Blogonomics: It's About Real Estate

Haven't finished my short sale yet but I'm ready to be approved for a new home...

Joe Libin - NMLS #231319 (Veritas Funding, SLC, UT) — Mon, 26 Sep 2011 20:17:04 -0700

As part of my website, I offer an "Ask an Expert" tool to help folks with various questions. Today I had this one.... "We currently have excellent credit FICO of close to 800. We will be relocating to Salt Lake City in a few months and need to sell our home in California. However, we will be selling our current home Short. I've read FHA guidelines and it states that if you are current on your mortgage at the time of a short sale you can immediately qualify for a new FHA loan. However, I've also read that no lenders are willing to step up to the plate so that "guideline" makes that senerio a fallacy. My husband's new job is in the same feild he has been working in for 10 years and other than the short sale we have perfect credit. Will we be able to get a mortgage to purchase a new home in Utah?"

Well first the answer is NO - duh! Second - and I'm not looking to judge anyone here, seriously, if you were the bank and a consumer who hasn't finished defaulting on their existing loan asked you for a new one - would you lend them money? Especially shocking.. "no lenders are willing to step up to the plate"... are folks that far removed from their situation to even understand what they're asking for? Your thoughts?

The smartest people in the room?

Joe Libin - NMLS #231319 (Veritas Funding, SLC, UT) — Tue, 20 Sep 2011 11:57:51 -0700

The Associated Press reported this morning that the IMF's chief economist Olivier Blanchard remarked that "The global economy has entered a dangerous new phase," and "The recovery has weakened considerably. Strong policies are needed to improve the outlook and reduce the risks."

Wow - is that breaking news or what? I'm pretty sure we've been in a precious position for some time due to the debt crisis in Europe as well as in the US. As a "glass is half full" type of guy and not looking to be too cynical here, has this guy been under a rock or what? At the end of the day, it's probably best for us to help folks own homes and move forward in a positive, realistic way.

WARNING! Only read this if you like to play golf.

Joe Libin - NMLS #231319 (Veritas Funding, SLC, UT) — Mon, 19 Sep 2011 19:27:06 -0700

Weekly update from a service I subscribe to and thought I'd share.....

"A 60 year old individual who has just retired would need a present value lump-sum of $138,000 to pay for his/her 3 rounds per week golf habit assuming a 22.4 year life expentancy, an average round of golf cost of $36, a 4% annual rate of inflation on the cost of golf, a static positive 3% rate of return on the savings and no lost golf balls (source: Center for Disease Control, BTN Research)."

My thoughts are where can one play for only $36 per round? And is this something that the Center for Disease Control should study? Well, if you're lucky enough to play three rounds per week, I guess that could qualify as a disease so who knows? But $36 per round - where can I sign up for that? Your thoughts?

Can you hear me now?

Joe Libin - NMLS #231319 (Veritas Funding, SLC, UT) — Mon, 31 Jan 2011 11:52:37 -0800

According to the Centers for Disease Control (CDC), more than one out of every four folks have cut the landline and use cell phones only http://www.cdc.gov/nchs/data/nhis/earlyrelease/wireless201012.pdf - "More than one of every four American homes (26.6%) had only wireless telephones (also known as cellular telephones, cell phones, or mobile phones) during the first half of 2010-an increase of 2.1 percentage points since the second half of 2009."

Is it me or does it seem closer to 50%? Also good news for those on Verizon, starting this Friday, February 4th, you can pre-order your iphone 4.

FREE Online Tool to Help Prevent Identity Theft and Reduce Junk Mail

Joe Libin - NMLS #231319 (Veritas Funding, SLC, UT) — Sun, 30 Jan 2011 12:55:39 -0800

OK so this one has been around for awhile but bears repeating. Optoutprescreen.com lets you opt out of pre-approved credit card offers and the risk of credit card fraud that comes with them. That means a much higher level of protection when it comes to your personal information. It only takes about 2 minutes to complete!

