Saturday, November 7, 2009

Homebuyer Tax Credit Changes FAQ's

Here are some of the most frequently asked questions on the changes to the Homebuyer Tax Credit:

Question: Existing homeowner credit: Must the new house cost more than the old house?
Answer: No. Thus, for example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6500 credit.

Question: I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a new home. I have lived in my current home for more than 5 consecutive years and am within the new income limits. I will go to settlement on November 20. If President Obama has signed the bill by the time I go to settlement, will I qualify for the new $6500 tax credit?
Answer: Yes. The existing homeowner credit goes into effect for purchases after the date of enactment (when the bill is signed). There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.

Question: I am a firsttime homebuyer but was not within the prior income limits at the time I entered into my contract to purchase on October 30, 2009. I will be covered, however, by the new income limits. If the new rules have been signed into law by the time I go to settlement, will I be eligible for a credit?
Answer: Yes. The new income limitations go into effect as soon as the President has signed the bill. The income limit and other eligibility rules will look to your status as of the date of purchase, which is the settlement date. So if the new rules have been signed when you go to settlement, you should be eligible for the credit (or a portion of the credit if you're within the phaseout range).

Question: I am an eligible existing homeowner. I have a fair amount of equity in my home. I have found a home with a nonnegotiable price of $825,000. Will I be able to use any of the $6500 tax credit?
Answer: No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amount above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an absolute ceiling.

Question: I owned my home for 10 years, but sold it two years ago year and have been renting since. If I purchase a home, will I be eligible for the $6500 tax credit if I meet all the other eligibility tests?
Answer: Yes. Because you lived in the home for more than 5 consecutive years of the previous 8, you will qualify for the $6500 credit. For example, Say John and his wife bought a home in 2000 and lived there until 2008 when he got a divorce. Whether John has been renting or bought in the interim, he WOULD INDEED be eligible for the credit because he owned a home and occupied it as his principal residence for 5 consecutive years out of the last 8 years. The keyword here is "consecutive." As long as he lived in that house for 5 years straight what he did since 3 years doesn't impact eligibility.

Question: I am an eligible firsttime homebuyer. I entered into a contract to purchase on November 1, 2009. Do I have to go to closing before December 1? How does the extension date affect me?
Answer: You do not have to close before December 1. Once the legislation has been signed, it will be as if the Nov 30 date had never existed. Therefore, so long as the contract settles before April 30 (or July 1, worst case), the purchaser will be eligible for the credit.

Please feel free to contact me if you have any additional questions about the tax credit changes.

(Information provided by NAR)

Monday, June 1, 2009

How To Make the Most Out of the $8000 Tax Credit

Three weeks ago, HUD Secretary Shaun Donovan announced a program that would allow borrowers to use the first-time homebuyer tax credit for a down payment or closing costs on an FHA insured mortgage at the NAR Mid-Year Conference. Forty-eight hours later that program was pulled due to insufficient details as to how to implement the program.

Last Friday, Secretary Donovan once again issued Mortgagee Letter 2009-15 detailing the guidelines of that program. Under the guidelines, FHA-approved lenders can develop bridge loans that home buyers can use to help cover their closing costs, buy down their interest rate, or put down more than the minimum 3.5 percent. However, according to senior HUD officials, loans cannot be used to cover the minimum 3.5 percent requirement. Thus, buyers applying for FHA-backed financing with an FHA-approved lender that offers a bridge-loan program can get a bridge-loan to significantly bring down the upfront costs of buying a home, but would still have to come up with the minimum 3.5 percent down-payment.

Secretary Donovan said “We think the policy is a real win for everyone, ensuring that borrowers can tap into the numerous organizations that are already part of the FHA network to receive this additional benefit.”

If you are a first-time home buyer and qualify for the tax credit this new program may be an option for you. Please keep in mind that you will need to have funds available for the 3.5 percent down-payment and you must close on the home by December 1, 2009. For more information about the tax credit visit my article titled First Time Home-Buyer Tax Credit FAQ's.

If you or anyone you know is interested in purchasing a home I would be happy to help you with your home search, no strings attached. Just contact me and I can have available homes that meet your criteria sent to your inbox, updated on a daily basis.

