RE/MAX Platinum Debra Hewitt

Tax Time Less Taxing for Home Owners

2011-03-22T21:09:00.002-05:00

“Owning a home offers myriad benefits throughout the year, but some of the financial advantages of home ownership are most apparent at tax time,” said NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. “As many of today’s hard-working American families are feeling a financial squeeze, the tax benefits that can come from owning a home can be a welcome relief.”

A number of tax deductions and credits are still available for home owners; these include deductions – with specific limits – for mortgage interest and capital gains on home sales, and credits for certain energy-efficient home improvements. Even with these benefits, home owners pay 80-90 percent of all U.S. federal income taxes.

“It’s been suggested that many of today’s tax incentives for home ownership primarily benefit wealthy individuals, but that’s simply not true,” said Phipps. “As today’s public debate continues about what home ownership means for families, communities, and the nation’s economy, there’s no question that for many, owning a home is still the best way to begin building wealth.”

Ninety-one percent of home owners who claim the mortgage interest deduction earn less than $200,000 a year, and the ability to deduct the interest paid on a mortgage can mean significant savings at tax time. For example, a family who bought a home in 2010 with a $200,000, 30-year, fixed-rate mortgage, assuming an interest rate of 4.5 percent, could save nearly $3,500 in federal taxes when they file this year.

To read this article in full visit www.realtor.org

Fine Arts School in Downtown Decatur!

2010-09-07T22:12:00.003-05:00

Lookout, downtown Decatur is changing! Rick Paler with Decatur Downtown Redevelopment Authority is working hard to make our Decatur an even greater place to live, work, and play. I am exciting about a fine arts school being built in downtown Decatur. This is a joint venture between Athens State University and Calhoun Community College. Initially they will offer a visual arts program but they eventually hope to combine for joint bachelor's degrees in art, drama, music, dance, and entertainment studies, and a bachelor of fine arts degree. Ground breaking is expected to be December 2010.

Home Buyers Tax Credit Expanded and Extended!

2009-11-10T17:00:00.003-06:00

Great news! Congress has extended the First Time Home Buyer tax credit! This credit of up to $8000 applies to anyone that has not owned a home in the last three years. Furthermore, this tax credit has been expanded and will now include up to a $6500 tax credit to current home owners purchasing a home between November 7, 2009 and April 30, 2010. These closings will need to take place on or before June 30, 2010.

Thank you to the Alabama Association of Realtors and National Association of Realtors for making this a priority. The First Time Home Buyer tax credit proved essential in helping turn our economy in the right direction.

If you have specific questions or need additional information, please contact a tax professional.

Home Buyers Tax Credit

2009-03-04T09:33:00.000-06:00

In 2008, Congress enacted a $7500 tax credit designed to be an incentive for first-time homebuyers to purchase a home. The credit was designed as a mechanism to decrease the over-supply of homes for sale.

For 2009, Congress has increased the credit to $8000 and made several additional improvements. This revised $8000 tax credit applies to purchases on or after January 1, 2009 and before December 1, 2009.

Tax Credits -- The Basics

1. What’s this new homebuyer tax incentive for 2009?

The 2008 $7500, repayable credit is increased to $8000 and the repayment feature is eliminated for 2009 purchasers. Any home that is purchased for $80,000 or more qualifies for the full $8000 amount. If the house costs less than $80,000, the credit will be 10% of the cost. Thus, if an individual purchased a home for $75,000, the credit would be $7500. It is available for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009.

2. Who is eligible?

Only first-time homebuyers are eligible. A person is considered a first-time buyer if he/she has not had any ownership interest in a home in the three years previous to the day of the 2009 purchase.

