According to the temporary tax credit President Bush approved in summer of 2008, first time homebuyers are able to received $7,500 credit for the purchase of homes before July 1, 2009. This can be claimed on your 2008 taxes or your 2009 taxes. I want you to know what your options are before making a purchase and claiming the credit on your tax return. Below is the summary of how the tax credit work.
*Your income cannot exceed $75,000 for individuals and $150,000 for joint return.
*Credit is 10% of the cost of the home, up to a maximum credit of $7,500
*Amount is repaid over 15 years with $502.50 each year. The rule is you pay 6.67% back each year.
*Claim the credit on IRS form 1040 tax return or any special forms the IRS might advise.
*The credit is for first time homebuyers who make their purchases between 1/1/2009 and 7/1/2009. You are permitted to treat the purchase as if it has occured on December 31, 2008. For more details refer to the following link.
http://www.realtor.org/gapublic.nsf/files/hbtaxcreditqa2008.pdf/$FILE/hbtaxcreditqa2008.pdf
Xiao-Qing Lu (Shall-Ching)
Keller Williams Realty
Phone: 702-212-2288
Real Estate for the Next Generation!
MBA - Rutgers University 2002
BS - Rutgers University 1996
On November 4, democratic President-elect Barak Obama was elected to the White House with 365 electoral votes and 53% of the popular vote
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On November 10, Circuit City declared bankruptcy and filed for Chapter 11. Its need for bankruptcy protection was due to several reasons, including the difficult competitive landscape, backlash from its decision last year to fire higher-paid sales staff and replace them with lower-paid sales staff, and the impact of the economic downturn which left its consumers with less money to shop.
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On November 10, AIG received a reworked $152.5 billion deal from the federal government, with significant changes made to its initial rescue plan. The Fed reduced AIG's original $85 million bridge loan to $60 billion, cut the interest rate by 5.5 percentage points, and agreed to provide $52.5 billion to set up two investment pools with AIG, replacing the additional Fed loans made to AIG in October. The Treasury will also purchase $40 billion in preferred stock.
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On November 10, the Federal Reserve bypassed the normal 30-day waiting period and approved American Express' request to become a commercial bank. This new status gives both American Express and its affiliate American Express Travel Related Services access to the Federal Reserve's emergency-lending facilities.
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On November 12, Treasury Secretary Henry Paulson announced that the rescue plan's $700 billion would not be used to purchase troubled assets as originally planned. Instead, he said the plan would continue to use $250 billion to purchase stock in banks to encourage them to resume normal lending. Paulson also said that the program should support financial markets which supply consumer credit in areas such as credit card debt, student loans and auto loans.
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At the November 13 hearings, the banking committee heard testimony from executives of Bank of America, Goldman Sachs, JP Morgan Chase, and Wells Fargo on how the companies are using the funds they received as part of the rescue plan.
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At the November 18 hearings, the House Financial Services Committee continued to discuss oversight of the $700 billion rescue plan. At the congressional hearings involving the Big Three automakers, congress abandoned its vote on the $25 million in government loans that the automakers were seeking in order to help them survive the worst sales environment in more than 25 years. Instead, congress has required the Big Three to have restructuring plans ready to present by December 2 in order to help determine the aid to be provided.
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On November 20, the Dow Jones Industrial Average plunged 445 points (5.6%) to close at 7,552, down 43% from its high in October 2007. This was the first time that the Dow closed below 8,000 since March 2003.
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| On November 25, Treasury Secretary unveiled new programs to pump $800 billion into the US financial system to unfreeze the markets for consumer debt, such as credit cards, auto loans, and student loans. |
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On October 1, the Senate passed the revised proposal in a 74-25 vote. The proposal was amended to include several provisions aimed at helping individuals and businesses. These revisions to the proposal were seen as a way to "sweeten the deal" and encourage the bill's passage.
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On October 3, the House of Representatives approved the revised proposal in a 263-171 vote. The President signed this bill into law the same day. However, uncertainty remained in the stock markets, as the Dow Jones closed down 157 points and finished its worst week in 6 years.
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On October 8, the Fed cut the Fed Funds rate by ½ a percentage point to 1.5% in a coordinated move with foreign central banks.
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On October 10, after Wall Street's worst week ever, the Dow Jones closed at 845.19, down 128.00 from the previous day. Paulsen also announced the plan to buy stocks in banks on this day.
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On October 12, Wachovia was acquired by Wells Fargo in a $15.1 billion all-stock deal. This deal was done without the need for government assistance and government assistance was not part of the deal's terms.
