Tips for Buyers
Thinking Of Buying Your First Home? Eight Reasons Why You Should Own!
Friday, January 15, 2010
If you are like most first time home buyers, you have probably wondered what is the big deal of owning the place where I lay my head to sleep? You have probably had family members and a number of your friends telling you that you should stop making your landlord rich and to go out and mortgage yourself to the hilt in the name of ownership! But you are intimidated.
To help you get over your reservations, below are eight sound reasons why you should buy your home NOW:
Appreciation
Real estate, like many things, has its ups and downs. However, over the years, real estate has consistently appreciated. Many of us consider our homes as a savings account, part of our retirement, and a hedge against inflation. In fact, if you were to go to The Federal Housing Finance Agency’s website (http://www.fhfa.gov) and look at their House Price Index, you will find that, in general, since 1995, the average home in Georgia has appreciated 67* percent!; since 2000 the value has gone up 24* percent!
*compared with FHFA assessment of value as of 2nd quarter of 2009; (values started rising again in the 3rd quarter); Also know that the Atlanta region was not as negatively affected with the 2008/2009 downturn as badly as the entire Georgia region;
Capital Gain Exclusion
If you live in your home for two of the previous five years, you can exclude from taxes up to $250,000 for an individual, and $500,000 for a married couple filing jointly, of the profit/gain when you sell your property! You do not have to reinvest the cash you get from a sale to avoid/defer taxes! There is no age restriction! You could, subject to some limitations (see your CPA), buy your ‘primary’ home and sell every two years and pocket your profit tax free!
Equity Loan Vehicle
Got credit cards? They charge interest on outstanding balances from 16% and up, and you cannot deduct the interest expense on your tax returns. Not so with an Equity Line! Many of us have taken out Equity Lines and then deduct the interest (which is typically much lower) on our tax returns. Valid reasons for Equity Lines include: school tuition, home improvements, medical emergencies, and opening your own business. Your lender will require a new appraisal be completed which shows you have built up the necessary equity to warrant an Equity Line. Another reason for making as large of a down payment as possible when you first buy!
Mortgage Interest Deduction
Your home mortgage is fully deductable on your tax return. Interest is the majority of your monthly mortgage payment!
Pride of Ownership
The number one reason people buy their first home and continue to own from that point forward? Pride of Ownership! Owning your own home gives you a sense of stability and security. You can also do what you want with the interior, and barring Deed restrictions or Homeowners’ Association Rules, play loud music to your heart’s content and/or paint the exterior to suit your taste! Feeling good also means you made an investment in your future!
Property Tax Deductions
Yes, you do have real estate taxes to pay when you own your home. But, the real estate taxes paid are fully deductable for income tax purposes!
Federal Tax Credits
Up to an $8,000 credit for purchasing your first home. WOW! BUT - you must be ‘Under Contract’ no later than April 30, 2010 and close the transaction by June 30, 2010.
Value
With the recent ‘correction’ the real estate market has experienced, you should be confident that you are buying a property for a value that will only go up!
Posted in: Intown Atlanta Real Estate News
Be Sure to File your Homestead Exemption by March 1, 2010
Tuesday, December 15, 2009
What is the Homestead Exemption?
All Georgia counties give homeowners an opportunity to file for a homestead tax exemption on their primary residence. To receive the homestead exemption for 2010, the homeowner must have owned the property on January 1st, 2010 and filed the homestead application by March 1st. You only apply for the Homestead Exemption once; yet it is good for as long as you keep the property as your primary residence.
If you have purchased a home during 2009 or before, this is a great time to file for the exemption! (You can file now for the 2010 credit.)
Counties generally allow homestead exemption applications by mail. You may receive a form in the mail automatically. If not, some counties allow you to download a form from its website. If you find you need to apply in person, you should take a copy of your warranty deed (if you do not have the deed call the real estate attorney’s office who handled your closing), a picture ID, your social security number, and your automobile tag number/vehicle registration. But do not wait for the County to contact you!. It is not the County’s responsibility to remind you to file. Afterall, a tax savings for you costs the County money, so they are not going to wave red flags and beg you to apply!