One great side-effect of using Optoutprescreen is that you end up with less junk mail to sort through. I figure that my junk mail decreased approximately 50% after I requested that my name be removed from credit card pre-approval lists. That's a LOT of mail! Think about how many trees we could save if we all had our names removed.

Lastly, always remember to open a new brower and type https://www.optoutprescreen.com (or any other financial related website) directly and verify the "s" in https:// the "s" for secure ensures the encryption of your data when you submit the form.

Stealing Your Identity In Five Easy Clicks

Joe Libin - NMLS #231319 (Veritas Funding, SLC, UT) — Sun, 30 Jan 2011 12:32:25 -0800

Hey Everyone,

I received this email from a good friend. Her aunt is a DEA agent and wanted to share so you could remove your name from this phonebook. The personal info they have is CRAZY and could easily fall into the wrong hands. Please read below for the website link and name removal instructions. I'm posting this because it's worth your time to protect yourself!

There's a site called SPOKEO.COM that's a new online USA phone book with personal information: everything from pics you've posted on FB or web, your credit score, home value, income, age, picture of your house etc. To remove yourself, start by searching your name. When you locate it, and you will, bring it up then copy the URL of your page. In the middle of the page will be the "see all" button, click on it. Then go to the bottom of that page, (they are trying to sell you the service), and click on "privacy", then paste your URL and fill out the other information. Click "Remove". You will get an e-mail asking you to confirm. Once you confirm, your information is removed however you can only delete two listings per email address. I had three listings (between me and my wife) so I used two email addresses for the confirmation removal. Be sure to check your listing is removed after the confirmation. This stuff is out there. Be careful what information you post on Social sites etc. If anyone pays the small fee, they will have access to your tax information, kids names, etc. Anything that is public record. The pictures of your house alone are enough to make you take the time. Thanks again to my friend Emily for sharing this info.

Building a superior referral strategy

Joe Libin - NMLS #231319 (Veritas Funding, SLC, UT) — Thu, 13 Jan 2011 10:43:30 -0800

I read the following about a month ago and it bears repeating - three basic things we all should be doing CONSISTENTLY that just make sense....

1. Know exactly who your ideal customers are. If someone wants to know more about how they can help and you tell them, ‘anyone' or ‘everyone' could be customer of yours, you will not get the help you want. First, it's rarely true that everyone can be a customer of any business and second, people can and will remember specifics where they will forget about generalities. The more specific you are about who you want to connect with, the easier you make it for someone else to help you.

2. Figure out who would be a good referral business for you. If you have a catering business, what other businesses are trying to target the same customers with different products or services. As a caterer, wedding planners or event facility managers would be excellent contacts to have. Focus your networking efforts on finding these types of people at networking events instead of embarking on a quest to meet as many random people as possible.

3. Instill confidence in the people you meet. Everyone wants to be connected with a winner. So, look the part and dress appropriately for your business. It doesn't mean you have to be dressed to the nines but being well groomed, having well matched, pressed clothes on, and having shoes that are shined or free of scuff marks tells a great deal about whom you are. For many, this translates into how well you run your business.

Effective networking is all about having a specific game plan for the event you are thinking of and making the people you come in contact with, glad to have met you. If you want to build a strong referral base and a personal brand that people will be all too happy to assist you with, follow these suggestions and practice, practice, practice. Good stuff!

MI Tax Deductibility Extended Through 2011

Joe Libin - NMLS #231319 (Veritas Funding, SLC, UT) — Wed, 22 Dec 2010 16:33:55 -0800

The President has signed the bill extending Mortgage Insurance tax deductibility through December 31, 2011. This makes it a great time to tell your customers how they can use MI to buy a home sooner and enjoy predictable payments, while benefiting by deducting the premiums from their income taxes. And MI can be canceled once the home buyer builds enough equity.

