Archive for the 'Taxes' Category
Can The Move-Up Buyer Tax Credit Help You?
November 19th, 2009 categories: Economic Recovery, For Buyers, For Homeowners, Housing Market, Mortgage Info, Real Estate News, Taxes
You probably read a lot earlier this month about the first-time homebuyer tax credit. That’s because Congress approved an extension of this important measure that provides first-time buyers an $8,000 tax credit when they purchase a house. Many in the real estate community, including myself, believe that that this tax credit has helped provide a significant boost to housing sales. That’s why we were so excited to learn that the credit wouldn’t expire at midnight on Nov. 30, as it was originally scheduled to do.
But amid all the press about the first-time buyer credit, you might have overlooked the significance of another housing measure that Congress also approved in early November: the so-called move-up buyer tax credit.
This tax credit provides $6,500 to anyone buying a new house who isn’t a first-time buyer. It’s another great financial incentive for homebuyers.
National real estate writer Kenneth Harney recently wrote an excellent column explaining this new housing credit. It’s a good summary of the credit.
Harney explains that the new credit, which took effect as soon as President Obama signed the bill creating it on Nov. 6, is available to homebuyers who have owned and lived in their current residences for a consecutive five out of the last eight years.
Your adjusted household income can’t exceed $125,000 if you file your taxes singly or $225,000 if you are married and filing jointly if you want to claim the entire tax credit. You might be able to qualify for a partial tax credit if your income is higher than those limits. But if your adjusted gross income is $145,000 and more and you are a single filer, you won’t qualify for any part of the credit. If you are married and filing jointly, you won’t get any credit if your modified adjusted gross income is $245,000 or more.
Harney also points out that the home you are purchasing can’t cost more than $800,000, and that it must become your main residence. However, you should be aware that you don’t have to sell your current house to qualify for the move-up buyer credit. You can keep that house and rent it out if you’d like. Just make sure, as Harney advises, to move out of your current home as soon as you close on your new house or condominium.
| Discussion: No Comments »
First-Time Homebuyer Tax Credit Does Its Job In Chicago
November 18th, 2009 categories: Chicago Real Estate News, For Buyers, For Homeowners, For Sellers, Housing Market, Real Estate News, Taxes
I was happy earlier this month when Congress approved an extension of the $8,000 first-time homebuyer tax credit along with a new $6,500 credit for move-up buyers. That’s because the first-time homebuyer tax credit has worked, at least here in Chicago.
Chicago home sales have slowly, but steadily, risen during the second half of this year. That trend continued in the year’s third quarter, according to the Illinois Association of REALTORS®. The local trade group said that 5,821 homes sold in Chicago during the third quarter. That’s up 15 percent from the 4,947 homes that sold in the year’s second quarter in Chicago.
To me, this is proof that the federal tax credit has had a significant impact. And that impact hasn’t only been felt in Chicago. Total home sales across the country rose 11.4 percent in the third quarter when compared to the second quarter, according to the National Association of REALTORS®.
Now that the $8,000 tax credit has been extended, I expect even more first-time buyers to enter the Chicago housing market. Why not? Chicago has some great neighborhoods and amenities. And it’s blessed with a strong housing stock.
Housing here is more affordable than it has been in years. According to the Illinois Association of REALTORS®, the median sales price of an existing home – which includes single-family homes, condominiums and townhouses – stood at $230,000 in the third quarter of 2009. That’s down 20.7 percent from a figure of $290,000 in the third quarter of 2008.
If you’ve been waiting to purchase a condo or single-family home in Chicago now might be the perfect time to act. Home sales historically slow during the winter months. Sellers are often more willing to compromise on everything from prices to closing dates during this time of year.
PLEASE CLICK HERE TO VIEW PROPERTIES NOT YET ON THE MARKET.
| Discussion: No Comments »
State Hoping To Lure First-Time Homebuyers, Veterans With Incentive
November 9th, 2009 categories: Chicago Info/News, Economic Recovery, For Buyers, Housing Market, Taxes
Chicago home buyers got the good news last week that the federal government was not only extending its first-time home buyer tax credit of $8,000, but was adding a $6,500 move-up home buyer tax credit, too. Combined, the two federal programs should make it easier for the majority of home buyers to afford condominiums or single-family homes in Chicago.
As if that wasn’t enough good news, Chicago Tribune writer Mary Ellen Podmolik in the Nov. 6 paper highlighted another new program, this one offered by the state of Illinois, to encourage both first-time buyers and military veterans to buy homes.
The state had already offered its HOME START program, a 30-year fixed-rate amortizing loan insured by the FHA. As of Oct. 30, the interest rate on this loan was just 5.25 percent. Now, though, the state has offered a companion piece to this program, the HOME START down payment assistance loan. This loan allows first-time home buyers to access additional funds to help them make their down payments. The loan is a 10-year, zero-percent, non-amortizing forgivable loan equal to 3 percent of the home’s purchase price. The loan does have a ceiling of $6,000.
