Return on Investments Stocks vs Real Estate

A quick read into Real Estate Investment taken from Case Schiller’s presentation on MSN Money.com

Return on investment

Five top things to impress your buyers

ENTRY DOOR First impression for a buyer, hence if the door is dented, damaged, or rusted, it would be wise to invest in a new door which complements with the overall style of the home.
GARAGE DOOR REPLACEMENT If the garage door is showing signs of wear, replace the same with a 4 section garage door with upgraded insulation and windows which allows in some natural light.
SIDING REPLACEMENT Consider replacing existing siding with new pre painted fiber cement siding.
KITCHEN REMODEL This project is always a winner. Though the percentage of cost recouped is approximately 72%. Work around the existing electrical wiring and plumbing, which can save you a chunk of money.
DECK ADDITION A right sized deck with built-in bench and planters is an ideal addition to a home. Keep the project simple and stain it in natural colors.

Housing shortage?

Is a housing shortage coming

Frequently asked questions for “Extension of home buyers tax credit”

1. Who is eligible to claim the $8,000 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 January 1, 2009 and on or before April 30, 2010. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner. A limited exception exists for certain contract for deed purchases and installment sale purchases. See the IRS website for more detail.However, the law also allows home sales occurring by June 30, 2010 to qualify, provided they are due to a binding sales contract in force on or before April 30, 2010.Persons who are claimed as dependents by other taxpayers or who are under age 18 are not qualified for the tax credit program.
2. 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. However, IRS Notice 2009-12 allows unmarried joint purchasers to allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. 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.
3. How is the amount of the tax credit determined?
   The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
4. Are there any income limits for claiming the tax credit?
   Yes. For sales occuring after November 6, 2009, the income limit for single taxpayers is $125,000; the limit is $225,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $125,000 for single taxpayers and $225,000 for married taxpayers filing a joint return. The phaseout range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $145,000 (single) or $245,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.
5. The income limits for claiming the tax credit were raised when the tax credit was extended. Are the higher limits retroactive?
   No. The new income limits are only applicable to purchases occurring after November 6, 2009.The income limits for sales occuring on or after January 1, 2009 and on or before November 6, 2009 are $75,000 for single taxpayers and $150,000 for married couples filing jointly.
6. 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 of foreign-earned income. See IRS Form 5405 for more details.
7. 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 $8,000 are available for some taxpayers whose MAGI exceeds the phaseout limits.
8. 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 $235,000. The applicable phaseout to qualify for the tax credit is $225,000, and the couple is $10,000 over this amount. Dividing $10,000 by the phaseout range of $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 $8,000 by 0.5. The result is $4,000.Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $138,000. The buyer’s income exceeds $125,000 by $13,000. Dividing $13,000 by the phaseout range of $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.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.
9. How is this home buyer tax credit different from the tax credit that Congress enacted in early 2009?
   The tax credit’s income limits were increased, the documentation requirements were tightened, and the program’s deadlines were extended.
10. How do I claim the tax credit? Do I need to complete a form or application? Are there documentation requirements?
    You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on line 67 of the 1040 income tax form for 2009 returns (line 69 of the 1040 income tax form for 2008 returns). Please note that although the Form is titled “First-Time Homebuyer Credit,” this is the correct form for claiming both the $8,000 first-time homebuyer tax credit and $6,500 repeat buyer tax credit.No other applications are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests. Note that you cannot claim the credit on Form 5405 for an intended purchase for some future date; it must be a completed purchase. Home buyers must attach a copy of their HUD-1 settlement form (closing statement) to Form 5405 as proof of the completed home purchase. In cases where a HUD-1 form is not used, such as for construction of some new homes, you should attach a copy of the certificate of occupancy in lieu of the HUD-1. Homebuyers should be sure to read the instructions for the revised IRS Form 5405 to be sure they meet the new program requirements.
11. What types of homes will qualify for the tax credit?
    Any home that will be used as a principal residence will qualify for the credit, provided the home is purchased for a price less than or equal to $800,000. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.It is important to note that you cannot purchase a home from, among other family members, your ancestors (parents, grandparents, etc.), your lineal descendants (children, grandchildren, etc.) or your spouse or your spouse’s family members. Please consult with your tax advisor for more information. Also see IRS Form 5405.
12. I read 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 the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).
13. Instead of buying a new home from a home builder, I 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 January 1, 2009 and on or before April 30, 2010 (or by June 30, 2010, provided a binding sales contract was in force by April, 30, 2010).In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date. To provide proof of purchase, homebuyers must attach a copy of the HUD-1 Form or certificate of occupancy to IRS Form 5405.
14. Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?
    Yes. The tax credit can be combined with an MRB home buyer program. Note that first-time home buyers who purchased a home in 2008 may not claim the tax credit if they are participating in an MRB program.
15. I live in the District of Columbia. Can I claim both the Washington, D.C. first-time home buyer credit and this new credit?
    No. You can claim only one.
16. 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.
17. Is a tax credit the same as a tax deduction?
    No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 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 $8,000 in income taxes. If the taxpayer receives an $8,000 deduction, the taxpayer’s tax liability would be reduced by $1,200 (15 percent of $8,000), or lowered from $8,000 to $6,800.
18. I bought a home in 2008. Do I qualify for this credit?
    No, but if you purchased your first home between April 9, 2008 and January 1, 2009, you may qualify for a different tax credit. Please consult with your tax advisor for more information.
19. Is there a way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2009 or 2010 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 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.In addition, rule changes made as part of the economic stimulus legislation allow home buyers to claim the tax credit and participate in a program financed by tax-exempt bonds. As a result, some state housing finance agencies have introduced programs that provide short-term second mortgage loans that may be used to fund a downpayment. Prospective home buyers should check with their state housing finance agency to see if such a program is available in their community. To date, 18 state agencies have announced tax credit assistance programs, and more are expected to follow suit. The National Council of State Housing Agencies (NCSHA) has compiled a list of such programs, which can be found here.
20. HUD is now allowing “monetization” of the tax credit. What does that mean?
    It means that HUD allows buyers using FHA-insured mortgages to apply their anticipated tax credit toward their home purchase immediately rather than waiting until they file their 2009 or 2010 income taxes to receive a refund. These funds may be used for certain downpayment and closing cost expenses.Under HUD’s guidelines, non-profits and FHA-approved lenders are allowed to give home buyers short-term loans of up to $8,000. The guidelines also allow government agencies, such as state housing finance agencies, to facilitate home sales by providing longer term loans secured by second mortgages.Housing finance agencies and other government entities may also issue tax credit loans, which home buyers may use to satisfy the FHA 3.5 percent downpayment requirement. In addition, approved FHA lenders can purchase a home buyer’s anticipated tax credit to pay closing costs and downpayment costs above the 3.5 percent downpayment that is required for FHA-insured homes.

