Economics Finance

There are many tax credits available to Texans for First Time Homebuyers. By definition, a first time homebuyer under federal standards is anyone who has not purchased a home before, or who has not been an owner of record on a home for the past three years. Under the federal stimulus package, a homebuyer may be eligible for up to a $8000 tax credit if they close and fund on a purchase as a first time homebuyer by November 30, 2009. This is not a loan- nor does it have to be repaid. There is a formula that must be applied and income does come into play for some higher income individuals which could lower the tax credit. There are no restrictions on what the homebuyer can do with the money, whatsoever. Use the funds to pay down other debt, put into savings, take a vacation, to buy furniture for your new home, or even to use as a down payment.

The State of Texas has just announced a special program where a portion of the $8000 tax credit can be used for a down payment on a purchase by advancing a portion of the tax credit at time of closing. There are some fees payable to the State of Texas and you have to go through an approved lender in order to access this program. Legacy Financial, Inc. is an approved lender with the State of Texas. The “loan” must be repaid within 90 days of closing or it becomes a second lien on the home and begins to accrue interest at 10%. Continue reading ‘Texas Home Mortgage Loan Tax Credits Explained’ »

Now is the time to buy a second home. With home prices declining, you can get the most economical deals. But wait, there’s more. Aside from the prices, you can reap tax benefits when embarking on a second home.

Tax benefits on your second home depend mainly on how you use the property. Different rules apply for personal use, for rental use and for selling. To find out the effects, read on…

Second Home for Personal Use

People buy second homes to use them as vacation homes. Or it can be used for traveling as in the case of a motor home or a boat. If you use the property for these purposes, your tax benefits fall mainly on your deductible. Here are some of them: Continue reading ‘Tax Advantages of Second Homes – How is it Applied?’ »

I am not a CPA or an accountant, so I don’t give out tax advice. However, I have compiled some information in regards to homeowner’s tax consequences for a short sale/ foreclosure event. These are some of the most common questions asked by homeowners.

If a homeowner has taken out a “home equity loan” (or aka, HELOC) loan and has received any cash out (even from a past refinance) to pay off unsecured debts, (i.e. credit cards, car loans, motorcycle or boat loan, etc…), the sum of that money maybe considered a “taxable event” aka mortgage debt forgiveness” by the IRS).

The “debt forgiveness” is calculated by deducting the original purchase price (or acquisition cost) FROM THE “NET LOSS” THE BANK INCURS after the home reverts back to the bank and is sold by their real estate division. Renovation Costs can be added to increase the base value…but in the case of an audit the proof is on the home owner and they must have all receipts. Continue reading ‘IRS Clarifies Shortsale Tax Consequences For Homeowners’ »

The government is making it easy for homeowners to save on their taxes this year. Whether you’re a first time buyer, or just renovating, there are a number of savings out there.

Save The Environment and Money Too!

Thanks to the $700 billion bailout plan, going Green in 2009 can net you some juicy tax credits. A number of incentives that are especially helpful for people living in older homes, include:

- Credit for 30 percent of the cost of a photovoltaic solar energy system. For a wind energy system a homeowner could receive up to $4,000 or 30 percent of the cost of installation of a home windmill system.

- A $1,500 credit for installing energy efficient windows, doors, water heaters, roofs, insulation, heating, or a central air system in 2009 or 2010.

Sell Your Home and Pocket the Profit

Selling your home at a profit provides a juicy tax break if it was your main residence for at least two of the past five years. Singles don’t pay taxes on profits of up to $250,000, and married couples have a $500,000 threshold. If, you owned the home for less than two years you may still qualify for gain exclusion if you sold your home due to job, health or unforeseen circumstances (such as divorce or death). Ensure that you have the necessary documents to back up your claim, such as a doctor’s letter. Continue reading ‘Tax Savings For Homeowners’ »

Before discussing the tax benefits of a second home, let us first define what it is. A second home is usually termed a vacation home. These are properties used by owners during holidays. Most homeowners can earn additional income from this as they can have it rented. Many people are now discovering that they can save more if they rent single family homes rather than stay in hotels when vacationing.

However, you have to keep in mind that the Internal Revenue Services (IRS) will categorize your property as residence if you use it personally for a certain period in a year. However, if you will have the property rented year round, it will be considered as an investment property. You should also take note that in order for a property to be deemed as a second home it has to have a kitchen, bathroom and a place to sleep.

Having a second home is becoming more attractive because of its tax benefits. However, it can be confusing. Having a second home has different tax advantages but you have to check with your accountant or similar advisers because tax regulations change from time to time. Continue reading ‘Tax Benefits For a Second Home’ »

If you are like most people you are trying to do whatever you can to lower your expenses. As gas prices and movies go up in price along with everything else we are always trying to cut at least one of our bills and save some money. Well, I have a way for you to possibly save a couple of hundred bucks a year if not more and it doesn’t involve cutting out your morning coffee or anything drastic like cutting your heat off in the winter.

