Category Archives: Home Selling

Tax Credit 411 – April 30th deadline

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First Time Homebuyer Tax Credit Extended Into 2010!
Plus…A New Tax Credit for Certain Existing Home Owners!
It’s official. President Obama has signed a bill that extends the tax credit for first-time homebuyers (FTHBs) into the first half of 2010. This program had been scheduled to expire on November 30, 2009.

In addition to extending the tax credit of up to $8,000 through June 30, 2010, the extension measure also opens up opportunities for others who are not buying a home for the first time.

So Who Gets What?
The program that has existed for FTHBs remains intact with the one exception that more people are now eligible based on an increase in the amount of income someone may now earn.

Additionally, the program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Deadlines
In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

Higher Income Caps in Effect
The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible.

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

Maximum Purchase Price
Qualifying buyers may purchase a property with a maximum sales price of $800,000.

First-Time Homebuyer Tax Credit – Frequently Asked Questions
Here are answers to some commonly asked questions about the tax credit.

What is a tax credit?
A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual’s primary residence.

What is the tax credit for first-time homebuyers (FTHBs)?
An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000.

Who is eligible for the FTHB tax credit?
Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible. This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.

As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500.

How do I claim the credit?
For those taking advantage of the tax credit in 2009, you may choose to either apply for the credit with your 2009 tax return or you may apply for the credit sooner by filing an amended 2008 tax return with Form 5405 (http://www.irs.gov/pub/irs-pdf/f5405.pdf).

Can you claim the tax credit in advance of purchasing a property?
No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place.

Can a taxpayer claim a credit if the property is purchased from a seller with seller financing and the seller retains title to the property?
Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the taxpayer may file for the credit. Examples of this would include a land contract, contract for deed, etc. According to the IRS, factors that would demonstrate the ownership of the property would include: 1. the right of possession, 2. the right to obtain legal title upon full payment of the purchase price, 3. the right to construct improvements, 4. the obligation to pay property taxes, 5. the risk of loss, 6. the responsibility to insure the property and 7. the duty to maintain the property.

Are there other restrictions to taking the credit?
Yes. According to the IRS, if any of the following describe your situation, a credit would not be due.

•You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
•You do not use the home as your principal residence.
•You sell your home before the end of the year.
•You are a nonresident alien.
•You are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)
•Your home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
•You owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2009, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2006, through July 1, 2009.
Can you buy a home from a step-relative and be eligible for the credit?
Yes. Provided the person you are buying a home from is not a direct blood relative, the purchase would be allowed.

Can parent(s) who will not live in the property cosign for a mortgage for their child and the child that is a qualifying FTHB still be eligible for the credit?
Yes.

Can a separated spouse who has not owned a home for four years qualify for the FTHB tax credit if the spouse has owned a property anytime in the last three years?
No. However, the spouse may be eligible for the repeat buyer credit.

The best path to take in any situation regarding income taxes is to speak with a professional tax preparer or CPA.

What’s the Rush?

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The new year has been off to an interesting start.  Typically, January is a little slow, due to the cold weather and post-holiday stress.  What I am seeing this year, is more activity due to impending dates, that are really just around the corner.  I have already had 2 listing appointments this year, and my open house traffic has been averaging around 7 guests, which again, for January, is considered busy.

 

What’s the rush?

First, interest rates are on everybody’s mind, and everyone wants to know when they are going up.  The Federal Reserve Bank is supposed to stop purchasing mortgage-backed securities issued by Fannie Mae and Freddy Mac.  The program is set to end in March of 2010, and when it does, interest rates are likely to increase and rather quickly.  

 

Another reason for the early activity in 2010, is that the tax credit deadlines for first-time home buyers and move-up buyers are steadily approaching.  You have to be under contract by April 30, 2010 to qualify.  So, if you need to sell a home, in order to purchase, it should be listed now.  As a first time home buyer, you will have more of a selection and less stress, if we start looking now.  First time home buyers who wait until April are going to feel pressure to make a hasty choice. Remember, a home is the most expensive item you will ever purchase, so let it be an educated decision.

 

Lastly, FHA changes are coming!  The Upfront Mortgage Insurance Premium (UFMIP) will be increasing from 1.75% to 2.25% later this Spring. In addition, allowable seller contributions will decrease from 6% to 3% come Summer 2010. This means first time home buyers will need to have more money saved in order to purchase a home.

 

Pets

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One of the most important things I tell students is the importance of listening to clients. Most people think listening comes naturally, and yet it is amazing what is missed when we are not paying attention.My Tarrytown clients have 2 cats, which was a concern when it came to allowing agents to show their home. I listened and having pets of my own, certainly understood their concern, so I offered a few different options on what to do. Pets often bring an interesting challenge. Dogs get excited and generally need to go outside when they have guests. Cats run for cover or want to give you a tour. Unfortunately, some people are afraid of dogs, and others have pet allergies, so they really don’t want Garfield rubbing on their pant leg.