3. How does a tax credit work?

Every dollar of a tax credit reduces income taxes by a dollar. Credits are claimed on an individual’s income tax return. Thus, a qualified purchaser would figure out all the income items and exemptions and make all the calculations required to figure out his/her total tax due. Then, once the total tax owed has been computed, tax credits are applied to reduce the total tax bill. So, if before taking any credits on a tax return a person has total tax liability of $9500, an $8000 credit would wipe out all but $1500 of the tax due. ($9,500 - $8000 = $1500)

4. So what happens if the purchaser is eligible for an $8000 credit but their entire income tax liability for the year is only $6000?

This tax credit is what’s called “refundable” credit. Thus, if the eligible purchaser’s total tax liability was $6000, the IRS would send the purchaser a check for $2000. The refundable amount is the difference between $8000 credit amount and the amount of tax liability. ($8000 - $6000 = $2000) Most taxpayers determine their tax liability by referring to tables that the IRS prepares each year.

5. How does withholding affect my tax credit and my refund?

A few examples are provided at the end of this document. There are several steps in this calculation, but most income tax software programs are equipped to make that determination.

6. Is there an income restriction?

Yes. The income restriction is based on the tax filing status the purchaser claims when filing his/her income tax return. Individuals filing Form 1040 as Single (or Head of Household) are eligible for the credit if their income is no more than $75,000. Married couples who file a Joint return may have income of no more than $150,000.

7. How is my “income” determined?

For most individuals, income is defined and calculated in the same manner as their Adjusted Gross Income (AGI) on their 1040 income tax return. AGI includes items like wages, salaries, interest and dividends, pension and retirement earnings, rental income and a host of other elements. AGI is the final number that appears on the bottom line of the front page of an IRS Form 1040.

8. What if I worked abroad for part of the year?

Some individuals have earned income and/or receive housing allowances while working outside the US. Their income will be adjusted to reflect those items to measure Modified Adjusted Gross Income (MAGI). Their eligibility for the credit will be based on their MAGI.

9. Do individuals with incomes higher than the $75,000 or $150,000 limits lose all the benefit of the credit?

Not always. The credit phases-out between $75,000 - $95,000 for singles and $150,000 - $170,000 for married filing joint. The closer a buyer comes to the maximum phase-out amount, the smaller the credit will be. The law provides a formula to gradually withdraw the credit. Thus, the credit will disappear after an individual’s income reaches $95,000 (single return) or $170,000 (joint return).

For example, if a married couple had income of $165,000, their credit would be reduced by 75% as shown:

Couple’s income $165,000
Income limit 150,000
Excess income $15,000

The excess income amount ($15,000 in this example) is used to form a fraction. The numerator of the fraction is the excess income amount ($15,000). The denominator is $20,000 (specified by the statute).

In this example, the disallowed portion of the credit is 75% of $8000, or $6000
($15,000/$20,000 = 75% x $8000 = $6000)

Stated another way, only 25% of the credit amount would be allowed.
In this example, the allowable credit would be $2000 (25% x $8000 = $2000)

10. What’s the definition of “principal residence?”
Generally, a principal residence is the home where an individual spends most of his/her time (generally defined as more than 50%). It is also defined as “owner-occupied” housing. The term includes single-family detached housing, condos or co-ops, townhouses or any similar type of new or existing dwelling. Even some houseboats or manufactured homes count as principal residences.

11. Are there restrictions on the location of the property?

Yes. The home must be located in the United States. Property located outside the US is not eligible for the credit.

12. Are there restrictions related to the financing for the mortgage on the property?

In 2009, most financing arrangements are acceptable and will not affect eligibility for the credit. Congress eliminated the financing restriction that applied in 2008. (In 2008, purchasers were ineligible for the $7500 credit if the financing was obtained by means of mortgage revenue bonds.) Now, mortgage-revenue bond financing will not disqualify an otherwise-eligible purchaser. (Mortgage revenue bonds are tax-exempt bonds issued by a state housing agency. Proceeds from the bonds must be used for below market loans to qualified buyers.)

13. Do I have to repay the 2009 tax credit?

NO. There is no repayment for 2009 tax credits.

