~First-Time Homebuyer Tax Credit~

First-time homebuyers may be able to take advantage of a tax credit for homes purchased in 2008 or 2009.

The credit:
*Applies to purchases that close after April 8, 2008, and before Dec. 1, 2009.
*Applies only to homes used as a taxpayer's principal residence.
*Reduces a taxpayer's tax bill or increases his or her refund, dollar for dollar.
*Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.
*The credit is claimed using Form 5405.

For 2008 Home Purchases:
The Housing and Economic Recovery Act of 2008 established a tax credit for first-time homebuyers that can be worth up to $7,500. For homes purchased in 2008, the credit is similar to a no-interest loan and must be repaid in 15 equal, annual installments beginning with the 2010 income tax year.

For 2009 Home Purchases:
The American Recovery and Reinvestment Act of 2009 expanded the first-time homebuyer credit by increasing the credit amount to $8,000 for purchases made in 2009 before Dec. 1.
For home purchased in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer's main residence within a three-year period following the purchase.
First-time homebuyers who purchase a home in 2009 can claim the credit on either a 2008 tax return, due April 15, 2009, or a 2009 tax return, due April 15, 2010. The credit may not be claimed before the closing date. But, if the closing occurs after April 15, 2009, a taxpayer can still claim it on a 2008 tax return by requesting an extension of time to file or by filing an amended return.

News release 2009-27 has more information on these options.

Source: http://www.irs.gov/newsroom/article/0,,id=204671,00.html

NEW YORK (CNNMoney.com) -- There's a nice windfall for some homebuyers in the economic stimulus bill awaiting President Obama's signature on Tuesday. First-time buyers can claim a credit worth $8,000 - or 10% of the home's value, whichever is less - on their 2008 or 2009 taxes.

A big plus is that the credit is refundable, meaning tax filers see a refund of the full $8,000 even if their total tax bill - the amount of witholding they paid during the year plus anything extra they had to pony up when they filed their returns - was less than that amount. But there has been a lot of confusion over this provision. Adam Billings of Knoxville, Tenn. wrote to CNNMoney.com asking: "I will qualify as a first-time home buyer, and I am currently set to get a small tax refund for 2008. Does that mean if I purchased now that I would get an extra $8,000 added on top of my current refund?"

The short answer? Yes, Billings would get back the $8,000 plus what he'd overpaid.

The long answer? It depends. Here are three scenarios:
Scenario 1: Your final tax liability is normally $6,000. You've had taxes withheld from every paycheck and at the end of the year you've paid Uncle Sam $6,000. Since you've already paid him all you owe, you get the entire $8,000 tax credit as a refund check.
Scenario 2: Your final tax liability is $6,000, but you've overpaid by $1,000 through your payroll witholding. Normally you would get a $1,000 refund check. In this scenario, you get $9,000, the $8,000 credit plus the $1,000 you overpaid.
Scenario 3: Your final tax liability is $6,000, but you've underpaid through your payroll witholding by $1,000. Normally, you would have to write the IRS a $1,000 check. This time, the first $1,000 of the tax credit pays your bill, and you get the remaining $7,000 as a refund.
To qualify for the credit, the purchase must be made between Jan. 1, 2009 and Nov. 30, 2009. Buyers may not have owned a home for the past three years to qualify as "first time" buyer. They must also live in the house for at least three years, or they will be obligated to pay back the credit.

Additionally, there are income restrictions: To qualify, buyers must make less than $75,000 for singles or $150,000 for couples. (Higher-income buyers may receive a partial credit.)
Applying for the credit will be easy - or at least as easy as doing your income taxes. Just claim it on your return. No other forms or papers have to be filed. Taxpayers who have already completed their returns can file amended returns for 2008 to claim the credit.

Lukewarm reception
The housing industry is somewhat pleased with the result because the stimulus plan improves on the current $7,500 tax credit, which was passed in July and was more of a low-interest loan than an actual credit. But the industry was also disappointed that Congress did not go even further and adopt the Senate's proposal of a $15,000 non-refundable credit for all homebuyers.
"[The Senate version] would have done a lot more to turn around the housing market," said Bernard Markstein, an economist and director of forecasting for the National Association of Homebuilders (NAHB). "We have a lot of reports of people who would be coming off the fence because of it."

