Many people see these 2 terms and think they mean the same.
But, ponder a while, do they really?
Since I have had the experience working and living elsewhere before coming to USA, I believe making money and building wealth are 2 very different things in USA.
I worked and lived in Hong Kong for 10 years before coming to live in USA. The top tax rate is Hong Kong is 15%, and every tax payer enjoy a rather high standard deduction. I knew people who were single and make about US$100,000, still only pay about 12% income tax after the deductions.
It still amaze me how much taxes people in US pay. But, oh well, that is another subject for another day, or month, or life time.
Given we live here, how does one build wealth if one must pay so much taxes?
Well, one of the tool is, of course, real estate.
Just last week I have a buyer under contract buying a foreclosed duplex.
This young man is so mature. He saved money, had a goal, and barely in his mid 20's, he is buying a 5 yr old duplex with more than 20% down.
With the current low interest rate, he can buy the duplex, live in one side, rent out the other, and the rent he will receive will cover over 80% of his mortgage payment.
Oh, this young buyer has further plan than this, he is getting a 15 yr loan, hoping that in 5-7 years, he will have more than 1/2 of the duplex paid, and then he will hopefully get married and buy a single family home.
At that point, he could keep the duplex for rent, or sell it, depending on the market.
Why Real Estate investment help build wealth? Well, for one, the IRS allow depreciation for the building you rent out. That depreciation is an expense, that can off set the rental income, therefore offset the taxes on the rental income.
The depreciation rule is rather complicated, but, no free lunch right? If one wants to save some taxes, one needs to put in a few hours of paperwork, and a few hours of tax code studying.
My husband and I own 10 units of rentals. In most years, those rentals report a lost on paper, after depreciation.
Simply, currently the IRS allow buildings to depreciate at a rate of 27.5 years. If you have a $120,000 duplex, and if the land that the duplex is on is worth $20,000, owner can depreciate the building, not the land.
So the building without land is worth $100,000, which allow owner to write off $3636.36 income per year.
Now, the tax code is a whole lot more complicated than that, but for now, this is enough to get someone to start to ponder about RE investments.
Monday, December 14, 2009
Tuesday, November 17, 2009
Q&A about Expanded Home Buyer Credit
http://www.irs.gov/newsroom/article/0,,id=204671,00.html
First-Time Homebuyer Credit
Updated Nov. 6, 2009, to reflect new legislation — more to be added soon
New Legislation
New legislation, the Worker, Homeownership and Business Assistance Act of 2009, which was signed into law on Nov. 6, 2009, extends and expands the first-time homebuyer credit allowed by previous Acts. The new law:
Extends deadlines for purchasing and closing on a home.
Authorizes the credit for long-time homeowners buying a replacement principal residence.
Raises the income limitations for homeowners claiming the credit.
Under the new law, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2010 and close on the home by June 30, 2010. For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 return.
For the first time, long-time homeowners who buy a replacement principal residence may also claim a homebuyer credit of up to $6,500 (up to $3,250 for a married individual filing separately). They must have lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the replacement home is purchased.
People with higher incomes can now qualify for the credit. The new law raises the income limits for homes purchased after Nov. 6, 2009. The credit phases out for individual taxpayers with modified adjusted gross income (MAGI) between $125,000 and $145,000 or between $225,000 and $245,000 for joint filers. The existing MAGI phase-outs of $75,000 to $95,000 or $150,000 to $170,000 for joint filers still apply to purchases on or before Nov. 6, 2009.
General Information
Homebuyers who purchased a home in 2008, 2009 or 2010 may be able to take advantage of the first-time homebuyer credit. The credit:
Applies only to homes used as a taxpayer's principal residence.
Reduces a taxpayer's tax bill or increases his or her refund, dollar for dollar.
Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.
The credit is claimed using Form 5405, which you file with your original or amended tax return.
For 2008 Home Purchases
The Housing and Economic Recovery Act of 2008 established a tax credit for first-time homebuyers that can be worth up to $7,500. For homes purchased in 2008, the credit is similar to a no-interest loan and must be repaid in 15 equal, annual installments beginning with the 2010 income tax year.
For 2009 Home Purchases
The American Recovery and Reinvestment Act of 2009 expanded the first-time homebuyer credit by increasing the credit amount to $8,000 for purchases made in 2009 before Dec. 1. However, the new Worker, Homeownership and Business Assistance Act of 2009 has extended the deadline. Now, taxpayers who have a binding contract to purchase a home before May 1, 2010, are eligible for the credit. Buyers must close on the home before July 1, 2010. [Added Nov. 12, 2009]
For home purchased in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer's main residence within a three-year period following the purchase.
First-time homebuyers who purchase a home in 2009 can claim the credit on either a 2008 tax return, due April 15, 2009, or a 2009 tax return, due April 15, 2010. The credit may not be claimed before the closing date. But, if the closing occurs after April 15, 2009, a taxpayer can still claim it on a 2008 tax return by requesting an extension of time to file or by filing an amended return. News release 2009-27 has more information on these options.
Questions and Answers
More information is available in the question and answer section.
First-Time Homebuyer Credit
Updated Nov. 6, 2009, to reflect new legislation — more to be added soon
New Legislation
New legislation, the Worker, Homeownership and Business Assistance Act of 2009, which was signed into law on Nov. 6, 2009, extends and expands the first-time homebuyer credit allowed by previous Acts. The new law:
Extends deadlines for purchasing and closing on a home.
Authorizes the credit for long-time homeowners buying a replacement principal residence.
Raises the income limitations for homeowners claiming the credit.
Under the new law, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2010 and close on the home by June 30, 2010. For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 return.
For the first time, long-time homeowners who buy a replacement principal residence may also claim a homebuyer credit of up to $6,500 (up to $3,250 for a married individual filing separately). They must have lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the replacement home is purchased.
People with higher incomes can now qualify for the credit. The new law raises the income limits for homes purchased after Nov. 6, 2009. The credit phases out for individual taxpayers with modified adjusted gross income (MAGI) between $125,000 and $145,000 or between $225,000 and $245,000 for joint filers. The existing MAGI phase-outs of $75,000 to $95,000 or $150,000 to $170,000 for joint filers still apply to purchases on or before Nov. 6, 2009.
General Information
Homebuyers who purchased a home in 2008, 2009 or 2010 may be able to take advantage of the first-time homebuyer credit. The credit:
Applies only to homes used as a taxpayer's principal residence.
Reduces a taxpayer's tax bill or increases his or her refund, dollar for dollar.
Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.
The credit is claimed using Form 5405, which you file with your original or amended tax return.
For 2008 Home Purchases
The Housing and Economic Recovery Act of 2008 established a tax credit for first-time homebuyers that can be worth up to $7,500. For homes purchased in 2008, the credit is similar to a no-interest loan and must be repaid in 15 equal, annual installments beginning with the 2010 income tax year.
For 2009 Home Purchases
The American Recovery and Reinvestment Act of 2009 expanded the first-time homebuyer credit by increasing the credit amount to $8,000 for purchases made in 2009 before Dec. 1. However, the new Worker, Homeownership and Business Assistance Act of 2009 has extended the deadline. Now, taxpayers who have a binding contract to purchase a home before May 1, 2010, are eligible for the credit. Buyers must close on the home before July 1, 2010. [Added Nov. 12, 2009]
For home purchased in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer's main residence within a three-year period following the purchase.
First-time homebuyers who purchase a home in 2009 can claim the credit on either a 2008 tax return, due April 15, 2009, or a 2009 tax return, due April 15, 2010. The credit may not be claimed before the closing date. But, if the closing occurs after April 15, 2009, a taxpayer can still claim it on a 2008 tax return by requesting an extension of time to file or by filing an amended return. News release 2009-27 has more information on these options.
Questions and Answers
More information is available in the question and answer section.
Update on First Time Home Buyer Tax Credit
http://www.irs.gov/newsroom/article/0,,id=206291,00.html
First-Time Homebuyer Credit Questions and Answers: Basic Information
Updated Nov. 6, 2009, to note new legislation. The new legislation extends and expands the first-time homebuyer credit allowed by previous Acts. The new law:
extends deadlines for purchasing and closing on a home
authorizes the credit for long-time homeowners buying a replacement principal residence
raises the income limitations for homeowners claiming the credit
This page will be reviewed and revised as appropriate soon based on the new legislation.
Q. What is the credit?
A. The first-time homebuyer credit is a new tax credit included in the Housing and Economic Recovery Act of 2008. For homes purchased in 2008, the credit operates like an interest-free loan because it must be repaid over a 15-year period.