14. Do 2008 purchasers still have to repay their tax credit?

YES. The $7500 credit in 2008 was more like an interest-free loan. All eligible purchasers who claimed the 2008 credit will still be required to repay it over 15 years, starting with their 2010 tax return.

Some Practical Questions

15. How do I apply for the credit?

There is no pre-purchase authorization, application or similar approval process. All eligible purchasers simply claim the credit on their IRS Form 1040 tax return. The credit will be reflected on a new Form 5405 that will be attached to the 1040. Form 5405 can be found at www.irs.gov.

16. So I can’t use the credit amount as part of my downpayment?

No. Congress tried hard to devise a mechanism that would make the funds available for closing costs, but found that pre-funding would require cumbersome processes that would, in effect, bring the IRS into the purchase and settlement phase of the transaction.

17. So there’s no way to get any cash flow benefits before I file my tax return?

Yes, there is. Any first-time homebuyers who believe they are eligible for all or part of the credit can modify their income tax withholding (through their employers) or adjust their quarterly estimated tax payments. Individuals subject to income tax withholding would get an IRS Form W-4 from their employer, follow the instructions on the schedules provided and give the completed Form W-4 back to the employer. In many cases their withholding would decrease and their take-home pay would increase. Those who make estimated tax payments would make similar adjustments.

Some “Real World” Examples

18. What if I purchase later this year but can’t get to settlement before December 1?

The credit is available for purchases before December 1, 2009. A home is considered as “purchased” when all events have occurred that transfer the title from the seller to the new purchaser. Thus, closings must occur before December 1, 2009 for purchases to be eligible for the credit.

19. I haven’t even filed my 2008 tax return yet. If I buy in 2009, do I have to wait until next year to get the benefit of the credit?

You’ll have a helpful choice that might speed up the process. Eligible homebuyers who make their purchase between January 1, 2009 and December 1, 2009 can treat the purchase as if it had occurred on December 31, 2008. Thus, they can claim the credit on their 2008 tax return that is due on April 15, 2009. They actually have three filing options.

· If they purchase between January 1, 2009 and April 15, 2009, they can claim the $8000 credit on the 2008 return due on April 15.
· They can extend their 2008 income-tax filing until as late as October 15, 2009. (The IRS grants automatic extensions, but the taxpayer must file for the extension. See www.irs.gov for instructions on how to obtain an extension.)
· If they have filed their 2008 return before they purchase the home, they may file an amended 2008 tax return on Form 1040X. (Form 1040X is available at www.irs.gov)

Of course, 2009 purchasers will always have the option of claiming the credit for the 2009 purchase on their 2009 return. Their 2009 tax return is due on April 15, 2010.

20. I purchased my home in early 2009 before the stimulus bill was enacted. I claimed a $7500 tax credit on my 2008 return as prior law had permitted. Am I restricted to just a $7500 credit?

No, you would qualify for the $8000 credit. Eligible purchasers who have already claimed the $7500 credit on a 2008 return for a 2009 purchase may file an amended return (IRS Form 1040X) for the 2008 tax year. This amended return will enable them to obtain the additional $500 credit amount.

21. If I claim my 2009 $8000 credit on my 2008 tax return, will I have to repay the credit just as the 2008 credits are repaid?

No. Congress anticipated this confusion and has made specific provision so that there would be no repayment of 2009 credits that are claimed on 2008 returns.

22. I made an eligible purchase of a principal residence in May 2008 and claimed the $7500 credit on my 2008 tax return. My brother, who has never owned a home, wishes to purchase a partial interest in the home this spring and move in. Will he qualify for the $8000 credit, as well?

No. Any purchase of a principal residence (or interest in a principal residence) from a related party such as a sibling, parent, grandparent, aunt or uncle is ineligible for the tax credit. Since you and your brother are related in this way, he cannot qualify for the credit on any portion of the home that he purchases from you, even if he is a first-time homebuyer.

23. I live in the District of Columbia. If I qualify as a first-time homebuyer, can I use both the $5000 DC credit and the $8000 credit?

