Tax Credits working for Homeowners, First Time Buyers and the Economy

in Cincinnati Real Estate Consulting, Cincinnati Real Estate Development News, Cincinnati Real Estate News, Florida Real Estate Development News, Florida Real Estate News, Jackonville Real Estate News, Jacksonville Real Estate, Ohio Real Estate Development News, Real Estate Loans, Real Estate Market News, Real Estate Taxes

A recent study and market analysis show the extension of the first-time home buyer tax credit and the addition of  credit for existing homeowners is working for our economy. But the credits are set to expire in April and interest rates are beginning to rise from their near historic lows so the time to buy is now.

“Twenty percent of homeowners are more likely to consider purchasing a home than they were six months ago, thanks to the revised $6,500 federal tax credit, according to the survey.”

Coldwell Banker conducted the survey of over a thousand homeowners and found that the vast majority planned to use the money on “smart spending” that pays off existing debts, goes to home improvements, savings and household expenses.  All of which aid our economy by increasing consumer confidence. That’s good news for existing homeowners.

“This may mean the move-up buyer is back in the marketplace,” said Jim Gillespie, chief executive officer of Coldwell Banker. “We’ve got a strong market for the first-time buyer and a strong market for investors. The move-up buyer has been sitting on the fence but hopefully the $6,500 tax credit will stir him to contact a realtor.”


$8,000 First Time Homebuyer Tax Credit Explained

in Cincinnati Real Estate Development, Cincinnati Real Estate Development News, Cincinnati Real Estate News, Florida Real Estate, Florida Real Estate Development, Florida Real Estate Development News, Florida Real Estate News, Jackonville Real Estate News, Jacksonville Real Estate, Ohio Real Estate Development News, Real Estate Loans, Real Estate Taxes

The first-time homebuyer credit is a new tax credit included in the recently enacted Housing and Economic Recovery Act of 2008.

For homes purchased in 2008, the credit operates like an interest-free loan because it must be repaid over a 15-year period.

The credit was expanded in 2009 for homes purchased in 2009, increasing the amount of the credit and eliminating the requirement to repay the credit, unless the home ceases to be your principal residence within the 36-month period beginning on the purchase date.

Q. How much is the credit?

A. The credit is 10 percent of the purchase price of the home, with a maximum available credit of $7,500 ($8,000 if you purchased your home in 2009) for either a single taxpayer or a married couple filing a joint return, but only half of that amount for married persons filing separate returns. The full credit is available for homes costing $75,000 or more.

Q. Which home purchases qualify for the first-time homebuyer credit?

A. Any home purchased as the taxpayer’s principal residence and located in the United States qualifies. You must buy the home after April 8, 2008, and before Dec. 1, 2009, to qualify for the credit. For a home that you construct, the purchase date is considered to be the first date you occupy the home. Taxpayers (including spouse, if married) who owned a principal residence at any time during the three years prior to the date of purchase are not eligible for the credit. This means that you can qualify for the credit if you (and your spouse, if married) have not owned a home in the three years prior to a purchase. If you make an eligible purchase in 2008, you claim the first-time homebuyer credit on your 2008 tax return. For an eligible purchase in 2009, you can choose to claim the credit on either your 2008 or 2009 income tax return.

Q. Can I apply for the credit if I bought a vacation home or rental property?

A. No. Vacation homes and rental property do not qualify for this credit.

Q. Who is considered to be a first-time homebuyer?

A. Taxpayers who have not owned another principal residence at any time during the three years prior to the date of purchase.

Q. How do I apply for the credit? Read more →


The Tax Loss Carry Back and what it means to Real Estate Investors and Buyers

in Cincinnati Real Estate Development, Florida Real Estate Development, Jacksonville Real Estate, Real Estate Debt Workout, Real Estate Market News, Real Estate Taxes

The Tax Loss Carry Back attached to the Unemployment Benefits Bill recently passed by congress and signed by the president has gotten little press but it may have great impact. First off, it will have the intended influence on stabilizing the Commercial Real Estate (CRE) market by helping potentially tens of thousands of mid level businesses – hit hard with the large drop in consumer spending over the last two years – by giving them much needed funds to stay in business and in their current leased or owned locations. Secondly, it will effect developers and builders, who fall into the previous categories, by giving them the funds necessary to survive and begin building again.

