mainlinemarketplace.com » Buyer Tips

The 3.8% Tax Is Not a Real Estate Transfer Tax

Robert Forster — Thu, 22 Sep 2011 16:02:18 +0000

By Robert Freedman, Senior Editor, REALTOR® Magazine

Click here to read the article: http://speakingofrealestate.blogs.realtor.org/2010/11/24/the-3-8-tax-is-not-a-real-estate-transfer-tax/

Pre-Owned home sales up

Robert Forster — Tue, 27 Apr 2010 17:33:48 +0000

Agreements on pre-owned homes increased in Feb. …the market long term – a massive real estate inventory will significantly decrease…is another piece of bad economic news and/or the end of this tax-credit cycle,” Glick added. Contact real estate writer Alan J. Heavens at 215…

Agreements on pre-owned homes increased in Feb.

From the Philadelphia Inquire

First Time Home Buyer tax credit, times running out

Robert Forster — Sat, 06 Feb 2010 22:11:02 +0000

By Alan J. Heavens

Inquirer Real Estate Writer

Liv Mansfield is racing the clock, hoping to find and settle, or at least sign a purchase agreement, on a townhouse before the $6,500 tax credit for qualified repeat home buyers expires April 30.

While the credit is not as important as staying in the Wallingford school district, where her younger daughter will enter sixth grade next fall, Mansfield says it will help make expenses associated with the move “a wash.”

“It will help with moving costs, and with getting this house ready for sale,” said Mansfield, who has lived in the five-bedroom split-level Colonial she bought with her former husband nine years ago.

The house, which she says is far larger than what “two people and a small dog need,” will list for under $525,000 and heads for the market Feb. 15.

Current homeowners buying a house between Nov. 7, 2009, and April 30 and who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight can qualify for the $6,500.

It seems less is known about the repeat-buyer credit. This incentive was added when the original $8,000 tax credit for qualified first-time buyers, which expired Nov. 30, was extended.

Houses purchased for $800,000 or less are eligible for repeat buyers. Single buyers with incomes up to $125,000 and married couples up to $225,000 may receive the maximum tax credit for both repeat and first-time purchases.

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. Buyers earning more than the maximum are not eligible for the credit.

If a binding written contract to purchase is in effect April 30, the purchaser will have until July 1 to close.

The 2009 credit for first-timers helped jump-start the sagging home market in the summer and fall, data show.

Walt Molony, a National Association of Realtors spokesman, said two million existing-home sales in 2009 could be attributed to the $8,000 first-time buyers credit.

Although it is too early to measure the credit’s effect on sales so far this year, Molony said NAR chief economist Lawrence Yun believes it will add 1.5 million sales to the tally.

The repeat-buyers credit was added to appease builders, who said the original did not offer enough time to purchasers of new houses, which take at least six months to build, to close on them.

New homes accounted for only 7 percent of the tax-credit-based sales, Molony said.

The National Association of Homebuilders’ Donna Reichle said, “We hear builders saying they are getting inquiries, but that’s all so far.”

“According to our economists, it’s way too early,” Reichle said. “If you look back at passage of the original $8,000 credit and impact on [housing starts], it took a couple of months, and that was in the spring as well.”

Moody’s Economy.com chief economist Mark Zandi says the credit will boost sales “modestly,” however, by 300,000, with one-third trade-up buyers.

“I don’t expect the credit to be extended again,” Zandi said. “Each time it is extended, it becomes less effective and thus more costly.”

It is easier to gauge the credits’ impact on the Philadelphia area’s market.

David Krieger, senior vice president and general manager of Coldwell Banker Preferred in Philadelphia, says he believes that “a very large increase in our listing inventory in January” is a result of the $6,500 credit.

Still, the $8,000 first-time credit remains the chief reason his company’s home sales were 33 percent higher last month than in January 2009, he said.

Typically, repeat buyers are better off financially than first-timers, so a lot of repeat buyers realize from the start they don’t qualify for the credit, Weichert Realtors agent Alec Schwartz said.

“What they do realize, and what is getting more sellers to list, is that they understand that there are plenty of first-time buyers who qualify for the $8,000 credit out there, and they have a much better chance of selling their house and buying a new one than before,” said Schwartz, who is the agent for Liv Mansfield, the woman looking to buy a townhouse.

This is also true in the region’s new-home market, said Wayne Norris, regional sales manager for Hanley Wood Market Intelligence.

“Builders have experienced increased activity in recent months” attributable to the $6,500 credit and “the fact that many potential buyers were able to sell their houses” to those taking advantage of the [first-time buyers] credit,” he said.

The sense of urgency to make the tax-credit deadline and fears of rising interest rates will push new-home sales higher in the spring, Norris said.

Thirty-year fixed interest rates were 5.01 percent this week, Freddie Mac reports.

Jerome Scarpello of Leo Mortgage in Spring House said many buyers eligible for the credit would pay origination points to lower their interest rate – “justifying that the cost of the points will be recouped with the credit, then still have a lower payment for the life of the loan.”

Builder Bruce Paparone of Bruce Paparone Inc. in Stratford, N.J., said a better understanding of the credit would result in more sales for him.

Still, “the incentive has definitely affected the buying decision of at least five of our last seven sales,” he said.

That said, first-time buyers continue to have a larger presence in all markets.

“Last night, we took a deposit for first-time buyers at $445,000,” Paparone said. “They are insisting that if we do not make closing by June 30 that we will cover them for the $8,000.”

