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DETAILS ON HOME-BUYER TAX CREDIT PROGRAM
Los Angeles Times, Sunday, November 8, 2009
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Millions of additional people may be able to take advantage of the new and improved first-time home-buyer tax credit now, and it's not just for first-time home buyers anymore. You may qualify. President Obama signed legislation Friday to extend unemployment benefits to American workers. The law also includes provisions that vastly expand the number of people eligible for home-buyer credits by boosting the income eligibility limits, giving buyers more time, creating a $6,500 credit for longtime homeowners and launching more-accommodating rules for members of the military. Here are the details. The $8,000 credit If you were locked out of the first-time home-buyer credit in the past simply because you earned too much, there's good news. Now you can qualify for the full $8,000 first-time home-buyer credit with a single income of up to $125,000 and married income of up to $225,000. Those who earn more will be phased out. The credit ends completely once single income exceeds $145,000 and married income exceeds $245,000. Still, that's a big boost from the previous law that shut off the credit for singles earning more than $95,000 and married couples who earned more than $170,000. Other eligibility rules * You must not have owned another home for at least the previous three years. * You must buy a home (or have a binding contract to buy) by April 30, 2010. Under the new law, if the sale doesn't close on time, you can still get the credit as long as you've got a binding contract on the ending date, said Jackie Perlman, tax analyst with the Tax Institute at H&R Block in Kansas City. * You must be older than 18 and not claimed as a dependent by any other taxpayer. * The property you purchase cannot have been acquired from a relative. * You must attach a copy of your settlement statement with your tax return to claim the credit. * Most buyers also must continue to own this new home for at least three years. If they sell in less time, the government will demand that they pay the credit back, said Clint Stretch, director of tax policy with Deloitte Tax. Special rules for military The government will not require repayment of the credit if you are a member of the military and had to sell or stop using the home as a residence because of extended duty, however. In addition, those serving outside of the U.S. during any part of 2009 or early 2010 will get an additional year to claim the credit. In other words, the credit ends for most people on April 30, 2010, but it lasts until April 30, 2011, for active-duty service members working overseas. The $6,500 credit The new law carves out an additional credit for current homeowners. If you have owned and lived in a home for at least five consecutive years of the last eight years, you could qualify for a $6,500 tax credit, if you buy a new home between now and April 30. The "five-of-eight" requirement means that this credit could accommodate people who lost their homes in the last year or two to foreclosure or even sold a house and didn't immediately replace it, said John. W. Roth, senior tax analyst with CCH Inc., a Riverwoods, Ill., publisher of tax information. Would you have to sell your residence for it to qualify for the $6,500 credit, if you wanted to buy a new one? Not necessarily, Roth said. The home you purchase must become your principal residence, so you would have to move there. But nothing in the law says you cannot keep your existing residence as a second home or rental, he said. If you do choose to sell your existing residence, you need to pay close attention to how much you earn on that sale, Stretch said. That's because taxable profits from the sale of your residence will be added to your other earnings to determine whether your adjusted gross income exceeds the allowable thresholds. This credit also phases out for singles earning more than $125,000 and married couples earning more than $225,000. On the bright side, some profits from the sale of a personal residence don't count. That's because taxpayers are allowed to exclude up to $250,000 per person or $500,000 per couple in profits on the sale of their personal residence from tax, if they lived in that home for two of the last five years, Stretch said. Only profits exceeding those excluded amounts would be included in income, he noted. Getting muddled? Let's look at an example to clarify. John and Sue Smith own a home that they bought for $100,000 in 1965. They're now retired and want to scale back, selling that home, which is now worth $750,000, and buying a smaller home with the help of the new $6,500 credit. Their net profit on this sale would be $650,000, but they can exclude $500,000 of that gain from tax, based on existing law. They will have to add the remaining $150,000 capital gain to their adjusted gross income to determine whether they can qualify for the new credit. If all of their other income adds up to less than $75,000, they have no worries because the $150,000 and $75,000 add up to $225,000 -- the beginning of the credit's phase-out range for married couples. If they earn more, however, they begin to lose their ability to take the credit. There are other arcane rules relating to profits earned on the sale of a home, so those with substantial profits may want to consult a tax professional before banking on the credit. "It's really confusing," Roth allowed. "It's as if they took the old law and threw it in a Mixmaster. Some things still apply; others don't. The time frames are all new. This is going to keep a lot of tax accountants in business for a long time." |
~Perception Sells! You only get one chance for a First Impression~
The Way We Market our Homes is Not the Way We Live In Our Homes...