The credit was expanded in 2009 for homes purchased in 2009, increasing the amount of the credit and eliminating the requirement to repay the credit, unless the home ceases to be your principal residence within the 36-month period beginning on the purchase date. It was further expanded in late 2009 to extend deadlines and to allow long-time homeowners buying replacement homes and people with higher incomes to qualify for the credit. (Nov. 12, 2009)
Q. How much is the credit?
A. The credit is 10 percent of the purchase price of the home, with a maximum available credit of $7,500 ($8,000 if you purchased your home in 2009) for either a single taxpayer or a married couple filing a joint return, but only half of that amount for married persons filing separate returns. The full credit is available for homes costing $75,000 or more ($80,000 if purchased after Dec. 31, 2008, and before Dec. 1, 2009).
Q. Which home purchases qualify for the first-time homebuyer credit?
A. Any home purchased as the taxpayer’s principal residence and located in the United States qualifies. You must buy the home after April 8, 2008, and before May. 1, 2010 (with closing to take place before July 1), to qualify for the credit. For a home that you construct, the purchase date is considered to be the first date you occupy the home.
Taxpayers (including spouse, if married) who owned a principal residence at any time during the three years prior to the date of purchase are not eligible for the credit. This means that you can qualify for the credit if you (and your spouse, if married) have not owned a home in the three years prior to a purchase. If you make an eligible purchase in 2008, you claim the first-time homebuyer credit on your 2008 tax return. For an eligible purchase in 2009, you can choose to claim the credit on either your 2008 or 2009 income tax return.
Q. If a taxpayer purchases a mobile home (manufactured home) with land and qualifies for the credit, is the amount of the credit based on the combined cost of the home and land?
A. Yes. The first-time homebuyer credit is ten percent of the purchase price of a principal residence. The total purchase price (mobile home and land) is used to determine the amount of the first-time homebuyer credit.
Q. Is a taxpayer who purchases a mobile home and places the home on leased land eligible for the first-time homebuyer credit?
A. Yes. A mobile home may qualify as a principal residence and it is not necessary that the taxpayer own the land to qualify for the first-time homebuyer credit.
Q. Can a taxpayer who purchases a travel trailer qualify for the credit?
A. A travel trailer that is affixed to land may qualify as a principal residence.
Q. Can an individual who has lived in an RV qualify for the credit?
A. For purposes of the first-time homebuyer credit, an RV with a built-in motor is personal property that is not affixed to land and does not qualify as a principal residence. Accordingly, someone who has owned and lived in an RV within the past three years may still qualify as a first-time homebuyer.
Q. Can I apply for the credit if I bought a vacation home or rental property?
A. No. Vacation homes and rental property do not qualify for this credit.
Q. Who is considered to be a first-time homebuyer?
A. Taxpayers who have not owned another principal residence at any time during the three years prior to the date of purchase.
Q. Can a dependent on someone else’s tax return claim the first time homebuyer credit if they otherwise qualify?
A. Yes. There is no limitation under section 36 that a first-time homebuyer cannot be a dependent. However, taxpayers who do not otherwise qualify for the credit do not become eligible for the credit simply by using a minor child’s name. In addition, under state law children under the age of 18 generally are not bound by any contract they sign and cannot be required to comply with the terms of the contract. Thus, it is extremely unlikely that a seller of a home, or a lender if financing is required, would enter into a bona fide sale of a home to a child. Merely using the child’s name to purchase a home does not qualify the child for the credit if, in substance, the child is not a bona fide purchaser of a home.
Q. When do I have to buy a new home to get the credit?
A. The home must be purchased after April 8, 2008, and before Dec. 1, 2009, in order to obtain the credit. For a home you construct, the purchase date is considered to be the date you first occupy the home.
Q. How do I apply for the credit?
A. The credit is claimed on new IRS Form 5405, First-Time Homebuyer Credit, and filed with your 2008 or 2009 federal income tax return.
Q. Are there income limits?
A. Yes. The credit is reduced or eliminated for higher-income taxpayers. The credit is phased out based on your modified adjusted gross income (MAGI). For a married couple filing a joint return, the phase-out range is $150,000 to $170,000. For other taxpayers, the phase-out range is $75,000 to $95,000. This means that the full credit is available for married couples filing a joint return whose MAGI is $150,000 or less and for other taxpayers whose MAGI is $75,000 or less.
Q. Can a taxpayer claim the first-time homebuyer credit after entering into a contract for the purchase of a residence but before closing on the purchase?
A. No. Taxpayers cannot claim the credit before there is a completed sale and purchase of the residence. The sale and purchase are generally completed at the time of closing on the purchase. (New 7/2/09)
Q. Can a taxpayer claim the first-time homebuyer credit if the purchase is pursuant to a seller financing arrangement (for example, a contract for deed, installment land sale contract, or long-term land contract), and the seller retains legal title to secure the taxpayer's payment obligations?
A. If the taxpayer obtains the "benefits and burdens" of ownership of a residence in a seller financing arrangement, then the taxpayer can claim the credit even though the seller retains legal title. Factors that indicate that a taxpayer has the benefits and burdens of ownership include: 1. the right of possession, 2. the right to obtain legal title upon full payment of the purchase price, 3. the right to construct improvements, 4. the obligation to pay property taxes, 5. the risk of loss, 6. the responsibility to insure the property and 7. the duty to maintain the property. (New 7/2/09)
Q. I purchased a home that qualifies for the first-time homebuyer credit. I will be renting two of the bedrooms and reporting the rental income on Schedule E. Will I still qualify for the credit if I use the home as my principal residence?
A. Yes, if you meet all first-time homebuyer eligibility requirements. See Form 5405, First-Time Homebuyer Credit, for more details.
Q. I purchased a duplex home with two separate dwelling units. I will live in one dwelling and will rent out the other dwelling unit and report the rental income on Schedule E. May I qualify for the first-time homebuyer credit, and what amount do I use for the purchase price to determine the amount of the credit?
A. Yes, you may qualify for the credit for the dwelling unit that you use as your principal residence. To determine the amount of your credit, you must allocate the purchase price of the duplex between the two separate dwelling units. Your credit is 10% of the portion of the purchase price of the duplex allocated to your dwelling unit that you use as your principal residence, up to a maximum credit of $8,000. You may not use the entire purchase price of the duplex to determine the amount of your credit.
Q. If two unmarried people buy a house together, how do they determine how much each may take of the credit?
A. IRS Notice 2009-12 provides guidance for allocating the first-time homebuyer credit between taxpayers who are not married.
Q. I am a single co-owner of a home. How do I get this credit?
A. Depending on the year of purchase, you will claim the credit on either your 2008 or 2009 federal income tax return.
Q. I don’t owe taxes and/or my income is exempt from tax and I do not have a filing requirement. Do I qualify for the credit?
A. The credit is fully refundable and, if you qualify as a first-time homebuyer, having tax-exempt income will not preclude eligibility. Although there are maximum income limits for qualifying first-time homebuyers, there are no minimum income criteria. Thus, someone with no taxable income who qualifies as a first-time homebuyer may file for the sole purpose of claiming the credit for a refund.
Q. Does the first-time homebuyer credit apply to homes located in the U.S. Territories?
A. No.
Q. Would I be considered a first time homebuyer if I owned a principal residence outside of the United States within the previous three years?
A. Yes. A taxpayer who owned a principal residence outside of the United States within the last three years is not disqualified from taking the credit for a purchase within the United States.
Q. If qualified, are homebuyers required to claim the first-time homebuyer credit?
A. No.
Q. Who cannot take the credit?
A. If any of the following describe you, you cannot take the credit, even if you buy a new home:
Your income exceeds the phase-out range. This means joint filers with MAGI of $170,000 and above and other taxpayers with MAGI of $95,000 and above.
You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
You do not use the home as your principal residence.
You sell your home before the end of the year.
You are a nonresident alien.
You are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)
Your home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
You 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.
Q. Does previously inheriting a home and living in the inherited home automatically disqualify an individual as a first-time homebuyer with respect to a different home that is purchased within the prescribed 2008 and 2009 time frames?
A. Yes, an ownership interest in a prior principal residence would preclude the taxpayer from being considered a first-time homebuyer. As long as the taxpayer owned and used the prior home as his principal residence, then he is not a first-time homebuyer. There is no exception for taxpayers who did not buy their prior residences. (05/06/09)
Q. Is a step-relative considered a related party?
A. Step-relatives are neither ancestors nor lineal descendents and are therefore not related persons for purposes of the first-time homebuyer credit. (05/06/09)
Q. If I claim the first-time homebuyer credit in 2009 and stop using the property as my main home before the 36 month period expires after I purchase, how is the credit repaid and how long would I have to repay it?