Tuesday, May 26, 2009

Recharge and Sell!! a.k.a. Our Indiana Landscape

It's Tuesday!! It's a great Tuesday!!! Okay you say, what's so special about Tuesday? Well, okay, not just a Tuesday but THE Tuesday. Tuesday after the Monday that was Memorial Day! To me, it's a great day!

As I look out the window, all I can see are clouds, the forecast calls for rain and thunderstorms after a dreary day yesterday but I'm rejuvenated and energized! I'm ready to go! I'm ready to have a great week working hard for my clients, setting showings, talking to builders, working on pending offers, helping track down the rightful owner of a property, buying, selling, helping solve all the real estate problems of the world! Okay, that may be a stretch, but I'm enthused to start a new week and end the month on a good note. Why all the energy for someone who typically hates a "Monday" morning like the best of them? I spent a fantastic weekend communing with nature at one of the best known secrets in Indiana and I'm ready to go!

Years ago, the Indiana tourism bureau had a campaign titled "Wander Indiana." I"m not exactly sure how many years that was the slogan and why it was changed but I loved it! I thought it was a great and that was what my family did. With two small children, I decided that this was one family that was going to wander Indiana. And so we did!

Each spring and summer, armed with our trusty Wander Indiana guide, we would plan out and execute our adventures around the state, seeing a wide variety of flora and fauna, geologic and man-made wonders of the state. Over the years we explored the state from the white sands of the Dunes to the fossil beds of the Ohio. During which we discovered many wonders that as a life-long resident of the state never even dreamed where here. I always enjoyed the time, it's a great, inexpensive way to see the world and had somewhat gotten away from it. Recently, I rediscoved the passion.

This past weekend I had the pleasure to rediscover a part of Central Indiana that I had forgotten existed. I spent the weekend camping at Lieber State Recreation Area at Cagles Mill Lake near the Putnam/Owen County line. It's a great little park with some hidden treasures. Because of the lake, it mostly brings out the boaters and fisherman, but offers a quiet campground to rest and relax.

Just outside the park, is another state property, Cataract Falls. Located just a few minutes drive from Lieber SRA, at a cascading drop of 86 feet, it is the state's largest waterfall and is truly worth the trip. The falls are magnificent and one could sit for hours watching the water rush and churn as it flows through the limestone creek bed. On the site there once stood a mill and today you can still see the stone foundation and remains of the walls that were built to channel the mighty forces of the water. It's a great place to fish, share a picnic or just relax and enjoy nature.

So you say, what does this blog have to do with real estate? I don't know. Maybe nothing. But maybe making readers more aware of the great wonders this state has to offer makes them a little more proud to be called a Hoosier and will make them a little more proud of their home and neighborhood. If it does nothing except to help connect me with readers through a common bond or allow clients and readers to know more about it, it has served it purpose. I hope you all get out and have a chance to Wander Indiana!

Tuesday, May 19, 2009

Great Things To Do In Indy

Ok, the month is half over but there are still some great things to do in Indy this week related to the 500 Festival. Some of them are well known, others not so much. Here's a quick run down.....

Wednesday, May 20
A community favorite, Community Day at the Track. The track will be open 9-6 with admission just $7 per person (6 and under free). Get tickets at gates 2 or 10. Activities you can participate in include taking a lap around the track in your own vehicle (enter through gate 10 off 30th Street).
Tour the IRL car transport trailers. Visit Pit Lane and check out the vintage cars on display. Pro Series drivers and past champions will be there to sign autographs.

Ever wonder what it feels like to be in Victory Circle? Well, now's your chance, you can have your photo taken in Victory Circle, just like you’re the winner in a car with a trophy, a wreath and a glass of milk!
Tours will be available for the suites and the official timing & scoring area in the pagoda.
And if that's not enough you can watch the Media Pit Stop Competition, enjoy live music, question and answer sessions much more!
Plus, visit the Indianapolis Motor Speedway Hall of Fame Museum since admission is included.

Thursday, May 21
Out at the track gates open at 9 a.m. with the Firestone Freedom 100 Practice from 9:00-9:45 and again from 11:45-12:30 with Firestone Indy Lights qualifying from 3:00-4:00. Admission for the day's events are free.