For more information, contact the appropriate County office:
Fulton County Dekalb County
404-730-6440 404-298-4000
www.co.fulton.ga.us www.co.dekalb.ga.us
Address: Address:
141 Pryor St, Suite 1047B, Atlanta 4380 Memorial Dr, Ste 100, Decatur
7741 Roswell Rd, Suite 234B, Atlanta 1358 Dresden Drive, Atlanta
5600 Stonewall Tell Rd, Ste 224, College Park
Cobb County Gwinnett County
770-528-8600 770-822-8800
www.cobbtax.org www.co.gwinnett.ga.us
Address: Address:
736 Whitlock Avenue, Suite 100, Marietta 75 Langley Drive, Lawrenceville
- Scott Askew
Posted in: Intown Atlanta Real Estate News
Frequently Asked Questions Concerning The 2009/2010 Federal Homebuyer Tax Credit
Thursday, December 03, 2009
Here are some of the more frequently asked questions
concerning the 2009 / 2010 Federal Homebuyer Tax Credit
Question: How much is the credit?
Answer: Up to $8,000 for first time Buyers ($4,000 if married and filing separately), with a $75,000 income limit for a single person and $150,000 for a married couple. For a ‘repeat Buyer’ the credit is up to $6,500 ($3,250 if married and filing separately). Additionally, the income limit is $125,000 for a single person and $225,000 for a married couple. For both, there is a $20,000 ‘phase-out’.
Question: I am an existing homeowner and am looking to move soon. Must the home I buy cost more than the old home I will be selling?
Answer: No.
Question: I am a first time homebuyer waiting to close on the purchase of my home. This year, my income is lower than the income limits set forth in the Tax Credit Bill. We will close by the end of November 2009. However, I just got a new job and my income for 2010 will exceed the income limits stated in the Bill. Am I still eligible for the credit?
Answer: Yes. The income limit and other eligibility rules will look to your status as of the Closing Date. So you should be eligible for the credit (or a portion of the credit if you’re within the phase-out range).
Question: I am an eligible existing homeowner. I have a fair amount of equity in my home. I have found a home where the Seller will not agree to a price lower than $825,000. Will I be able to use any of the $6500 tax credit?
Answer: No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amount above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an absolute ceiling.
Question: I owned my home for 10 years, but sold it two years ago and have been renting since. If I buy now, will I be eligible for the $6500 tax credit if I meet the other eligibility tests?
Answer: Yes. Because you lived in the home for more than 5 consecutive years of the previous 8, you will qualify for the $6500 credit. For example, Say John and his wife bought a home in 2000 and lived there until 2007 when they got a divorce. It would not matter if John has been renting since the divorce; he would be eligible for the credit because he owned a home and occupied it as his principal residence for 5 consecutive years out of the last 8 years. The keyword here is “consecutive”.
Question: I am an eligible first time homebuyer. I entered into a contract to purchase on November 1, 2009. Do I have to go to closing before December 1? How does the extension date affect me?
Answer: You do not have to close before December 1. Since the ‘new’ legislation is in effect, it is as if the previous, November 30 cut-off date never existed. So as long as the contract closes before April 30 (or July 1, worst case), you will be eligible for the credit.
- Scott Askew
Posted in: Intown Atlanta Real Estate News
2009/2010 Expanded Home Buyer Tax Credit
Thursday, November 12, 2009
Here are four major points you need to know about the 2009/2010 Federal Home Buyer Tax Credit:
1. For first-time home buyers: The credit can go as high as $8,000 for qualified, first-time home buyers. (The legislation defines “first-time home buyer” as anyone who has not owned a principal residence in the three years prior to making the purchase.) Home buyers must have a fully executed, binding, Purchase and Sales Agreement, before May 1, 2010, but you have until June 30th to actually close the transaction. The annual income limit is $125,000 for singles and $225,000 for married couples.
2. For current home owners: Most current homeowners are eligible for a tax credit of up to $6,500 when you purchase your next primary residence. Current homeowners must have lived in their home for five consecutive years over the previous eight to be eligible. Qualified home buyers can obtain the credit on homes purchased between November 7, 2009 and June 30, 2010. ( Just like the provision for first-time buyers, you must have a fully executed, binding, Purchase and Sales Agreement, before May 1, 2010 and close no later than June 30, 2010.) The income limits for current homeowners are the same as those for first-time home buyers.
3. Classification of Property and Purchase Price limitation: The credit can only be claimed on primary residences purchased for less than $800,000. And as long as you use the property as your primary residence for three or more years after the purchase, buyers don’t have to pay the credit back. If you do sell before the third anniversary of your purchase, the entire credit must be ‘paid back’ to Uncle Sam.
4. How To Obtain The Credit: Anyone claiming the credit must provide documentation, such as a copy of your HUD-1 Settlement Statement, to prove that the sale has closed. A big bonus is buyers can claim the credit on their 2009 taxes, even if the purchase was made in 2010 by filing an amended return!
Do you think this is a good use of your tax dollars? Weigh in! - Scott Askew
Posted in: Intown Atlanta Real Estate News