Buyers · Law/Regulations · Real Estate

Home Buyer Tax Credit…

If you take the first time or move up home buyer tax credit, make sure you can provide eligibility documentation for the IRS.

It seems there are some people that took the credit that weren’t eligible. In an attempt to avoid this from happening in the future, the IRS has tightened the rules regarding this tax credit.

To take the home buyer tax credit, offers must be contracted by April 30, 2010 and must fund by June 30, 2010.

For more information regarding the home buyer tax credit eligibility, refer to a tax professional and/or the IRS.

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Law/Regulations · Real Estate · Selling Real Estate

Washington State Residents, Did you know…

Did you know that effective July 1, 2010 Washington state adopted the 2009 International Building, Residential, Mechanical and Fire Codes?

One change that is of particular interest to the real estate market is the requirement that all existing residences (Residential Building Group R1, R2 and R3) sold on or after July 1, 2011 must have carbon monoxide (CO2) alarms (complying with UL 2034) installed based on this new code and the manufacturer’s installation instructions. This means sellers will be required to install them before selling. Fortunately, a seller should be able to easily purchase carbon monoxide detectors in the smoke alarm section of any local building or hardware store or department.

Starting January 1, 2011 all new construction homes (Residential Building Group R-1, R-2 and R-3) will also be required to have CO2 detectors installed.

According to the Washington State Building Code Counsel, Group R-1 includes hotels & motels, R-2 includes apartments and R-3 single family, except owner occupied single family.

According to the US Consumer Product Safety Commission, Carbon monoxide (CO) is a deadly, colorless, odorless, poisonous gas. It is produced by the incomplete burning of various fuels, including coal, wood, charcoal, oil, kerosene, propane, and natural gas. Products and equipment powered by internal combustion engine-powered equipment such as portable generators, cars, lawn mowers, and power washers also produce CO.

The US Consumer Product Safety Commission reports that on average, about 170 people in the United States die every year from CO produced by non-automotive consumer products. These products include malfunctioning fuel-burning appliances such as furnaces, ranges, water heaters and room heaters; engine-powered equipment such as portable generators; fireplaces; and charcoal that is burned in homes and other enclosed areas. In 2005 alone, CPSC staff is aware of at least 94 generator-related CO poisoning deaths. Forty-seven of these deaths were known to have occurred during power outages due to severe weather, including Hurricane Katrina. Still others die from CO produced by non-consumer products, such as cars left running in attached garages. The Centers for Disease Control and Prevention estimates that several thousand people go to hospital emergency rooms every year to be treated for CO poisoning.

For more information about this upcoming change check out the Washington State Building Code Counsel or your local building code office.

For information about the dangers of carbon monoxide, refer to the US Consumer Product Safety Commission.

Please note that I am not endorsing the above brand of CO2 detector, I merely included a picture to show what one looks like.  They look very similar to smoke detectors. There are also combo smoke and CO2 detectors on the market.

And now for my disclaimer, I’m not a lawyer, so please consult a legal professional if you have questions.

Law/Regulations · Mortgage · News · Real Estate

FHA Financing Changes…

Most of the changes have to do with tightening the regulations on the lenders.  The key changes that directly effect the FHA buyer are:

  • FHA upfront mortgage premium will increase to 2.25% from 1.75%.
  • If a borrower has a credit score below 580 they will be required to have a 10% down payment, while the minimum down payment for all other qualified buyers will be 3.5%.
  • Sellers concessions will be reduced from from 6% to 3%.
  • Feb. 1, 2010 the 90 holding rule on properties is being lifted for 1 year (some restrictions still apply, refer to HUD for more information).

In my opinion, the best loan out there is the VA Home Loan.  If you’re VA eligible, it’s the way to go right now. An eligible vet can purchase a home with ZERO down provided they qualify for the loan (income to debt, credit score, work history, etc.).

There’s still time to take advantage of the tax credit. Let’s talk!

For more info about FHA loans, check out hud.gov.

Law/Regulations · Real Estate

$8000 Tax Credit For 1st Time Buyers…

First-time home buyer?

If you haven’t owned a principal, single family home in the three years prior to purchase, you may be eligible for a tax credit up to $8,000.  This credit is available on homes purchased on or after January 1, 2009 and before December 1, 2009.  Generous income limits apply, single $75,000, married filing jointly $150,000.   There is no repayment as long as you keep the home for 3 years.

I’ve attached a link for some additional information about this tax credit.  For more information about this tax credit, please contact a qualified tax professional.

Buyers · Law/Regulations · Real Estate

Is There Capital Gains if Selling Your Home Short Sale?

I recently overheard a couple that were selling their home mention they were giving their house away at a very low price because they didn’t want to have to pay capital gains tax if they were foreclosed on by their mortgage company.

These particular people were not my customers, so it is not right for me to engage in conversation with them. I didn’t know their entire story, including the condition their home, nor it’s location.  That didn’t stop me from wondering why they thought they had to “give their home away.”

You see, the Mortgage Debt Relief Act of 2007 excludes this capital gains loss from 2007 – 2012 on the short sale of a primary residence. Now Realtors are not required to be experts in all things.  They aren’t CPA’s, nor do they work for the IRS; however, this particular information has been big news for the real estate market. A knowledgeable Realtor can inform their customers of valuable information like this.  http://www.irs.gov/individuals/article/0,,id=179414,00.html

Sellers should be informed of the facts before they price their home for sale. Generally, most Realtors provide sellers with a FREE Comparative Market Analysis (CMA) when meeting with potential sellers. During the CMA presentation, information is exchanged between the Realtor and the seller so both can make a decision.

Both make a decision? Why both? Because the seller and the Realtor need to determine if they can work together.

Pricing a house right can be the difference between selling and not selling. If a house is overpriced, it may age on the market. The longer it’s on the market, the more likely buyers will think something is wrong with the house because no one has bought it.

I strongly recommend a seller get more than one Realtor’s opinion before listing their house for sale. Know that a CMA is an “opinion” and that the seller has the final say on the asking price of their home. Sellers need to be aware that pricing their home should be based on what a buyer would be willing to pay, not what they think their house is worth.

If you are thinking about selling your home in the Clark County real estate market, I’d like the opportunity to provide you with a free CMA.

Preferably, I’d like to be the last Realtor you meet with!

Law/Regulations

Short Sale Debt Relief Act…

For a person about to lose their home to foreclosure, this information is important.

Prior to 2007 a seller would have to pay capital gains on the portion of their loan that a mortgage company writes off for them to sell their home in a short sale.  Today, “The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.”  This change is effective 2007-2012.

For more information, see:  http://www.irs.gov/individuals/article/0,,id=179414,00.html

I am not a tax professional, so please consult with a tax professional before making any tax decisions.