2010 Homebuyer Tax Credits.
A Great Deal in Real Estate is Now Better
Note: This is intended to provide an overview only - for specific information or individual concerns, please contact your lawyer, accountant and/or financial advisor.
The federal income tax credit for homebuyers has been extended and expanded to now include homeowners who wish to "move on" after 5 years of living in their current property, as well as first-time homebuyers.
•First-time homebuyers, or those who have not owned in the last three years, can receive up to an $8,000 tax credit
•Homeowners who have lived in a current home consecutively for 5 of the past 8 years can receive up to a $6,500 tax credit
•There may be no future extensions, so all qualified homebuyers are urged to act and have a written, binding contract by April 30, 2010 (close by June 30, 2010)
•Income limits are now $125,000 for singles, $225,000 for married couples with a $20,000 phase-out of the credit for both.
According to The National Association of Realtors News Release, dated 11/5/09, an estimated $22 billion has already been added to the general economy resulting from the bill and approximately 2 million people will utilize the tax credit in 2009.
The following chart provides more information:
Feature
For First-Time Homebuyers For Current Qualifying Homeowners
Amount of Credit
$8,000 ($4,000) married filing separate) $6,500 ($3,250 married filing separate)
Eligibility
May not have had an interest in a principal residence for 3 years prior to purchase
Must have used the home sold or being sold as a principal residence consecutively for 5 of the previous 8 years
Termination of Credit
Purchases after April 30, 2010 Purchases after April 30, 2010
Binding Contract Rule
So long as a written binding contract to purchase is in effect on April 30, 2010 the purchaser will have until June 30, 2010 to close
So long as a written binding contract to purchase is in effect on April 30, 2010 the purchaser will have until June 30, 2010 to close
Income Limits
$125,000 - Single $225,000 - Married
Additional $20,000 Phase Out $125,000 - Single
$225,000 - Married Additional $20,000 Phase Out
Limitation on Cost of Home Purchased
$800,000 $800,000
Purchase Made by a Dependent
Ineligible Ineligible
Additional Requirements
Purchaser must attach documentation of purchase to tax return
Information courtesy of http://www.realtor.org and http://www.whitehouse.gov
Saturday, April 24, 2010
Wednesday, April 14, 2010
Home Prices Drop for Seventh Straight Month: IAS
By: Carrie Bay
Integrated Asset Services, LLC (IAS) said Tuesday that its benchmark for national house prices fell 0.6 percent in February. The drop marked the seventh straight monthly decline reported by the collateral valuation firm and pushed its home price gauge to April 2004 levels.
With the February decline, the IAS360 House Price Index is down 7.5 percent from July 2009 and 25 percent from July 2007, the index’s high-water mark. February’s closing level is only fractionally higher than the index’s closing value six years ago, IAS said.
Two of the four U.S. census regions did manage modest gains in February – the Midwest, with a 0.8 percent rise, and the Northeast, with a slight 0.2 percent improvement. But IAS says the increases were weaker than usual for the time of the season.
For their part, the South and West regions actually lost ground across what is normally a positive period, the South falling another 1.4 percent, and the West slipping 0.9 percent. Both regions have produced negative returns for seven straight months.
“By now, the normal seasonal upturn in housing activity should have begun,” said Dave McCarthy, president and CEO of Integrated Asset Services. “But we’re looking at trend lines for neighborhoods all around the country and we just aren’t seeing the typical forces at work.”
Results in a number of the nation’s large metropolitan statistical areas seemed to confirm the point. The Los Angeles metro, for example, posted a 1.4 percent decline in home prices for February and doesn’t appear to be following the seasonal pattern this year, most likely due to the extreme economic crisis in California, IAS said.
Other major metro areas, including Las Vegas, Miami, and Washington D.C. are also running counter to the typical seasonal upswing. Home values in Las Vegas lost 1.0 percent from January to February. Miami prices dropped 2.0 percent, and the nation’s Capitol dipped 0.9 percent.