    More information about the guidelines is available on the NAHB web site. Read the HUD mortgagee letter (pdf) and an explanation of the FHA Mortgagee Letter on Tax Credit Monetization (pdf). An FAQ about monetization (pdf) is available at the NAHB web site.

21. If I’m qualified for the tax credit and buy a home in 2009 (or 2010), can I apply the tax credit against my 2008 (or 2009) tax return?
    Yes. The law allows taxpayers to choose (“elect”) to treat qualified home purchases in 2009 (or 2010) as if the purchase occurred on December 31, 2008 (or if in 2010, December 31, 2009). This means that the previous year’s income limit (MAGI) applies and the election accelerates when the credit can be claimed. A benefit of this election is that a home buyer in 2009 or 2010 will know their prior year MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.Taxpayers buying a home who wish to claim it on their prior year tax return, but who have already submitted their tax return to the IRS, may file an amended return claiming the tax credit using Form 1040X. You should consult with a tax professional to determine how to arrange this.
22. For a home purchase in 2009 or 2010, can I choose whether to treat the purchase as occurring in the prior or present year, 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 the present year and a larger credit would be available using the prior year MAGI amounts, then you can choose the year that yields the largest credit amount.
23. How can two unmarried buyers allocate the tax credit if one qualifies for the $8,000 first-time home buyer tax credit and the other qualifies for the $6,500 repeat home buyer credit?
    The buyers can allocate the tax credit in any reasonable manner, provided neither claims a tax credit higher than the one they qualify for and the home purchase does not yield a total of more than $8,000 in tax credits. For example, the repeat home buyer could claim $6,500 and the first-time home buyer could claim $1,500. Alternatively, both buyers could claim a $4,000 tax credit.
24. Does a married couple qualify for any home buyer tax credit in the following situation? Spouse A has lived in and owned the same principal residence for at least five years. Spouse B has lived in and owned the same principal residence for less than five years.
    In this situation, the couple does not qualify for any home buyer tax credit. Because the couple is married, the law tests the ownership history of both spouses. Spouse A clearly does not qualify for the $8,000 first-time home buyer tax credit, so neither does Spouse B.Spouse A does appear to qualify for the $6,500 repeat buyer credit, but because Spouse B has not owned and lived in the same principal residence for at least five years, neither of them can claim the repeat home buyer tax credit.

