Congress — both the U.S. House and Senate — passed the Homebuyer Assistance and Improvement Act of 2010 (HR 5623), which extends the Closing Deadline for Homebuyer-Tax-Credit eligible transactions to September 30, 2010 (instead of June 30).
This extension of the Closing Deadline applies only to transactions with ratified contracts in place as of April 30, 2010 but not yet closed.
Up to 180,000 homebuyers nationwide (including approx. 8,500 in Ohio) would have lost their tax credit had Congress not passed this extension.
What happened
The Senate approved the legislation – by unanimous consent – last night at 9:40 pm.
The House approved the legislation on Tuesday, June 29 by a vote of 409-5.
The legislation provides a seamless transition. There is no “gap” between June 30 and the time when the bill will be signed into law by President Obama (likely to occur today).
Government Affairs staff from the National Association of REALTORSâ worked vigorously with Congressional leaders on both sides of the political spectrum to get this legislation enacted.
Recently there has been speculation that there is now a Medicare tax on home sales as part of the new federal health care bill. That is not true!
According to the language in the law, as explained in this FactCheck.org article, the Medicare tax would be assessed only on proceeds from the sale of a home that are ALREADY SUBJECT TO TAXATION.
Every American who sells a home can earn up to $250,000 of proceeds tax free from the sale of the property. Couples that are married can earn $500,000 of proceeds before having to sell taxes. Proceeds are your profit – so if you purchased a home for $100,000 and sold it for $300,000 your proceeds are are only $200,000.
Moreover the medicare tax would only apply to high earning individuals with annual incomes of – $200,000 individuals and $250,000 couples. So in order to pay this tax a married couple would have to earn $250,000 in income and net over $500,000 in proceeds from the sale of their home. And the tax is only 3.8% on every dollar over $500,000.
Make sure that when you sell a property you always consult your tax professional for assistance in planning and recording for the IRS. The Government affairs office at the Cincinnati Area Board of Realtors provided additional information for this post.
Due in large part to the Federal Housing tax credit the pending home sales in April surged to a 110.9 index rating up from 104 in March. How do we know that the tax credit was the cause of the increase? Well we can look at the historical data and see that the last surge of pending home sales occurred in October 2009 just as the prior tax credit was expiring according to RSI media.
Locally in the Midwest the index rose 4.1% to 104.2 and is 17.9% above April 2009 index. The Cincinnati market was certainly impacted by the credit. Scores of buyers looked to take advantage of the program, and in turn helped to stimulate the regional economy as well. Each new home purchase helps to provide work for contractors, inspectors, title companies, and movers just to name a few impacted industries. While the tax credit was positioned to help the real estate market the halo effect is that the increased volume of home transactions really has stimulated commerce in a number of sectors.
In recent days I have had a few phone calls from first time home buyers asking me if they should still buy a house even though they missed the $8,000 tax credit. In some cases they could not find the right house, or they did not hear that the credit was extended. Regardless of the reason they missed credit I tell the same thing; YES!
There are a number of reasons that this is a good time to purchase a home.
First is that over the long term Real Estate has been a solid long term investment. Over the years Cincinnati has seen relatively stable property value appreciation. Our property values did rise and fall with the rest of the country over the last 6 years, but we did not have the dramatic soar and crash like Miami, or Las Vegas. Invest in a home because you love it, not because you are looking for fast appreciation.
Second thing I point to is the closing gap between Rent and Ownership costs. With property values AND interest rates lower the gap between Rent and Ownership has shrunk substantially. According to a national study by Marcus & Millichap Real Estate Investment Services the difference between the cost of Rent and Ownership has decreased to as little as $100 a month in some markets. The study looked at 43 major markets and found that using the median home price and median rent the cost difference was $256. That is the smallest gap since 1993.
