Distinguishing a Tax Credit versus a Tax Deduction

We’ve all heard by now about the $8,000 tax credit for first-time homebuyers and the $6,500 tax credit for current homeowners.  But, do you know what it really means?  And, do you know the difference between a tax credit and a tax deduction?  If not, let me try to quickly explain the two:

What is a tax credit? You don’t receive an income tax credit when you buy the product (such as a house), like an instant rebate. You claim the credit on your federal income tax form at the end of the year. The credit then increases the tax refund you receive or decreases the amount you have to pay.

Tax credits vs. tax deductions: In general, a tax credit is more valuable than a similar tax deduction. A tax credit reduces the tax you pay, dollar-for-dollar. Tax deductions – such as those for home mortgages and charitable giving – lower your taxable income. If you are in the highest 35-percent tax bracket, the income tax you pay is reduced by 35 percent of the value of a tax deduction. But a tax credit reduces your federal income tax by 100 percent of the amount of the credit.

So, simply put if you are in the market for a new home and you qualify for either tax credit, this is money that can come back to you in the form of a refund as long as you don’t owe more than the credit itself.  It’s Found Money!  If you are seriously thinking about buying a new home this year, you should do it before the April 30, 2010 deadline so you can claim the appropriate tax credit.

As always, please feel free to comment or contact me at www.michellelpeters.com .

Michelle

Come Get Your Tax Credit Today!!!

Home Buyer Affordibility Reduced by Higher Interest Rates

It’s still a buyer’s market and buyers are still in the driver’s seat, but if mortgage rates go up buyers may have to settle for a cheaper house to get the payment that they need.

Buyers are in one of the strongest positions they’ve been in in over the last two decades.  Buyers not only have many choices, they have great interest rates and a tax credit if they qualify.  If a buyer is even considering buying a home, now may be one of the best times in our recent history.

Merry Christmas and enjoy the holidays with the ones you love.  As always, please feel free to contact me with questions or comments or visit me on my website at www.michellelpeters.com .

Michelle

The Basics of the Extended Home Buyers Tax Credit

The Basics: Extended Home Buyer Tax Credit 2009/2010 Bringing the Dream of Homeownership Within Reach As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed new legislation that: •• Extends the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010. •• Expands the credit to grant up to $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.

Who Qualifies for the Extended Credit? •• First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010. •• Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight. To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase. 

 Which Properties Are Eligible? The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops. How Much Is Available? The maximum allowable credit for first-time home buyers is $8,000. The maximum allowable credit for current homeowners is $6,500.

How is a Buyer’s Credit Amount Determined? Each home buyer’s tax credit is determined by tow additional factors: 1.The price of the home. 2.The buyer’s income. Price Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less. Buyer Income Under the Extended Home Buyer Tax Credit, which is effective on November 7, 2009, single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit. These income limits have changed from the 2009 First-Time Home Buyer Tax Credit limits. 

 If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit? Yes, some buyers may still be eligible for the credit. The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $145,000 for singles and over $245,000 for couples are not eligible for the credit.

Can a Buyer Still Qualify If He/She Closes After April 30, 2010? Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.

Will the Tax Credit Need to Be Repaid? No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.

As always if you have any questions about our real estate market, don’t hesitate to contact me or visit me on the web at www.michellelpeters.com .

Are We Starting to See a Sellers Market Emerging?

