Archive for the 'Tax Credits' Category

Minneapolis Duplex Buyers Should Get More Time To Shop

said on November 5th, 2009 categorized under: Tax Credits

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We'll win!If you feel like you missed out on all the good deals before the expiration of the first time home buyer tax credit, there was some good news out of Washington yesterday.

The U.S. Senate voted unanimously to extend the clearance sale.

The $8000 first time home buyer tax credit will now run through April 30. An additional credit of $6500 will also be availabe to buyers who have owned their current home at least five years.

Buyers must have a purchase agreement in place by the end of April, and close on the property within 60 days. Single home buyers must earn less than $125,000 per year to qualify. Couples must earn a joint income of less than $225,000 to be eligible.

The credit would not cover the purchase of second homes, and in order to qualify, the price of the home must be less than $800,000.

Goldman Sachs estimates that approximately 70 percent of all current home owners may qualify for the expanded credit.

The National Association of Realtors estimates that as many as 400,000 recent real estate transactions.

The House of Representatives was expected to vote on the bill as early as today. If it passes, President Obama is expected to sign it.

Upon passage, wise duplex buyers should start shopping well before the April 30 deadline. It will help avoid those last minute tax credit shoppers and the multiple offers they inspire.

Minneapolis Duplex Tax Credit Extension Just A Bill

said on October 29th, 2009 categorized under: Tax Credits

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[youtube][/youtube]With news out of Washington last night that the Senate decided to extend the $8000 first time home buyer tax credit as well as expand it to include  some repeat buyers, my inbox has been swamped with enthusiastic emails announcing the extension.

Wait a minute.

Anyone remember Schoolhouse Rock?

A bill has to pass in both the House and the Senate before it becomes law.

Yes, the Senate agreed to extend the tax credit as we know it until the end of April. They also want to offer a reduced tax credit of up to $6,500 to buyers who’ve owned their current homes for at least five years.

The income levels eligible for qualification have also been increased. 

To receive the maximum tax credit,  individual duplex buyers can earn no more than $125,000/year. This figure is $50,000 higher than the previous cap. Married duplex buyers can now jointly earn up to $225,000 to earn the maximum benefit. This figure has nearly doubled.

Move up buyers would be faced with the same income caps. Their tax credit, however, would be a maximum of $6500.

As it stands, the Senate’s proposal would extend the tax credit deadline until April 30, with any purchase agreements written by that date needing to close no more than 60 days after in order to qualify.

Of course, both members of the House of Representatives and President Obama  need to agree to this for it to take effect.

If you would like to have a chance to earn the credit, it probably wouldn’t hurt to give your Representative a call.

Another Lap Likely For Minneapolis Duplex Tax Credit

said on October 19th, 2009 categorized under: Tax Credits


3d person and stopwatchFor those hoping for more time to get around the track in order to take advantage of the $8000 first time home buyer tax credit , it looked like Congress was poised to keep their hands off the stop watch last week.

Both CNBC reporter Diana Olick and Realty Times columnist Kenneth Harney reported last week that sources indicate to them that the credit will be extended for several months past its November 30 deadline.

Chairman of the House Ways and Means committee, Congressman Charles Rangel (N.Y. -Dem.) also stated to Dow Jones Newswires, “There’s no question I think it should be extended. How long, I haven’t discussed.” When it comes to expansion to all home buyers, however, Rangel expressed his opposition.

Both the National Association of Realtors and the National Association of Home Builders have been advocating for a one year extension of the credit, expanding it to all home buyers and capping it at a maximum of $15,000.

Of course, Congress is rightly concerned about how to pay for it. The original tax credit was included as part of the governments stimulus package. To date, this component alone has cost the government an estimated $15 billion.

Having said that, it has repeatedly been credited as being responsible for the uptick in activity in the housing market, and, as a result, one of the most successful pieces of the stimulus package.

Some estimates for the cost of an extension range as high as an additional $15 billion. One solution for covering the additional cost has been offered by the Republican Senator from Georgia, Johnny Isakson, who suggests the extension be funded with some of the unspent money from the original $800 billion economic stimulus bill.

Of course, until legislation is passed, the deadline to qualify for the credit remains November 30. We’ll watch for news out of Washington in coming weeks for further evidence of change.

Comments Off on Will There Be An Encore For The $8000 First Time Home Buyer Tax Credit?

concert cheeringWith just six weeks left in which to take advantage of the federal $8000 first time home buyer tax credit, overatures are coming from Washington that an encore may be in the works.