Friday, May 22
While May is a month of Celebration in Indy it is also a time of remembrance of all those who have so valiantly served this country. A must do this week is the 500 Festival Memorial Service presented by Rolls-Royce on the north steps of the Soldiers & Sailors Monument on the Circle. This free service begins at noon and is open to the public.
Highlights of the event will be a wreath-laying ceremony, dedicated to the memory of all Hoosiers in all wars and conflicts who sacrificed their lives in defense of our great nation, a military funeral Cort├Ęge, and ceremonial fly-over.
You can enjoy a jam packed day at the track during the Miller LIte Carb Day festivities. Gates are open from 8-6 with admission just $10 (5 and under free). The full line up of events includes: Indy 500 practice from 11:00-noon with the Firestone Freedom 100 pre-race activites at 12:15. Racing action begins at 12:30. The ever popular Pit Stop Challenge event will begin at 1;30 with the culmanating event of the day, the Miller Lite Carb Day Concert featuring 3 Doors Down to begin at 3:30.

Saturday,May 23
Probably the most well known event of the Festival is the IPL 500 Festival Parade. The parade kicks off at noon at the intersection of Pennsylvania and North Streets, heading south to Washington Street. West on Washington to Meridian and north on Meridian around the east side of the Circle to 11th Street.
But before you head to the parade did you think about attending the 500 Festival Costumed Character Breakfast? This event is held at Jillian's at 141 S. Meridian Street beginning at 9:30. This year's guests include SpongeBob SquarePants, The Wiggles and Pablo and Tyrone from The Backyardigans plus many more. Ticket price includes breakfast buffet, a $10 Jillian's game card and one bleacher seat ticket to the 500 Festival Parade.
As if your day hasn't been full enough, top the evening off at the Regions 500 Festival Snakepit Ball beginning at 6 p.m. at the Indiana Roof Ballroom where you can dance and sway to the music of legendary funk band The Ohio Players. This black tie, see and be seen event is known as the place to see the stars that are in town for the race weekend activites. Call 269-0420 for ticket information.

Sunday, May 24
The culmanating event for the month...what you've all been waiting for....The Greatest Spectale in Racing...the running of the Indianapolis 500. Gates open at 6:00 a.m. with driver introductions at 12:30, racing at 1:00. Ticket prices start at $20.

Sunday, March 22, 2009

The First Step in Buying a Home-YOUR CREDIT REPORT!

All too often I am approached by a prospective home buyer who asks to look at a home they have fallen in love with only to have them end up in the situation where they can't get the home. The culprit....the dreaded credit report!!

The first step that a buyer should take when beginning the search for a home, before they talk to a Realtor, before they talk to a lender, even before they think of pulling up or, they should pull up their credit report. Consumers have the ability to pull up a free credit report online through sites such as and should do just that.

I recently read that over 70% of consumers reported that they have found errors in their credit report, with 25% of them being serious enough to either deny the consumer credit or significantly delay the process. With over 54 billion credit updates annually, it is very likely that you may have an error on your credit that you are not aware of. Many times these errors are negatively impacting your credit in such a manner as to deny your ability to get credit or to cause you to pay excessive interest expenses.

All consumers should routinely pull their credit reports to look for errors and have them correctly immediately. They need to be proactive in protecting their credit and become educated and understand how credit works. When a questionable activity is identified, it needs to be correctly immediately. Usually the first step in doing so is to notify the applicable credit reporting bureau.

If you are wanting to buy a home, do this and then call me to help you find that perfect home. If you have questions regarding your credit, contact me and I will help you answer them.

Saturday, March 21, 2009

What's the Latest with West Wood?

We're all curious as to what the market is doing in our neighborhood. The latest information for West Wood is very positive! Two homes have sold in the neighborhood since January 1st of this year. One on Durden Court and the other on Benoit Drive. So welcome your new neighbors if you live near them!

Statistically, the average sales price of these homes was $121,950 with a price per square foot of $70.63. This is an increase over the total sales price per square foot for 2008 of $68.84. So for the first quarter of 2009 things seem to be looking up for us in terms of home values.

Currently there are 9 homes on the market ranging in sales price from $119,900 to $170,000. These homes range from 1480 sq. ft. to 2356 sq. ft. with an average price per square foot of $78.16. If you know of someone looking for a home, please tell them about our neighborhood. If you like living here, don't you think yours friends would also?