Posted: Monday, November 2, 2009 -Broker/Agent Magazine The housing market continues to steam forward. As reported by the National Association of Realtors®, the Pending Home Sales Index posted its 8th consecutive monthly gain in September. It’s the longest winning streak in the history of the index and Pending Home Sales are now at their highest levels since December 2006. A Pending Home Sale is a home under contract to sell, but not yet closed.  It’s the precursor to an Existing Home Sale.  Trade group data shows that nearly 80 percent of “pending” homes close within 2 months.  The majority of those remaining close within months 3 and 4. When the Pending Home Sales Index rises, it tells us that market activity has picked up.  September’s data confirms what we’ve been noticing since February — the Buyers Market is ending. With more homes under contract in the marketplace, homebuyers typically face one or more of the following:    1. Competitive, multiple-offer situations    2. Reduced purchase price leverage over sellers    3. Fewer seller concessions Therefore, if you’re buying a home in the next several months, know that the 8-month run in Pending Sales will lead to a run in closed sales.  It should result in higher home prices, too Indeed, we’re already seeing it here in the Triangle.  Prices have adjusted enough that it is becoming more common than not to have multiple offers on a house now.  I have had several clients in this situation and have advised them to walk away unless they were willing to make full price offers.  Reason being that most sellers have priced their home competetively and cannot afford to take low-ball offers. As always, please visit me on my website at www.michellelpeters.com .

Here Are the Latest Housing Statistics in Raleigh

• Third quarter closings beat second quarter closings for the first time in 3 years
• The number of September 2009 withdrawn listings were the lowest amount during the past 4 years
• Total inventory down 14%, new home listings are down 39%, resale inventory down 1% Third quarter showings were 12% higher than third quarter 2008 showings
• North Raleigh showings are the second highest in the entire Triangle

As always, please contact me if you have any real estate questions or visit me on my website at www.michellelpeters.com .

Quick Green Tip for the City of Raleigh

If you are interested in replacing your toilets with Watersense, High Efficiency Toilets to save water and lower your water bills, the City of Raleigh is offering a rebate of up to $100 per toilet. Go to the City of Raleigh website to get detailed information.  There is money available now, but do it soon- property managers and  builders are getting on board so the allocated funds will not last long.

www.raleighnc.gov/portal

http://www.epa.gov/OWM/water-efficiency/pp/find_het.htm

I hope you found this information helpful.  Please visit me on my website at www.michellelpeters.com .

Michelle

Be "Green" with Envy!

Wake County Housing Update

Home Prices Are Better Than Ever!

Here is just a brief note to update you on the housing market in Wake County to date.  The median sales price is $200,000 with the average sales price being $260,033.  Sellers have continued to adjust their asking price and are now receiving 96.8%.

This is the latest information from the Triangle Area Residential Realty Report (TARR).  I hope you found this helpful.  As always please do not hesitate to contact me with questions about the market.  I can also be found on my website at www.michellelpeters.com .

Michelle

Real Estate is a Local Business

FOR THE RECORD
The Real Facts of N.C. Real Estate
Issue 5, September/October 2009

HOMEOWNERSHIP> The Pending Home Sales Index in June 2009 rose 6.7
percent above June 2008. That’s the first time since
2004 that gains have been recorded for five consecutive
months.
> N.C. existing home sales rose for the third consecutive
month in July while posting the smallest decline in three
years when compared to July 2008.
> Sales of newly constructed homes leaped unexpectedly
in July to hit their highest level since last September.
> Affordability is the single greatest reason to buy in
today’s market. In July, the affordability index remained
36.6 percentage points above a year ago and hovered
near an 18-year high during the second quarter.
> The supply of homes is declining, slowly but surely.
The inventory of homes at the end of July in 28 major
metropolitan areas nationwide was down 2.5 percent
from a month earlier.
> Construction of single-family homes rose in July for
the fifth straight month, edging up to the highest level
since October 2008.
> The $8,000 first-time homebuyer tax credit is effectively
getting buyers off the fence and into new homes.
First-time homebuyers accounted for 30 percent of
homes sold in July.
> For the first time in three years, U.S. home prices rose
in the second quarter.

Real Estate is local & You should choose a local expert!