Last week the House quickly passed an extension of the credit for military, diplomatic and intelligence personnel serving overseas.

This action may well increase the odds that Congress will extend the program into next year.

Following a meeting with the president at the White House that was attended by Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi, congressional aides said that by en large, Democrats support an extension of the credit. In fact, Reid is the co-sponsor of a Senate bill that would do just that for another six months.

According to Washington Post columnist Kenneth Harney, word of a possible expansion of the credit begin to travel through Washington following the White House session.

Harney’s sources said one of the options under consideration is an expansion of the $8,000 credit to people purchasing replacement homes, provided their incomes do not exceed a pre-determined income limit.

The present tax credit is limited to single taxpayers who earn less than $75,0000 and couples earning $150,000 and less.

While this would be welcome news, we’ll leave our cell phones and lighters in our pockets until the necessary players are gathered on stage, ready to make an announcement.

Comments Off on Tax Credit Puts Squeeze On Minneapolis Duplex Sales

ToothpasteThe federal $8000 first time home buyer tax credit has been a lot like brushing your teeth.

We all know it’s good for us and the economy. And we all know if we don’t rush to take advantage of it, it, like our teeth, may well be gone.

But like brushing, buyers haven’t taken as much advantage of the tax credit as they should until they absolutely had to.

Realtors have been warning them for months of the coming rush, just as dentists warn of decay. And now, the deadline is near.

This fact is clearly reflected in this week’s Weekly Activity Report from the Minneapolis Area Association of Realtors.

The association reports that pending home sales for the week ending September 26 were up 41 percent from the same week last year.

To make matters worse for procrastinators, there are 20 percent fewer homes on the market to choose from than there were one year ago.

Things are even tougher over in the small multi-family market, where there were 40 percent less new listings for the week.

Of those duplexes that came on the market, 84 percent were listed below $200,000. Meanwhile, traditional sellers contributed 29 percent of the new inventory. This is up slightly from the 21.7 percent share of traditional sellers in the market in 2008.

Pended duplex sales were up as well, with 40 percent more receiving purchase agreements in the week than they had in the same strecth one year ago. While the average off market price was down 9.7 percent from last year’s figure, the properties that left the market did so after just 64.6 days. This is 12.4 fewer days than for the week in 2008.

Both years saw banks involved in the negotiations for about 84-85 percent of the transactions.

As we near the end of the tax credit, it looks like we’re all going to be squeezing the tube of toothpaste from every angle.

Comments Off on $8000 First Time Home Buyer Tax Credit Benefits Singles

saving moneyThe closer we get to the December 1 deadline for the $8000 first time home buyer tax credit, the more complicated the questions about it get.

Today I had to explore whether or not having a co-signor on a loan for a Minneapolis duplex who already owns a home would disqualify the buyer from earning the tax credit.

And the answer is no.

According to the Federal Housing Tax Credit web site, unmarried joint purchasers may allocate the credit to the party who qualifies for the credit.

In other words, if your parents are willing to help you obtain the loan, or you’re buying the duplex with a significant other who’s already owned a home, you can still obtain the $8000. One hundred percent of the credit can go to the partner who’s a first time buyer (whereas if both are first timers, it’s split down the middle).

Again, you simply can’t be married to your partner.

Hmm. There’s a reversal of benefits!

$8000 First Time Minneapolis Duplex Buyer Deadline Looms

said on August 24th, 2009 categorized under: Tax Credits

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Cash for ClunkersOn my way in to the office, I pass several auto dealerships.

This morning, I couldn’t help but notice big rows of older cars line up along the back of the lots;  the clunkers brought in as the part of the government’s “cash for clunkers” program, which ends tonight.

There were a lot of them.

I wondered what the weekend was like for the car dealers; whether they’d had a chance to sleep or eat, and if they had a line of people waiting to talk with them.

And when I read Ken Harney’s column in the Washington Post questioning whether Congresss would extend the $8000 first time home buyer tax credit, I imagined a line of buyers at the door of local real estate broker’s offices as the November 30 deadline approaches.

There are 14 weeks left. As most real estate transactions take, on average, 45 to 60 days to close (six to eight weeks),  there are, for all intents and purposes, just six weeks to go.

I realize that sounds like a lot of time. However, anyone who’s been out there looking can tell you, good properties can be hard to find.