A. If, within 36 months of the date of purchase, the property is no longer used as the taxpayer's principal residence, the taxpayer is required to repay the credit. Repayment of the full amount of the credit is due at that time the income tax return for the year the home ceased to be the taxpayer's principal residence is due. The full amount of the credit is reflected as additional tax on that year's tax return. Form 5405 and its instructions will be revised for tax year 2009 to include information about repayment of the credit. (05/06/09)
Q. If a person does not actually make the payments on a home that’s their primary residence, but the deed and mortgage documents are in their name, can they be considered a first-time home buyer?
A. Yes. If a taxpayer purchases a home to be used as a primary residence from an unrelated person and has not owned a home within the previous 36 months, the taxpayer is eligible for the first-time homebuyer credit regardless of who makes the mortgage payment. (05/06/09)
Q. Do taxpayers affected by Hurricane Katrina or other disasters qualify as first-time homebuyers if their principal residence (i.e. main home) became uninhabitable more than three years ago and they have not formally disposed of the uninhabitable home or purchased or built a new home in the interim?
A. A first-time homebuyer is an individual (and the individual's spouse, if married) who has not had an ownership interest in a principal residence (within the meaning of Section 121 of the Internal Revenue Code) during the three years before the date a new principal residence is purchased. Applying Section 121, a taxpayer can be a first-time homebuyer if the taxpayer has not owned and used a property as a principal residence at any time during the three years before the date of purchase of the new residence. Taxpayers affected by Hurricane Katrina who have owned but not used their property as a principal residence within the last three years may be eligible for the first-time homebuyer credit when they purchase a new principal residence. (05/07/09)
First-Time Homebuyer Credit Questions and Answers: Basic Information
Updated Nov. 6, 2009, to note new legislation. The new legislation extends and expands the first-time homebuyer credit allowed by previous Acts. The new law:
extends deadlines for purchasing and closing on a home
authorizes the credit for long-time homeowners buying a replacement principal residence
raises the income limitations for homeowners claiming the credit
This page will be reviewed and revised as appropriate soon based on the new legislation.
Q. What is the credit?
A. The first-time homebuyer credit is a new tax credit included in the Housing and Economic Recovery Act of 2008. For homes purchased in 2008, the credit operates like an interest-free loan because it must be repaid over a 15-year period.
The credit was expanded in 2009 for homes purchased in 2009, increasing the amount of the credit and eliminating the requirement to repay the credit, unless the home ceases to be your principal residence within the 36-month period beginning on the purchase date. It was further expanded in late 2009 to extend deadlines and to allow long-time homeowners buying replacement homes and people with higher incomes to qualify for the credit. (Nov. 12, 2009)
Q. How much is the credit?
A. The credit is 10 percent of the purchase price of the home, with a maximum available credit of $7,500 ($8,000 if you purchased your home in 2009) for either a single taxpayer or a married couple filing a joint return, but only half of that amount for married persons filing separate returns. The full credit is available for homes costing $75,000 or more ($80,000 if purchased after Dec. 31, 2008, and before Dec. 1, 2009).
Q. Which home purchases qualify for the first-time homebuyer credit?
A. Any home purchased as the taxpayer’s principal residence and located in the United States qualifies. You must buy the home after April 8, 2008, and before May. 1, 2010 (with closing to take place before July 1), to qualify for the credit. For a home that you construct, the purchase date is considered to be the first date you occupy the home.
Taxpayers (including spouse, if married) who owned a principal residence at any time during the three years prior to the date of purchase are not eligible for the credit. This means that you can qualify for the credit if you (and your spouse, if married) have not owned a home in the three years prior to a purchase. If you make an eligible purchase in 2008, you claim the first-time homebuyer credit on your 2008 tax return. For an eligible purchase in 2009, you can choose to claim the credit on either your 2008 or 2009 income tax return.
Q. If a taxpayer purchases a mobile home (manufactured home) with land and qualifies for the credit, is the amount of the credit based on the combined cost of the home and land?
A. Yes. The first-time homebuyer credit is ten percent of the purchase price of a principal residence. The total purchase price (mobile home and land) is used to determine the amount of the first-time homebuyer credit.
Q. Is a taxpayer who purchases a mobile home and places the home on leased land eligible for the first-time homebuyer credit?
A. Yes. A mobile home may qualify as a principal residence and it is not necessary that the taxpayer own the land to qualify for the first-time homebuyer credit.
Q. Can a taxpayer who purchases a travel trailer qualify for the credit?
A. A travel trailer that is affixed to land may qualify as a principal residence.
Q. Can an individual who has lived in an RV qualify for the credit?
A. For purposes of the first-time homebuyer credit, an RV with a built-in motor is personal property that is not affixed to land and does not qualify as a principal residence. Accordingly, someone who has owned and lived in an RV within the past three years may still qualify as a first-time homebuyer.
Q. Can I apply for the credit if I bought a vacation home or rental property?
A. No. Vacation homes and rental property do not qualify for this credit.
Q. Who is considered to be a first-time homebuyer?
A. Taxpayers who have not owned another principal residence at any time during the three years prior to the date of purchase.
Q. Can a dependent on someone else’s tax return claim the first time homebuyer credit if they otherwise qualify?
A. Yes. There is no limitation under section 36 that a first-time homebuyer cannot be a dependent. However, taxpayers who do not otherwise qualify for the credit do not become eligible for the credit simply by using a minor child’s name. In addition, under state law children under the age of 18 generally are not bound by any contract they sign and cannot be required to comply with the terms of the contract. Thus, it is extremely unlikely that a seller of a home, or a lender if financing is required, would enter into a bona fide sale of a home to a child. Merely using the child’s name to purchase a home does not qualify the child for the credit if, in substance, the child is not a bona fide purchaser of a home.
Q. When do I have to buy a new home to get the credit?
A. The home must be purchased after April 8, 2008, and before Dec. 1, 2009, in order to obtain the credit. For a home you construct, the purchase date is considered to be the date you first occupy the home.
Q. How do I apply for the credit?
A. The credit is claimed on new IRS Form 5405, First-Time Homebuyer Credit, and filed with your 2008 or 2009 federal income tax return.
Q. Are there income limits?
A. Yes. The credit is reduced or eliminated for higher-income taxpayers. The credit is phased out based on your modified adjusted gross income (MAGI). For a married couple filing a joint return, the phase-out range is $150,000 to $170,000. For other taxpayers, the phase-out range is $75,000 to $95,000. This means that the full credit is available for married couples filing a joint return whose MAGI is $150,000 or less and for other taxpayers whose MAGI is $75,000 or less.
Q. Can a taxpayer claim the first-time homebuyer credit after entering into a contract for the purchase of a residence but before closing on the purchase?
A. No. Taxpayers cannot claim the credit before there is a completed sale and purchase of the residence. The sale and purchase are generally completed at the time of closing on the purchase. (New 7/2/09)
Q. Can a taxpayer claim the first-time homebuyer credit if the purchase is pursuant to a seller financing arrangement (for example, a contract for deed, installment land sale contract, or long-term land contract), and the seller retains legal title to secure the taxpayer's payment obligations?
A. If the taxpayer obtains the "benefits and burdens" of ownership of a residence in a seller financing arrangement, then the taxpayer can claim the credit even though the seller retains legal title. Factors that indicate that a taxpayer has the benefits and burdens of ownership include: 1. the right of possession, 2. the right to obtain legal title upon full payment of the purchase price, 3. the right to construct improvements, 4. the obligation to pay property taxes, 5. the risk of loss, 6. the responsibility to insure the property and 7. the duty to maintain the property. (New 7/2/09)
Q. I purchased a home that qualifies for the first-time homebuyer credit. I will be renting two of the bedrooms and reporting the rental income on Schedule E. Will I still qualify for the credit if I use the home as my principal residence?
A. Yes, if you meet all first-time homebuyer eligibility requirements. See Form 5405, First-Time Homebuyer Credit, for more details.
Q. I purchased a duplex home with two separate dwelling units. I will live in one dwelling and will rent out the other dwelling unit and report the rental income on Schedule E. May I qualify for the first-time homebuyer credit, and what amount do I use for the purchase price to determine the amount of the credit?
A. Yes, you may qualify for the credit for the dwelling unit that you use as your principal residence. To determine the amount of your credit, you must allocate the purchase price of the duplex between the two separate dwelling units. Your credit is 10% of the portion of the purchase price of the duplex allocated to your dwelling unit that you use as your principal residence, up to a maximum credit of $8,000. You may not use the entire purchase price of the duplex to determine the amount of your credit.
Q. If two unmarried people buy a house together, how do they determine how much each may take of the credit?
A. IRS Notice 2009-12 provides guidance for allocating the first-time homebuyer credit between taxpayers who are not married.
Q. I am a single co-owner of a home. How do I get this credit?
A. Depending on the year of purchase, you will claim the credit on either your 2008 or 2009 federal income tax return.
Q. I don’t owe taxes and/or my income is exempt from tax and I do not have a filing requirement. Do I qualify for the credit?