Even so, the $8,000 credit will bring an additional 300,000 new homebuyers into the market, according to estimates by Lawrence Yun, chief economist for the National Association of Realtors.

The credit could also create a domino effect, he said, because each first-time homebuyer sale will lead to two more trade-up transactions down the line. "I think there are many homeowners who would be trading-up but they have had no buyers for their own homes," Yun said.
Who won't benefit, according to Mark Goldman, a real estate lecturer at San Diego State University, are those first-time homebuyers struggling to come up with down payments. The credit does not help get them over that hurdle - they still have to close the sale before claiming the bonus.

One state, Missouri, is trying to get around that problem by creating a short-term loan on the tax credit of up to $6,750. The state would loan borrowers the money so they could use it at closing as part of the downpayment. Then, when the buyers receive their tax credit from the IRS, they pay back the state. Other states may follow with similar programs, according to NAHB's Dietz.

Many may look at the tax credit as a discount on the home price, according to Yun. A $100,000 purchase effectively becomes a $92,000 one. That can reassure buyers apprehensive about purchasing and then watching prices continue falling, he added. And it provides a nice nest egg for the often-difficult early years of homeownership, when unexpected repairs and expenses often crop up. Recipients could also use the money to buy new stuff for their home - a lawnmower, a rug, a sofa - and, in that way, help stimulate the economy.

Tri-Cities Real Estate Climate

As we listen to the national news, and even the news coming from the westside of the state, we keep re-examining ourselves here in the Tri-Cities; taking our pulse and listening for a heartbeat. So far, things look good. Homes are selling and our inventory is lower than usual, but that creates a great supply and demand scenario for sellers. We do see some hesitance to purchase in some areas and our new construction has been impacted due to the inability to get financing. Our resale market is the strongest arena right now. We see some prices being lowered, but for the most part, our markets are strong and consistent.
Major new construction developments are experiencing difficulty in getting financing, particularly those in a niche market. There seems to be an adjustment going on in the financial world that will ultimately impact this market on a local basis. Plus, we're going to see a reduction in costs for materials and labor due to the supply and demand. There are more construction workers out there looking for work and materials, like electrical supplies and steel, are going through a reduction, too. Ultimately, we should see a resurgence in the niche market. Baby boomers are still wanting a different lifestyle, one more carefree with less or no maintenance involved. As long as they can sell their home, they will continue to migrate into this new lifestyle. It's the ole Patience, Faith, and Reward that will pull us all through this. Hopefully, we'll see a transition that doesn't hurt for too long.

~This Week's Featured Listing~

6991 Columbia River Road, Pasco, WA 99301
MLS# 154174 ~ $795,000

Amazing custom built home with panoramic views of the river, hills, and surrounding region. Timber framed interior with impressive beams and arches creating a character and statement like no other home. The kitchen says it all with a huge open island with seating for guests and family. The lower level features another complete kitchen off the family room and a theatre room that's just waiting for the next movie to be played.

Front of Home

Back of Home

Entry of Home

Great Room

Gourmet Kitchen

Beautiful Entry with Custom Architectural Beams

Living Area in Great Room

One of the Additional Bedrooms

Master Suite with Built in Gas Fireplace and T.V Nook

Master Bathroom

Lower-level Kitchen

View of Surrounding Mountains and the Columbia River

View from Back Deck

View of Columbia River

Richland Offers Help to First-time Home Buyers

The city of Richland is offering down payment help to low- to moderate-income first-time home buyers.

The Affordable Homebuyer Assistance Program is accepting applications this year for $4,000 for down payment help and applications for its infill housing list, which allows borrowers to qualify for up to $24,000 in gap assistance to buy a home. Also, borrowers who use Banner Bank for their primary mortgage might be eligible for another $6,000 for a limited time.