Treasury sets guidance to simplify “short sales”

NEW YORK (Reuters) – The U.S. Treasury on Monday set long-awaited guidance on a plan for mortgage companies to speed “short sales” of homes and other loan modification alternatives to stem a rising tide of foreclosures.
The Home Affordable Foreclosure Alternatives Program provides financial incentives and simplifies the procedures for completing short sales, a growing practice in which a lender agrees to accept the sale price of a home to pay off a mortgage even if the price falls short of the amount owed, according to an announcement on the Treasury’s website.
Guidelines address barriers that have often sidelined short sales by setting limits on the time it takes a bank to approve an offer, freeing borrowers from debt and capping claims of subordinate lenders.
The incentives, first announced in May, expand on the government’s Home Affordable Modification Program, known as HAMP, that has seen limited success in lowering payments for distressed homeowners. The Treasury earlier on Monday stepped up pressure on mortgage companies to make permanent the 650,000 trial modifications they have started.
“While HAMP program guidelines are intended to reach a broad range of at-risk borrowers, it is expected that servicers will encounter situations where they are unable to approve” or offer a modification, the Treasury said in its announcement.
Financial incentives for completing short sales or similar deed-in-lieu transactions — in which the deed is simply transferred to the lender — include a $1,000 payment to servicers, and a maximum of $1,000 to go to investors who sign off on payments to subordinate lien holders, the Treasury said. Borrowers would receive $1,500 in relocation expenses.
Short sales are favored by real estate agents and community groups over foreclosure because they can preserve the borrower’s credit rating and leave the property in better condition than when a homeowner is evicted. While primary lenders typically realize steep losses, their recovery is typically far better than under foreclosure.
But short sales have been frustrating for borrowers and real estate agents, often hung up by negotiations with multiple lien holders and mortgage insurance companies. Real estate agents have complained that sales fall through as lenders bicker over the sales price, what they should receive from the proceeds, and whether the borrower will be held accountable for the debt in the future.
Among requirements, mortgage servicers have 10 days to approve or disapprove a request for short sale, and when done the transaction must fully release the borrower from the debt.
It also prohibits mortgage servicing companies from reducing real estate commissions on the sale, a practice that has dissuaded many agents from taking short sale listings.
In one of the most contentious issues gumming up negotiations between lenders, the guidance caps the aggregate proceeds to subordinate lien holders at $3,000.
Second lien holders in recent months have begun demanding more money from the first lender, seller, buyer or agent in exchange for releasing their claim, agents have said. Because primary lenders would face larger losses in a foreclosure, some subordinate lenders have felt empowered, the agents said.
The largest second-lien holders are Bank of America Corp, Wells Fargo & Co, JPMorgan Chase & Co and Citigroup Inc.
Second lien holders may proceed with a short sale outside of the Treasury program, if they felt the cap was too low, a Treasury official said in October.
“If there was a short sale program that didn’t recognize the second lien holder position, it could have pretty damaging consequences for the industry,” Sanjiv Das, chief executive officer of CitiMortgage, said in an interview last week.
(Editing by Leslie Adler)

New service connected to your IL Driving License

Beginning this month, the State of Illinois is offering a new service connected to your driver’s license.. You can click on the link below and add two emergency contacts to your license data. Therefore, if you are incapacitated in some way, your license can be scanned and the emergency contacts retrieved so your loved ones can be contacted.

It only takes two minutes to complete. I encourage everyone to take advantage of this new service.
http://www.cyberdriveillinois.com/departments/drivers/ecd/home.html

Blog Information Profile for Turfhunter

County Property Taxes 2009

THIS IS HOW THE REAL ESTATE MARKET LOOKS LIKE THESE DAYS:

 

Your House As Seen By:

Yourself…

 

Your Buyer…

 

 

Your Lender…

 

 

 

Your Appraiser…

 

 

  

Your County

Tax Assessor…

 

 

 

By the way…..if you or any of your friends or family are thinking of buying or selling a home, please give me a call with their name and address and I’ll follow up with them.

 

It’s a goood life!

 

 

Illinois to start using Photo Radar in July !

Illinois will begin using photo radar in freeway work zones in July.
One mile per hour over the speed limit and the machine will get you a
nice $375.00 ticket in the mail. Beginning July 1st, the State of
Illinois will begin using the speed cameras in areas designated as “Work
Zones” on major freeways. Anyone caught by these devices will be mailed
a $375.00 ticket for the FIRST offense. The SECOND offense will cost
$1000.00 and comes with a 90-Day suspension. Drivers will also receive
demerit points against their license, which allow insurance companies to
raise Insurance rates.

This is the harshest penalty structure ever set for a governmental unit
involving PHOTO speed enforcement. The State already has two camera
vans on line issuing tickets 24/7 in work zones with speed limits
lowered to 45 MPH. Photos of both the Driver’s face and License plate
are taken.

For more info: (http://www.dot.state.il.us/press/r033005.html)

FHA Allows Tax Credit As Downpayment

Carrie Bay | 06.02.09

The Federal Housing Administration (FHA) laid out the details of a new policy [Mortgagee Letter 2009-15] on Friday that will allow first-time homebuyers to apply the $8,000 federal tax credit toward the purchase costs of an FHA-insured home. HUD Secretary Shaun Donovan said he expects the action to stimulate home sales across the country.

