posted by: Dale Marciniak on 8/26/2008 12:04:41 PM
Housing industry observers expect that prospective buyers will scramble to take advantage of seller-funded down-payment assistance before a federal ban on such programs takes effect on October 1st, 2008.
Seller-funded downpayment assistance will be eliminated which has helped first-time and low-income buyers get into homes.
As of October 1st, lenders will be requiring 3 percent down payment from buyers to purchase a home. Don't wait till this happens. Take advantage of great prices with little to nothing down.
Contact Kevin Marciniak TODAY!
RE/MAX Realty 100
414-604-1384
posted by: Dale Marciniak on 8/14/2008 11:52:03 AM
Buy a home and you get a tax break! As part of the Housing and Economic Recovery Act of 2008, a First-time Homebuyer Tax Credit is now available. However, this limited-time tax break ends in mid-2009. A homebuyer tax credit has been available for first-time homebuyers in Washington, D.C. for many years, and now first-time homebuyers nationwide can take advantage of a similar benefit. In this commentary, I'll give a quick overview of the credit-something every Realtor® should know. For further details, you can consult a longer PDF available here (328K PDF) or consult a Q&A put together by NAR's government affairs team (161K PDF). A brochure for Realtors® to give to clients interested in the provisions of the tax credit will be available here in late summer. For more information about the brochure, contact Thomas Doyle at tdoyle@realtors.org.
Who is Eligible?
First-time homebuyers who purchase a principle residence on April 9, 2008 and before July 1, 2009 are eligible for the credit. A first-time homebuyer is someone who has not owned his/her principle residence for a 3-year period before the date of purchase, and someone who has never taken advantage of the DC first-time homebuyer credit. In the case of married couples, both must be first-time homebuyers. For other groups purchasing a home, the statute is unclear. Purchasers should consult a tax advisor.
How does it work?
The credit directly reduces the total amount of taxes owed and is refundable. When the buyer files his/her taxes, for the year he purchased his home (2008 or 2009), he will be able to subtract the amount of the credit from his Federal income tax liability, increasing his refund or reducing the amount he owes.
How big is the tax credit?
The tax credit is equal to 10% of the purchase price of the home up to $7,500. The full credit is available for single buyers whose adjusted gross income is less than $75,000. If the buyer's adjusted gross income is greater than $75,000 and her home purchase qualifies her for the full credit, the credit phases out according to the chart below.
For married couples filing jointly, the credit begins to phase out at an adjusted gross income of $150,000 per this chart.
What about Repayment?
The tax credit is not completely free money for buyers to keep. It has a payback provision that makes it similar to an interest free loan. Two years after the credit is claimed, buyers begin repayment so that the credit is paid back in full over the course of 15 years. For those qualifying for the full credit, the payback amount is $500 per year. Those getting less than the full credit pay equally over the 15 years (which is a rate of 6.67% per year). If a qualifying home is resold before the credit is repaid, the seller will have to immediately pay the outstanding balance of the credit. If the home is sold at a loss, then nothing more is owed.
What's valuable about a credit you have to repay?
Money today is worth more than an equal amount of money in future, which economists call the time-value of money. First, money loses its purchasing power over time due to inflation. Second, you can use the money today to earn interest and repay the principal later-all the while keeping the interest for yourself. For this reason, multimillion-dollar lottery winners prefer taking a lower lump-sum amount than the multimillion dollar amount spread out over many years. Real examples in the PDF will help you illustrate this point to potential buyers.
Are there other conditions I should know about?
Buyers cannot claim both the DC and the national First-time Homebuyer tax credit
Purchases by non-resident aliens and purchases financed by proceeds from a qualified mortgage issue are not eligible.
Any single family residence located in the United States that will be used as a principal residence is eligible. Generally, this is the place where an individual spends most of his/her time. This includes single-family detached housing, condos or coops, townhouses or any similar type of new or existing dwelling.
The credit will not result in an individual owing additional federal taxes under the Alternative Minimum Tax.
Home purchases between relatives and other gifts of residences are not eligible for the credit.
Other tax benefits of homeownership are still in place. Mortgage interest deduction, capital gains tax exclusion, and property tax deduction are some well-known examples.
For more specific questions about the tax implications of the credit, please consult a tax professional.
Buying a first home is a big step!
Buying a first home is a big step. Fortunately, Realtors® are willing and able to help buyers through the process. In addition to the many benefits of homeownership, the homebuyer tax credit and more affordable prices make now an especially opportune time to purchase for the buyer who is mentally and financially prepared for the commitment.
Other Resources for First-time Homebuyers:
http://www.realtor.org/home_buyers_and_sellers/preparing_for_homeownership
http://finance.realtor.com/homefinance/guides/buyers/
http://www.hud.gov/buying/
http://www.freddiemac.com/corporate/buying_and_owning.html
posted by: Dale Marciniak on 8/14/2008 11:50:16 AM
MADISON, WI – A soft economy combined with weak consumer confidence kept second quarter Wisconsin sales volume below the same quarter last year. However, home prices were down only slightly according to data just released by the Wisconsin REALTORS® Association (WRA).
Home sales in the state fell 20.7 percent in the second quarter of 2008 compared to that same quarter in 2007, a slightly steeper decline than both the nation as a whole, which fell 16.3 percent, and the Midwest region, which dropped 17.9 percent. “It is clear that consumer concerns over the direction of the economy have kept a lot of buyers on the sidelines,” said WRA Chairman Michael Spranger. “Our hope is that buyers and sellers recognize that every market is unique and every market offers opportunities.”
Spranger noted that mortgage rates have begun to creep upward recently, which may prompt potential buyers into the market. “This is an opportune time for buyers to get off the fence,” said Spranger. “Conventional 30 year fixed rate mortgages increased about a half percent in the last two months, but still remain below 7 percent. That means there are excellent opportunities in this market, but buyers shouldn’t wait too long or they risk higher interest rates.”
Wisconsin’s median prices fell just 3 percent to $162,200 in the second quarter of 2008 as compared to the second quarter of 2007. “In a soft market like the current one, we expect some moderation in prices,” said William Malkasian, president of the WRA. “Given the relatively large reduction in sales volume in the second quarter, it’s encouraging that our prices here in Wisconsin have declined only modestly.” Malkasian noted that other parts of the country have seen substantially larger price reductions this year. He also noted that the housing bill that just passed Congress should provide some additional help to this market. “First time home buyers can now receive a tax credit of up to $7500, which should help to get some of them off the bubble and into a home,” Malkasian said.
A survey of REALTOR® brokers across Wisconsin this month showed a consistent belief (78 percent of respondents) that sellers are more motivated in the third quarter of this year as compared to that quarter last year, but only 26 percent believe buyer interest has increased. Thus, almost 83 percent of brokers surveyed think that inventories will stay the same or rise in the third quarter. There is consensus among brokers that the remainder of 2008 will be weaker than the second half of 2007. “REALTORS® are closely tied to both buyers and sellers on a daily basis, and as a result have a good sense of current and near future market conditions,” said Malkasian. “At this halfway point in the year, our folks are realistic about this market and are neither overly optimistic nor pessimistic about the balance of the year.” Malkasian said the WRA will survey REALTOR® broker’s sentiments on a quarterly basis.