The U.S. Department of Housing and Urban Development provides money to the city for these programs, which are on a first-come, first-served basis.

More information and applications are available at http://www.ci.richland.wa.us/. Packets are also available by calling (509) 942-7580.

Source: The Tri-City Herald, www.tri-cityherald.com

Modify my Home in THIS Market?

What to consider before undertaking a remodel. With many areas of the country now in a down sales cycle, it makes a lot of sense to consider some changes that will make your home more comfortable -- for you but not necessarily the next potential owner.

In fact, aging-in-place renovation work is expected to provide one of the bright spots for residential construction as the industry eventually begins gaining ground, according to panelists at the recent National Association of Home Builders' remodeling show. If you don't have to move, brighten and lighten and enjoy your place until the market recovers. Don't spend all your energy on creating a new room that a potential new buyer might enjoy. Ninety percent of all remodeling projects take more than one year of appreciation in order to recover the costs of the improvement. And, some projects never even get close to becoming a financial wash. But don't get carried away with a pet project that you think may draw the eye of a potential home buyer. Make changes that you and your family can enjoy. In fact, it may be a good time to revisit your long-term housing needs and consider staying right where you are. Some older homeowners are just now beginning to think about ways to tastefully modify their homes to enable them to remain living independently -- and more safely and comfortably. Solutions to problems often exist, but people are not always aware of the products.

Home modifications refer to adaptations to homes that can make it easier for someone to carry out daily activities, such as preparing meals, climbing stairs and bathing, as well as changes to the physical structure of a home to improve its overall safety and condition. These project designs have come a long way. They are custom, attractive amenities that no longer sing out "an old person lives here" that can also enhance the resale value of the home. These improvements and alternations can serve all ages, hence the term "universal design."

For example, universal design features, or UD, include installing lever-style doorknobs and faucet handles, providing kitchen counters with different heights, placing electric outlets higher and light switches lower on walls and creating at least one no-step entry into the home.

Minnesota-based Lifease Inc. charges a modest fee for its online questionnaire, LivAbility, which allows homeowners to assess their needs and abilities and then obtain personalized suggestions to improve their living environment. After the questionnaire is completed, the Lifease engine selects solutions based on the input. The resulting report includes ideas and products for safety, convenience, comfort and independence in the home. Low- and no-cost solutions are listed. If the solution is a product, Web sites are given for the supplier with a range of prices. If appropriate, the rationale for listing the product is included. Another company, Florida-based SAFE Aging Inc., has developed a questionnaire for older adults, which identifies potential risks or hazards that can threaten health, safety or function in the home. The Safety Appraisal For Elders (SAFE) can be completed privately at home, with or without assistance, and is also modestly priced.

Homeowners of all ages have roots in their communities and strong emotional ties to their homes. Few people want to move solely because their house no longer fits their needs. The problems faced by older individuals are compounded by the fact that they live in the oldest housing stock. These homes may have deferred maintenance, with roof or plumbing leaks, heating deficiencies, or dangerous electrical problems in addition to a lack of adequate lighting, railings, storage and other accessibility concerns. Modification needs often get lost among many other pressing maintenance items, prolonging dangerous arrangements that may lead to falls and subsequent isolation.

The way we live and work has changed dramatically in the past decade and our expectations of our homes have changed, too. If you are dead set about selling your home at some point down the road, don't gamble that your taste in a new kitchen, den or master suite will match the desires of the potential home buyers that come through your door. Don't waste your time -- or jeopardize your money -- by undertaking remodeling projects in an attempt to draw potential home buyers to an open house. It takes too long and you could easily guess wrong.

Copyright © 2008 Inman News - Tom Kelly

The Top Reasons Homes Won't Sell

For some, lowering price is only way out.

It's a challenging home sale market for sellers in many areas around the country. Sellers who are having difficulty selling have several options.

The first goal is to find out why your home isn't selling. Ask your listing agent for information about listings similar to yours in your neighborhood that sold within the last three to six weeks.

