$7500 First Time Home Buyer Tax Credit

Atlanta First Time home buyers can receive a $7500 credit on their 2008 returns for purchasing a home between April 2008 and July 2009. So, in addition to your itemized deductions you will receive for being a homeowner, there is another $7500 to reduce your income just by purchasing a home.

Sunset Date for Nehemiah Down payment Assistance is September 30, 2008.

The Nehemiah Downpayment Assistance program is one of the few ways to have a seller pay for part of your down payment. Sellers have always had the ability to pay closing costs. However, the ability to actually make part of the down payment has been a questionable practice where many of these amounts were paid after closing or POC (Paid Outside of closing). At any rate, this program ends on Sept 30, 2008 so if you need help with a down payment you should get moving.

Call me if you have any questions!

FHA Free-Money

The FHA has set up a 5 to 1 matching down payment grant up to a total amount of $10,000. This program is based on family income level and is reflective of the county that you live. However, if you want to purchase a home, this may be the best way to get FREE MONEY. Government Grants!

Change in FHA Down payment Requirement

Though most of us are not familiar with FHA loans, today (post mortgage meltdown) these loans tend to be the most available mortgages. The US government has raised the lending limits of all government sponsored mortgages which makes the FHA very useful for home purchases of $200,000 to $400,000. However, most FHA’s in the past required a 3% down payment. Though you now know that sellers can pay this for you or even the government, the rate will now change from 3% to 3.5% for all loans after October 1, 2008.

If you have questions about these programs as they relate to Atlanta Real Estate you can call or e-mail me. Even though I do specialize in commercial, I do locate and represent residential properties.

Just ask!

My mortgage broker, and friend, is one of the most knowledgeable originators in the country and so any questions you may have will answered ASAP! According to the FHA, a “First Time Homebuyer” is anyone who has never owned a home, or has not owned a home in 3 years.

Why Do Banks Take So Long To Approve a Short Sale?

The Housing and Economic Recovery Act of 2008 was recently passed and it included many positive things for buyers and sellers of real property. Many real estate bloggers have covered this topic (view blog search results), but Dan Green brought to light one of the biggest downsides to the new act.

As he found buried deep on page 690 of the 694 page law an important change to the Capital Gains Exclusion rule that could cost home sellers across the country.  Dan said…

“Under the former Capital Gains Exclusion rule, home sellers could claim $250,000 of home sale profits tax-free ($500,000 if filing jointly) provided they physically lived in the home for 2 of the previous 5 years. Savvy real estate investors exploited this tax rule by moving between residences every two years.

Even “regular” homeowners were coached to stay in their homes for at least 2 years for tax reasons.

Under the new Capital Gains Exclusion rule, however, this sort of tax-minimizing behavior is rendered impractical. The new Capital Gains Exclusion formula is not an all-or-nothing proposition. Instead, it’s a ratio.

In other words, if a home seller occupied a property as a primary residence in 2 of the last 5 year, under the new system, he would be entitled to 40% of his capital gains tax-free versus 100 percent of those gains before the new housing law passed.

The effective date for the new Capital Gains Exclusion rules is January 1, 2009 so homeowners selling in 2008 are exempt. “

Here is the formula:

Here is a sample equation:

You bought a home in January 2004 and paid $500,000.  This has been your primary residence until this year, January 2008, when you bought another property and moved your primary residence.  Say you sell your original property next year, January 2009, for $600,000.  Your capital gains formula:

1460 / 1825 = 0.80 x $100,000 = $80,000 Capital Gains Exclusion

1460(365 days x 4 years) / 1825(365 days x 1 year) = 0.80 x $100,000 ($600,000 – $500,000) = $80,000

Which means you would pay capital gains tax on $20,000.  Capital Gains Tax is currently at 15%, so you would pay $3,000 in new taxes that you would have avoided prior to this new law. *Please note this does not account for the state portion of capital gains, In Georgia that would be an additional 6% of the gains or $1,200 for a total of $4,200 in taxes on the gain.

It may sound like a small number when you profit $100,000 to only pay $4200, but what happens if the new government leaders change the Capital Gains Rate? This rate has been as high as 45.5 percent in the past.  This is not good for future sellers of real estate.

Modest consumer spending, a pullback in commercial construction and lower growth in exports has resulted in a lower forecast for 2009.

Inflation remains at the top end of the Fed’s target range, due to higher priced imports, energy and food.

Sub-par economic growth suggests the Fed will keep interest rates on hold through the end of 2008.

Consumer spending is likely to remain weak after the initial stimulus from tax rebates.

Business fixed investment is also expected to be weak, given slower revenue expectations, tighter credit, and reduced profits.

Trade remains a positive in the economy, and is expected to add one-half to one percent growth for the second half of 2008.