I personally feel that we are making some progress in getting our home values up. For a time we seemed plagued with a lot of foreclosed homes in the neighborhood and that trend has seemed to decrease. Most of these homes currently on the market are being sold by the home owner and do not represent bank owned properties. That is GREAT news for us as a community!! In order to keep our property values up, we need to lessen the number of foreclosures in our neighborhood.

Yeah, we all agree to that and I'm sure you're saying what can I do? I pay my bills but it's my neighbors who are causing the problem. Well, there is plenty you can do. If you know of a neighbor, or anyone for that matter, who is having difficult paying their mortgage or maybe has just lost their job, urge them to contact their lender IMMEDIATELY!!! There is a lot that can be done to keep that family in their home.

When the homeowner contacts the lender ask to speak to the home retention or workout department. Be firm and insist that you need help and that you run the risk of foreclosure and you want to work out a deal to keep you in your home. Lenders have the ability to restructure the loan any way they see fit and should be able to work out a plan to keep you in your home. The recent government acts have provided money to help lenders restructure loans to keep homeowners from losing their homes. Call your lender today if you have lost your job or are having difficulty paying your mortgage! Be proactive, don't wait to talk to them when they call you!

We can all do our part to help our neighborhood and our community. If you, or someone you know is in trouble, talk to them and have them take action. If you have any questions or need the number for your lender, please contact me. I'd love to help you keep your home!

Thursday, March 19, 2009

Why Pricing Is So Important

Trying to value a home to sell in any market is confusing for most sellers. In this market it is even more crucial. A colleague of mine, Greg Cooper, tells us why pricing is so important.

Wednesday, March 11, 2009

Downpayment-How Much?

Once you've found the home of your dreams, you'll be faced with financial decisions. Even though you have been pre-qualified, the amount of down payment will be your first consideration.
How much should you put down? And how does the amount affect your mortgage? Should you put down the least amount required, or as much as possible? The following are some tips and information you may find helpful in making the right decision for you.

Of course, you are always dependent on your specific financial situation. Very often first-time buyers are scraping together every available cent to make the minimum down payment. They may consider themselves fortunate to be able to do just that.

If you have more cash available, there are two ways to go. Some experts feel that you should make the smallest down payment that's acceptable to your lender. You will then have cash for emergencies, decorating, and any renovation that you want to do right away. You could also invest the extra funds. Weigh your options in dollars and cents. If you're trying to decide between putting 15 percent versus 20 percent down, and that difference is $5000, go with the 20 percent. You'll then save the cost of the PMI (Private Mortgage Insurance) which can really add up.

Generally, a 20% down payment is thought to be standard. If your home costs $100,000, you would be expected to come up with $20,000 in cash for the down payment, in addition to the closing costs. Many lenders believe that 20% down gives the homeowner a larger equity stake in the property, and thus decreases the likelihood of default.

Lenders today recognize that 20% of the purchase price is a great deal for most first-time buyers. As a result, different mortgage options have been developed to require a smaller down payment. For example, there are several mortgage options that will allow you to put down 10-15 percent. Conventional lenders will allow a smaller down payment if you agree to purchase private mortgage insurance. This insurance is paid monthly, along with your mortgage, until you have earned at least 20% equity in your property.

An FHA loan will require 3.5%-5% down. If you put down 3.5 percent, the FHA will accept a Community Development Block Grant, if one is available and you meet the guidelines, to make up the two percent difference.

A loan from the Veterans' Administration (VA) doesn't require any down payment. These loans are offered at a fixed rate that is set by the government, and the fees are low. These loans are available to honorably discharged veterans of the United States Armed Forces.

On the other hand, there is the argument that the more you put down, the less you pay back. The less the mortgage that you'll take and the less interest you'll end up paying. A greater down payment may eliminate the cost of private mortgage insurance. Talk to your lender, and run the numbers on a variety of scenarios. Then you can proceed in the manner that best serves you.

Copyright PropertySource Network 2009

Friday, February 27, 2009

Indianapolis Once Again Named Most Affordable City in Nation

By Les Christie, staff writer, Last Updated: February 23, 2009: 2:17 PM ET

NEW YORK ( -- Crashing home prices have led to the most affordable housing market in at least five years, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index released Thursday.

More than 60% of all U.S. homes sold during the last three months of 2008 were affordable - meaning that a family making the national median of $61,500 a year would pay 28% or less of their total income toward housing expenses.

