Archive for the 'Tax Credits' Category
said on August 30th, 2010 categorized under: Tax Credits
Comments Off on Is The Duplex Tax Credit About To Make A Comeback?
If you blinked over the weekend, you missed what might be the summer’s biggest news in the U.S. housing market.
There was actually a conversation on CNN‘s “State of the Union” program yesterday morning where Housing and Urban Development Secretary Shaun Donovan said it was too early to say whether or not the $8000 first time home buyer and $6500 repeat buyer tax credits would be revived.
Home buyers could purchase a single family homes, duplex homes, triplexes or apartment building to earn the credit; so long as they deemed the property their principal residence.
On the surface, that doesn’t sound like good or exciting news. However, it is the first time that I can recall a revival of the tax credit being discussed at all.
What prompted Donovan’s statement?
It was last week’s report of that sales of existing U.S. homes in July fell to their slowest pace in 15 years. It was worse than everybody, including the Obama administration, anticipated.
Of course, many fear an extension of the tax credit would increase the deficit. Others don’t see the economy improving until the housing market stabilizes.
I can’t tell you whether another tax credit will solve anything or not. I do know there seemed to be a greater sense of urgency to get something done among both my buyers and sellers when the extension was in place.
Without it, while many are planning to buy and want to sell, nobody seems in a hurry to do anything.
Comments Off on Minneapolis Duplex Short Sales May Be Your Prince
With just hours left to take advantage of either the $8000 first time home st buyer or $6500 repeat buyer tax credits, you may find the inventory of decent dupelxes offered by traditional sellers and banks gone.
In fact, with time running out, you may feel a bit like Cinderella. Your carriage is about to revert to a pumpkin.
But fairy tales aren’t the only place where magic happens.
In this case, have your fairy godmother Realtor wave her wand at a short sale.
Legal counsel for Coldwell Banker Burnet’s parent company, NRT, has found that in order to qualify for either credit, a fully executed contract must be in place no later than 11:59 pm on April 30, 2010. Counsel further advises that a short sale is considered a legally binding contract when both the buyer and seller have signed the purchase agreement.
The fact that the lender still has to approve the terms doesn’t prevent the contract from being created. Therefore, that contract qualifies the buyer to earn the credit.
Of course, Cinderella still had to wait for her glass slipper to be returned. Duplex tax credit sales are no different. They must still close no later than June 30, 2010, in order for the buyer to earn the credit, which may or may not be problematic.
Comments Off on Buy A Duplex, Get A Tax Credit
With just 8 days left to qualify for both the $8000 first time home buyer’s and $6500 repeat buyer’s tax credit, it’s important to remember that a duplex qualifies for both.
Remember, the credits are for up to 10 percent of the purchase price of the property, with the total benefit not to exceed $8000 for a first time home buyer, or $6500 for a move-up or repeat buyer.
For a duplex, qualification is based on the percentage of the property the buyer intends to owner occupy. For example, if the purchase price for a duplex was $200,000, and the buyer lived in half, her tax credit would be based on a purchase price of $100,000, with the total not to exceed the caps set by the federal government.
To be eligible for the first time credit, a person may not have owned a home in the last three years. Repeat buyers must have lived in their home for five consecutive years of the last eight years.
Both tax credits require that buyers have a binding purchase agreement in place no later than April 20,2010. However, these purchases have until June 30, 2010 to close.
Remember, FHA financing may be used for most duplexes, triplexes and fouplexes; meaning an owner occupant need only have 3.5 percent saved for a down payment.
Investors, on the other hand, are still restricted to conventional loans requiring 20 to 25 percent down as minimums.
Comments Off on Procrastinator Alert: Act Now or Lose $8000
If you’re a first time home buyer who’s been debating about buying a Minneapolis duplex or home, it’s time to get off the fence.
You have 25 days to pick out and come to terms with the seller on your new home. And if you don’t, you’ll lose the chance to take advantage of the government’s $8000 first time home buyer tax credit.
But won’t it be extended?
Odds don’t look good. Even real estate’s best friend in the Senate, Johnny Isakson, R-Ga, who was behind legislation to create, then extend the tax credit, is, according to his spokesperson, leaning toward letting it expire.
