Tuesday, February 24, 2009

Home Buyer Tax Credit

6 Things to Know

While the proposed $15,000 home-buyer tax credit died in negotiations between the House and the Senate, the $787 billion stimulus bill that President Barack Obama signed into law Tuesday includes a similar–albeit smaller–measure designed to help revive the real estate market. Here are six things you need to know about the freshly-enacted $8,000 first-time home buyer tax credit.

1. Eight grand, new buyers: The tax credit included in the economic stimulus legislation is much narrower than the $15,000 proposal. This credit is equivalent to 10 percent of the purchase price of the home–although it’s capped at $8,000–and applies only to first-time home buyers and principal residences. But unlike an earlier $7,500 home buyer tax credit, this one does not have to be repaid.

2. First time buyers defined: For the purpose of this legislation, a “first-time home buyer” is someone who hasn’t owned a principal residence for three years before buying a house. (The date of purchase is considered the day that the title is transferred.) That means if you’ve owned a vacation home–but not a principal residence–within the past three years, you would still qualify for the credit.

3. 2009 buyers only: Only those who purchase a home on or after January 1 and before December 1, 2009 are eligible for the credit. Anyone who bought a home last year won’t be able to take advantage of it.

4. Income limits: The tax credit is subject to income limitations. Single buyers need a modified adjusted gross income of $75,000 or less to qualify for the full credit, that’s $150,000 for married couples. Those earning more than these thresholds may be eligible for reduced credits.

5. Refundable: Because the tax credit is “refundable,” qualified buyers can take advantage of it even if they don’t have much tax liability.

6. Recapture: Buyers have to own the home for at least three years in order to capitalize on the credit. If they sell the home before then, they will have to return the credit to the government. (Exceptions will be made in certain cases, such as death or divorce.)

Tuesday, February 17, 2009

East Islip Real Estate

The buyer activity in East Islip, West Islip, Islip Terrace and Islip has picked up. I have seen and heard of more offers being made and being accepted. Lower interest rates and goverment help for first time home buyers seems to be working for buyers and sellers alike.

Great East Islip Homes

Country Village Splits:

Diamond Condition, Totally Renovated! $495,000. 3 Bedrooms, 2 New Full Bathrooms, New Kitchen, CAC, Hardwood Floors, 150 amp electrical service, Newer Boiler, Brick Pavers, Cedar Decking, PVC Fence, In-Ground Sprinklers, custom drapery, 1 car garage, A Must See!

Excellent Condition, Great Buy! $399,123. 3 Bedrooms, 1.5 Bathrooms, CAC, Hardwood Floors, New Kitchen, Fenced yard, 4 Zone In-Ground Sprinklers System, do Miss This Opportunity!

For more information contact Mark Hannigan at 631-766-5959 or lirealty123@gmail.com

Thursday, February 12, 2009

Foreclosure Process

FORECLOSURE PROCESS

What is Foreclosure? The foreclosure process enables a lender to recover the amount owed on a defaulted loan. The lender has the option of selling the property or repossessing the property. The beginning of a foreclosure process is initiated when a borrower defaults on mortgage payments. The lender then files a Notice of Default or Lis Pendens.

Some of the ways a foreclosure process may end are:

The borrower pays off the default amount during the pre-foreclosure period determined by state law.

The borrower sells the property to a third party during the pre-foreclosure period. The borrower is able then to pay off the loan and avoid foreclosure and damage to credit history.
At the end of the pre-foreclosure period the property is sold in a public auction to a third party.


The lender repossesses the property and resells it on the open market.

Real Estate Owned by the lender (REO), can be repossessed either by an agreement with the borrower during pre-foreclosure or by purchasing the property at the public auction.

Basic & Enhanced STAR Exemption
The Basic & Enhanced STAR exemption from the State of New York for 2008 will be lower.
The schedule below provides the estimated impact to East Islip residents of this lower exemption from school taxes.