So will Congress extend the deadline like they did with the clunkers program? Hard to tell. They have plenty on their plate already when they return from summer break; including the not-so-small matter of  health care reform.

According to Harney, there are already bills pending in both the House and Senate to extend the credit for another year.

Meanwhile, Senators Christopher Dodd (D-Conn) and Johnny Isakson (R- Georgia) are co-sponsoring a bill that would eliminate the income restrictions on the credit, raise it to a maximum of $15,0000 and extend it to all home buyers.

It all sounds exciting. However, it’s important to remember the tax credit ultimately ends up costing the government lost revenue. As the federal budget is already deeply in the red, there may be more than a little resistance.

So are they going to extend or expand the credit?

Don’t count on it. It is Washington, after all.

Eight Ways to Paint Your Minneapolis Duplex Green

said on August 3rd, 2009 categorized under: Legislation, Tax Credits

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Environmentally firendly houseIt’s not easy going green.

Oh, we all know there’s a push to do it. But let’s face it. It’s downright expensive. Where are you going to get the money?

Well, thanks to a salad bar full of recently passed and pending green legislation, it will soon be easier to finance these projects than ever.

Let’s start with the green opportunities already available to Minneapolis duplex owners:

  • Energy Efficient Mortgage (EEM) -Already in place, this FHA-backed mortgage allows a buyer to purchase or refinance a principal residence of one to four units and incorporate the cost of energy efficient improvements into the mortgage. Best of all, the borrower does not have to qualify for or make a down payment on the additional funding.

The energy efficient improvements must be cost effective. In other words, you have to prove the cost of the improvement is less than the total value of the energy it will save you over its useful life.

As part of the American Clean Energy and Security Act now before Congress (more widely heralded for it’s cap-and-trade” carbon emmissions program), proposed additional incentives include:

  • The FHA would directed to insure a mimimum of 50,000 new Energy Efficient Mortgages during the next three years, with the definition of an energy-efficient house being one where energy consumption is reduced by 20 percent after renovations.
  • Freddie Mac and Fannie Mae would be required to increase the qualifying incomes of mortgage applicants by at least one dollar for every dollar of projected energy savings from efficient design, green construction or renovations. (Think of this as somewhat like being able to use 75 percent of a property’s rental income to help you qualify for a loan to buy it; except this is dollar for dollar).
  • Loan applicants who live close to mass-transit lines or employment centers would receive similar concessions on their qualifying incomes.
  • Appraisers would be required to consider energy improvements as part of a duplex’s appraised value.
  • State governments would ensure property owners who go “off grid” by no longer using utility companies to provide power are not denied property hazard insurance.

The Minneapolis Duplex Tax Credit Race Is On

said on July 20th, 2009 categorized under: Buying A Duplex, Tax Credits

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horse racingI keep wondering when people will notice summer’s almost over.

OK, so it’s not exactly over. But we’re a week a week and change away from the first day of August. Summer might as well be over then, as it’s when we all start thinking “time to get ready to go back to…”.

Summer’s end promises the onset of fall. And fall means the end of the $8000 first time home buyer tax credit.

Yes, the credit expires on November 30, 2009. But that doesn’t mean you have to have picked out a duplex by then. It means you actually have to have closed on it. In other words, the key and the mortgage need to be yours.

Sounds easy enough, right?

Well, there’s the fact that it usually takes anywhere from two weeks to a month for the bank to give you the mortgage you applied for to buy the place.

No worries. That means you have to have found your first home by November 1, right?

Guess again.

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Rubber DucksThe first time home buyer tax credit is starting to feel like the carnival game Pick A Duck.

Congress seems to study the big prizes hanging on the wall, then the ducks floating past. They put down their money, study the ducks some more and finally, grab at what they are sure is the prize-winning bird as it floats by.

Apparently, however, instead of winning the giant stuffed bear, they keep winning Chinese finger traps.

First it was the $7500 first time home buyer tax credit that had to be repaid. Then came the $8000 first time home buyer tax credit, which was followed by the “which you can use immediately for closing costs” tax credit.

While many in the housing industry report these efforts have helped stimulate activity in entry-level housing, they have had little impact on move-up buyers and sellers. In other words, people who would like to sell their current duplex and move up to a larger property, or even those who would like to sell the family home and downsize.

Two stories in the Wall Street Journal this week hint that thanks to a push from the real estate industry, Congress is thinking about picking another duck.

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