The third point is that there are still very good deals to be had. There are sellers who want to sell their home now and are willing to negotiate on price and terms to get the deal done. While it is still somewhat a buyers market sellers are also feeling the home values stabilize and may not be ready to give their home away in a fire sale. They key point I try to emphasize is that interest rates are at record lows. Home values have returned to 2003 levels, but the interest rates today are lower. Bottom line – the price may be the same but it will cost you less to buy the same hose today as it did in 2003 thanks to low interest rates.
For more information please e-mail me or call me at 513-518-1140
Homeowners across the nation and here in Cincinnati are appealing their property taxes, taking advantage of a drop in housing prices over the last few years. Marketplace recently ran a story about the rise in property tax appeals across the country.
In most counties and cities properties are assessed every three years, which means that there is a chance that you are paying taxes based on the 2007 price of your home. Most of our property taxes have declined since then, but we are still paying taxes on that inflated value. In order to file an appeal for a reduction in property taxes it is important to gather information that shows the decline in your home’s value. In most instances a Cincinnati Realtor can help you gather that information and make the case.
If you are interested in finding out more information on Cincinnati property tax appeals send me an e-mail.
here has been a lot of talk recently about the impact of the Federal First Time Home Buyer tax credit. The newspapers, the talk shows, the blogs, and the radio dj’s have all been talking about how important it is. I wanted to take the opportunity and make clear, in detail, the benefits to first time home buyers, aside from the $8,000, and give some much needed insight into how this program is going to impact the number of home and condo sales in the Cincinnati real estate market in the winter/spring 2010.
The Federal Government extended the tax credit through April 30. This means that you must have an accepted contract signed by both parties by then and must close the sale on or before July 1, 2010. But there is more.
Did you know it now offers $6,500 to people who have already owned a home and are buying another larger or smaller home? So if, for example, you are looking to move out of Hyde Park and into the burbs, this credit is great news for you. The program is designed to create new inventory for first time home buyers. If you have owned and occupied your current home as your primary residence for 5 of the last 8 years then you may be eligible for a $6,500 tax credit depending on your income as there are income limits.
To qualify for the $8,000 tax credit you (and your spouse if you are married) cannot have owned a home within the last 3 years. If you owned a home and sold it back in 2005 to relocate and rented for 4 years then you may qualify! Never have you ever owned a home you say? I’d say it is worth finding out if you’re eligible for an $8,000 credit. There are income limits and sale price limits on this tax credit so please check with your accountant or Realtor to be sure you meet the criteria.
You should also know that you can use the tax credit in a number of ways. You can use it on your 2009 or 2010 tax returns. The credit amount is equal to 10% on the purchase price of the home up to $8,000 of credit, or $80,000 of purchase price. Now that you know there is an $8,000 credit waiting for you, how are you going to take advantage of it? What should you do? Who should you call? When do you need to take action?
The first step is thinking about your home as an investment, an investment you can sleep and entertain friends in. Start evaluating if home ownership is right for you right now. This is not a decision you should rush. It is always better to wait and buy when the time is right for you. Next, you need to speak with a mortgage lender and get prequalified for a loan that is within your financial means. Mortgage brokers or mortgage lenders can help you with this step. The third step is finding a house that is the best fit for you. But with an April 30th deadline when should you start and when should you write a contract?
If possible, you should start your home search in earnest in February, and submit your offer no later than mid April. You have to work backwards and look at the contracting process and the whole market to understand why February is the key month. Sellers who want to capture the surge of these qualified first time home buyers are going to need to get their houses prepared for sale and listed in February to give them the most exposure to the potential buyers. The same thing is true for buyers. If you are not actively looking for your dream home it may be purchased before you even see it. I believe that February is going to be a very active month for new listings and proactive buyers in every neighborhood in Cincinnati.
Typically the process of completing a contract from purchase to closing takes between 30 and 45 days. There are many steps that go into a real estate transaction, including home price negotiations, home inspections, repairs, remediations, loan applications and acceptance, appraisals and more. Another important tip is that it is best to try to secure a property before the April 30th deadline if possible to ensure enough time to find the property and negotiate agreeable terms. Inspectors will be busy, contractors will be booked, and banks underwriters will be backlogged. So the sooner you make an offer the better the chance you have of making the deadline.
