Wednesday, March 31, 2010

Limited Time $18,000 in Combined Homebuyer Tax Credits

Wow! What an opportunity for first time California homebuyers and move-up buyers purchasing brand new homes. Between now and April 30, 2010, if a first time buyer enters into an accepted contract and closes before June 30, 2010, they may qualify for up to $18,000 total in Federal and California State tax credits during a brief window of opportunity.

Move-up buyers, who are not first-time buyers, purchasing a brand new home and have lived in their present home for at least five years, may also use the same time frames to receive up to $16,500 in combined tax credits as permitted under the federal law.

According to the California Association of Realtors, "Under a newly enacted California law, a home buyer may receive up to $10,000 in tax credits as a first-time buyer or buyer of a property that has never been occupied. The new California law applies to certain purchases that close escrow on or after May 1, 2010 (see Cal. Rev. & Tax Code section 17059.1(a)(4)). California law generally allows buyers of never-occupied properties to reserve their credits before closing escrow, but buyers seeking to combine the federal and state tax credits will not be able to satisfy the timing requirements for such reservations (see Cal. Rev. & Tax Code section 17059.1(c)(1)(A)). Other terms and restrictions apply to both tax credits."

California lawmakers allocated $100 million to first time buyers and another $100 million for buyers of brand new homes to be applied in equal amounts over a period of three taxable years. So the new tax credits will only be available until the funds run out and there are certain limitations. The funds are limited, so don't dally.

For more information and details, visit the official
California Franchise Tax Board website

--Virginia Hall
Coldwell Banker Residential Brokerage
Direct (619)258-8585

Sunday, March 21, 2010

Buyer's Representation is Free, Free, Free!

I recently had a friend call me after he had entered into a contract on a home, only he used the listing agent to represent him,as the buyer. He thought that by using the listing agent with a cash offer, that he was more likely to get his offer accepted. Which may be true, since the agent will be double ending it--walking away with the full commission rather than just half. Can't blame the agent. Dual agency is legal in California. In most cases, an agent can represent both parties fairly...or so it seems.

Regarding commissions, the standard of practice in Southern California is the seller pays the full commission to their listing agent who splits it with the buyer's agent. Therefore the buyer who believes he is saving money and still getting the best representation, may be sorely mistaken.

Ironically my friend called me, someone he trusts, to ask if I knew of someone that could look over his paperwork. He hadn't used agent in his last real estate transaction and didn't understand all the paperwork. I had to explain to him that I could not, nor would any ethical realtor, review the paperwork after hiring the listing agent to represent him. This would be interferring with their agency and could land myself or the other realtor in hot water. So I had to refer him to a real estate lawyer. And they aren't cheap.

I explained that the next time, he would be better off hiring a separate agent to represent him and then he would feel like someone is really looking out for his best interest. Often the listing agent has established a relationship with the sellers, making it difficult to be impartial; as well as it is often difficult to keep certain confidential information from slipping out.

While I have done dual agency in the past, and believe that in certain circumstances it may be a good way to sell a more challenging home. However, I firmly believe the best way to buy a home is with your own FREE representation.

--Virginia Hall
Coldwell Banker Residential Brokerage
Direct (619)258-8585

Tuesday, March 9, 2010

Hidden Treasure

Tax day is just around the corner, and many homeowners forget that they’re sitting on a wealth of potential savings — in their home. Tax deductions for homeowners are plentiful, so keep these guidelines in mind as you prepare your return this year.

First, know that if you deduct home expenses, you have to file form 1040 (also known as the long form) and itemize your deductions on Schedule A. While it can be a headache, the rewards might be worth it.

Remember that the mortgage on your home is deductible — at least the real estate taxes, qualifying interest and premiums, for a loan up to $1 million, according to the IRS. Note that fire or homeowner’s insurance premiums and the principal mortgage amount are not deductible. Here’s how to calculate what’s deductible: Enter your total real estate taxes for the year, and enter the number of days in the property tax year that you owned the property. Divide the number of days by 366, and multiply that number by your total real estate taxes for the year.

Paid off your mortgage early? The penalty you might have received is tax deductible as home mortgage interest, as long as it’s not for a specific service performed or a cost connected with your mortgage loan.

You may have heard that home repairs can qualify for tax deductions, but home improvements are the real winners. An improvement is classified as anything that adds to the value of the home — for instance, making a room handicapped accessible or adding a deck to the back of your home. Always keep receipts and records — and remember, if you borrowed money for that improvement, the interest on the loan is tax deductible, just as it is with the mortgage payments.

Another item many homeowners forget is deductions for loan origination fees, better known as “points.” One point is equal to 1 percent of your loan. Depending on how many points you’ve accumulated, you may be eligible to deduct them. There are rules about deducting points, but a financial professional can help you sort through them.

And finally, don’t forget that if you upgraded to energy-efficient Energy Star windows, stoves or water heaters, those may be eligible for a tax credit. Check to see if your improvements are included.

Reprinted from The Residential Specialist "Your Home" March 2010