Invest in Your Future...

If you are a first-time home buyer, there are some outstanding opportunities. Unlike the $7,500 tax credit included in the Housing and Economic Recovery Act of 2008, the $8,000 tax credit recently enacted by Congress does not have to be repaid. The credit is 10% of the purchase price of a principal residence up to a maximum of $8,000 for qualified first-time home buyers. To find out more about buying a home, the first-time home buyer tax credit and other programs available to first-time home buyers, contact me today. It’s an investment in your future.

Contact Dennis via email or call (607) 227-6422 for more information on becoming a homeowner or to assist with your real estate needs.

http://www.ithaca-homes.com/

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The Time to Buy a Home IS Now

What a year it’s been. We’ve seen oil prices skyrocket to over $4/gallon with predictions of heading to over $7/gallon and then drop back to their current lows of under $2 per gallon. We witnessed a tough primary fight in the democratic primary followed by an historic election. The housing industry has experienced the worst slump since the great depression and the U.S. auto industry began falling apart.

However, all the doom and gloom we’ve experienced over the past year is beginning to be overshadowed with hope and promise as we approach 2009. A controversial $700 billion bailout of the financial industries was approved, the Federal Reserve cut its benchmark federal funds rate to a record low of 0 to .25% this past week, and the auto industry received an even more controversial lifeline to the tune of $17.4 billion. A major bill to assist first-time homebuyers was signed in July 2008. And this week we’ve watched mortgage rates continue to drop.

The local economy and housing market in Ithaca and Tompkins County have weathered the financial turmoil. According to an article by Elia Kacapyr in the 12/20/2008 issue of The Ithaca Journal, holiday retail sales in Tompkins County are predicted to be about 3.2% higher than 2007 based on the fact that retail sales are running about 3.2% ahead of last year’s pace through October. The drop in mortgage rates at some of the local Ithaca lending institutions this past week to under 5% will continue to spur the local housing market and economy as we enter 2009.

With the low mortgage rates, local median home prices still under $180,000, and most of the financial crisis beginning to appear in the rear-view mirror now IS the perfect time to consider buying a home or moving up. Don't miss the opportunity...contact Dennis today via email or call (607) 227-6422 for more information on becoming a homeowner or to assist with all your real estate needs.

http://www.ithaca-homes.com/

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First-Time Home Buyer Tax Credit

In a post on October 22, 2008, it was mentioned that it is a buyer’s market. There are many favorable contributing conditions such as plentiful housing inventory; mortgage rates are near an historic low; weak median home prices, and don’t forget the first-time home buyer tax credit. The tax credit is making home ownership more affordable and is available for a limited time only.

First-Time Home Buyer Tax Credit at a Glance

· The tax credit is available for first-time home buyers only.
· The maximum credit amount is $7,500.
· The credit is available for homes purchased on or after April 9, 2008 and before July 1, 2009.
· Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.
· The tax credit works like an interest-free loan and must be repaid over a 15-year period.

The first-time home buyer tax credit of up to $7,500 is available to first-time home buyers – new or resale – with a closing on or after April 9, 2008 and before July 1, 2009. For new construction, these dates apply to date of first occupancy. Certain income limits apply as indicated above and it is recommended to check with a tax advisor for specifics.

Some basics of the tax credit are that it is a refundable credit of up to 10% of the purchase price, with a maximum credit of $7,500, and not a tax deduction. A refundable credit means that you get the full amount applied towards your tax liability. If your liability is less, the IRS will send you a check for the balance. A deduction means you get to lower your taxable income by the amount of the deduction and only realize a percentage of the deduction. For example, if you are eligible for a $7,500 tax deduction and are in the 15% tax bracket with a tax liability of $5000, your tax liability would be lowered by $1,125 and you would still owe $3875. With a refundable tax credit of $7500 and a tax liability of $5000, your tax liability would become $0 and the IRS sends you a check for the $2500 balance.

One thing to keep in mind is that the tax credit is repayable. It is basically an interest free loan with a repayment period of 15 years. If you sell the home prior to 15 years, the balance is due up to the amount of profit you make on the home. For example, if you sell the home after 5 years and still owe $5000 towards the credit but only make a profit of $2500, you would only owe the difference of $2500. If you sell and break even or show a loss, the balance would be forgiven.

One may ask what the benefit is if the credit is repayable and why was it set up this way. The repayment requirement was set up to reduce the effect on the Federal Treasury and to stabilize home prices. It was also assumed that with stabilized home prices and increases in home prices in the future, you as a home buyer will benefit by the amount of the credit and probably more by allowing one to purchase more home for their money. If you bought a home for $100,000 and realized an increase in home price of 10%, you would have a home with a value of $110,000. With the tax credit, you now buy a home for $107,500. Assuming the same 10% increase, you now have a home with a value of $118,250. In the first example, you would have a profit of $10000. In the second, the profit would be $10750. And as time goes on and home prices continue to increase as they historically have, the higher priced home would show a larger increase in profit.

For more info on the first-time home buyer tax credit visit:
http://www.federalhousingtaxcredit.com/

Contact Dennis via email or call (607) 227-6422 for more information on becoming a homeowner or to assist with your real estate needs.

www.ithaca-homes.com

Read more!