Your hand made area rugs or the Beautiful hardwood flooring?
Your expensive collectibles or The Wonderful Built In Bookshelves?
Your colorful oil painting hanging on the wall or the crown and chair moldings?
Your custom window coverings that match your bedding/ accessories or the fabulous view of your nicely landscaped backyard?
Therefore LESS IS MORE!
Prospective Buyers do not want to see a home through the eyes of the current owner,
they need to be able to see the home through their own eyes and to visualize how the home will meet their own unique needs and lifestyles. In Essence, We must Appeal to the Buyer's perception of themselves, getting them to envision placing their own belongings in the home and being able to see the value, purpose and possibilities that each individual room could have. Perhaps an Unfinished storage room off of the Master could be finished and used as a Nursery, Sitting Room or Exercise Room- Perhaps the Formal Living Room could be used as a Home Office or the Kids playroom a 5th Bedroom-
Curb to Curb- Inside and Out-
Through Cleaning, Decluttering and Depersonalizing, Property Staging can transform your Home so that there are no distractions- "eye candy"- for the Buyers while touring your home... Wherever a Buyer's Eye rests, a Sale Begins or Ends- Clutter eats Equity; studies have shown that every 15 seconds a Buyer makes a decision whether or not to take another step---
By taking personality out of your home & introducing neutrality,
We will create an "I Want this Home" factor not a
"Wow, I like (or don't like) their things" factor...
Prospective Buyers must be able to see themselves living in the Home the first time they preview the Home, otherwise they will schedule a second showing and won't buy until they can justify the purchase price through the negotiation process. A Property is only worth what a buyer will pay for it...and the market tends to control the price of homes dependent on how long they are on the market- therefore your home must stand out among the others!
How Much does a Home Staging cost? It varies depending on a number of factors,
but will more than likely cost less than your first price reduction-
Staging- produces a properly prepared home-
reduces the risk of financial losses and can help you avoid Price Reductions, Sell Faster and NET you top dollar!!!
Call Heidi for your property consultation 859-509-0439
What are we Selling???
If you are looking to purchase a house in Lexington, Nicholasville, Georgetown, Richmond, Paris, or Winchester Kentucky, keep in mind the financing alternatives that can make your new home most affordable. All of these areas have seen the FHA lending limit increase from $200,160 to $271.050 recently drastically increasing the number of homes within reach of using FHA financing here in Kentucky. In discussing financing options recently with Kevin Weaver I realized the differences between FHA and Conventional could really make a huge difference for a lot of families when evaluating homes. I've noticed a lot of people have mistakenly thought FHA loans were only for 1st-time homebuyers. When in fact, these homeowners selling their first homes can truly take advantage of the benefits of FHA financing for their upgrade home purchase in the $200,000+ price range. Let's say you stand to net $10,000 in equity from the sale of your first home and want to purchase a home for $250,000. Conventional Financing with required 5% down payment = $237,500. Requires investment of $10,000 net equity and additional $2,500 from savings. Assuming 6% interest rate on a 30-yr Fixed, Principal & Interest payment= $1423.93 + PMI $154.38 + Insurance $50 + est taxes $200 = $1828.31 total monthly housing payment Now take a look at the numbers for an FHA loan... FHA loan based on maximum amount calculation for sales price = $248,040 with required investment of $7500 (3% of purchase price) Assuming 6% interest rate on a 30-yr Fixed, Principal & Interest payment= $1487.13 + PMI $101.82 + Insurance $50 + est taxes $200 = $1838.95 total monthly housing payment Using this FHA example, the homebuyer has and additional $5000 cash to retain for savings, invest, or use to make improvements to the property for only $10/month. ** Since most homebuyers desire to make improvements to suit their tastes, wouldn't it be nice to not drain yourself of savings or rack up the credit cards to do so? Stretching your dollars a little bit can put that dream home within reach! These increases to the lending limit are not permanent but designed to make more homes increasingly affordable to stimulate the market in 2008. Now is the time to take advantage of the opportunities to buy--ask me how! ~Heidi
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Heidi Snyder
Lexington,
KY
More about me…
M.E. Realty
Office Phone: (859) 272-1304
Cell Phone: (859) 509-0439
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