To take advantage of the down payment assistance loan, buyers must first qualify for and obtain the Illinois Housing Development Authority’s 30-year HOME START mortgage. Military veterans do not have to be first-time buyers, but all other participants do. The program does require buyers to receive homeownership counseling.
The main benefit of this second down-payment loan is that it can easily become a forgivable loan. Buyers must simply stay in their homes for at least 10 years. Those who stay less will be required to pay back a certain portion of their loan depending on how long they stay in the house. In her story, Podmolik says that a homeowner who purchases a $100,000 house and only stays in it for five years will have to pay $1,500 of the $3,000 down-payment loan back to the state.
We already know, based on national statistics, that the first-time home buyer tax credit did its job, encouraging more buyers to enter the housing market. I’ll be eager to see what impact Illinois’ new housing incentive has. My guess? It’ll encourage even more locals, including those looking for homes in Chicago, to enter the residential real estate market.
PLEASE CLICK HERE TO VIEW PROPERTIES NOT YET ON THE MARKET.
| Discussion: 2 Comments »
A Simple Explanation Of The Federal Reserve Statement (November 4, 2009 Edition)
November 4th, 2009 categories: Economic Recovery, Housing Market, Mortgage Info, Real Estate News, Taxes
The Federal Open Market Committee voted to leave the Fed Funds Rate within its target range of 0.000-0.250 percent.
In its press release, the FOMC noted that the U.S. economy “has continued to pick up” since the September FOMC meeting and that housing market activity has increased.
It’s the third consecutive post-FOMC statement in which the Fed speaks optimistically about the U.S. economy – a signal that the recession is likely over.
The economy isn’t without threats, however, and the Fed identified several in its announcement, including:
- Ongoing job losses for American workers
- Reduced fixed investment by businesses
- Ongoing challenges for the financial markets
The overall tone remained positive, however, as inflation appears to be held in check.
Also in its statement, the Fed confirmed its plan to hold the Fed Funds Rate near zero percent “for an extended period” and to honor its $1.25 trillion commitment to the mortgage bond market.
The Fed plans to wind down its mortgage market support over the next 5 months, reaffirming its March 2010 exit date. For now, Fed support helps hold mortgage rates down.
Mortgage market reaction to the Fed’s press release is negative overall. Mortgage rates are rising.
The FOMC’s next scheduled meeting is December 15-16, 2009.
PLEASE CLICK HERE TO VIEW PROPERTIES NOT YET ON THE MARKET.
| Discussion: No Comments »
Illinois Congresswoman Makes The Right Call: Pushes For Homebuyer Tax Credit Expansion
October 19th, 2009 categories: Economic Recovery, Housing Market, Mortgage Info, Real Estate News, Taxes
The first-time homebuyer tax credit has been one of the federal government’s more successful efforts to boost the nation’s economy. The $8,000 tax credit has inspired many first-time buyers to enter the housing market.
And across the country, including in Chicago, these first-time buyers have helped spur a steady rise in the sale of condominiums and single-family homes.
There’s a downside to the tax credit, though: It’s not permanent. It’s scheduled to expire on Nov. 30 at midnight. This means that buyers have to close on their mortgage loans by that time to qualify for the credit. In fact, because it can take so long to close a home sale, most buyers today are already excluded from the credit.
Members of the real estate community are lobbying politicians to make the tax credit permanent. This would help keep the nation’s housing recovery going strong, they argue. I agree: The tax credit has already had a tremendously positive influence on my market in Chicago and in many others across the country. Why not extend it?
Fortunately, some politicians agree. One of them even happens to be from Illinois. U.S. Rep. Judy Biggert, R-Ill., recently introduced legislation that, if approved, will extend the first-time homebuyer tax credit for six months. She has also introduced a second bill that would extend the credit for a year. That bill would also open the credit up to buyers who have bought a home before and would boost the maximum amount of the credit to $15,000.
Raising the maximum amount to $15,000 would be a great benefit to Chicago. That’s because Chicago housing prices are fairly high when compared to other markets. Simply put, an $8,000 tax credit in Chicago doesn’t go as far as one in Omaha or Topeka. But a $15,000 tax credit is significant even in the city.
The only improvement that I’d make to Biggert’s bill is that the tax credit should be made permanent. This would provide a constant incentive to buyers who might be waffling on entering the housing market. And the more buyers the tax credit persuades to enter the market, the sooner home sales will again provide a boon to the country’s still struggling economy.
PLEASE CLICK HERE TO VIEW PROPERTIES NOT YET ON THE MARKET.
| Discussion: No Comments »