At 62.4% affordable, the figure is up considerably from 56.1% in the previous quarter and 46.6% at the end of 2007, according to the report.

Topping the list of most affordable U.S. metro areas, which ranks areas with more than 500,000 in population, was Indianapolis. This is the city's 14th consecutive quarter in first place; it boasts a full 93% of all homes sold being affordable to median family households.

The least affordable was the New York City metro area, where only 13.9% of homes sold met the criteria.

In the fourth quarter, the national median home price
fell to $190,000 from $205,700 in the previous-year period, according to a report issued last week by the National Association of Realtors. That combined with falling mortgage rates has made home buying the most affordable it has been since early 2002.

"Falling home prices and very favorable mortgage rates both contributed to the housing affordability gains we saw in the fourth quarter of 2008," NAHB Chairman Joe Robson, a homebuilder from Tulsa, Okla., said in a prepared statement.

That still wasn't enough to get moribund housing markets moving again. Existing homes sold at an annualized rate of 4.74
million in December, according to the National Association of Realtors, down from more than 7 million during the boom.

And a government report revealed that new home sales crashed to an annualized rate of
331,000 in December, the lowest since record keeping began in 1963.

"Worsening economic conditions, historically low consumer confidence and uncertainty about future home prices kept many qualified buyers on the sidelines," Robson said. Still no buying push.

That affordability has improved so much does not necessarily make people go house hunting, according to Mike Larson, a real estate analyst with Weiss Research.

"You could argue that house affordability indexes are improving but that may not be the best way of defining whether it's a good time to buy," he said. "Concerns about the economy and whether they're going to still have a job have kept many homebuyers from stepping up to the plate."

During the boom, when house affordability plunged, buyers came out in droves. They were confident in the economy and afraid that home prices would soar out of reach. Today, just the opposite applies.

"Affordability is going to get even better," said Larson. "Home prices are not done falling. Buyers recognize this. There's no sense of urgency, and rightly so."

Indeed, according to Nicholas Retsinas, director of Harvard University's Joint Center for Housing Studies, affordability, which was a major factor in homebuying during the boom, no longer matters very much. In most parts of the United States, affordability has returned to where it was in 2002 or 2003.
"The new barrier is willingness to buy," he said.

That's why one major goal of President Obama's housing-rescue plan involves
slowing foreclosures to stabilize housing markets and foster consumer confidence.

"If that happens, maybe people will start thinking, 'Hey, maybe prices won't go down tomorrow,'" said Retsinas.

Most and least affordable
Affordability in Indianapolis, the 33rd largest metro area in the United States with 1.7 million people, was buoyed by fairly high median income of $65,100 and rock-bottom home prices. The median price for a home sold during the quarter was just $103,000, according to the National Association of Home Builders report.

Those prices, combined with reasonable mortgage interest rates, make home-buying in the area a snap. A buyer of a median-priced home putting 20% down would pay only about $450 a month in mortgage expenses.

But even though house buying costs are reasonable, the city's weakening economy meant it did not escape the foreclosure plague. More than 20,000 homes, representing nearly 3% of the city, received a foreclosure filing of some kind in 2008, the 26th highest rate in the nation.

Other most affordable towns were: Warren, Mich. (89.6%); Youngstown, Ohio (89.4%); and Detroit (89.3%).

In the New York City metro area, home prices took a steep dive during the quarter, to $455,000 from $500,000 three months earlier. But even that was not enough to dislodge the city from its rank as the most unaffordable metro area in the land.

Median income in the area is $63,000, less than in Indianapolis and, with home prices more than four times higher than in the Midwestern metropolis, only 13.9% of the homes sold there were affordable to median income families.

That was still a major improvement from two years ago, when only 5.1% of homes sold during the fourth quarter of 2006 were affordable. And New York households have been barely brushed by foreclosure so far with only 0.71% receiving some kind of foreclosure filing during 2008.

Other least-affordable metro areas included San Francisco at 20.6%, where affordability improved greatly from 5.7% during the second quarter of 2007; suburban Long Island, where 25.5% were affordable; and Los Angeles, where 26.9% were.

Tuesday, February 17, 2009

First-Time Home Buyer Tax Credit FAQ'S

Congress Enacts Bigger and Better Home Buyer Tax Credit

A tax credit of up to $8,000 is now available for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009. Unlike the tax credit enacted in 2008, the new credit does not have to be repaid.