A. The credit is fully refundable and, if you qualify as a first-time homebuyer, having tax-exempt income will not preclude eligibility. Although there are maximum income limits for qualifying first-time homebuyers, there are no minimum income criteria. Thus, someone with no taxable income who qualifies as a first-time homebuyer may file for the sole purpose of claiming the credit for a refund.
Q. Does the first-time homebuyer credit apply to homes located in the U.S. Territories?
A. No.
Q. Would I be considered a first time homebuyer if I owned a principal residence outside of the United States within the previous three years?
A. Yes. A taxpayer who owned a principal residence outside of the United States within the last three years is not disqualified from taking the credit for a purchase within the United States.
Q. If qualified, are homebuyers required to claim the first-time homebuyer credit?
A. No.
Q. Who cannot take the credit?
A. If any of the following describe you, you cannot take the credit, even if you buy a new home:
Your income exceeds the phase-out range. This means joint filers with MAGI of $170,000 and above and other taxpayers with MAGI of $95,000 and above.
You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
You do not use the home as your principal residence.
You sell your home before the end of the year.
You are a nonresident alien.
You are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)
Your home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
You 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.
Q. Does previously inheriting a home and living in the inherited home automatically disqualify an individual as a first-time homebuyer with respect to a different home that is purchased within the prescribed 2008 and 2009 time frames?
A. Yes, an ownership interest in a prior principal residence would preclude the taxpayer from being considered a first-time homebuyer. As long as the taxpayer owned and used the prior home as his principal residence, then he is not a first-time homebuyer. There is no exception for taxpayers who did not buy their prior residences. (05/06/09)
Q. Is a step-relative considered a related party?
A. Step-relatives are neither ancestors nor lineal descendents and are therefore not related persons for purposes of the first-time homebuyer credit. (05/06/09)
Q. If I claim the first-time homebuyer credit in 2009 and stop using the property as my main home before the 36 month period expires after I purchase, how is the credit repaid and how long would I have to repay it?
A. If, within 36 months of the date of purchase, the property is no longer used as the taxpayer's principal residence, the taxpayer is required to repay the credit. Repayment of the full amount of the credit is due at that time the income tax return for the year the home ceased to be the taxpayer's principal residence is due. The full amount of the credit is reflected as additional tax on that year's tax return. Form 5405 and its instructions will be revised for tax year 2009 to include information about repayment of the credit. (05/06/09)
Q. If a person does not actually make the payments on a home that’s their primary residence, but the deed and mortgage documents are in their name, can they be considered a first-time home buyer?
A. Yes. If a taxpayer purchases a home to be used as a primary residence from an unrelated person and has not owned a home within the previous 36 months, the taxpayer is eligible for the first-time homebuyer credit regardless of who makes the mortgage payment. (05/06/09)
Q. Do taxpayers affected by Hurricane Katrina or other disasters qualify as first-time homebuyers if their principal residence (i.e. main home) became uninhabitable more than three years ago and they have not formally disposed of the uninhabitable home or purchased or built a new home in the interim?
A. A first-time homebuyer is an individual (and the individual's spouse, if married) who has not had an ownership interest in a principal residence (within the meaning of Section 121 of the Internal Revenue Code) during the three years before the date a new principal residence is purchased. Applying Section 121, a taxpayer can be a first-time homebuyer if the taxpayer has not owned and used a property as a principal residence at any time during the three years before the date of purchase of the new residence. Taxpayers affected by Hurricane Katrina who have owned but not used their property as a principal residence within the last three years may be eligible for the first-time homebuyer credit when they purchase a new principal residence. (05/07/09)
Thursday, August 20, 2009
Will the $8,000 first time home buyer tax credit be extended or even expanded?
FWD: from Eleanor Thorne, Cary Mortgage Loans, Cary, NC
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Right now, there are 5 bills being presented in Congress which either extend or expand the current $8,000 first time home buyer tax credit which expires December 1, 2009.
The bills are:
Senate Bill S1230 - the Home Buyer Tax Credit Act of 2009 - introduced by Senator Johnny Isakson (R-GA), proposes a non-refundable tax credit up to $15,000, that can be split equally over two years, for all primary residence purchases - not just purchases by first time home buyers.
House Bill HR 2619 introduced by Representative Kenny Marchant (R-TX) proposes to extend the existing $8,000 tax credit to July 1, 2010 and add a tax credit of up to $3,000 for homeowners who refinance.
HR 2606 - the Home Buying Credit Expansion Act introduced by Representative Eddie Bernice Johnson (D-TX) proposes to remove the first-time home buyer requirement and would allow allowing all principle residence purchases to qualify for a tax credit. The bill would also extend the original bill through Jan 1, 2010.
HR 2801 - the Home Ownership Move the Economy (HOME) Act introduced by Representative Howard Coble (R-NC) is similar to S1230 discussed above but would extends the credit to Jan 1, 2011.
Finally, HR 2655 introduced by Representative Dan Burton (R-IN) would eliminate the first time home buyer requirement while extending the credit to Jan 1, 2011.
At a minimum, it looks like Congress will be having a healthy debate about whether to extend this credit and if it should be expanded. Personally, last year, I felt Congress should have enacted the proposal for the tax credit to be $15,000 and available for all home purchases. It is wonderful to provide incentives for first time home buyers but, given the state of the economy, it would be very beneficial to open the credit up ($8,000 or $15,000) to all home buyers. This could help provide a significant stimulus that the economy needs. Imagine how it would help the state of the Chapel Hill real estate market and the Durham real estate market.
I will keep you posted on new developments regarding the $8,000 home buyer tax credit.
--------------------------------------------------------
Right now, there are 5 bills being presented in Congress which either extend or expand the current $8,000 first time home buyer tax credit which expires December 1, 2009.
The bills are:
Senate Bill S1230 - the Home Buyer Tax Credit Act of 2009 - introduced by Senator Johnny Isakson (R-GA), proposes a non-refundable tax credit up to $15,000, that can be split equally over two years, for all primary residence purchases - not just purchases by first time home buyers.
House Bill HR 2619 introduced by Representative Kenny Marchant (R-TX) proposes to extend the existing $8,000 tax credit to July 1, 2010 and add a tax credit of up to $3,000 for homeowners who refinance.
HR 2606 - the Home Buying Credit Expansion Act introduced by Representative Eddie Bernice Johnson (D-TX) proposes to remove the first-time home buyer requirement and would allow allowing all principle residence purchases to qualify for a tax credit. The bill would also extend the original bill through Jan 1, 2010.
HR 2801 - the Home Ownership Move the Economy (HOME) Act introduced by Representative Howard Coble (R-NC) is similar to S1230 discussed above but would extends the credit to Jan 1, 2011.
Finally, HR 2655 introduced by Representative Dan Burton (R-IN) would eliminate the first time home buyer requirement while extending the credit to Jan 1, 2011.
At a minimum, it looks like Congress will be having a healthy debate about whether to extend this credit and if it should be expanded. Personally, last year, I felt Congress should have enacted the proposal for the tax credit to be $15,000 and available for all home purchases. It is wonderful to provide incentives for first time home buyers but, given the state of the economy, it would be very beneficial to open the credit up ($8,000 or $15,000) to all home buyers. This could help provide a significant stimulus that the economy needs. Imagine how it would help the state of the Chapel Hill real estate market and the Durham real estate market.
I will keep you posted on new developments regarding the $8,000 home buyer tax credit.
