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In an effort to stabilize home values and improve conditions in communities where foreclosure activity is high, HUD Secretary Shaun Donovan recently announced a temporary policy that will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties. The announcement is part of the Obama administration’s commitment to addressing foreclosure. Secretary Donovan recently announced $2 billion in Neighborhood Stabilization Program grants to local communities and nonprofit housing developers to combat the effects of vacant and abandoned homes.

“As a result of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential home buyers,” said Donovan. “FHA has an unprecedented opportunity to fulfill its mission by helping many home buyers find affordable housing while contributing to neighborhood stabilization.”

With certain exceptions, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. This temporary waiver will give FHA borrowers access to a broader array of recently foreclosed properties.

“This change in policy is temporary and will have very strict conditions and guidelines to assure that predatory practices are not allowed,” Donovan said.

In today’s market, FHA research finds that acquiring, rehabilitating and reselling these properties to prospective homeowners often takes less than 90 days. Prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition adversely impacts the willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-day period of time.

The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.

“FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties,” said FHA Commissioner David H. Stevens. “This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity.”

The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of “flipping,” where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general conditions:

-All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
-In cases in which the sales price of the property is 20% or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions.
-The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.

For more information, visit www.hud.gov.

RISMEDIA, —As part of the government’s high price-tag efforts to rejuvenate the flailing American economy, on November 6, 2009, President Barack Obama signed into law an expansion and extension of the home buyer tax credit.

With housing at the center of the country’s economic engine, extending the lifeline a little further for a little longer is being hailed as a significant measure by both economists and real estate leaders.

The estimated cost of the home buyer tax credit, part of the Worker, Homeownership, and Business Assistance Act of 2009, is $18.5 billion, yet another mind-boggling sum in a series of stimulus strategies. With that $18.5 billion comes great responsibility for real estate professionals—a responsibility to maximize the opportunity and help get the wheels of the housing market turning again.

“The extension and expansion of the home buyer tax credit was absolutely necessary for the housing market and, most importantly, the U.S. economy,” says Alex Perriello, president and CEO, Realogy Franchise Group. “Clearly, Congress and the Administration recognized that inaction on their part—and thus an expiration of the previous first-time home buyer credit—would have been extremely detrimental. We’re proud of the active role that Realogy management and brokers played in educating key policy makers in Washington about the economic benefits of extending and expanding the home buyer tax credit.”

“The extension of the tax credit—and its expansion to include qualified move-up buyers—offers additional hope for a struggling economy and unlimited opportunity for dedicated brokers and agents,” agrees Steve Brown, special liaison for Large Firm Relations, NAR, and broker/owner of Irongate Realty in Dayton, Ohio.

“Activity inspires people—this tax credit has stimulated the entire economy,” says Tami Bonnell, president of the U.S. Organization for EXIT Realty. “There was a glut of people who stood still, not sure what to do. Finally, especially with the addition of the existing homeowner portion of the credit, people are jumping onboard.”

According to Greg Rand, managing partner of Better Homes and Gardens Rand Realty in Westchester County, New York, the home buyer tax credit helped the real estate industry—nationwide—to a 2009 fourth quarter that marked the biggest increase in home sales in 20 years. “The media is finally beginning to pick up on what’s going on and is finally driving some positive consumer confidence. This is prompting people to start thinking about purchasing a home.”

Absorbing the Details…Quickly
As Margaret Kelly, CEO of RE/MAX International, Inc., explains, “Congress extended the tax credit and amended it to include repeat buyers in hopes of securing a more sustained real estate upswing. However, the narrow window suggests none of us should count on another extension.” With a deadline of April 30, 2010 (closing must occur by June 30), consumers need to act fast in order to capitalize on the expanded and extended credit. In order for consumers to act fast, brokers and agents must serve as a trusted guide.

“First and foremost, we cannot and should not assume that real estate consumers know what we know,” advises Perriello. “As real estate professionals, we are closest to the situation and it is imperative for the industry to aggressively impart our knowledge and promote the key facts about the home buyer tax credit in order to educate potential home buyers about the various details that may specifically apply to their specific situations.”

Here are the main points of the tax credit legislation:

-The Timeline: The credit is available for homes purchased on or after November 7, 2009 and before May 1, 2010. The federal income credit can be claimed on one’s individual or joint tax return for the purchase of any single-family home (newly constructed or resale, single-family detached, townhomes or condominiums) between the dates of November 7, 2009 and April 30, 2010. Home purchases subject to a binding sales contract signed before May 1, 2010 will also qualify for the tax credit as long as closing occurs by June 30, 2010.