The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009.The following questions and answers provide basic information about the tax credit. If you have more specific questions, we strongly encourage you to consult a qualified tax advisor or legal professional about your unique situation.

Who is eligible to claim the tax credit?
First-time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.

What is the definition of a first-time home buyer?
The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.

How is the amount of the tax credit determined?
The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.

Are there any income limits for claiming the tax credit?
The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

What is "modified adjusted gross income"?
Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine "adjusted gross income" or AGI. AGI is total income for a year minus certain deductions (known as "adjustments" or "above-the-line deductions"), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.To determine modified adjusted gross income (MAGI), add to AGI certain amounts such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for higher-education costs.

If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
Possibly. It depends on your income. Partial credits of less than $8,000 are available for some taxpayers whose MAGI exceeds the phaseout limits.

Can you give me an example of how the partial tax credit is determined?
Just as an example, assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.

How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008?
The most significant difference is that this tax credit does not have to be repaid. Because it had to be repaid, the previous "credit" was essentially an interest-free loan. This tax incentive is a true tax credit. However, home buyers must use the residence as a principal residence for at least three years or face recapture of the tax credit amount. Certain exceptions apply.

How do I claim the tax credit? Do I need to complete a form or application?
Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on Line 69 of their 1040 income tax return. No other applications or forms are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests.

What types of homes will qualify for the tax credit?
Any home that will be used as a principal residence will qualify for the credit. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.

I read that the tax credit is "refundable." What does that mean?
The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).

I purchased a home in early 2009 and have already filed to receive the $7,500 tax credit on my 2008 tax returns. How can I claim the new $8,000 tax credit instead?
Home buyers in this situation may file an amended 2008 tax return with a 1040X form. You should consult with a tax advisor to ensure you file this return properly.

Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?
Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been "purchased" on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after January 1, 2009 and before December 1, 2009.In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.

Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?
Yes. The tax credit can be combined with the MRB home buyer program. Note that first-time home buyers who purchased a home in 2008 may not claim the tax credit if they are participating in an MRB program.

I live in the District of Columbia. Can I claim both the Washington, D.C. first-time home buyer credit and this new credit?
No. You can claim only one.

I am not a U.S. citizen. Can I claim the tax credit?
Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of "nonresident alien" in IRS Publication 519.

Is a tax credit the same as a tax deduction?
No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS.A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes. If the taxpayer receives an $8,000 deduction, the taxpayer’s tax liability would be reduced by $1,200 (15 percent of $8,000), or lowered from $8,000 to $6,800.

Is there any way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2009 tax return?
Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the downpayment.Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.Further, rule changes made as part of the economic stimulus legislation allow home buyers to claim the tax credit and participate in a program financed by tax-exempt bonds. Some state housing finance agencies, such as the Missouri Housing Development Commission, have introduced programs that provide short-term credit acceleration loans that may be used to fund a downpayment. Prospective home buyers should inquire with their state housing finance agency to determine the availability of such a program in their community.

If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?
Yes. The law allows taxpayers to choose ("elect") to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.Taxpayers buying a home who wish to claim it on their 2008 tax return, but who have already submitted their 2008 return to the IRS, may file an amended 2008 return claiming the tax credit. You should consult with a tax professional to determine how to arrange this.

For further information click on this link:

Provided Courtesy of CENTURY 21 Realty Group

Tuesday, February 10, 2009


CENTURY 21 Realty Group has just unveiled some new and exciting tools designed to better serve their customers with their home search in the 21st Century regardless of whether they are going mobile or Internet surfing. This is way cool stuff that no other realty company in the state has.

We now have provided for us one of the best and most up to date online sites in which to host properties for sales. Each of our listings has a unique website dedicated to it which not only includes the visual tour but also gives links to tons of information about the area, schools, what is close, community demographics, great mapping tools and more. When driving by a property Buyers can get more information about the property instantly on their cell phone via a simple text code. If viewing online, they can download a flyer which has all the information about the property. To see epropertysites in action check out my featured property.

Do you ever drive by a home for sale and wish you could get more information about the home without calling your agent? Then I have the tool for you. CENTURY 21's Going Mobile will allow you to download an app to your smart phone that will allow you do just that. Using GPS capabilities it will pinpoint the area where you are and pull up all the listings in that area. And the best thing??? CENTURY 21 Realty Group it pulls from 10 MLS boards and covers most of the Central Indiana/Kentucky area. So if you are looking for a home, or just curious, contact me and I will set you up.