East Islip UFSD
Impact of smaller STAR Reimbursement in 2008-09
10/16/2008 9:29
2007-08 2008-09 $ Change % Lower
Basic STAR Exemption per parcel $7,140 $6,430 ($710) -9.94%
Enhanced STAR Exemption per parcel $13,540 $12,190 ($1,350) -9.97%
Homestead Tax Rate $15.190 $15.795
Basic STAR Reimbursement $1,085 $1,016 ($69) -6.36%
Enhanced STAR Reimbursement $2,057 $1,925 ($131) -6.38%

Tuesday, February 10, 2009

Open House at 165 Sherry Street, East Islip



Sunday 2/15/09


Open House from

12:00pm to 4:00pm


165 Sherry Street in East Islip



RSVP: lirealty123@gmail.com


This home has been totally renovated inside and out. Offering 3 bedrooms, 2 full bathrooms, new kitchen and appliances, livingroom, dining room, den, finished basement, 1 car garage, Andersen windows and doors, CAC, upgraded 150 amp electric service, newer boiler, new self container outside oil tank, cedar decking, new patio pavers, in-ground sprinklers, landscaping profesionally designed and maintained.


Stop by and see all the great features this home has to offer.

165 Sherry Street
East Islip, NY 11730

Frequently Asked QuestionsAbout the First-Time Home Buyer Tax Credit
The Housing and Economic Recovery Act of 2008 authorizes a $7,500 tax credit for qualified first-time home buyers purchasing homes on or after April 9, 2008 and before July 1, 2009. The following questions and answers provide basic information about the tax credit. If you have more specific questions, we strongly encourage you to consult a qualified tax advisor or legal professional about your unique situation. Credit Expires June 30, 2009

  1. Who is eligible to claim the $7,500 tax credit?

  2. What is the definition of a first-time home buyer?

  3. How do I claim the tax credit? Do I need to complete a form or application?

  4. What types of homes will qualify for the tax credit?

  5. Instead of buying a new home from a home builder, I have hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?

  6. What is "modified adjusted gross income"?

  7. If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?

  8. Can you give me an example of how the partial tax credit is determined?

  9. Does the credit amount differ based on tax filing status?

  10. Are there any circumstances for which buyers whose incomes are at or below the $75,000 limit for singles or the $150,000 limit for married taxpayers might not be able to claim the full $7,500 tax credit?

  11. I heard that the tax credit is refundable. What does that mean?

  12. What is the difference between a tax credit and a tax deduction?

  13. Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?

  14. I live in the District of Columbia. Can I claim both the DC first-time home buyer credit and this new credit?

  15. I am not a U.S. citizen. Can I claim the tax credit?

  16. Does the credit have to be paid back to the government? If so, what are the payback provisions?
    Why must the money be repaid?

  17. Because the money must be repaid, isn’t the first-time home buyer program really a zero-interest loan rather than a traditional tax credit?

  18. If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?

  19. For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?

  20. Is there any way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2008 tax return?


Who is eligible to claim the $7,500 tax credit? First time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after April 9, 2008 and before July 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs.


What is the definition of a first-time home buyer? The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.


How do I claim the tax credit? Do I need to complete a form or application?Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. No other applications or forms are required. No pre-approval is necessary; however, prospective home buyers will want to be sure they qualify for the credit under the income limits and first-time home buyer tests.


What types of homes will qualify for the tax credit? Any home purchased by an eligible first-time home buyer will qualify for the credit, provided that the home will be used as a principal residence and the buyer has not owned a home in the previous three years. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats.


Instead of buying a new home from a home builder, I have hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit? Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been "purchased" on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after April 9, 2008 and before July 1, 2009. In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.


What is "modified adjusted gross income"? Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine "adjusted gross income" or AGI. AGI is total income for a year minus certain deductions (known as "adjustments" or "above-the-line deductions"), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains. To determine modified adjusted gross income (MAGI), add to AGI certain amounts such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for higher-education costs.


If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit? Possibly. It depends on your income. Partial credits of less than $7,500 are available for some taxpayers whose MAGI exceeds the phaseout limits. The credit becomes totally unavailable for individual taxpayers with a modified adjusted gross income of more than $95,000 and for married taxpayers filing joint returns with an AGI of more than $170,000.


Can you give me an example of how the partial tax credit is determined? Just as an example, assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $7,500 by 0.5. The result is $3,750.

Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $7,500 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,625.

Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.


Does the credit amount differ based on tax filing status? No. The credit is in general equal to $7,500 for a qualified home purchase, whether the home buyer files taxes as a single or married taxpayer. However, if a household files their taxes as "married filing separately" (in effect, filing two returns), then the credit of $7,500 is claimed as a $3,750 credit on each of the two returns.


