Tag Archives: Buying a home

Looking to purchase a home in Austin? Doreen Zelma is a real estate professional ready to help, whether you are a first time home buyer or seasoned second time or move up buyer.

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.

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.

Money Doesn’t Buy Everything

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I previewed a $3.5 million dollar home on Friday, in Tarrytown. I have several clients looking in Tarrytown, of which, this particular house turned out not to be a match for any of them. Not all of them are necessary looking in that price point, but I have clients who tell me all of time, if they could afford more; they would find the right house. More often than not, that is very far from the truth.

Even when I custom built a home, it still didn’t turn out to be perfect, for me. I always look at homes through my clients’ eyes. Even at $3.5 million, I walked around that home thinking, that’s not Shellie’s kitchen and that’s not the Smith’s family pool. Even at $3.5 million I couldn’t say that house was a good fit for any my clients. Now, don’t get me wrong. It was a great house, with an amazing view of the lake. Homes need to be functional in different ways, for different people. It just wasn’t going to work with my clients’ lifestyles.

Having more money to spend on a house isn’t going to necessarily buy you a home that’s a perfect fit. You can find a house at any price point that is a perfect fit for you. Money doesn’t buy ‘perfect’, because perfection really doesn’t have a price.

I support local Austin; after all I think it’s only neighborly.

What’s your dream house doing in someone else’s dream?

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I met my clients in the Denny’s parking lot on I-35 to sign an offer, which was then scanned and emailed to the Listing Agent, by midnight. After telling someone this, he said I was nuts. Yes, that may be true, but when my clients want a house, I don’t sit around and wait for someone else to buy it.

Even with our combined effort, the house had multiple offers on it, after only being on the market for 6 days, and we lost it. We tried our best, and will be just as passionate and steadfast for the next one, because your dream house often appears in the dreams of others as well.

Do you need my services? I support local Austin, after all I think its only neighborly.

Resale vs. New Construction

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I taught the Buyer Consultation class to new agents this week. When you are buying a home, especially in an area where there is still building going on, you need to be mindful of its resale potential. If you are planning on selling in less than 3 years, you may very well be competing against new construction.

One year young – is not new. You will not be able to price your home equal to a new build, if all other things, like lot location, are equal. This is why certain areas have excess inventory right now. The Resale market is slower in price points in areas where new construction going on. Why buy used, when you can buy new? If your home is listed for resale in these areas, you need to be competitively priced. Its like picking a car off the lot, instead of ordering one.

I always say money has a way of making things disappear. So, maybe you can’t ‘pick your colors’ as with new construction, but if a buyer can save some money on your resale…you may be able to make that existing paint color vanish.

I support local Austin, after all I think its only neighborly.

ADOM vs. CDOM

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Lately, I’ve been getting creative with how I am searching homes for clients. I have been paying particular attention to scouting for homes with long cumulative days on the market.

Active Days on Market (ADOM) is a number attached to a property’s Listing number. Cumulative Days on Market (CDOM) is attached to a property’s tax ID. What’s the difference and why do I look? If Dr. Jones lists his home for 6 months and it doesn’t sell. He might let his listing agreement run out, wait a month and re-list the house to put it back on the market. Whether he uses the same agent or not, his ADOM count will begin with 0, and go up from there. His CDOM number will start at about 180 (6 months @ 30 days in a month..6 x 30 = 180). So, I will see something that looks like this:

ADOM = 0

CDOM = 180

Dr. Jones’ house is going to appear as new listing on everyone’s home search – even mine. In reality though, Dr. Jones has been trying to sell his home for 180 days. Maybe Dr. Jones would like an offer? (hint, hint). The only way the CDOM number will be the same as the ADOM number, is when a house has not been active or pending for at least 90 days.

Like I said, every market is good for someone. In certain price points, in certain areas of Austin, you won’t find a home lasting more than 60 days on the market. In other areas, its different. Watching the CDOM numbers, helps me find hidden opportunities.

From the Hill Country to Downtown 360 Condominiums

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I went down to Dripping Springs to tour some homes in the $400’s and went further North to Westlake to see at newly built home for $1.3 million, which does come with boat dock rights. In between Dripping and Westlake, was a stop Downtown to the 360 Condominiums

It’s always interesting for me to tour a development after I have seen models and artist renditions of what’s to come. I have to say 360 delivers and then some. From the pool, to the club room, to the theater room (just bring your DVD) – the building’s amenities and units are impressive.

Prices vary with floor levels and finish outs. If you know anyone who is interested, please have them call me.