Analysts believe one reason home values are under pressure is that foreclosed homes are adding to the inventory of unsold properties, which compete with more expensive new housing. According to the latest published figures, more than 300,000 homes received foreclosure filings last month, and the number may reach 4.5 million by year-end.
“Residential real estate markets are a local phenomenon and easily influenced by numerous market factors,” McCarthy explained. “A keen understanding of what’s going on at the local level is going to be absolutely critical as we move through what is arguably the most volatile time in the history of the U.S. housing market.”
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Integrated Asset Services, LLC (IAS) said Tuesday that its benchmark for national house prices fell 0.6 percent in February. The drop marked the seventh straight monthly decline reported by the collateral valuation firm and pushed its home price gauge to April 2004 levels.
With the February decline, the IAS360 House Price Index is down 7.5 percent from July 2009 and 25 percent from July 2007, the index’s high-water mark. February’s closing level is only fractionally higher than the index’s closing value six years ago, IAS said.
Two of the four U.S. census regions did manage modest gains in February – the Midwest, with a 0.8 percent rise, and the Northeast, with a slight 0.2 percent improvement. But IAS says the increases were weaker than usual for the time of the season.
For their part, the South and West regions actually lost ground across what is normally a positive period, the South falling another 1.4 percent, and the West slipping 0.9 percent. Both regions have produced negative returns for seven straight months.
“By now, the normal seasonal upturn in housing activity should have begun,” said Dave McCarthy, president and CEO of Integrated Asset Services. “But we’re looking at trend lines for neighborhoods all around the country and we just aren’t seeing the typical forces at work.”
Results in a number of the nation’s large metropolitan statistical areas seemed to confirm the point. The Los Angeles metro, for example, posted a 1.4 percent decline in home prices for February and doesn’t appear to be following the seasonal pattern this year, most likely due to the extreme economic crisis in California, IAS said.
Other major metro areas, including Las Vegas, Miami, and Washington D.C. are also running counter to the typical seasonal upswing. Home values in Las Vegas lost 1.0 percent from January to February. Miami prices dropped 2.0 percent, and the nation’s Capitol dipped 0.9 percent.
Analysts believe one reason home values are under pressure is that foreclosed homes are adding to the inventory of unsold properties, which compete with more expensive new housing. According to the latest published figures, more than 300,000 homes received foreclosure filings last month, and the number may reach 4.5 million by year-end.
“Residential real estate markets are a local phenomenon and easily influenced by numerous market factors,” McCarthy explained. “A keen understanding of what’s going on at the local level is going to be absolutely critical as we move through what is arguably the most volatile time in the history of the U.S. housing market.”
No More State Tax on Forgiven Debt
SOURCE: California Association of Realtors Website
Distressed homeowners no longer have to pay California state income tax on debt forgiven in a short sale, foreclosure, or loan modification. Enacted into law yesterday, Senate Bill 401 generally aligns California’s tax treatment of mortgage debt relief income with federal law. For debt forgiven on a loan secured by a “qualified principal residence,” borrowers will now be exempt from both federal and state income tax consequences. The existing federal exemption is for indebtedness up to $2 million, whereas the new California exemption is for indebtedness up to $800,000 and forgiven debt up to $500,000.
“Qualified principal residence” indebtedness is defined as debt incurred in acquiring, constructing, or substantially improving a principal residence. It includes both first and second trust deeds. It also includes a refinance loan to the extent the funds were used to payoff a previous loan that would have qualified.
The tax breaks apply to debts discharged from 2009 through 2012. Californians who have already filed their 2009 tax returns may claim the exemption by filing a Form 540X amendment.
Taxpayers who do not qualify for the above exemptions (e.g., second home or rental property) may nevertheless be exempt under other provisions. Most notably, taxpayers who are bankrupt are exempt from debt relief income tax. Also, taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets.
For More Information about Mortgage Forgiveness tax consequences, click here: Mortgage Forgiveness Debt Relieft Extended For the Internal Revenue Service’s Webpage click here: Mortgage Forgiveness Debt Relief Act and Debt Cancellation. For a full text of the Senate Bill 401 click here: www.Legainfo.ca.gov
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