Details on Tax Deductibility for MI Remain Unchanged

The home purchase or refinance loan must close between January 1, 2007 and December 31, 2011;
Household income must be at or below $100,000 for a full deduction of premium;
The premium deduction is reduced 10% for each $1,000 of income over $100,000;
The premium deduction is prorated in the first year based on the month the loan closes;
Applies to primary residence and one other residence purchased for personal use by the taxpayer;

Monthly, annual, and single MI premiums are eligible. Financed premium deductions should be taken over a seven year period.

MI Tax Deductibility Extended Through 2011

Joe Libin - NMLS #231319 (Veritas Funding, SLC, UT) — Tue, 21 Dec 2010 19:10:38 -0800

MI Tax Deductibility Extended Through 2011

Details on Tax Deductibility for MI Remain Unchanged

The home purchase or refinance loan must close between January 1, 2007 and December 31, 2011;
Household income must be at or below $100,000 for a full deduction of premium;
The premium deduction is reduced 10% for each $1,000 of income over $100,000;
The premium deduction is prorated in the first year based on the month the loan closes;
Applies to primary residence and one other residence purchased for personal use by the taxpayer;
Monthly, annual, and single MI premiums are eligible. Financed premium deductions should be taken over a seven year period.

Congratulations! You're getting a 2% raise for 2011!

Joe Libin - NMLS #231319 (Veritas Funding, SLC, UT) — Tue, 21 Dec 2010 14:27:55 -0800

Update on New Tax Law

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, signed into law Dec. 17, extends and expands a wide variety of valuable tax breaks and includes tax provisions affecting individuals and businesses. Here's a brief summary of the most important provisions.

Individual Tax Provisions

General:

New two-percentage-point payroll tax cut for 2011
Extension of the lower ordinary income tax rates for all tax brackets through 2012
Extension of marriage penalty relief through 2012
Extension of the elimination of itemized deduction and personal exemption phaseouts through 2012
Extension of the deduction for state and local sales taxes in lieu of state and local income taxes through 2011
Extension of the increased alternative minimum tax (AMT) exemptions through 2011
Extension of the ability to offset AMT liability with certain nonrefundable personal credits through 2011

Investing:

Extension of the lower long-term capital gains rates through 2012
Extension of the lower qualified dividend tax rates through 2012
Extension of the 100% gain exclusion on certain qualified small business stock to stock acquired through 2011

Children and Education:

Extension of the $1,000 child credit and other enhancements of the credit through 2012
Extension of the higher adoption credit and income exclusion for employer-provided adoption assistance through 2012
Extension of the higher dependent care credit through 2012
Extension of the American Opportunity education credit through 2012
Extension of the above-the-line tuition and fees deduction through 2011
Extension of the income exclusion for employer-provided education assistance through 2012
Extension of the enhancements to the student loan interest deduction through 2012
Extension of the $2,000 Coverdell Education Savings Account contribution limit and other enhancements through 2012

Charitable Giving:

Extension of the ability to exclude from income direct contributions from IRAs to qualified charities (up to $100,000 annually) through 2011
Extension of the ability to take a larger deduction for donations of long-term capital gains real property for conservation purposes through 2011

Estate Planning:

Reinstatement of the estate tax for 2010 with a top rate of 35% and a $5 million exemption (compared to 45% and $3.5 million for 2009)
Option for estates of taxpayers who died in 2010 to elect to follow the pre-Tax Relief act regime - no estate tax but limits on step-up in basis for transferred assets
Reinstatement of the generation-skipping transfer (GST) tax for 2010 at a 0% rate with a $5 million exemption (compared to 45% and $3.5 million for 2009)
Decrease in the top estate and gift tax rates and the GST tax rate to 35% for 2011 and 2012
Increase in the estate, GST and gift tax exemptions to $5 million for 2011, indexed for inflation in 2012
Ability of the estate of a taxpayer who dies in 2011 or 2012 to elect to allow the surviving spouse to use the deceased's unused estate tax exemption

Business Tax Provisions

Investment Incentives:

Increase in bonus depreciation to 100%, generally for assets placed in service after Sept. 8, 2010, and before Jan. 1, 2012
Extension of 50% bonus depreciation, generally for assets placed in service Jan. 1, 2012, through Dec. 31, 2012
Increase in the Sec. 179 expensing limit to $125,000 (indexed for inflation) for 2012
Increase in the Sec. 179 expensing phaseout threshold to $500,000 (indexed for inflation) for 2012
Extension of accelerated depreciation for qualified leasehold-improvement, restaurant and retail-improvement property through 2011

Tax credits:

Extension of the research credit through 2011
Extension of the Work Opportunity credit through 2011

Charitable giving:

Extension of the enhanced deduction for food inventory donations through 2011
Extension of the enhanced deduction for donations of book inventory to public schools through 2011
Extension of the enhanced deduction for computer inventory donations for educational purposes through 2011

Just the tip of the iceberg

The Tax Relief act includes numerous provisions, and we've only touched on some of them here. Many breaks are subject to a variety of rules and limitations, so it's important to discuss them with your tax advisor to determine exactly how they'll affect you.

UPDATE: BEWARE the one year waiver on the 90 Day Rule - FHA Financing

Joe Libin - NMLS #231319 (Veritas Funding, SLC, UT) — Thu, 25 Mar 2010 10:24:12 -0700

As a follow up to my previous post - most folks know that FHA requires 91 days to pass before a contract can be written on a property that has changed ownership in order for the buyer to qualify for an FHA loan. This is called the "90 Day Rule" and is designed to "protect FHA borrowers against predatory practices of ‘flipping' where properties are quickly resold at inflated prices to unsuspecting borrowers" for a quick profit.

On Friday, January 15^th, HUD announced a one year "waiver" taking effect on Monday, February 1^st lifting the 90 Day Rule http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf to which I blogged about giving kudos to HUD and Secretary Donovan for listening and fixing the problem, however, not so fast.....

THE REALITY & WHAT THIS MEANS TO YOU!

Unfortunately the majority of lenders have chosen to retain their existing "overlays" and NOT adopt the "waiver" as of yet. Others are allowing it IF the transaction meets certain criteria, the first of which says the new sales price cannot be greater than 20% of the acquisition price (regardless of improvements). Netting this out, I've had two transactions here in March that have to be reworked so that the sales contract is post dated to the 91^st day. If you're writing an offer and notice the seller is an LLC, take a minute, call your title company and ask them to pull the last 90 days for you. This can save you and your clients some short term challenges while still being workable for all the parties involved. Both BANK OF AMERICA and WELLS FARGO HOME MORTGAGE evoke this 20% increase in sales price as opposed to purchase price. Don't let this bite you! Please visit my website at www.utahloanplan.com for more info or call me directly at 801.983.8211 to discuss.

HUD announces increase in UFMIP effective April 5th

Joe Libin - NMLS #231319 (Veritas Funding, SLC, UT) — Fri, 22 Jan 2010 13:13:47 -0800

Most folks know that FHA requires an Upfront Mortgage Insurance Premium (UFMIP) in addition to the monthly mortgage insurance for a government loan. On Thursday, January 21^st, HUD announced an increase of this premium from the current 1.75% to 2.25% for FHA loans for which the case number is assigned on or after April 5^th, 2010. Read in full here http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/10-02ml.pdf regarding this update.

WHAT THIS MEANS TO YOU!

Although the UFMIP is typically financed into an FHA loan (thus the borrower doesn't have to come up with the funds at closing), this increase is worth discussion. Consider a first time home buyer purchasing a $250,000 home with a 3.5% down payment. Their base loan amount is $241,250; total loan amount (including 1.75% UFMIP) is $245,471. After April 4^th, the total loan amount jumps up by $1,207 (reflecting the increase from 1.75% to 2.25% UFMIP) to $246,678. In addition to the extra $1,207, their payment increases by $6.48 per month. Use this information to help your clients get off the fence. Ask them, "Why wait until spring if it costs you that much more?" Please visit my website at www.utahloanplan.com for more info or call me directly at 801.983.8211 to discuss.