-Who’s Eligible: The tax credit is now available for first-time home buyers and eligible current homeowners. A first-time home buyer is defined as an individual who has not owned a principal residence during the three-year period prior to the purchase. This law applies for both parties in a married couple; if you haven’t owned a home for three years, but your husband has, then neither one of you can qualify for the tax credit. A qualified current homeowner who wishes to move to a different home (a “move-up” buyer), must have owned and resided in their residence for five consecutive years out of the last eight.

-Salary Requirements: Under the legislation, the income limits to qualify are the same for both first-time home buyers and current homeowners: Single taxpayers with incomes up to $125,000 and married couples with a joint income up to $225,000 qualify for the full tax credit. According to Goldman Sachs, these income limits make almost all first-time home buyers eligible and approximately 70% of current homeowners eligible. Single taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000 are eligible to receive a partial credit.

-Credit Amounts: The maximum credit amount for first-time home buyers is $8,000; the maximum credit amount for current homeowners is $6,500. The federal tax credit amounts to 10% of the cost of the home, up to a maximum credit of $8,000 for first-time home buyers and $6,500 for current homeowners. Under the new legislation, a tax credit may only be issued for homes purchased for $800,000 or less.

-Tax Facts: Provided the home-owner stays in the home for three or more years, the tax credit is a true credit and does not need to be repaid. The tax credit is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if you owe no tax or the credit is more than the tax owed. The credit is claimed using Form 5405, which you file with your original or amended tax return. Buyers can claim the credit on their 2009 taxes, even if the home is purchased in 2010, by filing an amended tax return.

-Fraud Prevention: The current tax credit legislation has built-in fraud measures, therefore, anyone claiming the credit must provide documentation to prove that the sale has closed, such as a copy of their HUD-1 Settlement Statement. The law also prevents anyone younger than 18 from claiming the credit.

Motivating Move-up Buyers
While the extended deadlines and increased salary caps of the tax credit are indeed a boon to first-time home buyers, the expansion of the tax credit to include current homeowners stands to have a significant impact on home sales.

According to Scott McDonald, president of RE/MAX Gateway in Chantilly, Virginia, and a member of the Top 5 in Real Estate Network®, “Over the last year, we have seen few move-up buyers as a result of lost equity, uncertainty of perceived value in the market as a result of foreclosures and short sales, and low consumer confidence. It is a matter of education on the Realtor’s part as well as the media to get the word out to our move-up market.”

“The expanded tax credit means that the gridlock caused by a stagnant ‘move-up’ market could be broken and the field could soon be wide open,” says Sherry Chris, president and CEO of Better Homes and Gardens Real Estate.

Ken Trepeta, director of Real Estate Services for the National Association of Realtors, explains that move-up buyers are eligible for the tax credit as long as the home being sold or vacated was their principal residence for five consecutive years within the last eight. “To elaborate, it must be the same home,” says Trepeta. “It is not enough that they have been homeowners for five consecutive years, they must have been in the same home for five consecutive years.” McDonald and Trepeta underscore the important fact that current homeowners need not sell their existing home in order to take advantage of the credit. They may keep it and rent it for additional profit.

Getting the Word Out
For the tax credit to succeed in buoying the real estate market, it is essential for brokers and agents to aggressively market the benefits—and the deadlines—of the legislation to consumers.

At Better Homes and Gardens Rand Realty, Managing Partner Joe Rand, an attorney, has developed a home buyer tax credit website­—www.homebuyertaxcredit.com—and a “Home Buyer Tax Credit Eligibility Test” that will let buyers know if they qualify. If they do, the program will provide an instant option to download the proper tax documents.

To get the word out about the website, the Rands are budgeting $100,000 of the firm’s marketing budget to broadcast media—specifically radio. “We’ve seen a lot of general interest in buying a home,” says Greg Rand. “Right now, if people aren’t aware or clear on the tax credit, they’ll seek out a source that explains it quickly—that, in turn, might just make our company a bit stickier.” Educating consumers on the tax credit is compulsory and many real estate experts are leading that charge.

“The bottom line for all consumers is ‘how does this impact me?’” says Bonnell. “We’re trying to help them answer that and we’re getting excellent results. I put on webinars to the general public—buyers, sellers, investors, etc.—twice on the second Tuesday of every month. On it, we go over the changes since the new adjustment. They can submit questions during the webinars and we typically answer them right there.”

Misunderstanding or confusion over the details of the tax credit can prevent many consumers from pursuing a home purchase. As Perriello says, “As professionals, it is our obligation to make sure we properly communicate the new tax credit details because an educated consumer is an empowered consumer.”

Great Expectations
Industry leaders have high hopes for the extended and expanded tax credit, believing it may be just what the housing market needs to make its way out of the trough in 2010. But time is of the essence—and that’s all part of the plan.

“It is important that there is a clear time limit for the tax credit because the purpose of this economic stimulus is to jump-start momentum in the housing market and the economy,” says Perriello. “The expanded home buyer tax credit is intended to provide an incentive for a broader pool of home buyers to make a home purchasing decision in the early part of the year. Otherwise, lacking the urgency of such a deadline, more potential buyers might stay on the sidelines.”