If you have any additional questions about the Tax Credit and how you can take advantage of it please feel free to call me and ask questions. I would be happy to provide you resources and information that will make your home buying experience exceptional.
Alison Moss is a 9 year veteran of the real estate industry and can be reached at 513-518-1140 or by e-mail at Alison.moss@comey.com
As we approach the end of the year the various cities and counties in Cincinnati will begin to calculate the property taxes that we all owe. Some areas of Cincinnati are currently in a tax abatement zone (they pay less or no property tax at all), but the rest of us will owe our 2009 property taxes in 2010.
What happens if you feel your property taxes are too high? If a number of houses have sold in your area and you are certain they were for less than your home’s taxable value? As a Cincinnati Realtor I have access to the information and the insight you need to appeal your property taxes.
Property taxes are based on the value of your home, and your home is only as valuable as the homes in your neighborhood. If they sell for less then your home is worth less and that is important in appealing property taxes. Considering the economic changes that occurred between 2007 and today property values in Cincinnati have changed. Some areas have appreciated, and some have depreciated. It is important to know where your house is valued so you can make sure you are paying your fair share. If you have questions about appealing your property taxes please contact me and I will be happy to consult with you. 513-518-1140
The City of Cincinnati will not increase property taxes this year. Even though the city is facing a budget shortfall, City council did not request a higher rate early enough in the process and therefore Cincinnati City Property Tax rates will remain at 4.46 mills.
Local residents should not see an increase in their property tax bill, at least the City portion of their bill. Council was able to act in time and approved the continuation of the rate. Had they not voted the City could have had the rate default to 0.0 mils, taking away $60 million dollars of much needed tax money.
If you are concerned about your property taxes and think the county appraiser overvalued your home call me. We can talk about comparable sales and determine if you are paying to much in property tax and what we can do about it. 518-1140
The deadline for the First Time Home Buyer tax Credit is quickly approaching. The language of the legislation reads that the homes must be closed by November 30th, and many home buyers are not aware of the time it takes to complete a real estate transaction. On average I have seen transactions take 30-35 days.
HOWEVER those transactions did not have to contend with a lending system that is currently running slow, and an impending of new contracts and lending requests that are certain to enter the system in the upcoming weeks. Considering the current systemic challenges I am telling my buyers that mid October is their deadline for securing a contract on a home and qualify for the credit.
The bottom line is if you are waiting until the beginning of November to make an offer and qualify for the credit you may be risking $8,000. If you have have your eye on a home CALL ME TODAY at 518-1140, or send me an e-mail to schedule a showing.
The Federal Government continues to provide incentives to homeowners to improve their energy efficiency. The tax credit is worth up to $1,500 for energy improvements made during 2009. In Cincinnati there are opportunities to utilize energy savings for both the summer and winter with enhanced windows, doors, and even geothermal comfort systems. An explanation of the various tax credits now available for home improvements is below.
- must be installed between January 1, 2009 – December 31, 2010
- must be for taxpayer’s principal residence, EXCEPT for geothermal heat pumps, solar water heaters, solar panels, and small wind energy systems (where second homes and rentals qualify)
- $1,500 is the maximum total amount that can be claimed for all products placed in service in 2009 & 2010 for most home improvements, EXCEPT for geothermal heat pumps, solar water heaters, solar panels, fuel cells, and small wind energy systems which are not subject to this cap, and are in effect through 2016
- must have a Manufacturer Certification Statement3 to qualify
- for record keeping, save your receipts and the Manufacturer Certification Statement3
- improvements made in 2009 will be claimed on your 2009 taxes (filed by April 15, 2010) — use IRS Tax Form 5695 (2009 version) — it will be available late 2009 or early 2010