In my experience, it takes a first time home buyer 30 days or more to find a duplex she not only wants to call home, but that fits her financial criteria as well.
So if you’d like to let the government hand you a check for $8000, give me a call. There’s still time, if we start looking now.
said on March 22nd, 2010 categorized under: Tax Credits
Comments Off on No Time For Decaf With The Tax Credit Deadline
If you’re not already out shopping for a duplex or single family home to purchase before the April 30 tax credit deadline, you’d better grab a caffeinated venti, a Realtor, and start doing some serious shopping.
There are less than six weeks left in both the $8000 first time home and $6500 repeat home buyer tax credits. To qualify for the former, you may not have owned a home in the last three years. For the latter, you must have lived in your present home for at least five years.
There are income limits, and, of course, both credits are capped at 10 percent of the purchase price, not to exceed $8000 or $6500 respectively.
It’s also important to remember that if you’re buying a duplex, triplex or fourplex, only the portion of the property you live in may be used to qualify. In other words, if you buy a duplex for $150,000 and move in to one half, you would divide $150,000 by half to get a value of $75,000. Your credit would be worth 10 percent of that figure, or $7500.
So you’ve got six weeks, right? What’s the big deal? Well, most first time home buyers I work with take longer than that to select their first home. And this year, they’re going to be competing against gallons of other first time home buyers for the “good” properties.
But won’t the tax credit be extended again? After all, not a single national media source is reporting a m
resurgence of the housing market, right?
Don’t count on it. With six weeks to go in last fall’s tax credit deadline, media and lobbyists alike were clamoring Congress to consider an extension.
To date, I’ve only seen one media story suggesting the National Association of Realtors may have begun lobbying Congress for an extension.
But largely, there appears to be no broad push for an extension.
Time to get shopping.
Comments Off on The Question Most Often Asked On Duplex Chick Is…?
As a Realtor, I get asked a lot of questions.
They range from, “What were they thinking when they installed the bathroom here?” to “Won’t people just make us an offer, even if we list our duplex at a higher price?”
I don’t know the answer to the first question. And the answer to the second is usally no.
But these days, the question I get asked most often is “Does a duplex qualify for the $8000 first time home buyer tax credit?”
And while I’ve discussed it here before, then answer was and is yes.
For the record, multifamily homes like triplexes, four-plexes and apartment buildings qualify too. However, the property must be used as your principal residence. It’s also important to note you can only get credit for the part you live in.
The credit has been structured so that any first time home buyer who has a binding purchase agreement in place by April 30, 2010, can receive up to 10 percent of the property’s purchase price, not to exceed a total of $8000 in the form of a tax credit.
Since only one half of the duplex would be used as your principal residence, you can only use the value of one half of the property to qualify.
For example, if you pay $160,000, your half would be worth $80,000. If you buy a duplex for $100,000, however, your half is worth $50,000. Your tax credit would then be 10 percent of your half , or $5000.
The same would be true if you bought a four-plex for $200,000 and lived in one of the units. The value would again be $50,000, giving you a credit of $5000.
Of course, to receive this credit, you must not have owned a home in the past three years. If you’re single, you can’t earn more than $125,000 a year and if you’re married, the two of you can’t earn more than $225,000.
Purchase agreements must be signed no later than April 30, and the transaction must close no later than 60 days after that.
Call me if you want to beat the deadline.
said on February 15th, 2010 categorized under: Tax Credits
Comments Off on Clock Ticking On Minneapolis Duplex Tax Credit
With all the snow on the ground, April 30 seems ages away.
But really, it’s only 74 days away.
Less than three months to find your first duplex or house before the $8000 first time home buyer tax credit expires. Less than three months for repeat buyers to qualify for the $6500 credit.
Yes, it still sounds like a lot of time. Except for the fact that many of the first time buyers I’ve worked with have taken four to six months to define exactly what it is they’re looking for in a property and then find one that matches both their budgets and criteria.
Remember, purchase agreements must be signed no later than April 30, 2010, to qualify for the credit. New owners must take title no later than June 30.
