit, which is helping to absorb inventory.
Poor Appraisals Stall Transactions
However, the increase in sales is less than expected because poor appraisals are stalling transactions. Pending home sales indicated much stronger activity, but some contracts are falling through from faulty valuations that keep buyers from getting a loan.”
Total housing inventory at the end of May fell 3.5 percent to 3.80 million existing homes available for sale, which represents a 9.6-month supply at the current sales pace, down from a 10.1-month supply in April.
Yun says the appraisal problem is serious.
“Lenders are using appraisers who may not be familiar with a neighborhood, or who compare traditional homes with distressed and discounted sales,” he says. “In the past month, stories of appraisal problems have been snowballing from across the country with many contracts falling through at the last moment. There is danger of a delayed housing market recovery and a further rise in foreclosures if the appraisal problems are not quickly corrected.”
NAR President Charles McMillan says appraisals and the tax credit are key issues.
“To maximize the potential for a housing recovery and subsequent economic recovery, we need realistic appraisals that are based on proper comparisons and done by a local specialist,” he said. “In addition, the first-time buyer tax credit should be expanded to all buyers of primary homes regardless of income. Extending the credit into 2010 would allow more time for the market to catch up with underlying demand, in part because many families with children, who normally time their purchase based on school year considerations, do not have enough time to move before the start of school in late August.
“Freeing a pent-up demand in housing will absorb inventory at a faster pace, strengthen communities and stabilize home prices earlier,” McMillan said.
A Closer Look at May Housing Data
An NAR practitioner survey in May showed first-time buyers accounted for 29 percent of transactions, and that the number of buyers looking at homes is nearly 10 percentage points higher than a year ago.
“This is the time of year when we see large increases in the number of repeat buyers, who are benefiting from sales to entry-level buyers,” Yun says. “Investors appear less active, but are more prevalent in areas with large price corrections.”
National median existing-home price: for all housing types was $173,000 in May, down 16.8 percent from a year earlier. Distressed properties, which declined to 33 percent of all sales in May from 45 percent in April, continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes.
“The decline in the distressed sales share likely results from an increase of repeat buyers in May,” Yun says. “First-time buyers are concentrated in the lower price ranges, which include most of the distressed sales.”
Single-family home sales: rose 1.9 percent to a seasonally adjusted annual rate of 4.25 million in May from a pace of 4.17 million in April, but are 3 percent below the 4.38 million-unit level in May 2008. The median existing single-family home price was $172,900 in May, down 16.1 percent from a year ago.
Existing condominium and co-op sales: increased 6.1 percent to a seasonally adjusted annual rate of 520,000 units in May from 490,000 in April, but are 8.9 percent below the 571,000-unit level in May 2008. The median existing condo price was $173,800 in May, down 21.9 percent from a year earlier.
By the Region
Here’s how housing fared across the country for existing-home sales:
- Northeast: rose 3.9 percent to an annual level of 800,000 in May, but are 10.1 percent below a year ago. Median price: $243,600, which is 12.5 percent below May 2008.
- Midwest: jumped 9 percent in May to a pace of 1.09 million but are 4.4 percent below May 2008. Median price: $145,800, which is 10.4 percent lower than a year ago.
- South: unchanged at an annual pace of 1.74 million in May but are 8.9 percent below a year ago. Median price: $157,400, down 9.9 percent from May 2008.
- West: slipped 0.9 percent to an annual rate of 1.14 million in May, but are 11.8 percent higher than May 2008. Median price: $197,700, down 30.6 percent from a year ago.
Source: National Association of Realtors