Friday, February 6, 2009

Not Your Ordinary Agent!

I'm different. I'll admit it. Yeah, I'm your agent and I do things a little differently. I think I owe it to you. It's all a part of who I am. I'm not going to candy coat things for you, I'm not going to pressure you. I'm not going to tell you what to do. I'm going to give you information and let you make the decision. After all, you are the one who will have to live with it.

Sellers. I'd love to have your listing. If you want to sell. If you don't, then don't call me. If you're out there, looking to make a profit on the home you bought 3 years ago, don't call me. If you feel that your home is worth $10,000 more that the house down the street, just like yours, that was totally updated before putting it on the market because you have that little mudroom on the back that "really could make into a 4th bedroom if they need it and that other house only has three," don't call me. If you'd rather give a 'carpet allowance' then take the time to put it in and repaint, don't call me. I don't need that kind of business.

In today's market, Sellers have to understand the whole picture. They have to understand that the competition out there is tough. They have to understand the importance of pricing correctly, from the start. Selllers have to understand that homes need to be move in ready or discounted in price if not. They need to know what their true competition is. They have to know what buyers want.

Sellers need to understand that percieved objections greatly affect the price a buyer is willing to pay. If buyers think it will be an issue, it will and they won't make an offer. Too many times I've heard, "If just takes a little time to get used to the trains going by." If you really want to sell, you have to consider things like that.

Buyers are looking for a bargain. They are looking for a deal. As a Seller, you have to make them understand that they are getting one. Together, we will do so.

Friday, January 30, 2009

Let's Make a Deal!

I met with a client yesterday afternoon to write an offer. This time it was a pre-foreclosure or short sale on a property. My client has been looking for a new home for some time and we have met and talked about the process of buying, the current market, and this neighborhood in particular on numerous occassions. At the time we met, she wasn't in the position to purchase but we knew that by having some time, we could seriously evaluate the neighborhood, look at market trends and find the best deal possible for her. Approaching retirement, this is intended to be her final home purchase and we wanted to make sure to do things right.

As we looked over paperwork, I realized that although we had talked numerous times about the buying process, this particular situation was one we hadn't discussed before. We were going to be working with the bank on this one. There was not going to be an emotional seller involved. No hurt feelings at what we were asking for and what concession we were hoping they would make. No other offers on the table that we were aware of, just a builder who was needing to unload a property. This was strictly a business decision on the part of the seller and although my client has bought several homes, this was unchartered territory for her.

As I explained more about the process of working with a bank I felt that I was having deja vu. I just went through that the week before with another buyer. Ahh!! Hello folks! This is the market we are in today.

Buying bank owned or foreclosed properties isn't difficult. It just takes a little perserverance and some education on the part of the buyer. Recently I have talked with agents who have been in the business of real estate for a number of years who have never made an offer on a bank owned property. The basics are the same, Realtors just have to make sure that they have educated their buyers how the process works.

As for education of the real estate agent, I would say that it is imperative for the buyer's agent to talk to the listing agent about the property. The agent will not place the property as pending or activeB or such until after it closes and as the buyer's agent you may not know that they have 16 offers on it until you submit yours. Make sure that your agent has talked with the listing agent to get the low down on the property. Banks are usually willing to work with buyers and give some concessions. I would say it just depends on how badly they are wanting to unload the property. See what you or your agent can find out.

As your buyer's agent, we will submit an offer similar to any other offer, keeping in mind that since the property is bank owned it is being offered in "As Is" condition. Meaning, the bank will not pay for any repairs that need to be made; they won't fix anything. Okay, but if we're getting a really good deal, we don't care. When the bank receives the offer they will look it over, see what it will net them and decide whether they want to take it or not. If they have a counter, they will contact the listing agent who will verbally counter back with me. Unlike the "real" world of real estate, banks won't mess with paper counter offers. Once we come to an agreement on the price, the bank will send back their version of the purchase agreement along with their several page bank addendum for the buyer to sign stating what they want in terms of closing, time for inspections, etc.