If you’re wondering whether you qualify, just remember; a first time home buyer is defined as anyone who has not owned a home in the last three years.
A repeat buyer must have lived in their homes consecutively for five of the previous eight years.
For either, income limits are $125,000 for single buyers and $225,000 on a joint tax return.
Of course, in either instance, the maximum home price is $800,000.
said on January 11th, 2010 categorized under: Tax Credits
Comments Off on What About The Rodney Dangerfield Tax Credit?
Did you know there are two home buyer tax credits available right now?
I’m sure you’ve heard of the recently extended $8000 first time home buyer tax credit. But the second?
To quote Rodney Dangerfield, it “gets no respect”.
Maybe it’s because it doesn’t have a catchy, self-explanatory name for the media to latch on to. Instead, it’s often labeled by the rather cumbersome monikers of the “move-up” or “second time home buyer” tax credit.
But neither is exactly accurate. You don’t have to be either moving up or looking for your second home to qualify.
So what is it?
The tax credit, which is can be as much as $6500, is available to anybody who has owned and lived in the same home for at least five of the previous eight years prior to the purchase of their new home. In other words, repeat buyers.
And, like the first time home buyer tax credit, it can be used for any type of property you’re willing to label as your principal residence, including a single family home, duplex, triplex, fourplex, manufactured home or houseboat.
To qualify, single buyers can’t earn more than $125,000. Married buyers are capped at an annual combined income of $225,000. It is phased out past those income limits and dissolves completely for singles who earn more than $145,000 and couples who top $245,000.
While it’s likely that most repeat buyers have homes and duplexes they need to sell to be able to buy another, it isn’t necessary in order to qualify for the credit. The buyer simply needs to declare the new property his or her principal residence.
In recent weeks I’ve actually spoken with several potential sellers who are nearing retirement. They see this credit, when combined with the added incentives of bargain prices and low interest rates as an opportunity to get a better deal on their retirement property. For many, they are simply doing so a little bit early.
Like the first time home buyer tax credit, repeat buyers must have a purchase agreement in place no later than April 30, 2010, and close on the property before the end of June.
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While everyone was rushing to the airport or to the mall last week, the real estate market delivered news that appeared to be signs of a split personality.
On Tuesday, there were smiles everywhere when the National Association of Realtors reported sales of existing homes rose 7.4 percent in November from their October mark, and are 44.1 percent higher than they were in November 2008. In fact, current sales haven’t been this high since February, 2007.
On Wednesday, frowns appeared when the Commerce Department reported sales of newly-built homes dropped 11.3 percent; reaching a seven month low.
So what’s the truth about the real estate market?
Here’s a hint. Data for exiting home sales is reported for when the transaction closed. In other words, that leap in November transactions may well reflect the expiration of the original first time home buyer tax credit, which expired at the end of the month.
New home sales, on the other hand, are calculated based on when the contracts were signed; meaning after November 1.
In other words, we may see a similar dip in existing home sales when next month’s data is reported. However, it’s important to note the volume of existing home sales wasn’t the only good news in NAR’s report.
What’s interesting to note is that the total supply of unsold inventory on the national real estate market is down 15.5 percent from one year ago. If no new homes came on the market, we’d be out of houses to sell in 6.5 months.
The last time there were fewer houses to sell was in April, 2006; generally considered the biggest of the boom years.
The basic economic principle of supply and demand dictates that as supply diminishes, prices go up. We’ll see if that holds true as we head toward the April 30th deadline for the first time and “move up” buyer tax credits.
said on December 18th, 2009 categorized under: Tax Credits
Comments Off on When Can You Get The First Time Home Buyer Tax Credit?
If you buy a Minneapolis duplex before the end of the first time home buyer tax credit ends on April 30, 2010, can you get your $8000 check now or do you have to wait until you file your 2010 returns?
After all, the original version of the credit could be claimed against 2008 or 2009 taxes.
The good news is for all qualifying purchases in 2010, first time owner occupant duplex buyers can take the credit on either their 2009 or 2010 tax returns.
However, anyone who purchased a property after November 6, 2009, needs to use a new version of Form 5405, which should be issued by the IRS in the next few weeks.