Expanded Recovery Act Tax Credits Help Homeowners Winterize their Homes

According to the IRS's newest press release, taxpayers can now weatherize their homes and be rewarded for their efforts. In addition to reducing heating bills, certain home improvements will also qualify for a tax credit provided by the Recovery Act of 2009. However, these credits are only good until December 31, 2010.

Nonbusiness Energy Property Credit

This credit equals 30 percent of what a homeowner spends on eligible energy-saving improvements, up to a maximum tax credit of $1,500 for the combined 2009 and 2010 tax years. The cost of certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass all qualify, along with labor costs for installing these items. In addition, the cost of energy-efficient windows and skylights, energy-efficient doors, qualifying insulation and certain roofs also qualify for the credit, though the cost of installing these items does not count.

By spending as little as $5,000 before the end of the year on eligible energy-saving improvements, a homeowner can save as much as $1,500 on his or her 2010 federal income tax return. Due to limits based on tax liability, amounts spent on eligible energy-saving improvements in 2009, other credits claimed by a particular taxpayer and other factors, actual tax savings will vary. These tax savings are on top of any energy savings that may result.

Residential Energy Efficient Property Credit

Homeowners going green should also check out a second tax credit designed to spur investment in alternative energy equipment. The residential energy efficient property credit equals 30 percent of what a homeowner spends on qualifying property such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property. Generally, labor costs are included when figuring this credit. Also, except for fuel cell property, no cap exists on the amount of credit available.

Continue reading at IRS.gov...

Obama Housing Program Slowing To A Crawl While Homeowners Suffer

From Huffington Post.com:

More than 18 months after President Barack Obama announced a $75 billion program to help three to four million homeowners avoid foreclosure, the administration's primary foreclosure-prevention initiative is slowing to a crawl.

Less than 17,000 homeowners were offered temporary trial plans in July under the Home Affordable Modification Program to reduce their monthly mortgage payments, an 86 percent decrease from the same period last year, according to Treasury Department data released Friday. About 37,000 homeowners transitioned from trial plans into permanently-modified mortgages, which offer years of lower monthly payments thanks to cuts in the mortgage's interest rate and extensions to the life of the mortgage. It's the lowest figure since December, and a 28 percent decrease from June's total.

More than 100,000 homeowners were bounced from the program, known as HAMP, last month as homeowners either fail to provide documentation verifying their situation, fell behind on their new, reduced payments (an indication of how deeply in debt they are) or their mortgage servicers simply kicked them out due to error, a common occurrence, according to homeowners, their advocates, and government auditors. It's a seven percent increase from June. An average of 108,000 homeowners per month have been kicked out since March 1.

About half, or 48 percent, of struggling homeowners who have entered the program since the spring of 2009 have been kicked out.

10 Tax Breaks for the Home, Room by Room

There are a lot of tax breaks out there for home owners, but it can be difficult trying to figure out which you qualify for. AOL.com put together a new piece on tax breaks for the home, room-by-room, and interviewed me regarding home-related tax benefits for business owners. You can find a section of their article – including my quote – or head on RealEstate.AOL.com for the rest

If you primarily work from home, you should be able to deduct a percentage of your mortgage interest, real estate taxes, casualty losses, home repairs and maintenance, utilities, house insurance, security system and even garbage removal based on the square footage of your home office space compared to the overall square footage of your home.

"In order to qualify as a home office in the eyes of the IRS," says tax attorney Roni Deutch, CEO of the Roni Deutch Tax Center," you need to have a separate room or designated space that is used exclusively for business purposes. If it is not a room, then the space needs to be separated by a room divider of some sort. Additionally, the IRS is very strict about the exclusive use rule, so if your children play in the office or your spouse uses the room as a home gym then it will not qualify."

Use IRS Form 8829 if you are self-employed. Download Publication 587 for IRS rules. And if turned an old bedroom into an office space using California Closets or other remodeling project, you should be able to deduct that expense too for work, if you itemize.

Obama Proposes Homeowner “Cash for Caulkers” Program

According to Bloomberg.com, President Obama has proposed a new incentive for homeowners modeled after the highly “Cash for Clunkers” program. Humorously referred to as “Cash for Caulkers,” the legislation would provide incentive for taxpayers to make energy efficient improvements to their homes. In addition to helping homeowners, the program is expected to create new jobs by stimulating companies like Dow Chemical Co. and retailers Home Depot and Lowe’s.

“The president’s proposals on weatherization and industrial energy efficiency will have the triple benefit of creating jobs quickly, saving consumers money and reducing our nation’s carbon footprint,” Plishka said in a statement.

Rebates for residences that are made more energy-efficient were proposed by Obama in a speech yesterday calling for new spending to cut the U.S. jobless rate. Lawmakers and business executives suggested the project, and the term “cash for caulkers,” as a way to replicate this year’s “cash for clunkers” auto rebate program.

“I’m calling on Congress to consider a new program to provide incentives for consumers who retrofit their homes to become more energy-efficient, which we know creates jobs, saves money for families and reduces the pollution that threatens our environment,” Obama said at the Brookings Institution in Washington.

The president didn’t use the program’s nickname or provide specifics, such as the amount of the rebates or cost. It would have to be approved by Congress.

“This kind of energy program will help homeowners gain back some of the value they may have lost over the past few years,” Chris Ahearn, a spokeswoman for Mooresville, North Carolina-based Lowe’s, said in a phone interview yesterday. “It will also help contractors who want to get back to work or add work.”

Mortgage Firms Struggle to Redo Hard-Hit Loans

At a time when struggling homeowners need it most, new studies are showing that mortgage firms are struggling to negotiate loan modifications fast enough to keep up with demand. The change comes with new government pressure to negotiate more loans under their Home Affordable Modification Program, or HAMP, where the Federal government encourages these firms to help keep families in their homes. Check out the following story on the issue courtesy of the Wall Street Journal.