 

FORECLOSURE FACTS
> HUD and FHA recently implemented the “Making
Home Affordable Loan Modification Program.” The program
aims to buy down loans by up to 30 percent of the
unpaid principal balance, defer these amounts until the
first mortgage is paid off and assist FHA servicers by
bringing mortgages current.
> Real estate truly is local. While the nation experienced
a 32 percent increase in foreclosure activity in July
compared to the previous year, N.C. maintained a 20
percent decline in foreclosures compared to July 2008.
ECONOMY
> Fayetteville and Burlington recently ranked in the top
10 nationally for strongest housing markets based on
the share of single-family homes in which values rose
in the second quarter of 2009.
> Though still high by most standards, the rate of job
losses has slowed significantly. Employers eliminated
247,000 jobs nationally in July, the smallest monthly
loss since last August.
> The government’s preliminary estimates show that
the economy’s downturn slowed markedly in recent
months, shrinking only 1 percent in the second quarter
compared to 6.4 percent in the first

July new US home sales up 9.6 percent

This just in…

WASHINGTON – New U.S. home sales surged 9.6 percent in July, rising for the fourth straight month and beating expectations as the housing market marches steadily back from its historic downturn.

The Commerce Department said Wednesday that sales rose to a seasonally adjusted annual rate of 433,000 from an upwardly revised June rate of 395,000. Sales are now up more than 30 percent from the bottom in January, but are still off nearly percent from the frenzied peak four years ago.

The median sales price of $210,100, however, was off 11.5 percent from year-ago levels and down slightly from $221,400 in June.

Last month’s sales pace was the strongest since September and exceeded the forecasts of economists surveyed by Thomson Reuters, who expected a pace of 390,000 units.

In a kind of Cash for Clunkers effect, homebuyers are rushing to take advantage of a federal tax credit that covers 10 percent of the home price, or up to $8,000, for first-time owners. Home sales must be completed by the end of November for buyers to qualify.

I hope you found this article useful.  As always don’t hesitate to call or email me with questions.  I can also be reached on my website at http://www.site.michellelpeters.com/

Michelle

There's still time to get a great deal!

Home Inspections: Do You Really Need One?

The short answer is “Yes”.  Although North Carolina is a Buyer Beware state and it is not required to purchase a home, I advise all of my clients to protect themselves and do a home inspection.  North Carolina is also one of a handful of states that requires a home inspector to be licensed in order to perform inspections.  So, for the consumer this is great news.

Some buyers feel a home inspection is unnecessary, especially if they are buying new construction.  If a light switch doesn’t work or the air conditioner blows out hot air, those are problems you can see and test. The problems that aren’t readily identifiable to you such as code violations, a furnace that leaks carbon monoxide or a failing chimney, are the types of defects a home inspector could identify in a new home. Builders’ contractors make mistakes, too. 

The following are items that are typically checked during the home inspection process.  Please note that this list does not include inspections for radon, pests, or other structural issues:

Structural Elements.
Construction of walls, ceilings, floors, roof and foundation.

Exterior Evaluation.
Wall covering, landscaping, grading, elevation, drainage, driveways, fences, sidewalks, fascia, trim, doors, windows, lights and exterior receptacles.

Roof and Attic.
Framing, ventilation, type of roof construction, flashing and gutters. It does not include a guarantee of roof condition nor a roof certification.

Plumbing.
Identification of pipe materials used for potable, drain, waste and vent pipes. including condition. Toilets, showers, sinks, faucets and traps. It does not include a sewer inspection.

Systems and Components.
Water heaters, furnaces, air conditioning, duct work, chimney, fireplace and sprinklers.

Electrical.
Main panel, circuit breakers, types of wiring, grounding, exhaust fans, receptacles, ceiling fans and light fixtures.  

Appliances.
Dishwasher, range and oven, built-in microwaves, garbage disposal and, yes, even smoke detectors.

Garage.
Slab, walls, ceiling, vents, entry, firewall, garage door, openers, lights, receptacles, exterior, windows and roof.

Congratulate yourself if you’ve decided to do a home inspection on your next home purchase.  As always if you have any questions please don’t hesitate to contact me or visit me on my website at http://www.site.michellelpeters.com/.

Michelle

Be smart and do a home inspection!