Thursday, April 23, 2009
World Journal Article
陳寧：買房子 正是時候
記者阮叔梅密蘇里州哥倫比亞市報導
March 14, 2009 12:00 AM | 17 觀看次數 | 0 0 評論推薦: | 電郵給朋友 | 打印
在密州哥倫比亞市從事房屋仲介業的陳寧認為，房價下跌、低利率、聯邦政府津貼等因素，都極有利於購屋者。 記者阮叔梅／攝影
在密州哥倫比亞市從事房屋仲介業的陳寧認為，房價下跌、低利率、聯邦政府津貼等因素，都極有利於購屋者。 記者阮叔梅／攝影
slideshow
經濟不景氣，全美各地房地產價格普遍下跌，加上低利率、聯邦政府津貼，有些房屋仲介業者認為，目前買房，正是時候。
在密州哥倫比亞市從事房屋仲介業的陳寧表示，為了刺激經濟，聯邦政府日前推出優惠方案，凡是首次購屋者，購屋時間為2009年1月1日至2009年11月30日之間，均可獲得聯邦政府8000元的津貼﹔首次購屋者的定義為過去三年未擁有自用住宅的消費者。
陳寧說，許多法拍屋價格慘跌，但是消費者還是必須小心，事先找人估價並檢查房屋狀況，才能保證事後不會後悔。
全美法拍屋比例高達約12%，內華達、加州、亞利桑納、佛羅里達為法拍屋比例最高的四個州，但是近來受到失業率不斷上升影響，密西根、喬治亞、俄亥俄等州法拍屋比例有後來居上的趨勢。
密蘇里州法拍屋比例全美排名19，相對而言，哥市為大學城，受經濟不景氣衝擊有限，法拍屋比例不到2%，過去三年，哥市的房價跌了大約5%。
陳寧表示，哥市是有些價位低於20萬的房子，甚至出現買主競相出價的情況。她也建議房屋賣主，重新粉刷牆壁，更換客廳地毯，都有助於房屋及早賣出。
記者阮叔梅密蘇里州哥倫比亞市報導
March 14, 2009 12:00 AM | 17 觀看次數 | 0 0 評論推薦: | 電郵給朋友 | 打印
在密州哥倫比亞市從事房屋仲介業的陳寧認為，房價下跌、低利率、聯邦政府津貼等因素，都極有利於購屋者。 記者阮叔梅／攝影
在密州哥倫比亞市從事房屋仲介業的陳寧認為，房價下跌、低利率、聯邦政府津貼等因素，都極有利於購屋者。 記者阮叔梅／攝影
slideshow
經濟不景氣，全美各地房地產價格普遍下跌，加上低利率、聯邦政府津貼，有些房屋仲介業者認為，目前買房，正是時候。
在密州哥倫比亞市從事房屋仲介業的陳寧表示，為了刺激經濟，聯邦政府日前推出優惠方案，凡是首次購屋者，購屋時間為2009年1月1日至2009年11月30日之間，均可獲得聯邦政府8000元的津貼﹔首次購屋者的定義為過去三年未擁有自用住宅的消費者。
陳寧說，許多法拍屋價格慘跌，但是消費者還是必須小心，事先找人估價並檢查房屋狀況，才能保證事後不會後悔。
全美法拍屋比例高達約12%，內華達、加州、亞利桑納、佛羅里達為法拍屋比例最高的四個州，但是近來受到失業率不斷上升影響，密西根、喬治亞、俄亥俄等州法拍屋比例有後來居上的趨勢。
密蘇里州法拍屋比例全美排名19，相對而言，哥市為大學城，受經濟不景氣衝擊有限，法拍屋比例不到2%，過去三年，哥市的房價跌了大約5%。
陳寧表示，哥市是有些價位低於20萬的房子，甚至出現買主競相出價的情況。她也建議房屋賣主，重新粉刷牆壁，更換客廳地毯，都有助於房屋及早賣出。
Wednesday, April 22, 2009
Market condition
It is really getting busy in Columbia MO.
We now have 8 under contract. 4 will close in April, 3 will close in May, 1 in Oct.
2 more new listings coming soon also.
Too busy to blog these days.
We now have 8 under contract. 4 will close in April, 3 will close in May, 1 in Oct.
2 more new listings coming soon also.
Too busy to blog these days.
Saturday, April 11, 2009
Being a landlord
Got first maintenance bill, about $400. So the 4 plex gets $475 per unit for rent, but maintenance almost cost the rent of 1 unit.
Hopefully this is just the start up cost, and things will go smoother from here. 2 units needed almost all the screens replaced, another unit needed dishwasher work. Once these are repaired, they should be good for a while.
I hope.
Hopefully this is just the start up cost, and things will go smoother from here. 2 units needed almost all the screens replaced, another unit needed dishwasher work. Once these are repaired, they should be good for a while.
I hope.
2 Listings under contract
It has been a great week. 2 listings got offers and are now under contract. One was only on market for 10 days.
Both should close in end of April.
Both should close in end of April.
Sunday, April 5, 2009
What kind of houses woudl be easy to sell
Over the weekend, I have heard this comment 3 times.
Well, it really is not the location or the age that decide that, it is the price.
No matter a 50 year old house or a 2 year old house, no matter a house in best school district or in the far end edge of town, how fast it sells really depend on its price comparing to houses similar to it.
If the house across the street with same age, same size and same style just sold for $120,000, although you updated your furnace and air conditioner and spent over $6000, it would still be hard for the updated home to sell for $127,000.
Money that homeowner spent on updating does not always come back to them in sales price.
It may help it to sell faster -- in turn that is saving seller money indirectly. Just think of the mortgage interest and real estate taxes for 3 more month.
Moreover, a vacant home's insurance is a lot more than normal owner occupied home. Last time I checked, it was 3 times more.
In addition, there are factors no one can control, such as a highway being built after owner buys the house, or the change of school districts decided by the local government.
Life is an adventure, isn't it?
Well, it really is not the location or the age that decide that, it is the price.
No matter a 50 year old house or a 2 year old house, no matter a house in best school district or in the far end edge of town, how fast it sells really depend on its price comparing to houses similar to it.
If the house across the street with same age, same size and same style just sold for $120,000, although you updated your furnace and air conditioner and spent over $6000, it would still be hard for the updated home to sell for $127,000.
Money that homeowner spent on updating does not always come back to them in sales price.
It may help it to sell faster -- in turn that is saving seller money indirectly. Just think of the mortgage interest and real estate taxes for 3 more month.
Moreover, a vacant home's insurance is a lot more than normal owner occupied home. Last time I checked, it was 3 times more.
In addition, there are factors no one can control, such as a highway being built after owner buys the house, or the change of school districts decided by the local government.
Life is an adventure, isn't it?
Our Market as of April 5, 2009
Here is a quick and rough data:
We currently have 226 single family homes priced between $50,000 to $250,000 under contract in Columbia school district in MLS.
Of these 226, 66 were on market less than 30 days.
The longest on market day is over 700 days.
Why some sold in 1 day, while others take 700 days?
In my experience, first factor is price. No matter the age and location of the house, if it is over priced, it will be on the market for a while. How long it will sit depending on how much it is over priced.
Sellers who bought a home around 05-06 have a hard time to price it according to current market. Yet the reality is pricing it right, pricing it competitively will save seller much headache and money later. Having a home for sale for over a year or 2 years cannot be beneficial to anyone esp. the buyer -- often the over priced home end up selling for less than market because the buyer tend to negotiate more aggressively, knowing that it's a stale listing.
Needless to say, other than price, how well the home shows is important. Painting is an inexpensive way to spruce up a home quickly. I have heard many seller say, 'we don't know what color the buyer would like, buyers would like to paint it to their own color choice anyway.'
However, the living room and kitchen often give the first impression, and if seller is serious about selling, they should paint at least the living room and kitchen to a neutral color, but not white. I cannot count how often a buyer would say 'boy that house look sterile.' A house with nothing but white paint make people think of hospitals.
A few hundred dollar in paint and labor can bring a couple of more thousand in sales price, because new and neutral paint would make a home look new and well cared for.
If a seller does not know what color to choose, one easy way is to go view some new construction homes, and copy one of them.
We currently have 226 single family homes priced between $50,000 to $250,000 under contract in Columbia school district in MLS.
Of these 226, 66 were on market less than 30 days.
The longest on market day is over 700 days.
Why some sold in 1 day, while others take 700 days?
In my experience, first factor is price. No matter the age and location of the house, if it is over priced, it will be on the market for a while. How long it will sit depending on how much it is over priced.
Sellers who bought a home around 05-06 have a hard time to price it according to current market. Yet the reality is pricing it right, pricing it competitively will save seller much headache and money later. Having a home for sale for over a year or 2 years cannot be beneficial to anyone esp. the buyer -- often the over priced home end up selling for less than market because the buyer tend to negotiate more aggressively, knowing that it's a stale listing.
Needless to say, other than price, how well the home shows is important. Painting is an inexpensive way to spruce up a home quickly. I have heard many seller say, 'we don't know what color the buyer would like, buyers would like to paint it to their own color choice anyway.'
However, the living room and kitchen often give the first impression, and if seller is serious about selling, they should paint at least the living room and kitchen to a neutral color, but not white. I cannot count how often a buyer would say 'boy that house look sterile.' A house with nothing but white paint make people think of hospitals.
A few hundred dollar in paint and labor can bring a couple of more thousand in sales price, because new and neutral paint would make a home look new and well cared for.
If a seller does not know what color to choose, one easy way is to go view some new construction homes, and copy one of them.
Saturday, March 21, 2009
Being a landlord
We finally closed on our 4-plex. Previous owner owed taxes plus mortgage, and etc. We finally agreed on a price that they and we both had to pay more to get the deal done.
As it happened, the day we closed, I had a friend who had a friend needed a place to live for 1-2 months. So we rented to them. 3 of the 4 units were already rented, although March rent has not been paid. Previous owner was a long distance owner, he did not take care of his tenants well, and the tenants did not pay rent on time. Such was a vicious cycle.