“We expect the tax credit to continue to encourage home buyers to enter the housing market through the extension dates, then the typical spring market should take hold and the housing industry will help carry us further out of the recession if conditions remain stable,” says McDonald.

“The extended and expanded home buyer tax credit should help increase demand, stimulate home sales and, ultimately, reduce inventory levels,” adds Perriello. “In turn, this should help stabilize home sales prices. Those are all necessary steps that need to occur before we can have a sustainable long-term recovery in the market.”

Read more: http://rismedia.com/2009-01-03/18-5-billion-reasons-to-make-the-home-buyer-tax-credit-work/#ixzz0cN1kZKd1 ]]> http://joeldameral.com/2010/01/12/why-a-tax-credit/feed/ 2 http://joeldameral.com/2010/01/10/efficient-washing-machine-rebate/ http://joeldameral.com/2010/01/10/efficient-washing-machine-rebate/#comments Sun, 10 Jan 2010 16:42:20 +0000 Joel Dameral /?p=178

Rebate Offer for Locals & Clients -
The South Tahoe Public Utility District announced Jan. 8 that the district is offering a $200 rebate on water efficient clothes washers effectively immediately.

To be eligible, clothes washers must have a water factor of 8.5 or lower, must have been purchased between Jan. 1, 2008, and Jan. 15, 2010, and installed within the district’s service area.

Applications must be turned in by Feb. 28, 2010, with a copy of the purchase receipt, manufacturer’s information including model number and water factor, and an IRS W-9 form.

Applications are available at the district’s customer service office at 1275 Meadow Crest Drive, or online at www.stpud.us.

For information, contact Shelly Barnes, water conservation specialist, at (530) 543-6268.

Image by Getty Images via Daylife

RISMEDIA, November 6, 2009—President Barack Obama has approved the first-time homebuyer tax credit extension which will extend the tax credit until April 30, 2010.

The extension is part of a $24 billion economic stimulus bill that will extend the $8,000 tax credit for homebuyers who are purchasing their first home from the current November 30 deadline and expands the program to offer a credit of $6,500 to homeowners who have lived in their current home for at least five years and are seeking to relocate.

The following details apply to the homebuyer tax credit expansion:

Who is Eligible
-First-time homebuyers, who are defined by the law as buyers who have not owned a principal residence during the three-year period prior to the purchase, may be eligible for up to an $8,000 tax credit.
-Existing homeowners who have been residing in their principal residence for five consecutive years out of the last eight and are purchasing a home to be their principal residence (“repeat buyer”), may be eligible for up to a $6,500 tax credit.
-All U.S. citizens who file taxes are eligible to participate in the program.

Income Limits
Homebuyers who file as single or head-of-household taxpayers can claim the full credit ($8,000 for first-time buyers and $6,500 for repeat buyers) if their modified adjusted gross income (MAGI) is less than $125,000.
-For married couples filing a joint return, the combined income limit is $225,000.
-Single or head-of-household taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000 are eligible to receive a partial credit.
-The credit is not available for single taxpayers whose MAGI is greater than $145,000 and married couples with a MAGI that exceeds $245,000.

Effective Dates
-The eligibility period for the tax credit is for homes purchased after Nov. 6, 2009, and before May 1, 2010. However, home purchases subject to a binding sales contract signed by April 30, 2010, will qualify for the tax credit provided closing occurs prior to July 1, 2010.

Types of Homes that Qualify
-All homes with a purchase price of less than $800,000 qualify, including newly-constructed or resale, and single-family detached, townhomes or condominiums, provided that the home will be used as their principal residence. Vacation home and rental property purchases do NOT qualify.

Tax Credit is Refundable
-A refundable credit means that if the amount of income taxes you owe is less than the credit amount you qualify for, the government will send you a check for the difference.
-For example:
-A first-time buyer who qualifies for the full $8,000 credit who owes $5,000 in federal income taxes would pay nothing to the IRS and receive a $3,000 payment from the government. If you are due to receive a $1,000 refund, you would receive $9,000 ($1,000 plus the $8,000 first-time homebuyer tax credit).
-A repeat buyer who owes $5,000 would pay nothing to the IRS and receive $1,500 back from the government. If you are due to get a $1,000 refund, you would get $7,500 ($1,000 plus the $6,500 repeat buyer tax credit).
-All qualified homebuyers can take the tax credit on their 2009 or 2010 income tax return.

Payback Provisions
The tax credit is a true credit. It does not have to be repaid unless the home owner sells or stops using the home as their principal residence within three years after the purchase.

The www.federalhousingtaxcredit.com site is being updated. Check the site next week for more detailed information on the new tax credit.

For more information, visit www.nahb.org.