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On October 13, the stock market rallied after a series of global initiatives were announced over the past few days to lessen the credit crisis. The Federal Reserve removed currency swap limits with the Bank of England, the European Central Bank, and the Swiss National Bank so that it could supply an unlimited amount of dollar liquidity to these central banks. The Dow Jones closed 936 points higher at 9,387.61. This was the Dow's largest ever point-gain during a session and was equal to an increase of 11.1%, the best one-day percentage gain since 1932.
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On October 28, the Dow Jones experienced its 2nd biggest daily point surge ever. The Dow Jones climbed by 889 points in anticipation of the Fed's upcoming rate actions.
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On October 29, the Fed cut the Fed Funds bank rate to 1% in hopes of stimulating the economy. This rate is the interest that banks charge on overnight loans. A rate this low was last seen in 2003-2004. The rate has not been lower since 1958. The Fed also cut its discount rate, the rate is charges banks for short term loans, to 1.25%
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| October concluded as the worst month for the Standard & Poor's index of 500 stocks in 21 years, down 16.9% for the month. The Dow Jones Industrial Average and Nasdaq both also experienced a volatile month, decreasing 14.1% and 17.4%, respectively, through October 31. However, the final week of October was the best week for the market in 34 years. Additionally, the oil market experienced its worst month since oil futures began trading in 1983, falling 33 percent. |
On September 7, the government seized control of Fannie Mae and Freddie Mac in order to protect the mortgage market from the failure of the two companies and to prevent their problems from negatively impacting the global markets
On September 14, Bank of America acquired Merrill Lynch for approximately $50 billion in an all-stock transaction. Leading up to this acquisition, Merrill Lynch had been experiencing many financial struggles due to billions of dollars of its assets being tied to mortgages that had decreased tremendously in value
When possible buyouts by Bank of America and Barclays fell through, Lehman Brothers was forced to declare bankruptcy on September 15 as a result of its exposure to risky real estate related investments and inadequate capital. This bankruptcy was the largest bankruptcy in US history.
On September 15, the Dow Jones experienced its worst one-day loss (504.5 points) since the 9/11 terrorist attacks as investors reacted negatively to the news relating to Lehman Brothers and Merrill Lynch.
On September 16, the government rescued AIG by injecting $85 billion into the company for an 80% ownership stake. AIG needed this money to work through problems it had due to investments in mortgage-backed securities and credit default swaps. As AIG was deemed by the federal government to be too big to fail, this rescue was done to avert a collapse of the company, which would have likely caused further failures in the financial industry.
On September 17, the Dow Jones fell 450 more points. In addition, proving that markets around the world have been affected by the US financial crisis, Russia shut down its market after its stocks dropped to their lowest points in almost three years.
On September 18, the US Federal Reserve along with the European Central Bank, the Bank of England, the Bank of Canada, the Bank of Japan, and the Swiss National Bank authorized $180 billion to be pumped into money markets in order to pump more short-term liquidity into the financial system. In doing so, the Fed expanded its temporary reciprocal currency arrangements, known as swap lines, to allow banks to borrow at lower rates in money markets
On September 20, the government proposed the Emergency Economic Stabilization Act. The purpose of this act, which authorized the US Treasury to spend up to $700 billion to purchase distressed assets, was to purchase bad assets, reduce uncertainty regarding the worth of remaining assets and restore confidence in the credit markets.
On September 22, Morgan Stanley and Goldman Sachs became bank holding companies, abandoned investment bank status, and submitted to supervision by the Federal Reserve.
On September 25, Washington Mutual was taken over by JP Morgan Chase in a deal brokered by the FDIC, making it the largest bank seizure made by the government in US history. JP Morgan Chase paid $1.9 billion for WaMu's deposits and branches.
On September 29, the initial Emergency Economic Stabilization Act proposal was rejected by the House of Representatives in a 205-228 vote. It needed 218 votes to pass. In reaction to the failed proposal, the Dow Jones fell by 778 points, the biggest point-drop in history.
It's almost tax time. Look for 10 most often overlooked real estate tax deductions below:
1. Failure to deduct principal residence acquisition mortgage fee.
2. Failure to deduct home mortgage refinance loan fees over the life of the home loan.
3. Failure to deduct undedicated loan fees from prior home loan refinance.
4. Failure to deduct any mortgage prepayment penalty you paid.
5. If you changed your job location and your residence your moving costs may be deductible.
6. Remember to deduct any casualty loss.
7. Failure to deduct prorated property tax in year of home sale or purchase.
8. Failure to deduct prorated mortgage interest in the year of home sale or purchase.
9. Failure to deduct prepaid property taxes and mortgage interest.
10. If your home is on leased land you may be entitled to deduct ground rent.
Real Estate Professional with MBA in Business Management, BS in Industrial Engineering. I work with first time home buyers and first time investors to begin building wealth for you and your family.
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