“Fortunately, the house is at foundation and should make the date,” he said.

More on the First Time Home Buyer Credit

Robert Forster — Wed, 27 May 2009 14:38:02 +0000

First-Time Buyer Tax Credit Already Deemed a Success

Preliminary figures from the Internal Revenue Service (IRS) show that the first-time buyer tax credit may have been a deal maker in 10 percent of the approximately 5 million new- and existing-home sales last year.

By March 6, 2009 — six weeks prior to when 2008 returns were due — 567,685 taxpayers had claimed more than $3.9 billion worth of first-time buyer tax credits on their 2008 tax returns, according to Steve Cook of the real estate Web site RealEstateEconomyWatch.com. Given that pace, the final figure should exceed the dollar value of the credits estimated by Congress last year.

With the more attractive $8,000 first-time buyer tax credit still available for transactions that close before Dec. 1, 2009, it is expected that the tax credit will continue to be a major factor in the housing recovery currently underway.

Great news about the $8,000 first time home buyer credit!

Robert Forster — Thu, 14 May 2009 18:38:37 +0000

Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, said that the
Federal Housing Administration is going to permit its lenders to allow homeowners to use the $8,000 tax credit as a downpayment.

Secretary Donovan said that important changes, which the National Association of Realtors^® has been calling for, will help consumers purchase a home. “We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a downpayment,” Donovan said. According to Donovan, the FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.

Donovan said the Obama administration plans to further stabilize the housing market. “I do think we have some early signs hat the market overall is stabilizing,” said Donovan. “Since January we’ve seen both home sales moving up and down around a relatively stable number and we are seeing the first signs that the rapid decline in home prices is starting to abate.”

This article is from the National Association of Realtors

First Time Home Buyers Tax Credit

Robert Forster — Mon, 04 May 2009 15:55:19 +0000

If you qualify for the Federal tax credit of $8,000.00 you only have until December 1 to cash in. First time home buyers are not the only ones who qualify. Read this article to learn more and see if you qualify, and remember this opportunity might not come up again in your lifetime!

The economic stimulus plan signed into law in February included a financial incentive for first-time buyers — an $8,000 tax credit, that unlike past versions does not need to be repaid. Combined with historically low interest rates and more affordable home prices, the tax credit has made the decision to purchase real estate an easy choice for many buyers.

Review the following information to see if you are eligible to take advantage of the tax credit:

The home purchase closed/will close on or after Jan. 1, 2009, and before Dec. 1, 2009.

The home is being used as a principal residence.

You have either never owned a home, or have not owned a home in the last three years.

Your modified gross income is less than $95,000 for single tax payers or $170,000 for married filers.

Advice for Buyers in this tough market

Robert Forster — Tue, 28 Apr 2009 19:45:34 +0000

MORRIS PLAINS, N.J., – Whether buying a car, picking a stock or purchasing a home, it’s natural to want to get the best value possible. Yet waiting to try and make your purchase at the absolute lowest price can be tricky – if not impossible.

According to James M Weichert, president and founder of Weichert, Realtors, one of the nation’s largest independently-owned real estate companies, when it comes to real estate, holding out for a slightly better deal can also be costly.

“No one has a crystal ball. Despite what many financial experts would have you think, it’s impossible to predict the exact moment prices will be at their very best,” said Weichert. “The only way to really know when prices have hit bottom is after they start coming back up. But waiting until that point cost buyers in terms of money and buying potential.”

Instead of trying to time the market for the perfect deal, Weichert recommends those interested in becoming a homeowner take advantage now of the unprecedented combination of affordable prices and historically-low interest rates that he says has created a sort of ideal ‘buying zone.’

After several years of declining prices, home affordability is at its highest level in decades. In fact, the National Association of Realtors’ (NAR) Housing Affordability Index recently rose to its highest level since it began the index nearly forty years ago. At the same time, the cost to borrow money is at a historically-low level with interest rates for a 30-year fixed mortgage dipping under 5 percent for the first time since the 1950’s.

When you factor in the $8,000 federal tax credit being offered to first-time home buyers, it is hard to imagine buying conditions getting much better. And it seems a large number of first-time buyers agree. In fact, the NAR recently reported that first-time buyers accounted for more than half of all home sales in the month for the first-time ever.

Perhaps, the biggest reason first-time buyers may feel more comfortable purchasing a home today than a year ago is because they are optimistic about the prospects for the housing market in the near future. In particular, the government’s ongoing commitment to stabilize home prices and keep interest rates low to stimulate the economy seems to have instilled new confidence in buyers.

“Those considering purchasing a home have to ask themselves if they think the home they can buy today will cost more or less a few years from now – not just in terms of price but also mortgage,” said Weichert. “While it’s always possible conditions could improve further, it’s more likely that we’ll see a drop in the record-high affordability and historically-low interest rates that are making now such a great time to buy.”

With the tax credit set to expire on December 1 of this year, Weichert urges all buyers, but particularly first-time buyers, who ultimately want to capitalize on this great buying opportunity to not wait until it’s too late.

“Thinking about missed opportunities in life can be unpleasant, particularly the ones we knew about but didn’t act upon. We are in the midst of a tremendous buyer’s market right now but it isn’t going to last forever. Inevitably, when we come out of a market like we have today, the most common thing I hear from buyers is regret that they didn’t act sooner,” added Weichert