No; double dipping is not allowed. You would be eligible for only the $8000 credit. This will be an advantage because of the higher credit amount, plus the eligibility requirements for the $8000 credit are somewhat more easily satisfied than the DC credit.

24. I know there is no repayment requirement for the $8000 credit. Will I ever have to repay any of the credit back to the government?

One situation does require a recapture payment back to the government. If you claim the credit but then sell the property within 3 years of the date of purchase, you are required to pay back the full amount of any credit, including any refund you received from it. A few exceptions apply. (See below, #24). Note that this same 3-year recapture rule applies, as well, to the $7500 credit available for 2008. This provision is designed as an anti-flipping rule.

25. What if I die or get divorced or my property is ruined in a natural disaster within the 3 years?

The repayment rules are eased for many circumstances. If the homeowner who used the credit dies within the first three years of ownership, there is no recapture. Special rules make adjustments for people who sell homes as part of a divorce settlement, as well. Similarly, adjustments are made in the case of a home that is part of an involuntary conversion (property is destroyed in a natural disaster or subject to condemnation by eminent domain by an authorized agency) within the first three years.

26. I have a home under construction. Am I eligible for the credit?

Yes, so long as you actually occupy the home before December 1, 2009.

Pending Home Sales Up

2009-02-13T14:42:00.002-06:00

According to the National Associaon of Realtors, pending home sales increased as more buyers took advantage of improved affordability conditions. Big gains in the South and Midwest helped declines in other regions. The Pending Home Sales Index rose 6.3 percent to 87.7 from 82.5 in November, and is 2.1 percent higher than December 2007 when it was 85.9. The monthly gain in pending home sales, spurred by buyers responding to lower home prices and mortgage interest rates, more than offset an index decline in the previous month. Great news!

2009 MCAOR Member of the Year

2009-01-18T20:10:00.002-06:00

Last Thursday I attended our monthly Morgan County Association of Realtors membership luncheon. As always, there was great fellowship and a tasty lunch. Our guest speaker was my long time friend, local attorney Doug Bachuss. This month the MCAOR Member of the Year was to be announced and I was told Bob McMillan was the 2008 recipient. As the announcement was read, I turned slightly to watch Bob's expression as his name was announced. Much to my surprise, my name was called! What an honor. To all of my fellow Realtors, thank you. You are a blessing!

Downtown Decatur Redevelopment

2008-11-21T10:49:00.000-06:00

Rick Paler with The Decatur Downtown Redevelopment Authority hosted a public meeting Monday night at our own Princess Theatre. The establishment of a Calhoun Community College fine arts school in downtown Decatur is included the five year plan. There are 31 projects in the plan including further riverfront development. Paler reported that it is unlikely all 31 projects would be completed within the next five years. He has meetings scheduled with businesses to discuss funding the projects. Paler said public input is welcomed. Thanks to Mr. Paler for working so hard in helping make Decatur a great place to be!

Fulin's Coming to Decatur!

2008-11-10T12:51:00.001-06:00

Fulin's Asian Cuisine will open this month at The Crossings of Decatur. Some compare the 6400 square foot upscale restaurant to PF Chang's. The restaurant will feature a sushi bar. Its menu includes lunches in the $7 range and dinner entrees from $7 to $20. The Crossings of Decatur is anchored by Target. Other eating establishments at The Crossings include Panera Bread, 5 Guys Burgers, and Starbucks. Welcome Fulin's!

Hockey coming to Decatur!

2008-10-29T21:52:00.000-05:00

Decatur's very own Point Mallard Park’s ice skating rink has partnered with Huntsville to host the USA Hockey Southeastern District tournament in 2009. It is estimated the tournament will draw more than 2,400 players, coaches, officials and supporters to Decatur and Huntsville. The tournament is scheduled for March 12-15 and will feature 48 teams. The winning teams will proceed to the national championship. Congrats Decatur!

Academy Sports to Open Spring 2009!