The American Recovery and Reinvestment Act of 2009, enacted under President Obama, offers homebuyers a tax credit of up to $8,000 for purchasing their first home before December 1, 2009, but the credit can only be accessed after filing an amended tax return with the Internal Revenue Service (IRS). However, the new FHA rules allow first-time homebuyers using FHA-backed financing to obtain a short term loan from state housing finance agencies and certain non-profits for 10 percent of the home’s price, up to the full amount of the tax credit.

Homebuyers must come up with the initial FHA-required 3.5 percent downpayment themselves, and can then use the tax credit loan to make a larger downpayment or cover other closing costs – which in turn could help them qualify for a lower interest rate. The loan is repaid a few months later, after the buyer receives the tax credit from the IRS.

Donovan called the tax credit downpayment a win for everyone and an important step toward accelerating the recovery of the nation’s housing markets. “Families will now be able to apply their anticipated tax credit toward their home purchase right away,” Donovan said. “[The new tax credit allowance] will not only help these families to purchase their first home but will present an enormous benefit for communities struggling to deal with an oversupply of housing.”

Donovan added that the agency was also putting safeguards in place to ensure homebuyers are protected from unscrupulous lenders. He said that unlike seller-funded down-payment assistance, which was a vehicle for abuse, the new program will allow homebuyers to shop for the best home price and services using their anticipated tax credit.

For every FHA borrower who is assisted through the tax credit program, FHA said it will collect the name and employer identification number of the organization providing the service, as well as associated fees and charges. The agency said it will use this information to track the business closely and will refer any questionable practices to the appropriate regulators.

According to estimates by the National Association of Home Builders, the administration’s homebuyer tax credit will stimulate 160,000 home sales across the nation – 101,000 of which will be first-time buyers who will receive the credit, and 59,000 existing homeowners who will be able to buy another property because a first-time buyer purchased their home. Given FHA’s current market share, HUD estimates that thousands of families will be able to snag their American dream by applying the anticipated tax credit toward their purchase of an FHA-insured mortgage.

Some individual states, including Colorado, New Jersey, New Mexico, Ohio, and Pennsylvania have already instituted their own programs which provide downpayment loans for the federal tax credit. Home builders and Realtors alike have been strong proponents of a more widespread initiative, such as has been put in place by the FHA.

Lawrence Yun, chief economist for the National Association of Realtors (NAR), says he expects to see more buyers step off the sidelines and enter the market now that they can use the $8,000 tax credit as a downpayment. While he doesn’t anticipate an immediate pickup in the coming months, Yun believes early summer will be a critical indicator of homebuyers’ response to the new allowance.

“The home buying process takes time,” Yun said. “This summer will gauge the success of the first-time homebuyer tax credit.”

Several House lawmakers have expressed their support of the homebuyer tax credit and recently introduced bills that would expand its benefits. NAR said it commends these individual efforts but has not endorsed any particular approach, suggesting that taken together, all three bills would have advantageous effects on housing conditions nationwide.

Rep. Eddie Bernice Johnson (D-Texas) has introduced H.R. 2606, which would offer the credit to all homebuyers, not just first-timers. The bill also extends the credit through the end of 2010 and eliminates the repayment mandate applicable to the $7500 tax credit from 2008.

H.R. 2619 has been put forth by Rep. Kenny Marchant (R-Texas). Marchant also wants to make the credit available to all purchasers and push out the expiration date, to June 30, 2010. In addition, this bill provides a temporary $3,000 tax credit that would refund the closing costs associated with refinancing a mortgage, as long as the new loan amount was no more than the original outstanding balance.

Rep. Ron Kind (D-Wisconsin) has proposed H.R. 2562, which would extend the tax credit through December 1, 2010, for those homebuyers who served in the military for at least three months during 2009.

Swine flu

Swine Flu was first identified in 1930 by isolating a virus in a pig. In 1976, over 200 soldiers at Fort Dix, NJ got infected with swine flu. From December 2005 until January 2009, there were 12 cases of swine flu reported in the U.S.A.
Symptoms of swine flu in people are similar to the symptoms of a regular human flu and include fever, cough, body aches, and fatigue. In the past, severe illness and deaths have been reported with swine flu infection in humans.

TO PROTECT YOURSELF FROM SWINE FLU INFECTION:

• Cover your nose and mouth with a tissue when you cough or sneeze.
• Wash your hands often with soap and water, especially after you cough or sneeze.
• Avoid touching your eyes, nose or mouth, to prevent spreading of germs.
• Try to avoid close contact with sick people.
• Practice good health habits including adequate sleep, eating nutritious food and keeping physically active.

If you get sick with influenza, CDC recommends that you stay home from work or school and limit contact with others to keep from infecting them.

Be safe and stay healthy.