You need to know the facts about listings that have sold and closed and those that went pending during this period. A pending sale is one where the sellers have accepted an offer, but the sale has not yet closed.

Pending sales are an indicator of the most recent market activity in your price range. If you find that listings like yours have sold during this time period then there is either something wrong with your home or your home isn't priced right for the market.

Your agent should talk to agents whose buyers considered your home but bought another listing instead. Find out why they didn't choose your home. If you get feedback that your home doesn't show well, do what you can to enhance its appeal. You might consider temporarily withdrawing your home from the market during the makeover.

You may discover that your home has an incurable defect, like a location next to a freeway, or a long flight of stairs from the garage to the front door. There's nothing you can do about this except adjust the price.

In many cases, the main reason a home isn't selling is the list price. Most sellers have an emotional attachment to their homes. This can cloud their judgment about its current market value. Another factor influencing sellers' objectivity about the value of their homes is denial.

According to the recent Q4 Homeowner Confidence Survey conducted by Zillow.com, 49 percent of U.S. homeowners didn't think their homes lost value during the past year. In reality, 74 percent of U.S. homes lost value over the past year.

HOUSE HUNTING TIP:

Sellers who are serious about selling should adjust the list price of their home as soon as the data indicates that the price is out of line with current market conditions. This is recommended even if the listing has been on the market only for a couple of weeks.

It's risky to wait to make a price adjustment to see if conditions improve. The market is continually changing. But, this means that the market could deteriorate before it gets better. Waiting to bring the price down so that it's in line with the market could mean selling for less.

An insignificant price reduction is unlikely to trigger a sale. To have an impact, the new price should undercut your competitor's prices so that your home is perceived as the best value in the neighborhood. Usually, a price reduction of less than 5 percent won't bring about the desired result. Seller's who make a series of small price reductions can end up chasing a declining market.

Another option for some sellers is to take their home off the market before the holiday season and bring it back on the market next year. But, the holiday season can benefit sellers who keep their homes on the market because the inventory of listings usually drops off at this time of year.

Also, there is no guarantee that next year will be better. Some economists think that we haven't yet hit bottom in the housing cycle and that the median price could drop another 10 or 20 percent in 2009 before the market turns around.

Copyright © 2008 Inman News - Dian Hymer

Tax Credit Could Unleash Home Sales

If all home buyers become eligible for a tax credit without a repayment feature, it could result in an additional 555,000 home sales, enough to meaningfully draw down excess housing inventory, the NATIONAL ASSOCIATION OF REALTORS® says. An evaluation of options for a home buyer tax credit by NAR shows wide ranging implications and benefits. A full credit to all buyers means an additional 2.22 million households would meet the income requirements for purchasing a home, but only one in four of those households would actually make a purchase. Under the current $7,500 first-time home buyer tax credit, which must be repaid over 15 years, 264,000 households meet the purchase requirements. Using the same assumptions, with plans to hold their home for a median 10 years, it would mean only 66,000 additional sales.

Lawrence Yun, NAR chief economist, said NAR is advocating a tax credit for any home purchase meeting qualifying underwriting standards. “A home buyer incentive is critical to help reduce housing inventory and stabilize home prices,” he said. “The bigger the incentive, the faster housing can help pull the economy out of recession. The cost to the Treasury would be far less than the additional costs of a prolonged recession with insufficient housing stimulus.”Analysis of other options shows that if only first-time buyers are eligible and the repayment feature is dropped, it could mean an additional 202,000 home sales. If extended to all home buyers but the repayment feature is retained, the gain would be 181,000 home sales.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said a flexible approach to the tax credit would have added benefits. “A home buyer tax credit also should be allowed to be used as a part of downpayment. This would instantly add an equity cushion for homeowners – a vested financial interest provides the foundation for sustainable homeownership, which helps improve economic stability,” he said. NAR estimates only 25 percent of newly eligible households would become homeowners, and does not capture the effect of increased trade-up buying activity. As such, these projections may understate the full impact of a home buyer tax credit.

Source: National Association of Realtors, http://www.realtor.org/