More than just real estate.
Dear friends,
Below are some Q and A regarding the recently announced tax credit.
Hopefully this will answer most of your questions, if not feel free to contact me.
Q&A on $8,000 First-Time Home Buyer Tax Credit Q: Who is eligible to use the tax credit? A: The $8,000 tax credit is available for first-time home buyers only. The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. All U.S. citizens who file taxes are eligible to participate in the program.
Q: Are there any payback provisions? A: The tax credit is a true credit. It does not have to be repaid. The only repayment requirement is if the home owner sold the home within three years after the purchase.
Q: Are there income limits to qualify for the credit? A: Home buyers who file as single or head-of-household taxpayers can claim the full $8,000 credit if their modified adjusted gross income (MAGI) is less than $75,000. For married couples filing a joint return, the income limit doubles to $150,000. Single or head-of-household taxpayers who earn between $75,000 and $95,000 are eligible to receive a partial first-time home buyer tax credit. Married couples who earn between $150,000 and $170,000 are eligible to receive a partial first-time home buyer tax credit. The credit is not available for single taxpayers whose MAGI is greater than $95,000 and married couples with a MAGI that exceeds $170,000.
Q: What are the effective dates for the tax credit? A: First-time home buyers would receive an $8,000 tax credit for the purchase of any home on or after January 1, 2009 and before December 1, 2009. To qualify, you must actually close on the sale of the home during this period.
Q: Is the tax credit refundable? A: Yes. A refundable credit means that if you pay less than $8,000 in federal income taxes, then the government will write you a check for the difference. For example, if you owe $5,000 in federal income taxes, you would pay nothing to the IRS and receive a $3,000 payment from the government. If you are due to receive a $1,000 tax refund from the government, your refund would grow to $9,000 ($1,000 plus $8,000 from the home buyer tax credit).Q: What years can buyers apply the tax credit to their tax returns? A: Buyers can take the tax credit on their 2008 or 2009 income tax return.
Q: What types of homes qualify for the tax credit? A: All homes, whether single-family, townhomes or condominium apartments will qualify, provided that the home will be used as a principal residence and the buyer has not owned a principal residence in the prior three years. This also includes newly-constructed homes.
Q: Where can I find more details on the tax credit? A: NAHB has a consumer Web site that provides comprehensive information on the tax credit. The Web site is http://www.federalhousingtaxcredit.com/ .
Courtesy of John Adams 02/26/09. http://www.money99.com/
Thursday, February 26, 2009
Sunday, February 22, 2009
Your personal stimulus tax break
More than just real estate.
Roughly 97% of American households could see tax savings as a result of the American Recovery and Reinvestment Act, according to a new analysis by a nonpartisan research group.
The Tax Policy Center crunched the numbers and concluded that the average savings would be $1,179. But how much a household actually gets depends on income, marital status and whether a filer has children. The savings range from a few hundred dollars to several thousand.
The law, which President Obama signed on Tuesday, contains a range of tax breaks for individuals. Those likely to affect the greatest number of households are the new Making Work Pay credit worth up to $400 ($800 for joint filers); a patch to protect middle- and upper-middle-income families from having to pay the Alternative Minimum Tax; and expansions of the earned income tax credit and the child tax credit for low-income families.
There are also breaks that address specific situations: a new credit for first-time home buyers, a sales tax deduction for car buyers and a new credit to help pay for college tuition. For people receiving unemployment benefits, the first $2,400 will be tax free.
On Saturday, President Obama said the government had already taken action on the broadest of the law's cuts -- the Making Work Pay.
The Treasury Department has told employers to reduce the amount of taxes withheld from paychecks by April 1. Treasury estimates that a typical family will begin taking home about $65 more per month, according to Obama.
"Never before in our history has a tax cut taken effect faster or gone to so many hardworking Americans," Obama said in his weekly video and radio address.
In addition, the economic recovery plan contains a host of tax breaks for small businesses.
The Tax Policy Center used a representative sampling of all tax filers and non-filers, including information on their income, their spending and their demographics. And then they applied the various tax provisions for which those in the sample pool qualify.
Some tax-saving scenarios
A single person with no children making between $20,000 and $30,000 would see a 12.5% reduction in his or her tax liability for an annual savings of $453. The same person making between $50,000 and $75,000 would see a 4.6% drop, or $626.
At the upper income ranges, someone with income between $100,000 and $200,000 would see a 2.1% drop, which translates into $706.
With or without kids, a married couple filing jointly making between $50,000 and $75,000 could see a 10.5% drop for a savings of $991. Those making between $75,000 and $100,000 would see their tax liability go down 9.1%, or $1,457.