2008-10-19T21:05:00.002-05:00

Academy Sports officials said they hope to begin construction January 2009 on their 74,863-square-foot store. Completion is expected to be July 2009. The store will be located on Wimberly Road and is adjacent to Home Depot. This convenient location is just off of Beltline Road and is close to the newly constructed Chili's Restaurant. Academy Sports was founded in 1938 and is one of the country’s largest sporting goods retailers. It employs more than 11,000 people at 105 stores across the southeastern United States. Great news for Decatur! Welcome Academy Sports!

New Retail Stores at The Crossings of Decatur!

2008-10-15T08:00:00.002-05:00

Workers are prepping ground at The Crossings of Decatur for a Regions Bank and an AT&T store. Both Regions and AT&T expect their completion in the spring of 2009. AT&T will build a 3,500-square foot store. The Regions Bank branch will replace the branch at Gateway Shopping Center on Sixth Avenue Southeast. It is always exciting to see new businesses coming to Decatur!

Daikin - Decatur beats China!

2008-10-03T09:05:00.000-05:00

Daikin Industries chose Decatur over China for a plant expansion! The $66 million expansion will create at least 25 jobs. This will be the largest of Daikin's expansions since 1994. The expansion will increase Daikin's production of ethylene tetrafluoroethylene copolymer used in plastic in wire and cable. Japan-based Daikin estimates the expansion will generate $161,000 in one-time revenue for the city because of sales tax revenue on construction employees and the building permit. Daikin Industries employs 19,000 people and has manufacturing operations in 11 countries.

State Convention

2008-10-02T22:50:00.000-05:00

Just a few weeks ago I attended the Alabama Association of Realtors state convention in Florence, Alabama. What an experience. I have been to several state conventions and have never been disappointed. Not only were there great speakers and continuing education classes, I witnessed some unusual dance moves from my fellow Realtors! The 2009 AAR convention will be in Chattanooga, Tennessee. I am looking forward to this convention so I can learn more and stay up to date on technology to better serve my customers.

2008 Parade of Homes

2008-09-29T14:37:00.002-05:00

Decatur Morgan County Parade of Homes

The 2008 Parade of Homes sponsored by the Greater Morgan County Builders Association was this past weekend and will continue through this weekend. You can view 17 homes Saturday and Sunday from 2-5 pm. The homes are located in Decatur, Priceville, and Trinity.
The Showcase Home in beautiful City View Estates was built by Jason Owens and Jeremiah Frost. The address is 2026 Sarah Lane SW. Below are addresses for other Parade Homes:

2030 Sarah Lane SW Decatur (City View Estates)
2204 Stockton Lane Decatur (Princeton Place)
2705 Old Vineyard Road Decatur (South Chapel Hill Estates)
78 Jackson Way Priceville (Burningtree Glens)
2096 East Upper River Road (Priceville area)
80 Shadow Mountain Drive Priceville (Shadow Mountain Subdivision)
70 Cypress Cove Drive Priceville (off Bethel Road)
37 Little Creek Crossing (near Priceville Elementary School )
243 Wildwood Way Priceville area (Stillmeadow Estates)
32 Bolerbrook Drive Trinity (Stone Village Estates)
26, 32 and 50 Canterbrook Drive Trinity (Stone Village Estates)
94 Owensby Way Trinity (Stone Village Estates)
11 Tower Street Trinity (Stone Village Estates)
64 Mountain Cove Drive Trinity (Mountain Cove Estates)

Decatur starts to plan for 2020

2008-05-14T21:40:00.000-05:00

http://decaturdaily.com/stories/10638.html

Bass Pro Shops Impact on Decatur

2008-05-08T12:04:00.000-05:00

Click here to view Bass Pro Shops article

Decatur City School Violin Program

2008-05-08T12:01:00.001-05:00

Click here to view violin program

Bass Pro Development

2008-05-01T21:42:00.001-05:00

Bass Pro development