Best regards,

Joe Libin

First Time Homebuyer Tax Credit Update - REVISED IRS 5405 NOW AVAILABLE!

Joe Libin - NMLS #231319 (Veritas Funding, SLC, UT) — Mon, 18 Jan 2010 18:22:17 -0800

So who knew the IRS worked on weekends? Especially on the MLK holiday weekend? As a follow up to previous posts regarding the lack of availability of the revised IRS form 5405 (see reposted blog below). The IRS put up the new form on their site this last Saturday, January 16th. see here...

http://www.irs.gov/pub/irs-pdf/f5405.pdf

To all you First Time Home Buyers who purchased after November 6th, call you CPA today and file your 2009 or amend your 2008 tax returns to claim your $8000!

First Time Homebuyer Tax Credit Update - Will the right/ WRONG Form 5405 work?

Yikes! The IRS is at it again. I've been having my first time home buyers visit my CPA referral partner to re-file amended 2008 tax returns to claim the $8000 tax credit - averaging about six to eight weeks to get their money. Throughout 2009 everything was working like a honey until..... November 7, 2009 - the extension date of the FTHB tax credit. The IRS is updating Form 5405 (the form needed to claim the credit) but hasn't made it available (yet).

WHAT THIS MEANS TO YOU!

Clients who purchased a home AFTER November 6^th, must wait until the REVISED Form 5405 is available BEFORE claiming the $8000 (or $6500 move up) tax credit. This can be "sticky" if the FTHB is receiving gift funds with the intention of paying them back with the tax credit proceeds (as is the case with one of my clients). Please read this below and educate yourself - see my website at www.utahloanplan.com for more info or call me directly at 801.983.8211 to discuss.

Information regarding the 2008 Form 5405,

First-Time Homebuyer Credit

Changes have been made to the first-time homebuyer credit by Public Law 111-92, the Worker, Homeownership, and Business Assistance Act of 2009, which was enacted on November 6, 2009. As a result, this 2008 Form 5405 can be used only for homes purchased before November 7, 2009, for which you choose to claim the credit for 2008. We will issue a December 2009 revision of Form 5405 to reflect the new law. The December 2009 revision must be used for all homes purchased after November 6, 2009 (whether the credit is claimed for 2008 or for 2009) and for all claims on 2009 returns for homes purchased any time in 2009 or in 2010. We expect to post the new revision of Form 5405, and its new separate instructions, on IRS.gov by January 8, 2010.

HUD announces one year waiver on 90 Day Rule

Joe Libin - NMLS #231319 (Veritas Funding, SLC, UT) — Mon, 18 Jan 2010 18:10:11 -0800

Most folks know that FHA requires 91 days to pass before a contract can be written on a property that has changed ownership in order for the buyer to qualify for an FHA loan. This is called the "90 Day Rule" and is designed to "protect FHA borrowers against predatory practices of ‘flipping' where properties are quickly resold at inflated prices to unsuspecting borrowers" for a quick profit.

On Friday, January 15^th, HUD announced a one year "waiver" taking effect on Monday, February 1^st lifting the 90 Day Rule under (most) circumstance. Read in full here http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf regarding those requirements.

WHAT THIS MEANS TO YOU!

Clients can now write an offer on a rehabbed home before the end of the 90 days. For example, I have an investor that buys bank owned property (typically hammered), fixes it up nicely and then lists it for sale within one month's time. Previously, he'd have to wait until the 91^st day after original vesting before accepting an offer. During months two and three, the house remained repaired yet vacant with buyers ready, willing and able yet not eligible for FHA financing until now. Kudos to HUD and Secretary Donovan for listening and fixing the problem, we appreciate your help. Please visit my website at www.utahloanplan.com for more info or call me directly at 801.983.8211 to discuss.