Hopefully, as we have become the owner, and hired a good manager, he would start reinforcing the rent payment, and taking care of the tenants better. 3 old tenants all have a list of repairs that previous owner did not attend to.
Since I was the one rented out the last unit last week, I dealt with the tenant. It's not a tough job, but can be tedious. Most of the jobs are cleaning jobs, and thankfully, they got done within the week.
I can see now that it is really worth it to hire someone to manage the rental property. With a family to take care of, and having another job, trying to take care of these rentals ourselves would be very time consuming.
We pay our manager 7% of our gross rent. He is responsible to collect rent, get tenants if one unit becomes vacant. The repair and cleaning is extra, for which we pay him $20/hour. If the job is more than he can handle, he would discuss with us.
There is no free lunch. Although our gross rent return looks very good, this investment is not without risk, nor is it a piece of cake.
As it happened, the day we closed, I had a friend who had a friend needed a place to live for 1-2 months. So we rented to them. 3 of the 4 units were already rented, although March rent has not been paid. Previous owner was a long distance owner, he did not take care of his tenants well, and the tenants did not pay rent on time. Such was a vicious cycle.
Hopefully, as we have become the owner, and hired a good manager, he would start reinforcing the rent payment, and taking care of the tenants better. 3 old tenants all have a list of repairs that previous owner did not attend to.
Since I was the one rented out the last unit last week, I dealt with the tenant. It's not a tough job, but can be tedious. Most of the jobs are cleaning jobs, and thankfully, they got done within the week.
I can see now that it is really worth it to hire someone to manage the rental property. With a family to take care of, and having another job, trying to take care of these rentals ourselves would be very time consuming.
We pay our manager 7% of our gross rent. He is responsible to collect rent, get tenants if one unit becomes vacant. The repair and cleaning is extra, for which we pay him $20/hour. If the job is more than he can handle, he would discuss with us.
There is no free lunch. Although our gross rent return looks very good, this investment is not without risk, nor is it a piece of cake.
Monday, March 9, 2009
24 pendings over the weekend
This past weekend we had 24 properties under contract in Columbia MLS system. One of Paul' buyer is one of them. Paul also has a condo under contract verbally, which is not included in the 24 count.
One thing worth to note is that 3 of the 24 are in the $300k price range. So the outlook for the higher price home in the Columbia MO market is looking good this year.
One thing worth to note is that 3 of the 24 are in the $300k price range. So the outlook for the higher price home in the Columbia MO market is looking good this year.
Tuesday, March 3, 2009
Foreclosure rate in Boone County
From Columbia Business Times:
--------------------------------------------------
Local foreclosures on record pace; However, numbers still small proportion of property total
by Jacob Barker
November 28,2008
Tom Schauwecker, Boone County’s assessor since 1989, and Greg Harmon, a veteran real estate agent, are both authorities on the subject of foreclosures. Both say they’ve never experienced anything like the current market, which is forcing a record number of people to lose homes and land.
For Tom Schauwecker and his staff, the downturn is giving them some down time for the first time in years. For Harmon the slowdown has swamped his Web site, which tracks and lists foreclosures in Boone County.
Schauwecker said for the past 19 years, “we’ve been so busy appraising and photographing new construction, that the decline in building permits has allowed us to step back and do a little analysis.”
Tom Schauwecker
Tom Schauwecker
Greg Harmon
Greg Harmon
His staff was able to compile a detailed list of property foreclosures in Boone County-expected to reach 300 this year-and develop a map showing their location. There’s been a lot of inquiry on the subject, he said, primarily from the media.
Rob Wolverton, president of R. Anthony Development, cautions that the local foreclosure rate should be put in perspective: it’s high for Boone County, but low relative to total property and to the national rates.
“For those 300 people, this is a catastrophe,” Wolverton said. “But there are more than 40,000 housing units in Boone County. It’s an issue, but it’s less than 1 percent of the market.”
An estimate from the Secretary of State’s office at the beginning of October put the total number of foreclosed homes in Missouri at 27,000. Nationally, for all FDIC insured institutions, the ratio of non-current loans and leases to total loans and leases in the second quarter more than doubled, to 2.04 percent.
-----------------------
To read more:
http://www.columbiabusinesstimes.com/2825/2008/11/28/local-foreclosures-on-record-pace-however-numbers-still-small-proportion-of-property-total/
--------------------------------------------------
Local foreclosures on record pace; However, numbers still small proportion of property total
by Jacob Barker
November 28,2008
Tom Schauwecker, Boone County’s assessor since 1989, and Greg Harmon, a veteran real estate agent, are both authorities on the subject of foreclosures. Both say they’ve never experienced anything like the current market, which is forcing a record number of people to lose homes and land.
For Tom Schauwecker and his staff, the downturn is giving them some down time for the first time in years. For Harmon the slowdown has swamped his Web site, which tracks and lists foreclosures in Boone County.
Schauwecker said for the past 19 years, “we’ve been so busy appraising and photographing new construction, that the decline in building permits has allowed us to step back and do a little analysis.”
Tom Schauwecker
Tom Schauwecker
Greg Harmon
Greg Harmon
His staff was able to compile a detailed list of property foreclosures in Boone County-expected to reach 300 this year-and develop a map showing their location. There’s been a lot of inquiry on the subject, he said, primarily from the media.
Rob Wolverton, president of R. Anthony Development, cautions that the local foreclosure rate should be put in perspective: it’s high for Boone County, but low relative to total property and to the national rates.
“For those 300 people, this is a catastrophe,” Wolverton said. “But there are more than 40,000 housing units in Boone County. It’s an issue, but it’s less than 1 percent of the market.”
An estimate from the Secretary of State’s office at the beginning of October put the total number of foreclosed homes in Missouri at 27,000. Nationally, for all FDIC insured institutions, the ratio of non-current loans and leases to total loans and leases in the second quarter more than doubled, to 2.04 percent.
-----------------------
To read more:
http://www.columbiabusinesstimes.com/2825/2008/11/28/local-foreclosures-on-record-pace-however-numbers-still-small-proportion-of-property-total/
I am on someone else's blog
http://decoratornextdoor.blogspot.com/
Tuesday, March 3, 2009
This Might Be The Year
An interview with Ling Bunch, Realtor
House of Brokers
Tuesday, March 3, 2009
This Might Be The Year
An interview with Ling Bunch, Realtor
House of Brokers
Monday, March 2, 2009
Another busy week
In the CBOR MLS, 17 homes went under contract over the weekend.
I had a closing on Friday, Feb 27th. It was a relaxing weekend for me, I did not work much at all, other than surfing the internet.
Buyers are like tulips, they pop up out of no where when Spring comes around.
I had a closing on Friday, Feb 27th. It was a relaxing weekend for me, I did not work much at all, other than surfing the internet.
Buyers are like tulips, they pop up out of no where when Spring comes around.
Monday, February 23, 2009
22 houses under contract over the weekend
Weather is still cold but home buyers have gotten out of their hibernation. Over the weekend, in the MLS, 22 properties went under contract. That is a bigger number than I have seen in a long time.
One of them is our listing in Hallsville, $191500. There were almost a bidding war on that! And in the beginning I thought it might be hard to sell.
Paul and I both had open houses. The house I was in was a $172000 3bed 2 bath slab in SW, 10 parties came, that was fun!
Paul was in a ranch w/o in SW, priced $225000. He had 6 parties coming through. Lots of people looking now.
One of them is our listing in Hallsville, $191500. There were almost a bidding war on that! And in the beginning I thought it might be hard to sell.
Paul and I both had open houses. The house I was in was a $172000 3bed 2 bath slab in SW, 10 parties came, that was fun!
Paul was in a ranch w/o in SW, priced $225000. He had 6 parties coming through. Lots of people looking now.
Friday, February 20, 2009
Buying Foreclosed Properties
I had 4 opportunities to work with buyers buying foreclosed properties in 2008.
Foreclosed properties can be good deals for the buyer, but not always. I have seen foreclosed properties listed for higher price than normal market price. The owner of foreclosed properties are often not in town, and do not know the local market well. They normally use a local real estate agent, but not always. Currently in Columbia market, there are foreclosed properties listed by real estate agencies located 2 hours away. A side note, there are rental properties managed by out of town management companies. Why the landlord decide to use someone 2 hours away to manage the property is baffling to me.
In any case, the buyers may get a good deal buying a foreclosed property, but buyer also take on some risk.
Normally the seller would not repair anything wrong that is found by the inspector. Although after inspection, the buyer can back out of the contract, but at that point, buyer has already paid for the inspection. So that is an expense. Also, if the property pass inspection, buyer applying for loans still need to get an appraisal and pay for it.