No, you can reduce one of your largest expenses by simply signing your name if you are a homeowner. What I am talking about is your property taxes. Each year you must pay your property taxes whether it is escrowed thru your mortgage company or you pay it out of pocket yourself. The amount of property taxes you must pay each year is set by the county’s tax assessor’s office. They decide how much you will pay based on what your neighbors are paying and what amenities your home has compared to theirs.

For example, if you have a 1200 square foot house and your neighbor’s house is 1400 square feet then in theory, your neighbor’s taxes should be higher. But if your in cook county this isn’t always the case. So normally what happens is if you believe that you have a higher than normal tax bill you are able to challenge the assessment that is used to figure out your tax bill. If the board of review finds that you are paying more than your fair share of taxes then they will lower your assessment and thereby lower your tax bill. If they find out that your taxes are not lower than everyone else they will not reassess your property and your taxes will not be changed. Continue reading ‘How to Lower Your Property Taxes Quickly and Easily’ »

It is often very dangerous to make blanket statements that apply to large geographical areas. The 2007-2009 period, however, can be said to have been a brutal one for the real estate market in general. This might create a property tax readjustment for those who are clever.

Property taxes are used to fund most local financial needs. This includes city or county governments, the police, firemen and so on. Most of the costs are noble, but there is little denying that rates have become incredibly burdensome to homeowners in most of the country. As rates rise, you and your neighbors undoubtedly grumble more and more about paying them.

The last few years has seen a real estate market that can only be described as being in free fall. While some pockets of the country remained stable or even grew a bit, most areas saw home values plummet like a rock dropped from roof. It was quick. It was brutal. A lot of people got hurt. As these prices have spiraled downward, the issue of property taxes should have popped into your head. Simply put, did you home drop far enough in value to result in lower ones if an assessment was done? If so, opportunity is knocking. Continue reading ‘A Unique Property Tax Adjustment Idea’ »

My grandfather was always insistent that we manage our own escrow account. Never let the bank pay your house taxes and home owners insurance, do it yourself. They’re making money off you when you could making that money for yourself. Here’s how you do it.

Add up your annual payments for your house taxes and home owners insurance. Take that total and divide by 12. That’s how much you need to put in savings every month in order to have the money to pay those things when they come due once a year. Actually, I also put our car tags, life insurance and auto insurance in with those totals, too, that way I’m always sure to have money in savings for whatever bill comes due at odd times.

In my case I put $550 a month in savings which goes toward paying those items. Whenever I get a bill for auto insurance (every 6 months) or the truck license plate tags (annually) I always have the money in a special savings account called Escrow. I never have to scramble to work extra hours to find money to pay them. There’s never a sense of panic, we always have the money tucked away. Continue reading ‘How to Manage Your Own Escrow Account’ »

How does your local municipality calculate your real estate taxes? It may not be as complicated as you think. Here is the break down.

Lets examine the following terms: market value, assessed valuation, tax rate, assessment and assessment ratio. Most homeowners have trouble understanding these terms when they receive their tax bill.

Market Value – The most probable price that a property should bring in a competitive and open market under conditions to a fair sale, the seller and buyer each acting prudently and knowledgeably. After a revaluation, all assessments in the municipality must be 100% true market value.

Assessed Valuation-The value established for property tax purposes.
The homeowner receives a statement indicating that, in the judgment of the local tax assessor, the property is worth $400,000. By law, properties in this municipality are assessed at 75% of market value. ($400,000 x .75% = $300,000 the assessed value). Property taxes will based upon this assessed value. Continue reading ‘How Your Local Real Estate Taxes Are Calculated’ »

If you’re interested in beginning to invest in tax sale property, here’s an insider tip that will save you a lot of time and money: skip the tax sale. There are other ways to go about getting tax delinquent property. The tax sale is a big mess, and will cause you more headaches than it’s worth.

First of all, you will need to have a lot of cash on hand if you want to bid and buy. If you’re a winning bidder, you’re required to pay for your new property or lien, in cash, right then and there. You can get started investing in tax sale property with only a few hundred dollars, if that’s all you have, and there’s no good reason to go the tax sale route. If you do have a big amount of cash, even better– but you still won’t want to bid at tax sale.

This is because you’ll frequently find yourself bidding against agents from large investment firms. These companies are simply better equipped and have more money to invest than the average investor– meaning that they can afford to bid a little more than you can, and take a smaller return on their investment than you. It’s rare for the average Joe to even be able to win the bid profitably at tax sale.

Not only that, but if you do somehow end up bidding and winning, it’ll be on a property you haven’t had a chance to inspect. You can’t legally go inside these tax properties beforehand, and anything and everything may be wrong with them. This is a risk few new investors should be willing to take. Nothing will sour you on property investing more quickly than ending up owning a money pit that costs you money rather than makes you money. Continue reading ‘Profit From Tax Sale Property While Avoiding the Tax Sale Altogether’ »