Michigan

First Time Homebuyer Tax Credit Extended Into 2010!
Plus...A New Tax Credit for Certain Existing Home Owners!

It's official. President Obama has signed a bill that extends the tax credit for first-time homebuyers (FTHBs) into the first half of 2010. This program had been scheduled to expire on November 30, 2009.

In addition to extending the tax credit of up to $8,000 through June 30, 2010, the extension measure also opens up opportunities for others who are not buying a home for the first time.

So Who Gets What?
The program that has existed for FTHBs remains intact with the one exception that more people are now eligible based on an increase in the amount of income someone may now earn.

Additionally, the program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Deadlines
In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

Higher Income Caps in Effect
The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible.

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

Maximum Purchase Price
Qualifying buyers may purchase a property with a maximum sales price of $800,000.

First-Time Homebuyer Tax Credit - Frequently Asked Questions
Here are answers to some commonly asked questions about the tax credit.

What is a tax credit?
A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual's primary residence.

What is the tax credit for first-time homebuyers (FTHBs)?
An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000.

Who is eligible for the FTHB tax credit?
Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible. This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.

As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500.

How do I claim the credit?
For those taking advantage of the tax credit in 2009, you may choose to either apply for the credit with your 2009 tax return or you may apply for the credit sooner by filing an amended 2008 tax return with Form 5405 (http://www.irs.gov/pub/irs-pdf/f5405.pdf).

Can you claim the tax credit in advance of purchasing a property?
No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place.

Can a taxpayer claim a credit if the property is purchased from a seller with seller financing and the seller retains title to the property?
Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the taxpayer may file for the credit. Examples of this would include a land contract, contract for deed, etc. According to the IRS, factors that would demonstrate the ownership of the property would include: 1. the right of possession, 2. the right to obtain legal title upon full payment of the purchase price, 3. the right to construct improvements, 4. the obligation to pay property taxes, 5. the risk of loss, 6. the responsibility to insure the property and 7. the duty to maintain the property.

Are there other restrictions to taking the credit?
Yes. According to the IRS, if any of the following describe your situation, a credit would not be due.

• You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
• You do not use the home as your principal residence.
• You sell your home before the end of the year.
• You are a nonresident alien.
• You are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)
• Your home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
• You owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2009, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2006, through July 1, 2009.

Can you buy a home from a step-relative and be eligible for the credit?
Yes. Provided the person you are buying a home from is not a direct blood relative, the purchase would be allowed.

Can parent(s) who will not live in the property cosign for a mortgage for their child and the child that is a qualifying FTHB still be eligible for the credit?
Yes.

Can a separated spouse who has not owned a home for four years qualify for the FTHB tax credit if the spouse has owned a property anytime in the last three years?
No. However, the spouse may be eligible for the repeat buyer credit. The best path to take in any situation regarding income taxes is to speak with a professional tax preparer or CPA.

If you have any questions that fall outside the situations here, give me a call and if you do not have an accountant to speak with, I can refer you to one.

Congratulations CSI, your new home purchase in Brimley MI will serve you well during snowmobiling season... Thank you for allowing me to assist you with your Michigan real estate transaction...

May the Michigan UP recieve 24 inches of snow by Christmas...

Complete Reatly, LLC
Angie Ridley
Angie@AngieRidley.com
810 744 4600

Serving MI's Oakland, Genesee, Lapeer, Saginaw and Tuscola Counties (and more...)

WE LOVE REFERRALS...

Yesterday President Obama signed into law the bill that extends and expands the First-Time homebuyers’ Tax Credit, but does this mean ‘real’ money to you?

If you are a First-Time home buyer, and you don’t procrastinate, you should be able to find a home, get it closed in time to take advantage of the tax credit, the important dates to keep in mind are: April 30th 2010. You have to be under contract by this date to qualify, and you have to close by: July 1st 2010.

There is also a provision for current home owners built into this tax credit, allowing anyone who has used the home they are selling as a principal residence consecutively for 5 of the previous 8 years. This tax credit is $6500 (married) or $3200 (filing separately) This is where it gets a little difficult, for those who think they are going to wait until spring to list their house, get it sold and have a house under contract by April 30th, they may have a rude awakening, as homes need to be very aggressively priced to sell quickly in this market. My advise to you would be to get your house on the market as soon as possible, to allow enough time to get it sold, closed, and time for you to find a new home in time to take advantage of the credit.

It is a myth that homes don’t sell in the winter, they most certainly do, as a matter of fact, more times than not, my best month of the year has come in March, due to the activity that commonly increases at the first of the year. Below are some reasons why this may be the perfect time to have your house on the market. Read through this list, and if you are considering a move and want to take advantage of the new tax credit, don’t wait until spring, call your Realtor today.

Remember….”The early bird gets the worm”, and in this case….the cash!