If the appraisal price is lower than contract price, again, buyer can back out, but by now buyer has spent more money.
It is important the buyer use an agent or do detail research on their own to find out whether the previous owner (before foreclosure) owed anything else on the property.
In Jan. one of my buyer bought a foreclosed property and we found there were a $20000+ tax lien on it. The seller paid for it, otherwise, the buyer would not have bought the house!
In conclusion, buying foreclosed property could be a good deal, but the buyer and agent have to be extra careful.
Foreclosed properties can be good deals for the buyer, but not always. I have seen foreclosed properties listed for higher price than normal market price. The owner of foreclosed properties are often not in town, and do not know the local market well. They normally use a local real estate agent, but not always. Currently in Columbia market, there are foreclosed properties listed by real estate agencies located 2 hours away. A side note, there are rental properties managed by out of town management companies. Why the landlord decide to use someone 2 hours away to manage the property is baffling to me.
In any case, the buyers may get a good deal buying a foreclosed property, but buyer also take on some risk.
Normally the seller would not repair anything wrong that is found by the inspector. Although after inspection, the buyer can back out of the contract, but at that point, buyer has already paid for the inspection. So that is an expense. Also, if the property pass inspection, buyer applying for loans still need to get an appraisal and pay for it.
If the appraisal price is lower than contract price, again, buyer can back out, but by now buyer has spent more money.
It is important the buyer use an agent or do detail research on their own to find out whether the previous owner (before foreclosure) owed anything else on the property.
In Jan. one of my buyer bought a foreclosed property and we found there were a $20000+ tax lien on it. The seller paid for it, otherwise, the buyer would not have bought the house!
In conclusion, buying foreclosed property could be a good deal, but the buyer and agent have to be extra careful.
Full price offer!
One of Paul's listing got a full price offer. They may even get 2 full price offer. It's a 5 acre land with a 5 yr old house. House is not big or fancy, but there are also 2 large workshop/barn. A lot of men's dream place, I guess.
买房购车可退税 耆老额外有津贴
http://gb.news.sina.com/us/singtao/104-103-102-102/2009-02-14/06273636631.html
国会13日通过的7870亿元经济刺激案，将从多个方面惠及普通百姓，从子女上学，购买新车，购置第一处住房，到改善住宅能效，纳税人都能享受到某种程度的税务优惠。
国会13日通过的7870亿元经济刺激案，将从多个方面惠及普通百姓，从子女上学，购买新车，购置第一处住房，到改善住宅能效，纳税人都能享受到某种程度的税务优惠。
不过振市案通过后，美国政府2009年赤字额将达1.6万亿元，历年总赤字额则高达10.7万亿元，令全美人均负债3.6万元。子孙后代将面临税率增加和公共服务减少的境遇。以下为该案主要内容，所有条款有效期均为两年。
薪资红包6月起发
自2009年6月起，每位在职个人每周薪酬支票可少扣税约13元，截至年底共退税400元，夫妻可享受退税800元。2010全年，个人每周退 税额降至约7.7元。年收入低于7.5万元的个人和不足15万元的夫妻可享受全额退税，年收入低于10万元的个人和不足20万元的夫妻可获部分退税。不缴 纳联邦收入税的特困家庭也有资格申请薪酬退税。
约2000万中高收入纳税人今年可免缴最低替代税（AMT）。
老弱病残福利扩大
粮食券福利上调13.6%，因此四口之家可在每月588元基础上额外获发80元。
领取社安补助金的穷人、老人和残疾人，以及退休人员可一次性额外享受250元津贴。
2009年和2010年申请每名子女1000元退税的门槛降至年收入3000元，因此不缴纳联邦收入税的特困家庭也有资格申请。根据扩大的薪酬 退税政策（Earned Income Tax Credit），有3个或以上子女的贫困家庭可享受的退税比例从四成上调至45%。
首次购屋退税8000元
在2009年1月1日至12月1日之间的首次购房者可享受8000元退税，只要3年内不转售房屋，则不需归还此笔退税。年收入低于7.5万元的 个人和不足15万元的夫妻可享受全额退税。但在2008年4月9日至12月31日的首次购房者，仍按原规定执行，只能享受房价10%退税额度，上限仍为 7500元，且须在15年内还清。
购置节能门窗、炉灶和空调的家庭，可享受採购成本3成的退税，退税上限为1500元。
失业人士不失健保
失业者可额外领取20周失业金，位于高失业率地区可在此基础上再额外领取13周失业金（即33周）。每周失业金将在约300元基础上增加25元。今年领取失业福利者，失业金头2400元不需缴纳联邦收入税。
在失业时失去健保者可以较低价格维持健保。根据Cobra计划，大中型公司的僱员失业后可继续享受18个月的健保，但每月支出超过1000元。 振市案规定，政府承担头9个月保险金的65%，适用于受僱20人以上公司、在去年9月1日至今年年底失业的人。未选择Cobra计划的符合条件人士可在 60天内提交申请。该津贴仅适用年收入低于12.5万元的个人和不足25万元的夫妻。
IRS form 5405 for First Time homebuyer tax credit
IRS has updated the 5405 form to reflect the $8000 First Time homebuyer tax credit today.
http://www.irs.gov/app/picklist/list/formsInstructions.html?value=5405&criteria=formNumber
Home Ownership Assistance Program
This morning I took a class at CBOR (Cloumbia Board of Realtors) to learn about this program.
Details are here:
http://www.gocolumbiamo.com/Planning/Housing_Programs/homepro.php
Current income limits are as follows:
Family Size Lower Income
1 person $34,700
2 persons $39,700
3 persons $44,650
4 persons $49.600
5 persons $53,550
6 persons $57,550
7 persons $61,500
8 persons $65,450
How does the program work?
Through the normal process of buying a home, low- to moderate-income families may not have adequate funds for the down payment and other up-front loan closing costs. Assistance up to $5,000 or 5% of the purchase price, whichever is less, can be provided in the form of a 5 year forgivable loan to assist homebuyers in purchasing an existing home. These funds are only to be used for down payment and closing costs (prepaid costs such as taxes and insurance are not eligible), or to reduce the principle amount of a loan, and buyers must provide a minimum of $500 in cash toward the purchase.
Application for assistance is made through your lender in cooperation with the City of Columbia Planning and Development. Once you have met your lender’s requirements to get a home loan, have your loan officer contact Planning and Development at (573) 874-7239.
Buyers are required to attend a homebuyer education program, such as “Home Buying 101” or “MoneySmart” designed to help them understand their credit history and the process of buying and paying for a home. Local lenders are partners in this program. Some lenders offer home loans at terms that make home-ownership attractive and affordable. They can also refer buyers to the appropriate credit and homebuyer education programs offered throughout Columbia.
In cases where additional assistance is required to meet lender or program underwriting requirements, the City may increase assistance to a maximum of $10,000 or 10% of the purchase price, whichever is less, in order to fill a financing gap. A deed of trust will be required where City assistance exceeds $5,000, and loans will be forgiven over ten years.
Where can I buy a house?
Houses purchased under this program must be located within the city limits of Columbia. Applicants must avoid floodplains to qualify.
What types of property are eligible?
The property can be a single or a multi-family (condominium) dwelling. City staff must inspect the entire property to determine that it meets the City’s property maintenance code. All deficiencies must be corrected prior to homeownership assistance funds being provided.
Houses built prior to January 1, 1978, must have an inspection to determine if deteriorated paint exists, and in certain situations, samples of deteriorated paint and bare soil may be taken and sent to a lab for analysis. If the paint is determined to contain lead above HUD’s level of concern, paint stabilization of deteriorated surfaces by trained personnel is required prior to homeownership assistance funds being provided. You are also restricted from moving into the home until it is determined that identified lead hazards are corrected and a clearance of the unit is achieved. A $500 grant is available to the buyer to help offset costs associated with lead hazard reduction; all costs over $500 must be paid by the buyer or seller.
Are there any other requirements?
Prior to receiving city funds, and depending upon how much assistance the buyer receives, he/she is required to sign an Affidavit and Promissory Note to prevent the leasing, subleasing or selling of their home for a minimum of five years. A deed of trust will be required where City assistance exceeds $5,000. The Affidavit and Deed of Trust will be recorded at the Boone County Recorder’s Office. Funds provided for down payment and closing cost assistance shall be repaid on a prorated basis if the property is sold or ceases to be owner-occupied before the end of the affordability period.
The value of the property to be purchased cannot exceed $257,497.
What other programs are available?
Local lenders offer a number of loan packages -- take the time needed to find the loan package that works best for you. You should also carefully read the informative brochure published by HUD, Don’t Be a Victim of Loan Fraud – Protect Yourself from Predatory Lenders.