First Time Homebuyer Tax Credit Update – AKA IRS Implies “When Hell Freezes Over”

Joe Libin - NMLS #231319 (Veritas Funding, SLC, UT) — Mon, 11 Jan 2010 17:57:57 -0800

*** Today's news from the IRS - the release date of the updated IRS Form 5405 changes from January 8th, 2010 to "soon". *** See here.. http://www.irs.gov/pub/irs-pdf/f5405.pdf?portlet=3 Anyone care to elaborate on what that means?

(Below please read blog dated 1/04/10 which shows the original IRS bulletin stating the new 5405 would be available on January 8th, 2010).

First Time Homebuyer Tax Credit Update - Will the right/ WRONG Form 5405 work?

WHAT THIS MEANS TO YOU!

Information regarding the 2008 Form 5405,

First-Time Homebuyer Credit

BCS - Why can't we have a real playoff?

Joe Libin - NMLS #231319 (Veritas Funding, SLC, UT) — Fri, 08 Jan 2010 15:48:05 -0800

Read Randy's comments on the BCS - other than the "it's tradition" argument - wouldn't you agree that a playoff system just makes sense?

Via Randy DeLaMare (Utah Select Realty, Inc.):

It makes me crazy once again this year we have two undefeated teams and the BCS champion can't really claim the National Championship because there is no playoff system. Say what you want about Boise State not being able to beat either of the teams that played tonight. Last year nobody gave Utah a chance in the Sugar Bowl against mighty Alabama, and Utah handed them a convincing loss. Who wouldn't pay to see Boise State and Alabama play it out? In my opinion there will always be an asterik until we have a true playoff system. Strength of schedule, and all other arguments aside It would be awesome. Are there any sports enthusiasts out there who don't like March Madness?

The Old Man, The Boy and The Donkey Or You Can Never Please Everyone

Joe Libin - NMLS #231319 (Veritas Funding, SLC, UT) — Tue, 05 Jan 2010 23:32:01 -0800

From Michael Port's Book Yourself Solid the following excerpt is an old fable (author unknown) demonstrating the futility of trying to please all the people all the time....enjoy!

An old man, a boy and a donkey were going to town. The boy rode on the donkey and the old man walked beside him. As they went along they passed some people who remarked it was a shame the old man was walking and the boy was riding. The man and the boy thought maybe the critics were right so they changed positions.

Later, they passed some people who remarked, "What a shame! He makes that little boy walk." They then decided they both would walk.

Soon they passed some more people who thought they were stupid to walk when they had a decent donkey to ride. So they both rode the donkey.

Now they passed some people who shamed them by saying how awful to put such a load on a poor donkey. The boy and the man said they were probably right, so they decided to carry the donkey. As they crossed the bridge, they lost their grip on the animal and he fell into the river and drowned.

The moral of the story? If you try to please everyone, you might as well kiss your ass goodbye.

Twitter Link Test Blog

Joe Libin - NMLS #231319 (Veritas Funding, SLC, UT) — Mon, 04 Jan 2010 14:30:47 -0800

Twitter Link Test Blog - Please read something more interesting below! Thanks!

First Time Homebuyer Tax Credit Update – Will the right/ WRONG Form 5405 work?

Joe Libin - NMLS #231319 (Veritas Funding, SLC, UT) — Mon, 04 Jan 2010 12:54:30 -0800

WHAT THIS MEANS TO YOU!

Information regarding the 2008 Form 5405,

First-Time Homebuyer Credit

All lit up for Christmas

Joe Libin - NMLS #231319 (Veritas Funding, SLC, UT) — Mon, 04 Jan 2010 11:46:15 -0800

Even though the holidays are over and the lights will come down soon... this is just an excellent shot from the old Hotel Utah (aka the Joseph Smith Memorial Building) by my friend Randy DeLaMare. All things being equal, we have a beautiful, safe downtown that offers exceptional access and should not be missed!

Via Randy DeLaMare (Utah Select Realty, Inc.):

Temple Square in Salt Lake City, Utah is the #1 toursist site in Utah. From Thanksgiving to New Years Day there is an incredible light display. You can only see a portion of the lights on this square in this picture. This shot is taken from the Joseph Smith Memorial Building near the Roof Restaurant. A wonderful buffet is served at the Roof. There is also another restaurant called the Garden on the same floor. Just south of Temple Square is a large development with shopping and housing. The views from the new high rise should be incredible.