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10 Reasons To List Your Home During The Winter

by Jim Remley, Pro Performer Seminars

1. Fewer Showings-Yes there are less buyers, but those buyers that are

left are usually very serious about making a purchase.

2. Less Competition-Most people wait until spring and summer to list

their home, which means during the fall and winter you will have far

less competition than at any other time of the year.

3. Homes Show Better During the Holidays-Buyers love homes that can

tell a story. The holidays are a great time to show homes because the

home is usually dressed up for the holiday celebrations!

4. January is the Biggest Transfer Month-Did you know that more

corporate moves happen during January than at any other time of the

year? This may be a great reason to list your home now.

5. Timing-By putting the home on the market during the winter you

may be able to more easily hit your moving goals!

6. More Time To Get Top Dollar-By starting to market your home early

you may be able to secure a higher price.

7. Great Time To Shop-If your home sells quickly you will be able to

shop for your next home during the winter, this is a great time to find

a bargain!

8. More Advertising-Because most agents and offices have less inventory

during the winter your home may be advertised more often than

during the spring and summer months!

9. More Attention-Most agents will be able to devote more specialized

attention to your needs during the winter because they have less

clients to manage.

10.The Market-Today’s interest rates are at forty year lows. This gives

buyers more spending power, and will be even more important when

you begin shopping for your next home!

Going From Mark-To-Market to Mark-To-Make Believe!

By Robert Pliska

Have we gone from "mark-to-market" to "mark-to-make believe"? The FDIC just released its policy statement - Prudent Commercial Real Estate Loan Workouts. The FDIC's purpose is provide transparency and consistency to commercial real estate workout transactions and not curtail the availability of credit to sound borrowers. While the FDIC's intentions are honorable, the policy may provide the opposite effect - lack of transparency and consistency and extending the lack of credit to sound borrowers.

The key point of this policy statement is - loan workouts need to be designed to help ensure that the institution maximizes its recovery potential. Renewed or restructured loans to borrowers who have the ability to pay their debts under reasonable modified terms will not be subject to adverse classification solely because the value of the underlying collateral has declined to an amount that is less than the loan balance. So if the borrower and/or its guarantors can still make the payment and the financial institution would prefer to extend the loan rather than take a loss, the fact that the property is worth less is not the determining factor.

The loan can be in good standing if the borrower/guarantor can show that they can still make payments. New appraisals need not be ordered if an internal review by the institution appropriately updates the original appraisal assumptions to reflect the current market and provides an estimate of the fair value for impairment analysis. Documentation should demonstrate a full understanding of the property's current "as is" condition. However, if the institution intends to work with the borrower to get a property to "as stabilized" market value, then the institution can consider the "as stabilized value" in its collateral assessment for credit risk rating. This seems to be heading far to the "make believe" area. Just present a "good story" and the institution can buy a lot of time.

This "good story" accounting will provide more of a lack of transparency and consistency. Two people, for example, can tell a "good story" much differently. It will probably make the FDIC's job more difficult. In the 1990's, for example, banks in Japan were allowed to avoid taking losses and write-downs. The result was an entire decade of stagnation. The steps by the FDIC could create a parallel situation. This may extend the time of lack of credit to borrowers. Let's get back to reality rather than "make believe". Hopefully, our commercial real estate problems may be resolved sooner. For further discuss ion of this topic, feel free to contact the author Robert Pliska, CRE, CPA.

Victorian Sleighbell Parade & Old
Christmas Weekend

December 3-6, 2009
Manistee, Michigan

My all time favorite event in Manistee is the Victorian Sleighbell Parade. In all my years, I have only missed one of the parades. In 2008 I went to New York City with my girlfriends and I often tell people that the tree in Rockefeller Center does not compare to the gigantic tree pulled by horses down River Street in Manistee, Michigan during the Victorian Parade. I'm dead serious!

This year's parade will be Saturday, December 5, 2009 at 5:30 pm. If you are reading this - YOU MUST ATTEND! Why? You won't find a more unique Christmas parade where...

• Everyone wears Victorian period clothing. And I do mean everyone - practically every person from Manistee is in the parade!
• All entries in are decorated with live greenery, cloth ribbons, etc. No plastic allowed. I love it!
• There are lots of horses, as no motorized vehicles area allowed, with the exception of automobiles built prior to 1901.
• All music must be live and from the Victorian period.
• All lighting in the parade is in the form of candles, lanterns, oil lamps, etc.
• Nothing is distributed in the parade - that's right, NO CANDY. I love it and my kids don't even miss it!

Remember, the Manistee Victorian Sleighbell parade starts at 5:30 pm on December 5th downtown on River Street in Manistee, MI. Hope to see you there - I'll be riding in the Coldwell Banker carriage.

Click here for a full schedule of events

Contact Meagan Kempf for all of your real estate needs in Manistee, Mason & Lake Counties!



Meagan Kempf
231-510-5572 cell/text
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