We have written here about the changes in Cincinnati’s property values over the last two years. A part of the real estate downturn that is being overlooked is the assessments for property taxes. Locally we have seen our home value decline between 5% and 11% depending on where we live but it has not been as bad as California. Their property value has declined so much that there is now a company that will help homeowners obtain a break on their property tax reasons.

Prop8.org takes advantage of a California proposition that allows for homeowners to get a reduction in their property taxes. Prop8.org charges a fee to help homeowners navigate the legal paperwork, and submit the necessary papers. We do not have this luxury in Cincinnati but it is important that the next time your property is assessed that you pay attention and gather the recent sale data for your neighborhood so you understand you new property assessment.

CNN Money published a study today on the future value of homes all over the nation. After looking through the home value tool, the outlook for Cincinnati is fairly similar to that of Ohio.  The state will see about a 5% drop in home values over the course of 2008 with the depreciation slowing to a less than 1% fall in 2009.

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What this means to the average home buyer is that if you are looking to move up market, it is time to take a look and make a move. Moving upmarket in a housing slowdown is a financially rewarding thing if you are in a position to take advantage of the value changes.

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If you are moving from a $150,000 home to a $250,000 that is a $100,000 jump. If both homes sell for 5% less due to the market you are moving from a $142,500 home to a $237,500 home in a $95,000 jump. Same homes in question. $5,000 savings. Moreover the new house property tax will be assessed at the 5%  lower sale price.

A Senate bill in Washington aimed at helping Americans through the sub prime mortgage crisis may include funding of up to $4 billion dollars to support a temporary $7,000 tax credit for people buying new homes or properties in foreclosure.

Ohio Senators Sherrod Brown and Sen. George Voinovich each have their own questions and concerns about the bill and its impacts on both Ohio residents and lending institutions reports the Dayton Daily News.

If you could claim a $7,000 tax credit for buying aq foreclosed house would you? Is it enough to get you to look exclusively at foreclosed properties? Our thoughts are that after the credit crisis and the lending practices get resolved these proactive measures will bolster the real estate market by removing some of the excess inventory. The long term consequences of this act could benefit millions of Americans and many here in Cincinnati. This will have impacts on the large lending as well, helping them to liquidate these properties and get back to what they do best - working with money not managing empty houses.

If you live in the city of Cincinnati and are considering renovating your home there is good news for you. The City of Cincinnati Department of Community Development has implemented both a residential and commercial tax abatement program to help attract new residents, businesses, and investors and encourage current residents, businesses, investors to improve their current properties. Any property owner may be eligible for this property tax abatement if they purchase a newly constructed home or are renovating their current home. Residential is defined as a single family home or any building with 1-3 units. With this tax abatement program, the commercial category is defined as residential multi-family property containing more than 4 units, office, retail, industrial, or mixed use.

Who Qualifies for the Residential Tax Abatement?

The way this program works is that certain types of improvements that actually add value to the home will qualify, while others will not. Part of the application process helps to determine if the improvements that you are making to the home are simply improving the condition of the home versus actually adding value. Painting your home, replacing your roof, new siding, new windows, new gutters, improved landscaping, a retaining wall, or resealing a driveway will all improve the condition and salability of your home but do not add dollar value. While adding a pool, deck, patio, or more usable square footage or living space to the home will add dollar value to your property and will qualify for the tax abatement. LEED- certified remodeled or newly constructed residential property is eligible for an additional tax exemption based on the certification level. Please click here for more information on LEED homes. The period for tax abatement begins with the date of documented completion of work.

Tax Abatement Limits

For example, if the owner of a $75,000 home makes $25,000 in improvements, the owner is only responsible for taxes based on the home’s original value for a period of ten years. So that would mean that the property owner’s taxes would remain at the assessed value of the $75,000 price but the house would actually be worth $100,000 if the owner were to have the home re-appraised. The portion of the tax by which the remodeling increased the value of the structure may be abated up to a maximum $275,000 market value.

Total Investment Eligible for Exemption (fair market value): $275,000
Assessed Value/Taxable Value is 35% of fair market value: $96,250
Assessed Value Multiplied by Tax Rate (.05694): $5,480.48
10% Rollback: $548.05
Estimated tax abated for one year: $4,932.43

For an application for the Residential CRA Tax Abatement Program, please click here.

Need some extra money for that a downpayment on a new home or household repairs?

Starting this May, the IRS will be sending the economic stimulus rebate checks to households who file their 2007 tax returns. In order to determine if you are eligible for this rebate the only requirement is to file your 2007 return and the IRS will take care of the rest of the paperwork. Some individuals and families who file early and electronically will receive their rebates as early as May and the final rebate checks for those who file later will be sent out until December 2008.

In most cases the maximum amount of the rebate check will be $600 for individuals and $1,200 for taxpayers who file a joint return. Eligible taxpayers who qualify for a rebate check will receive an additional $300 for each child who qualifies for the child tax credit. Per the IRS website, qualifying income includes Social Security benefits, certain Railroad Retirement benefits, certain veterans’ benefits and earned income, such as income from wages, salaries, tips and self-employment. Depending on your source of income, some of these people may not be normally required to file a tax return because they do not meet the filing requirement. Please remember that this year if they want to qualify for the rebate, the IRS emphasizes they must file a 2007 return in order to receive a rebate check.

Rebate checks to higher income taxpayers will be reduced by 5 percent of the amount of adjusted gross income above $75,000 for individuals and $150,000 for those filing jointly. For more information on your specific eligibility for this rebate please click here.

In the last few months we all have heard a lot of information about interest rates, and that they are moving up and down. The rates have been in flux and Dan Green, a local Cincinnati Mortgage Broker who writes The Mortgage Report blog, gives a great interview explaining why mortgage rates change and what it all means beyond our own house payments. This is great background information for anyone looking to buy a home.

Everyone agrees that people loosing their homes to Foreclosure is bad for individuals, banks, and neighborhoods. In fact so many people are aware of it even Congress is stepping in to help people in better proceed with Debt Forgiveness. In normal circumstances when you have a debt forgiven, or reduced, that amount is counted as taxable Income, according to the IRS. If you bank forgives you for the last $10,000 of your loan, why would the IRS think you have the cash to pay taxes on it? Silly.

The Federal Government is stepping in and offering up H.R. 3648, a bill that would eliminate Federal tax on debt forgiveness. The House has passed the bill and it is on the way to the Senate. So how would that impact us? Well in short it could lead to more Cincinnati residents staying in their homes. The US Census Bureau says that home ownership in the Cincinnati metro area has slipped a bit from 68.4% in 2005 to 65.5 in 2006. It is so important for us as a community to do the most we can to maintain our home ownership rates up because people who care about their homes also care about their communities. You can continue reading about this topic at Open Congress.