You didn’t talk about work at the company holiday party? BLASTFAMY! (Or thank goodness as the case may be)

Joe Libin - NMLS #231319 (Veritas Funding, SLC, UT) — Wed, 16 Dec 2009 14:52:56 -0800

Well, it's not always about real estate. Last Friday, December 11^th was the Graystone Mortgage Holiday Party held at the Tucanos Brazilian Grill at the Gateway in downtown Salt Lake City. As much as we love to discuss FHA purchase transactions, what a home just appraised for in Sugarhouse as opposed to Sandy or the various regulatory (RESPA) changes coming down the pipe, we actually DIDN'T (at least for one night).

What we did do was eat way too much! I mean, have you ever been to one of these Brazilian grills? Either Tucanos in Gateway or the Rodizio at Trolley Square - apparently there are 17 different "slabs of beef" - skewers the servers bring around to gorge you. In addition, don't miss the "salad bar" - about 40 different types of salads (and cultural foods you've never seen before) - complete overkill. Now I've never been a fan of "all you can eat" anything because, let's face it, no good comes from this, but Tucanos was awesome! It was my first time and I'd definitely go back.

After dinner we strolled over to KEYS ON MAIN - the dueling piano bar located (oddly enough) on Main Street in downtown Salt Lake City between 2^nd and 3^rd South. This is a wildly entertaining venue for a large group of folks (8 or more) to hang out and have a good time. Without getting myself into trouble, I let the pictures do the talking.

Happy Holidays,

Homebuyer Tax Credit Update!

Joe Libin - NMLS #231319 (Veritas Funding, SLC, UT) — Tue, 10 Nov 2009 15:02:45 -0800

On Friday afternoon, November 6^th, President Obama signed into law an extension of the First Time Home Buyer Tax Credit PLUS a Move Up Buyer Provision. Here's everything you need to know. I suggest saving this for future reference......

Tax Credit for Homebuyers - Both First Timers and Move Up!

First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000. Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Current Owners (NEW!!!!): The tax credit 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. Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New 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

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. The IRS will use 2008 Federal Tax Returns (adjusted gross income) to confirm eligibility if 2009 Federal Tax Returns have not been filed.

Maximum Purchase Price

Qualifying buyers may purchase a property with a maximum sale price of $800,000.

Who is Eligible fort 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 Much are Current Home Owners Eligible to Receive?

The tax credit program includes 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.

Can Homebuyers 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. Some examples of this would include a land contract or a contract for deed.

According to the IRS, factors that would demonstrate the ownership of the property would include:

1. Right of possession,
2. Right to obtain legal title upon full payment of the purchase price,
3. Right to construct improvements,
4. Obligation to pay property taxes,
5. Risk of loss,
6. Responsibility to insure the property, and
7. Duty to maintain the property.

Are There Other Restrictions to Taking the FTHB Credit?

Yes. According to the IRS, if any of the following describe a homebuyer's situation, a credit would not be due:

They buy the home from a close relative. This includes a spouse, parent, grandparent, child or grandchild. (Please see the question below for details regarding purchases from "step-relatives.")
They do not use the home as your principal residence.
They sell their home before the end of the year.
They are a nonresident alien.
They 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, 2008, 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, 2005, through July 1, 2008.

Can Homebuyers Purchase a Home from a Step-Relative and still be Eligible for the Credit?

Yes. As long as the person they buy the home from is not a direct blood relative, the purchase would be allowed.

If a Parent (Who Will Not Live In The Property) Cosigns for a Mortgage, Will Their Child Still be Eligible for the Credit?

Yes, provided that the child meets the other requirements for the tax credit.

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Remember, the new tax credit program includes a number of details and qualifications. For more information or answers to specific questions, please call or email me today. I have partnered with a CPA who is available to help!

Best regards,

Joe Libin