We always reserve the right to have the property inspected...and I can't stress enough how imprortant it is. Just to warn you, this can be a pricy endevor depending on the size of the house. Inspections themselves aren't that expensive and are well worth the money spent but if the home has been winterized, it is imperative that a de-winterization and rewinterization be done. Most bank owned homes are going to have the utilities turned off. Rarely are they disconnected, ususally they are just turned off. The utilities will be have to be restored before the inspection can take place, but IT IS IMPERATIVE THAT NOTHING IS TURNED ON TO THE HOME EXCEPT BY THE INDIVIDUAL DOING THE DE-WINTERIZATION!! Your worst nightmare would be for the water company to come out and turn on the water just to have that water come barrelling out of open faucets in the house with no one there to stop it!!!

Costs for the winterization process is determined by the number of baths in the house, so those of you buying those homes with 4.5+ baths will pay for it! When you contact the inspection company, let them know that you need to de-winterize and re-winterize the property. Most companies provide that service. If they don't, find someone who will.
Unless the inspection shows a major defect with the property, we are good to go. Now we know what does and doesn't need to be fixed and we know where we stand with the condition of the home.

I always caution my buyers to make sure to schedule the home inspection early in the process. This will allow time for us to make sure that all inspections can be done in the alloted timeframe without having to ask for an extension. If the inspection takes place at a time when the roof can not be safely inspected due to snow or rain, then the inspection company will come back out to complete the inspection at a later date if asked. I have also had cases where although the home was winterized, there were none operating faucets in the home and the inspector returned to verify that there were no leaks or broken pipes in the home. I also caution buyers not to wait until we receive the bank signed documents back to schedule the inspection. Sometimes that can take a few days, especially if we are dealing with the weekend. If they only have a week to get the inspection, it needs to be scheduled immediately after we know that we have a deal with the bank.

One derivation that I do make for bank owned properties is that I normally set the closing date about 45 days out rather than the normal 30 days. Banks often will charge a per diem if the closing does not take place on the scheduled date and I want to make sure to allow ample time for the mortgage process so that we don't get caught having to pay extra fees. We can move the closing up without penalty, just not set it back.

The rest of the process to closing is very much the same for a bank owned purchase as it is for a nornal purchase. As your buyer's agent I will make contact with you to see that the process is going smoothly and to check to see if you have any questions. Once everything is ready for closing, your lender or I will contact you with the amount of funds needed at closing and then we go have fun signing on the dotted line.

Sunday, January 25, 2009

To Buy or Not to Buy?

Yesterday I stood freezing my toes off with a client looking at three different condos trying to decide if this is the right time for her to buy. The conditions are right. My client is wanting to buy, she doesn't have a house to sell, has good credit and has a sizable downpayment. If you know anything about the market you're probably screaming, "OF COURSE IT IS, WHAT ARE YOU WAITING FOR!!" So, what's the issue here?

The area that she is wanting to buy in is with a builder that is ceasing operations in Indiana. My client is concerned about what will happen with the neighborhood and since it is a condo community, who will be receiving the monthly maintenance fees, take care of the property management, handle any necessary repairs, etc. Even though those are very valid concerns I told her not to worry. My client is very fortunate in that the community she is buying in is a finished community. All of the lots have been sold, the homes built and the community has been turned over to the Homeowners' Association who has hired a property management firm to handle the day to day operations of the association. I assured my client that she probably wouldn't notice any difference in her specific community in the ways things are being handled now that the builder is no longer in operation than if that builder was still actively building in the area.

So, is my client going to buy? I'm not sure. My advice to her is that the property is a very good deal. We might be able to find her another similar condo but the price could be substantially more than what she would pay today to purchase this one. Probably this is a deal that might be too good to be true, but all Realtors know that we don't have a crystal ball to tell us what will happen with the market.

Wednesday, January 14, 2009

Welcome To the New Year!!

Okay, sure it's the 14th and the new year is well underway, but this is my first post of the new year. So, Welcome!!

As I sit and watch the snow pile up out my office window I have reflected on the current condition of the real estate market. We hear a lot of negatives through the media and around the office cooler. Yes, times are trying. But when things get trying, opportunity presents itself. Opportunities for a lot of things to happen. Opportunities to grow. Opportunities to get better. It doesn't matter what the circumstance is, when we get pushed outside of our comfort zone things can happen. It's just up to you to determine what the outcome will look like for you.