Couples with very high incomes -- between $200,000 to $500,000 -- could see a 7.5% decline in their tax bill, or $5,645.
Households with children, regardless of the parent's marital status, would see savings on their tax bill averaging 9.7% of their tax liability, or $1,975.
When you'll see savings
The first tax credit filers will enjoy is the Making Work Pay credit, which will show up in increments in people's paychecks starting in April.
In some instances, such as with the first time home buyer's tax credit, the money can be claimed on one's 2008 tax return if the home purchase occurs between Jan. 1 and before Nov. 30 of this year.
But in many cases, a household won't see some of their stimulus savings until they file their 2009 returns, which they can't do until 2010.
Of course what filers' save on their federal taxes under stimulus may be muted by the fact that their cities and states -- facing steep budget shortfalls that will be lessened but not eliminated by stimulus funding -- may end up raising taxes and fees.
Source; CNN Money Feb 09.
Roughly 97% of American households could see tax savings as a result of the American Recovery and Reinvestment Act, according to a new analysis by a nonpartisan research group.
The Tax Policy Center crunched the numbers and concluded that the average savings would be $1,179. But how much a household actually gets depends on income, marital status and whether a filer has children. The savings range from a few hundred dollars to several thousand.
The law, which President Obama signed on Tuesday, contains a range of tax breaks for individuals. Those likely to affect the greatest number of households are the new Making Work Pay credit worth up to $400 ($800 for joint filers); a patch to protect middle- and upper-middle-income families from having to pay the Alternative Minimum Tax; and expansions of the earned income tax credit and the child tax credit for low-income families.
There are also breaks that address specific situations: a new credit for first-time home buyers, a sales tax deduction for car buyers and a new credit to help pay for college tuition. For people receiving unemployment benefits, the first $2,400 will be tax free.
On Saturday, President Obama said the government had already taken action on the broadest of the law's cuts -- the Making Work Pay.
The Treasury Department has told employers to reduce the amount of taxes withheld from paychecks by April 1. Treasury estimates that a typical family will begin taking home about $65 more per month, according to Obama.
"Never before in our history has a tax cut taken effect faster or gone to so many hardworking Americans," Obama said in his weekly video and radio address.
In addition, the economic recovery plan contains a host of tax breaks for small businesses.
The Tax Policy Center used a representative sampling of all tax filers and non-filers, including information on their income, their spending and their demographics. And then they applied the various tax provisions for which those in the sample pool qualify.
Some tax-saving scenarios
A single person with no children making between $20,000 and $30,000 would see a 12.5% reduction in his or her tax liability for an annual savings of $453. The same person making between $50,000 and $75,000 would see a 4.6% drop, or $626.
At the upper income ranges, someone with income between $100,000 and $200,000 would see a 2.1% drop, which translates into $706.
With or without kids, a married couple filing jointly making between $50,000 and $75,000 could see a 10.5% drop for a savings of $991. Those making between $75,000 and $100,000 would see their tax liability go down 9.1%, or $1,457.
Couples with very high incomes -- between $200,000 to $500,000 -- could see a 7.5% decline in their tax bill, or $5,645.
Households with children, regardless of the parent's marital status, would see savings on their tax bill averaging 9.7% of their tax liability, or $1,975.
When you'll see savings
The first tax credit filers will enjoy is the Making Work Pay credit, which will show up in increments in people's paychecks starting in April.
In some instances, such as with the first time home buyer's tax credit, the money can be claimed on one's 2008 tax return if the home purchase occurs between Jan. 1 and before Nov. 30 of this year.
But in many cases, a household won't see some of their stimulus savings until they file their 2009 returns, which they can't do until 2010.
Of course what filers' save on their federal taxes under stimulus may be muted by the fact that their cities and states -- facing steep budget shortfalls that will be lessened but not eliminated by stimulus funding -- may end up raising taxes and fees.
Source; CNN Money Feb 09.
Tuesday, February 17, 2009
Property Tax relief
More than just real estate.
The Georgia Senate recently passed two property tax-relief bills, overcoming criticism from minority Democrats and some Republicans that the measures were unnecessary and would raise taxes on businesses.
Senators voted 40-14 to double Georgia’s homestead property tax exemption from $2,000 to $4,000. A few minutes later, legislation already passed by the House to preserve the state’s Homeowners Tax Relief Grant program this year cleared the Senate 29-24.
Mortgage rates fell during the past week, pushed lower from the uncertainty stemming from the bank bailout plan unveiled Tuesday.
The average 30-year fixed mortgage rate fell to 5.34% from 5.70% for the week ended Feb. 11, according to Bankrate.com.