Morgan Stanley chief John Mack recently made a new friend, he told shareholders in April -- a Southern woman who had benefited from the big bank's stepped-up efforts to modify loans under a new federal program aimed at keeping borrowers in their homes.

"I'm now invited -- if I ever visit Memphis, Tennessee -- to drive two hours south to have dinner with her and her family," Mr. Mack said.

But by some measures, Morgan Stanley's mortgage-loan servicing firm, Saxon Mortgage Services Inc., has a long road to go. An April Credit Suisse Group analysis of how quickly companies have renegotiated loans ranked Saxon last among 18 mortgage-servicing firms. Saxon has modified just 6% of the loans it oversees that originated between 2005 and 2007. By contrast, Litton Loan Servicing, a Goldman Sachs Group Inc. unit, modified 28% of its loans.

Such firms are at the center of a grand government experiment aimed at halting foreclosures and the collateral damage they cause neighboring homes. New foreclosure notices will total 2.4 million this year, which could trigger price drops in 69.5 million nearby homes, estimates the Center for Responsible Lending, a financial-services research and policy firm. At an average decline of $7,200 a house, that translates to a potential drop of $502 billion in total U.S. property values.

The government plan, rolled out in February and called the Home Affordable Modification Program, or HAMP, will pay mortgage-servicing firms to modify mortgages and find other ways to keep people in their homes. But the program's sheer scale and the speed with which it was rolled out have created a new set of problems for some of the 27 firms charged with carrying it out.

Continue reading…

American Land Title Association Urges Support of $15,000 Tax Credit

As I have posted multiple different times, numerous members of Congress are hoping to increase this year’s new homebuyers tax credit to $15,000. Now, the American Land Title Association has also sent an open letter to congress asking them to support the increase. You can find a clip from a MarketWatch.com article covering the story below.

In a letter sent June 26 to the Senate and House, ALTA asked legislatures to extend the $8,000 first-time home buyer tax credit and remove income and other restrictions on who can qualify for the credit.

The Senate version of the bill, S.B. 1230, was introduced by Sen. Johnny Isakson, R-Ga., and is co-sponsored by Senate Banking Committee Chairman Chris Dodd, D-Conn. The companion bill in the House, H.R. 1245, was introduced by Rep Ken Calvert, R-Calif. Both bills are known as the Home Buyer Tax Credit Act of 2009.

The proposals would extend the home buyer credit to multi-family properties used as the borrower's primary residence, eliminate income caps of $75,000 and $150,000 on individuals and couples seeking to claim the credit. The bill would extend the current credit, which expires Dec. 31, 2009, for one year after enacted.

The idea of expanding the tax credit first surfaced in the federal stimulus bill at the beginning of the year, passed the Senate but was dropped from the final version. The legislation has gained renewed attention since a noticeable uptick in purchase transactions driven by the $8,000 tax credit.

Continue reading this article, here.

11 Tax Tips for Homeowners and Buyers

From TheChigaco77.com:

Tax season is looming and homeowners everywhere should know the opportunities available to them for tax breaks and incentives. This info is also valuable for potential home buyers so they are aware of what expenses are deductible and the ins and outs of new tax laws, since there are so many nowadays! Thanks President Obama!

So here’s the skinny and how to save yourself some dough…and hopefully headaches. As always, if you need assistance, please contact your friendly and professional tax adviser.

1. Deduct the interest you pay on your home loan on your tax return. A mortgage interest deduction reduces your taxable income. And because your mortgage payments for the first few years are heavily comprised of interest, they are almost entirely deductible.

2. Deduct property taxes and points you paid to lower your loan’s interest rate. The IRS offsets the expense of your state and local property taxes by allowing you to deduct those fees from your itemized income tax return. You may also get a tax benefit if you paid points at closing to lower your mortgage interest rate.

3. Take advantage of new laws in this challenging market. Look into new tax laws that may allow new homebuyers to get an $8,000 tax credit, short-sellers to escape penalty for forgiven mortgage debt, and homeowners to contest property taxes in a struggling market. Note, the $8,000 tax credit for first-time homebuyers is not immediately available. You must file your taxes to receive this credit and it’s only good on purchases from Jan. 1, 2009 to Dec. 31, 2009.

4. Request a property tax reassessment if your home’s market value has declined. If your property value is significantly lower now than when you bought it, show proof of your home’s current market value and recent comparable sales in your neighborhood to your local tax assessor for a tax adjustment. Your real estate agent can provide you these values through comparable properties (often called comps) that have recently sold or are currently on the market. For a good barometer on how far back to research, most lenders will only accept appraisals based on 3 months prior activity since the housing market is currently so volatile.

5. Research past and proposed assessments that may apply to your home. Understanding property taxes and assessments in your area will give you a more accurate homeownership cost, as well as help you predict and control your monthly expenses.

6. Get a reliable estimate of your property tax bill. Don’t rely on the old tax data passed down from your home’s previous owners. Depending on the circumstances of the sale, your tax bill can differ from their bill. (Now living in Cook county, we all know this is easier said than done because our taxes are paid in arrears, or more put more simply, a year late).

IRS Kicks Home Owners While They're Down

According to the Washington Post, the IRS has bad news for homeowners who are seriously delinquent on their mortgages and hoping for debt relief. If your lender decides to modify your loan or forgive your debt, you could end up owing federal income taxes on that amount. The IRS essentially treats the amount that is forgiven as ordinary income. Lenders are even required by law to notify the IRS when they forgive the debt. This news is especially bad in the current market, where many people are finding themselves upside-down in the current market because of interest only loans or property value decreases.