Remember, moving can be a stressful time for your pets, as well. Strangers in their ‘dens’ can be quite unsettling. The best thing to do find a safe place for your furry friends to go whether it is family, doggy day care or even a crate in the garage. The goal is to keep them calm and secure, because if you have one, you know…they can be spiteful little creatures.

Ode to the Texas Fireplace

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Did you ever notice its rarely the biggest things in life that give us the greatest chuckle?  Often, it’s the little things that go unnoticed, until were stumble on them accidentally.  I had one of those moments, when I sold yet another home with a unused fireplace.

Oh yeah.  Did you know Texans love their fireplaces?  It brings some monetary data points to a home, but the intrinsic appeal is huge.  It is often a must-have item for my buyers.  Yes, I can actually make a fireplace, criteria on a search.  What I find so amusing though, is the lack of use these must-have items receive. A fireplace is the only house hold ‘accessory’ I can think of, that is often never used.

I guess its presence brings about an option for use, which simply might be missed without it.  Sure, Santa will use it, even if no one else does.  It’s just symbolic for me of that childhood must-have toy, but once you got – you never played with it.  So, go on Texans – light those fireplaces!  At least, when you fill out those Seller’s Disclosure Notices – you will know if they work!

Austin Neighborhood Market Spotlights

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I have selected some random areas in Austin,
and listed some current real estate market data.

If there is an area you want me to spotlight -please let me know.

Tarrytown

Number of Active Homes on the Market: 23

Average Days on Market: 116

Median Home Price: $589,000

Travis Heights

Number of Active Homes on the Market: 25

Average Days on Market: 108

Median Home Price: $489,000

West Lake Hills

Number of Active Houses on the Market: 13

Average Days on Market: 225 (# is high due to 2 homes active over 600 days)

Median Home Price: $1,249,000

Mueller

Number of Active Houses on the Market: 13

Average Days on Market: 104

Median Home Price: $ 475,635

Northwest Hills

Number of Active Houses on the Market: 18

Average Days on Market: 66

Median Home Price: $ 606,500

Pools

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If you did not already know…I teach the Sell a Home class to both new and seasoned agents who join Keller Williams. Last week, I had a student ask me what I do differently when selling homes with pools. I guess the look on my face wasn’t one that my class expected; because ‘POOL’ is literally and can be figuratively a four-letter word in real estate. For Buyers, who want a pool… houses with them are that much easier to sell. Forget the condition of the house– that oasis in the backyard, especially on a hot day kind of sells itself; doesn’t it? After all, they make great sources of entertainment for children and adults alike. They are an instant vacation.

For Sellers, pools can be more of a hindrance than a help. Not everyone wants a pool. In fact, I’ll say 65% of people don’t. Pools cost money and time to maintain. In addition, there are safety concerns for people with small children. They can also take up a lot of yard space.

So, here are my dos and don’ts for pools, for both Buyers and Sellers.

Sellers: Maintain and update your pool. Nobody wants to buy a money pit (literally). If you can switch to saline – do it.

Buyers: If you buy in a subdivision where most homes have a pool…make sure the pool is up-to-date. You want to have one of the better pools in the subdivision. If you want to know how much it costs to maintain a pool and how much you will spend on electric – the answer is – you don’t want a pool! They can be costly and if you are already watching your budget – a pool is going to blow it.

Now, I am not anti-pools. I grew up having one. My experience is that they are great for certain moments in time. But, remember: you will spend more time staring at your pool, then you will spend in it. Once more, pools don’t necessarily add monetary substance. I rarely, factor them into a list price, simply due to the lower buyer pool they attract. So, if you have one….make sure it shines.

Doreen Zelma

Realtor, GRI

Going Green

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After spending some green on my car last week, it was time to get out and see some green; green construction that is. I traveled from Crestview to Buda to see some interesting green building projects.First, let’s talk about Crestview. I got to watch some 5-star green modular condominiums.

Modular construction lends itself to green standards because it produces far less waste then site built homes. That is, of course, only the beginning, from front and back porches to reduce solar heat gain from entering the home, to on-demand (tankless) water heaters, these homes produced by Town Builders, are extremely energy efficient.

In Buda, I went on a tour of Elm Grove Homes, a subdivision built by GreenBuilders, Inc. Like Crestview, these homes have been awarded the city’s 5-Star energy rating. Located right off of 1626, they are convenient to get to, and close to the elementary school. These homes are so green, they even include gutters with rain barrels that capture water that can be used for landscaping. One story and 2 story units are available. Everything I saw was between $220 and $260k.

Both green projects had blown insulation in the roof – not in the attic floor. It is more efficient to ’seal’ the home at the roof line then to allow the heat to enter the attic. It also keeps molds and other allergens from entering the house.

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Doreen Zelma

Realtor, GRI