The weak dollar and strong growth in several international markets are driving demand.

Short-term interest rates are likely to remain in range, while long-term rates are expected to increase once the turmoil in financial markets subsides.

Read the entire July Report from Wachovia.

According to data compiled by city officials, a one-mill rate increase for a homeowner with a $200,000 home is an added $49 in taxes, bringing the total tax bill up to $490. A homeowner with a $100,000 home would pay $23 more in taxes, bringing the tax bill up to $229, documents show.

The current millage rate is 5.880 mills, and the 2008-2009 budget is based on a millage rate of 6.53 mills, which is an increase of .65 of a mill.  The total budget is about $30.2 million, which is a decrease from nearly $33 million last year. The general fund is about $14.7 million, which is an increase from about $14.5 million last year.

After the city’s general fund budget was short about $2 million and the water and sewer fund was short $2 million earlier this year, city officials made cuts and found ways to balance the budget.  One casualty of the cuts was the budget for concerts; there was $100,000 budgeted, and the council cut that amount in half.  The reductions included cutting $103,909 from $189,289 for pension catch-up; $1,276 from $4,276 for a Woodstock Community Center renovation and gazebo; and $65,000 from $373,000 for property & liability insurance savings. Administrative software for $5,000, alarm police software in police record management financing for $19,800 and three servers in police record management for $12,459 were completely cut from the budget.

source: cherokee ledger news

If you are 62 years old or over, you can have your school taxes removed from your yearly tax bill in Cobb County and Cherokee County by applying for the school tax exemption.

In Cobb County, the school tax represents approximately two-thirds of your property tax bill, which would afford you a huge tax savings every year. In Cherokee County, it is approximately three-fourths of the property taxes. This tax reduction is on top of the reduction for your Homestead Exemption. This tax exemption makes too much sense for most politicians to approve (it’s unlikely citizens over 62 have any school age children), kudos to Cobb and Cherokee for getting it right!

Every year there are some changes, so please confirm this information with the respective tax offices.

Here is the general program:

The home you claim for an exemption must be your primary residence. The taxes are based on your status as of January 1st of each year. If you were to turn 62 this year, you would be eligible to receive the senior exemption next year.

In Cherokee County, you will be exempted from school taxes for the appraised value of your home up to $320,625.00 fair market value; $128,250.00 of assessed value. After that amount, your school taxes would be included in your tax bill.

In Cobb County, you are exempted from school taxes for the entire appraised value of your home, no matter how much your home is worth.

Both counties also permit you to have the customary Homestead Exemption, which is the exemption allowed because this is your primary residence.

Tax exemptions in both counties are filed between January 1st and June 30th of the year after you are eligible. So, for instance, if you are 62 this year and you move into a new home on May 8th, you will be able to file for your exemptions beginning the following January for the next year’s taxes.

You can find information on Cobb County Property Taxes by calling 770-528-8600. You may call Cherokee County at 770-479-0433. In either county just ask about their senior tax exemptions.

As a retiree or senior, you’ve worked hard all your life and have goals and dreams that are not the same as a first-time home buyer. Make sure you choose a Realtor who understands these differences and can work with you to match your goals with real estate advice to maximize your home-buying experience!

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February Economic Report from Wachovia

Here are some of the highlights from the report:

    * We continue to believe that the economy will nominally avoid that outcome, but effectively it is a recession-like environment for decision makers. We now expect real GDP growth to slow to just a 0.2 percent pace in the first quarter and look for only 0.8 percent growth in the second quarter. Moreover, fourth quarter growth will likely be revised down from the initially reported 0.6 percent pace to around a 0.3 percent pace. With three quarters of growth this weak, another adverse shock would push the economy into negative territory.

    * On the plus side, many of the conditions that are typically present prior to a recession are not present today. At the onset of most prior recessions, business inventories were high and rising. Today inventories are low and declining. The Employment Cost Index (ECI) was typically high and rising at the onset of most previous recessions, which led to huge layoffs throughout the economy. Today the ECI is low and decelerating, lessening the need for massive layoffs.

    * Finally, monetary and fiscal policies are reacting much more rapidly to the current slowdown. We expect at least two more quarter point cuts in the federal funds rate and for the stimulus plan along the lines President Bush and the House have proposed to be enacted in the second quarter.

Thanks to David Bell for providing these reports.

David L. Bell
Vice President
Wachovia Business Banking
360 Interstate North Parkway, 5th Floor GA 4656
Atlanta, GA  30339
W 678 627 3716
C 404 630 7599
F 678 627 3747

Dan Green is one of my favorite real estate bloggers.  He consistently delivers valuable information and does it with a passion that is infectious.  I recently stumbled across this video where he does an excellent job of illustrating how Mortgage Guidelines affect our real estate market.