Where can I get more information?
Contact a loan officer at a local bank, savings and loan, mortgage company, or credit union, or the Department of Planning & Development on the 2nd floor of City Hall at 701 E. Broadway.
Telephone: (573)874-7239 (TTY: 1-800-MOR-ELAY)
Fax: (573)874-7546
Website: www.gocolumbiamo.com/dept/plan
E-mail: planning@gocolumbiamo.com.
Details are here:
http://www.gocolumbiamo.com/Planning/Housing_Programs/homepro.php
Current income limits are as follows:
Family Size Lower Income
1 person $34,700
2 persons $39,700
3 persons $44,650
4 persons $49.600
5 persons $53,550
6 persons $57,550
7 persons $61,500
8 persons $65,450
How does the program work?
Through the normal process of buying a home, low- to moderate-income families may not have adequate funds for the down payment and other up-front loan closing costs. Assistance up to $5,000 or 5% of the purchase price, whichever is less, can be provided in the form of a 5 year forgivable loan to assist homebuyers in purchasing an existing home. These funds are only to be used for down payment and closing costs (prepaid costs such as taxes and insurance are not eligible), or to reduce the principle amount of a loan, and buyers must provide a minimum of $500 in cash toward the purchase.
Application for assistance is made through your lender in cooperation with the City of Columbia Planning and Development. Once you have met your lender’s requirements to get a home loan, have your loan officer contact Planning and Development at (573) 874-7239.
Buyers are required to attend a homebuyer education program, such as “Home Buying 101” or “MoneySmart” designed to help them understand their credit history and the process of buying and paying for a home. Local lenders are partners in this program. Some lenders offer home loans at terms that make home-ownership attractive and affordable. They can also refer buyers to the appropriate credit and homebuyer education programs offered throughout Columbia.
In cases where additional assistance is required to meet lender or program underwriting requirements, the City may increase assistance to a maximum of $10,000 or 10% of the purchase price, whichever is less, in order to fill a financing gap. A deed of trust will be required where City assistance exceeds $5,000, and loans will be forgiven over ten years.
Where can I buy a house?
Houses purchased under this program must be located within the city limits of Columbia. Applicants must avoid floodplains to qualify.
What types of property are eligible?
The property can be a single or a multi-family (condominium) dwelling. City staff must inspect the entire property to determine that it meets the City’s property maintenance code. All deficiencies must be corrected prior to homeownership assistance funds being provided.
Houses built prior to January 1, 1978, must have an inspection to determine if deteriorated paint exists, and in certain situations, samples of deteriorated paint and bare soil may be taken and sent to a lab for analysis. If the paint is determined to contain lead above HUD’s level of concern, paint stabilization of deteriorated surfaces by trained personnel is required prior to homeownership assistance funds being provided. You are also restricted from moving into the home until it is determined that identified lead hazards are corrected and a clearance of the unit is achieved. A $500 grant is available to the buyer to help offset costs associated with lead hazard reduction; all costs over $500 must be paid by the buyer or seller.
Are there any other requirements?
Prior to receiving city funds, and depending upon how much assistance the buyer receives, he/she is required to sign an Affidavit and Promissory Note to prevent the leasing, subleasing or selling of their home for a minimum of five years. A deed of trust will be required where City assistance exceeds $5,000. The Affidavit and Deed of Trust will be recorded at the Boone County Recorder’s Office. Funds provided for down payment and closing cost assistance shall be repaid on a prorated basis if the property is sold or ceases to be owner-occupied before the end of the affordability period.
The value of the property to be purchased cannot exceed $257,497.
What other programs are available?
Local lenders offer a number of loan packages -- take the time needed to find the loan package that works best for you. You should also carefully read the informative brochure published by HUD, Don’t Be a Victim of Loan Fraud – Protect Yourself from Predatory Lenders.
Where can I get more information?
Contact a loan officer at a local bank, savings and loan, mortgage company, or credit union, or the Department of Planning & Development on the 2nd floor of City Hall at 701 E. Broadway.
Telephone: (573)874-7239 (TTY: 1-800-MOR-ELAY)
Fax: (573)874-7546
Website: www.gocolumbiamo.com/dept/plan
E-mail: planning@gocolumbiamo.com.
Wednesday, February 18, 2009
Another lost in bidding war
Just this morning, Paul's buyer lost a duplex in a bidding war. When price is low enough, buyers are fighting for them.
Somehow I don't hear those on the evening news.
Somehow I don't hear those on the evening news.
Tuesday, February 17, 2009
Bidding wars in real estate, again.
In the past 10 days, I saw 2 bidding wars in our office. One house was $149900, and had 3 interested parties. Another house was $172900, and had 2 full price offer.
Humm, spring is coming...
Humm, spring is coming...
Monday, February 16, 2009
Seafood on sale at Hyvee
Feb 16, 2009
Today I found Orange Roughy on sale at HyVee for $4.49 for 12 oz pack. These are our favorite fish. Kids love fish and rice -- the Chinese way.
今天Hyvee海鲜减价， 罗非鱼 $4.49/12oz.
Shrimp is on sale too, $9.99 for a 2 lb bag, pre-cooked, and shelled.
冰冻熟虾仁9。99/2磅。
It's close to Lent time, I guess that is why seafood are on sale.
Today I found Orange Roughy on sale at HyVee for $4.49 for 12 oz pack. These are our favorite fish. Kids love fish and rice -- the Chinese way.
今天Hyvee海鲜减价， 罗非鱼 $4.49/12oz.
Shrimp is on sale too, $9.99 for a 2 lb bag, pre-cooked, and shelled.
冰冻熟虾仁9。99/2磅。
It's close to Lent time, I guess that is why seafood are on sale.
Time to splant
Paul started some tomato seeds. He is trying to grow Abraham Lincoln tomato this year.
I am thinking of starting some lettuce and some Chinese baby bok choi.
I am thinking of starting some lettuce and some Chinese baby bok choi.
Frustration with compact fluorescent light bulbs
When these first became available, Paul got several boxes -- total of 30 bulbs I think -- when they were on sale at WestLakes.
Well, over the past 2 yrs, our experience was that about 10% of these burn out faster than they promised.
The good news is, Westlake would take them back without receipts. A clerk there told us we are not the only ones returning them. Enough people are returning them so Westlake is accepting all returns. They would either exchange one for you or give you money back.
Oh, and Homedepot will take the burnt out ones. Try not to dispose these CFL bulbs in the normal trash, because they contain mercury.
I just found an article that explains this issue much better than I can:
http://greeninc.blogs.nytimes.com/2009/01/27/why-efficient-light-bulbs-fail-to-thrive/?partner=rss&emc=rss
Well, over the past 2 yrs, our experience was that about 10% of these burn out faster than they promised.
The good news is, Westlake would take them back without receipts. A clerk there told us we are not the only ones returning them. Enough people are returning them so Westlake is accepting all returns. They would either exchange one for you or give you money back.
Oh, and Homedepot will take the burnt out ones. Try not to dispose these CFL bulbs in the normal trash, because they contain mercury.
I just found an article that explains this issue much better than I can:
Why Efficient Light Bulbs Fail to Thrive
By Leora Broydo Vestelhttp://greeninc.blogs.nytimes.com/2009/01/27/why-efficient-light-bulbs-fail-to-thrive/?partner=rss&emc=rss
Sunday, February 15, 2009
Our rentals
We have 4 rentals, renting from $500 to $720/month. After managing them ourselves for about 3 yrs, we turned it to a management co. Well, he is worth his charge! After he took over, for the first time, all 4 are rented, and 1 of the 4 even had a rent increase.
Our yearly gross rent income (before taxes, insurance and expenses) over property purchase price is a little less than 10%. But nowadays, there are rental property on the market that brings over 12% return.
Humm, may be time to buy some more...
Our yearly gross rent income (before taxes, insurance and expenses) over property purchase price is a little less than 10%. But nowadays, there are rental property on the market that brings over 12% return.
Humm, may be time to buy some more...
$8000 tax credit for first time home buyer in 2009
I have been research everyday to get the details about this. Here is what I found so far:
From the Wall Street Journal:
Congress slightly increased to $8,000 an existing $7,500 credit for first-time homebuyers and eliminated repayment provisions. Congressional negotiators said that $8,000 number isn’t yet finalized…
The new credit is retroactive to Dec. 31, 2008, which means that anyone who buys a house this year, through August, won’t have to repay it. First time buyers who used the credit in 2008 still have to pay it back over a 15-year period.
------------------
Ling's note: Somewhere else I read that credit is available to buyers who close on a house through Dec 1, 2009 -- why not Dec 31, 2009? I don't know.
Alo, there is income limit. For people making over $75,000/yr or couple over $150,000/yr, this may not apply.
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