“According to National Association of Home Builders President Jerry Howard, “This injection of capital will enable a lot of our members, a significant number of small and medium sized builders that have been hanging on by their fingernails, to keep their doors open, and hopefully with this increased stimulus and demand from the tax credit, to be able to get back on their feet and get the country moving forward again.”” Source.

What does that mean for Real Estate buyers and investors? Morning Star gives a hint:

“Many builders are flush with cash and have already cleaned out their inventory of “C” and “D” locations. Most builders aren’t going to let loose of their precious “A” and “B” locations at a time when several in the industry have moved back into land acquisition mode and quality land is actually scarce in several markets. With survival not in question for the vast majority of public builders, many will opt to keep their land rather than sell it at fire-sale prices for tax purposes.”

The extremely low prices currently being seen in Real Estate won’t last long when new units are being designed to deal with with the growing pent up demand and the new demand created by the extension of the first-time home buyers credit and the added home-owners credit also recently passed by congress and signed by President Obama.


Florida Property Tax Portability Explained

in Florida Real Estate, Florida Real Estate Development, Florida Real Estate Development News, Florida Real Estate News, Jackonville Real Estate News, Jacksonville Real Estate, Real Estate Taxes

For those who have made a home in Florida and are considering a move to a new Florida home, one of the most important things to be aware of is the newly enacted Property Tax Portability Amendment.

So just what is Property Tax Portability?

A new Florida law allows residents that are moving from one primary residence to another to bring the built-up property tax benefits on the assessed value of their existing home along with them to their new home. This can mean up to a $500,000 decrease in the taxable value of the new home, and a huge annual property tax savings.

Florida primary residences are protected to a maximum percent increase in the assessed value each year by legislation known as “Save Our Homes”.

Without the portability provision, if you moved you lost all of the assessed value savings created by Save Our Homes and your new home was assessed at current market value. The Portability Amendment literally made that tax savings “portable” so you can now transfer up to $500,000 of your accrued Save Our Homes benefit to your new home.

EXAMPLE: You sell your current Florida Homestead that has an Assessed Value of $200,000 and a Just (Market) Value of $350,000. $350,000 – $200,000 = $150,000 in Tax Benefit. You buy a new home for $400,000. The $150,000 SOH tax benefit is applied to the new homes Just (Market) Value to creates a lower Assessed Value.

So if you own a home in Florida and are looking into downsizing to a condo or if you have been living inland and want to take advantage of the great waterfront property prices on the coast, a dramatic change in property taxes may not be something to worry about. Those homeowners who sell one home in order to move into another full time, will find that the taxes on their new property are adjusted to reflect the savings from their old home.


Investing in Real Estate through 1031 Exchange

in Cincinnati Real Estate Consulting, Cincinnati Real Estate Development, Cincinnati Real Estate News, Florida Real Estate, Florida Real Estate Development, Florida Real Estate Development News, Florida Real Estate News, Jackonville Real Estate News, Jacksonville Real Estate, Ohio Real Estate Development News, Real Estate Consulting, Real Estate Taxes

Keeping Your Real Estate Equity In Tact During a Sale With 1031 Exchanges presents a wide variety of opportunities from taking advantage of the 1031 exchange technique provided by the real estate code.

In a 1031 tax free exchange a real estate investor can sell an appreciated property and invest the sale proceeds in a like kind property. By investing the real estate profits in a new property purchase, the taxes on the gain are deferred. A financial institution that is knowledgeable in 131 tax free exchanges should handle the transaction to make certain that all regulations are complied with. This is a valuable tool for the preservation of cash and equity in the appreciated real estate.

Real estate investors will find oceanfront condos, downtown lofts, apartment projects, apartment conversion candidates and office buildings, all worthy of considering for the reinvestment of 1031 proceeds.

Condos provide supply and demand upsides and a wide variety of potential future buyers including homeowners, vacation homeowners and investors.

Downtown lofts offer unique loft designs, proximity to  downtown business districts and lively downtown neighborhoods.

Apartment buildings and offices, particularly in high demand areas like historic districts, present the opportunity for positive cash flow and future equity appreciation.

When zoned CRO, which allows a building to be used for residential, commercial or office purposes, apartment building have the additional value of being able to be converted to offices. Small apartment buildings zoned CRO in historic neighborhoods are prime candidates and highly sought after by real estate investors looking for 1031 exchanges.

A 1031 exchange can save a real estate investor a great deal of cash.