The average 15-year fixed rate mortgage sank to 5.03% from 5.31%, and the average jumbo 30-year fixed rate slipped to 6.98% from 7.12%.
Adjustable rate mortgages also dropped over the past week, with the average 1-year ARM falling to 5.67% from 5.73% and the 5/1 ARM sinking to 5.37% from 5.5%.
Meanwhile, foreclosure filings more than doubled in the first three months of 2008, spiking 112%. So far this year 156,463 families have lost their homes to repossessions. Many markets won't hit bottom till late 2009 or even 2010.
Pity the residents of Stockton, Calif., whose homes are likely to lose more than half of their 2006 value. But if you happen to live in Texas, congratulations: The housing tornado passed you by.
The Obama administration is looking at subsidizing the mortgage payments of struggling borrowers before they default, according to sources familiar with the discussions.
If it comes to pass, the program would blaze a new trail in the federal government's foreclosure prevention initiatives. Until now, the efforts have focused on helping those already behind in their payments through interest-rate reductions and other loan modifications. The Bush administration had not committed any money to helping borrowers.
Obama, however, has pledged to spend at least $50 billion to help borrowers in trouble. Treasury Secretary Tim Geithner said Tuesday that the administration would release its plan within a few weeks. He and Housing Secretary Shaun Donovan have been meeting with banks, housing advocates and trade organizations this week to listen to their foreclosure prevention proposals.
Details remain scarce, but at this point the subsidy plan entails having struggling homeowners take an affordability test and undergo a re-appraisal to see if they are eligible. The subsidy would allow servicers to adjust the loan terms without having the mortgage's investors take a loss, which should make them more open to the loan modification.
Assisting borrowers before they default would help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.
"This will help put a floor on home values," said one person familiar with the negotiations.
Obama's plan is also likely to include ramping up the streamlining of modifications for borrowers already in default. Already, several banks and Fannie Mae and Freddie Mac are working with homeowners to make their monthly payments more affordable by reducing interest rates, lengthening loan terms and deferring principal to the end of the loan
The Georgia Senate recently passed two property tax-relief bills, overcoming criticism from minority Democrats and some Republicans that the measures were unnecessary and would raise taxes on businesses.
Senators voted 40-14 to double Georgia’s homestead property tax exemption from $2,000 to $4,000. A few minutes later, legislation already passed by the House to preserve the state’s Homeowners Tax Relief Grant program this year cleared the Senate 29-24.
Mortgage rates fell during the past week, pushed lower from the uncertainty stemming from the bank bailout plan unveiled Tuesday.
The average 30-year fixed mortgage rate fell to 5.34% from 5.70% for the week ended Feb. 11, according to Bankrate.com.
The average 15-year fixed rate mortgage sank to 5.03% from 5.31%, and the average jumbo 30-year fixed rate slipped to 6.98% from 7.12%.
Adjustable rate mortgages also dropped over the past week, with the average 1-year ARM falling to 5.67% from 5.73% and the 5/1 ARM sinking to 5.37% from 5.5%.
Meanwhile, foreclosure filings more than doubled in the first three months of 2008, spiking 112%. So far this year 156,463 families have lost their homes to repossessions. Many markets won't hit bottom till late 2009 or even 2010.
Pity the residents of Stockton, Calif., whose homes are likely to lose more than half of their 2006 value. But if you happen to live in Texas, congratulations: The housing tornado passed you by.
The Obama administration is looking at subsidizing the mortgage payments of struggling borrowers before they default, according to sources familiar with the discussions.
If it comes to pass, the program would blaze a new trail in the federal government's foreclosure prevention initiatives. Until now, the efforts have focused on helping those already behind in their payments through interest-rate reductions and other loan modifications. The Bush administration had not committed any money to helping borrowers.
Obama, however, has pledged to spend at least $50 billion to help borrowers in trouble. Treasury Secretary Tim Geithner said Tuesday that the administration would release its plan within a few weeks. He and Housing Secretary Shaun Donovan have been meeting with banks, housing advocates and trade organizations this week to listen to their foreclosure prevention proposals.
Details remain scarce, but at this point the subsidy plan entails having struggling homeowners take an affordability test and undergo a re-appraisal to see if they are eligible. The subsidy would allow servicers to adjust the loan terms without having the mortgage's investors take a loss, which should make them more open to the loan modification.
Assisting borrowers before they default would help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.
"This will help put a floor on home values," said one person familiar with the negotiations.
Obama's plan is also likely to include ramping up the streamlining of modifications for borrowers already in default. Already, several banks and Fannie Mae and Freddie Mac are working with homeowners to make their monthly payments more affordable by reducing interest rates, lengthening loan terms and deferring principal to the end of the loan
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