The IRS released the tax form required for claiming the new version of the home buyer tax credit on January 15th. If you’re planning on claiming the credit, know that the IRS will require documentation proving you purchased the home in the eligible period. Since this documentation will not be electronically submittable, you will have to file a paper return or amended return. In addition, due to the increased scrutiny of those claiming the credit, it may take 3-4 months to get the money. The good news is that this increased scrutiny will limit further fraud!
IRS Releases Tax Form for Home Buyer Credit – Expect 3-4 Month Wait
January 19, 2010 By Leave a Comment
Financing For Some Condos Becoming Very, Very, Very Difficult
January 11, 2010 By 1 Comment
The housing boom brought us a slew of new community developments including condos, townhomes and retail/condo buildings. While financing on townhomes is still doable, financing options for condo & mixed-use buildings is becoming very difficult. The developments with the hardest time getting financing are the ones that have had the highest rates of foreclosure.
So many condos built from 2005-2008 in the last boom were purchased either at the top of the price curve and/or were bought with challenged loans or borrowers. This has meant some buildings having 50% (or maybe more) of their units go back to the bank. When that happens you have underfunded associations with expenses well above income, small or non-existent reserves and prices spiraling down.
In single family homes, if there are foreclosures around yours you will see some effect on your value but often it can be partially mitigated by your property’s unique characteristics and condition. Additionally, an appraiser can also search the rest of the neighborhood for comparables to yours.
When you are in a condo building, most of your comparables are the others in your building. When you have only a few floor plans in a building and units that are only a few years old, it is very hard to argue that there is a huge difference between your “traditional seller” owned home and a bank owned REO. With each additional sale prices fall further and more and more owners become upside down on their mortgages, which may lead some to simply walk away from their mortgage and lead to even more foreclosures.
Often these buildings become almost impossible to finance. For many of these buildings, cash is the only way to buy them. With FHA eliminating spot approvals for condos and further tightening lending guidelines, more buildings are about to become cash-only financing. If you look at the financial landscape of buyers, most are taking out a loan to purchase. Without a financing option, the pool of potential buyers shrinks even more and we see prices further decline and investors swooping in to pick these units up on the cheap.
I have seen quite a few condos that could be financed with payments well below equivalent rents – meaning these units are DEALS. Unfortunately even though they’re good deals now (some down 40% – 60% from their peak) if they can’t be financed they aren’t an option for the majority of buyers.
Once these buildings have gone through foreclosure and are owner-occupied again, budgets and the overall health of the association will likely improve dramatically. But until we can secure financing for owner-occupant buyers, what are we to do?
Just-before-print update: Fannie Mae Relaxes Condo Funding Rules in Florida
New and Repeat Home Buyer Tax Credit Information
January 8, 2010 By Leave a Comment
As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed new legislation that:
- Extends the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010.
- Expands the credit to grant up to $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.
Here is more information about how the Extended Home Buyer Tax Credit can help prospective home buyers become part of the American dream. If you have specific questions or need additional information, please contact a tax professional or the Internal Revenue Service at 800-829-1040.
Who Qualifies for the Extended Credit?
- First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010.
- Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.
To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.
If you purchased a home between January 1, 2009 and November 6, 2009, please see: 2009 First-Time Home Buyer Tax Credit.
Which Properties Are Eligible?
The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.
How Much Is Available?
The maximum allowable credit for first-time home buyers is $8,000.
The maximum allowable credit for current homeowners is $6,500.
How is a Buyer’s Credit Amount Determined?
Each home buyer’s tax credit is determined by two additional factors:
- The price of the home.
- The buyer’s income.
Price
Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.
Buyer Income
Under the Extended Home Buyer Tax Credit, which is effective on November 7, 2009, single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit.
These income limits have changed from the 2009 First-Time Home Buyer Tax Credit limits. If you purchased a home between January 1, 2009 and November 6, 2009, please see 2009 First-Time Home Buyer Tax Credit.
If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?
Yes, some buyers may still be eligible for the credit.
The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $145,000 for singles and over $245,000 for couples are not eligible for the credit.
Can a Buyer Still Qualify If He/She Closes After April 30, 2010?
Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.
Will the Tax Credit Need to Be Repaid?
No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.
Minnesota to Offer Rebates up to $200 for New Appliances!
January 6, 2010 By 1 Comment
This is the latest information available (as of 1/4/2010) from the State of Minnesota’s “Office of Energy Security” web site. With an expected program start date of March 1, 2010 and money available for only approximately 25,000 homeowners, it will be important to keep a close eye on this!
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Trade-in & Save Appliance Program
Targeted for a March 1, 2010 start, the Trade-in & Save Appliance Program, part of the American Recovery and Reinvestment Act (ARRA), will offer approximately 25,000 Minnesota homeowners a rebate for replacing their old appliance with a qualifying ENERGY STAR model purchased from a Minnesota retailer. Rebates are not retroactive for purchases made outside the program timeframe. This program is estimated to create 59 jobs and annually save 2,200,412 KWh in energy, 43,729,920 gallons of water and 4,705,065 lbs of carbon (CO2).
Minnesota’s allocation of $5,009,000 includes rebates on:
- clothes washers ($200)
- dishwashers ($150)
- freezers ($100 with purchase and proof of recycling, $50 for purchase only)
- refrigerators ($200 with purchase and proof of recycling, $100 for purchase only)
A program-specific website to be launched in early 2010 will contain the program’s eligibility requirements, rules and forms. We recommend that homeowners view ENERGY STAR and their utility websites for additional rebate opportunities, including appliance bounty programs that pay you for taking away a second working refrigerator or freezer stored in your basement or garage. Homeowners will be limited to one rebate for a single appliance purchase. Rebates are not retroactive for purchases made outside the program timeframe. Additional residential rebates for energy-saving products can be found here.
If you are a consumer and have questions on the program, send us your inquiry at energy.info@state.mn.us or sign-up for our stimulus e-newsletter that provides a monthly update on all stimulus programs.
If you are a retailer located in Minnesota that sells appliances and would like to receive program materials, please send us your full contact information (company name, contact name, full address, phone, email and website) to appliancerebate.retailer@state.mn.us . Contact information provided to us will only be used to distribute program materials.
The Office of Energy Security would like to thank the following Official Partner organizations that have offered in-kind support to ensure the OES meets the administrative funding match requirements for this program: Sears Holdings Corporation, Best Buy, Warners’ Stellian, Castanea Labs Inc., Great River Energy (GRE), Whirlpool Corporation, BSH Home Appliances Corporation (Bosch), and Minnesota Power.