Are there any circumstances for which buyers whose incomes are at or below the $75,000 limit for singles or the $150,000 limit for married taxpayers might not be able to claim the full $7,500 tax credit? In general, the tax credit is equal to 10% of the qualified home purchase price, but the credit amount is capped or limited at $7,500. For most first-time home buyers, this means the credit will equal $7,500. For home buyers purchasing a home priced less than $75,000, the credit will equal 10% of the purchase price.


I heard that the tax credit is refundable. What does that mean? The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.

For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that taxpayer qualified for the $7,500 home buyer tax credit. As a result, the taxpayer would receive a check for $6,500 ($7,500 minus the $1,000 owed).


What is the difference between a tax credit and a tax deduction? A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $7,500 in income taxes and who receives a $7,500 tax credit would owe nothing to the IRS.

A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $7,500 in income taxes. If the taxpayer receives a $7,500 deduction, the taxpayer’s tax liability would be reduced by $1,125 (15 percent of $7,500), or lowered from $7,500 to $6,375.


Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program? No. The tax credit cannot be combined with the MRB home buyer program.


I live in the District of Columbia. Can I claim both the DC first-time home buyer credit and this new credit? No. You can claim only one.


I am not a U.S. citizen. Can I claim the tax credit?Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of "nonresident alien" in IRS Publication 519.


Does the credit have to be paid back to the government? If so, what are the payback provisions?Yes, the tax credit must be repaid. Home buyers will be required to repay the credit to the government, without interest, over 15 years or when they sell the house, if there is sufficient capital gain from the sale. For example, a home buyer claiming a $7,500 credit would repay the credit at $500 per year. The home owner does not have to begin making repayments on the credit until two years after the credit is claimed. So if the tax credit is claimed on the 2008 tax return, a $500 payment is not due until the 2010 tax return is filed. If the home owner sold the home, then the remaining credit amount would be due from the profit on the home sale. If there was insufficient profit, then the remaining credit payback would be forgiven.


Why must the money be repaid? Congress’s intent was to provide as large a financial resource as possible for home buyers in the year that they purchase a home. In addition to helping first-time home buyers, this will maximize the stimulus for the housing market and the economy, will help stabilize home prices, and will increase home sales. The repayment requirement reduces the effect on the Federal Treasury and assumes that home buyers will benefit from stabilized and, eventually, increasing future housing prices.


Because the money must be repaid, isn’t the first-time home buyer program really a zero-interest loan rather than a traditional tax credit? Yes. Because the tax credit must be repaid, it operates like a zero-interest loan. Assuming an interest rate of 7%, that means the home owner saves up to $4,200 in interest payments over the 15-year repayment period. Compared to $7,500 financed through a 30-year mortgage with a 7% interest rate, the home buyer tax credit saves home buyers over $8,100 in interest payments. The program is called a tax credit because it operates through the tax code and is administered by the IRS. Also like a tax credit, it provides a reduction in tax liability in the year it is claimed.


If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return? Yes. The law allows taxpayers to choose ("elect") to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.


For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest? Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount.


Is there any way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2008 tax return? Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the future home buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the downpayment. Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.

Credit Expires June 30, 2009

Monday, February 9, 2009

Long Island Real Estate Grand Opening Promotion

Realty 123 Inc. is Open for Business!



If you are thinking about selling your home now or in the near future contact us today to schedule a free no obligation market analysis of your home. With the present economy and housing slump, reviewing and understanding current and accurate information is crucial in determining the current market value of your home.



Our clients receive the following services:


  • MLS agent participation (20,000 plus agents working for you)

  • MLSLI.com

  • Realtor.com with featured home capability

  • Realtor.com weekly property viewing stats

  • Realty-123.com

  • VLS Homes posting

  • Broker Open House

  • Public Open Houses

  • Posted on all of the top web-site real estate syndicates

  • Virtual tour

  • Multiple clear photos that compliment your home

  • Personal property web-site

  • Client Listing Book account (owner can review activity and competetion)

  • Blast e-mails to local agents and buyers

  • AccuShow appointment center account

  • 60 day market review

  • Service, Guidance and Professionalism

Fact: Homes that sell quickly are the best homes on the market at the best price.


Fact: Your home is only worth what someone is will to pay.


Regards,


Mark Hannigan Broker / Owner, SRES, CBR, CNS


Realty 123 Inc. ..........An affordable real estate marketing solution.

*Commision fees from 1% and no more than 3%


631-760-5570


lirealty123@gmail.com

*Sign up fee of $495. Promotional event waives fee to the first 50 clients.

Update: 47 client promotion coupons available.