Change of View October 18, 2008
Posted by Chris Zanger in Bay Area News, Campbell, Campbell Real Estate, Economics, Home Design, Housing, Inventory, Investments, Los Gatos, Real Estate, Real Estate Expert, Santa Clara County Real Estate, Saratoga, Technology, The Zanger Team, Uncategorized.add a comment
Two years ago, this open modern home was just a cottage-really. It was an accumulation of bits and pieces added over the years with a vine-entwined colonnade to make the front entry. Located in a first-ring suburb outside Minneapolis, it was built in the 1940s and had one intimate room after another filled with floral prints. But homeowners Robbie and Patti Soskin, sweethearts since high school, were reinventing themselves (not for the first time). Their change would also affect their three children-Jorie, 22; Zach, 16; Maddie, 15-and Edith, a Havanese (a member of the bichon family, and the national dog of Cuba).
Patti explains, “When my business partner and I opened our restaurant [Yum! Kitchen and Baker, in nearby Saint Louis Park] in 2005, it gave me a new perspective on modern. I liked the open, clean space. I began to feel comfortable with stainless steel-even the scratches. That was the turning point to do the house.”
Then, when a growing Zach began to hit his head on the ceiling of his bathroom in 2006, the conversations about a renovation got serious. The Soskins knew about Julie Snow’s work: Julie Snow Architects had designed an addition to their children’s school and done work for a friend. Noted for modern, open and light-filled commercial spaces, Snow takes very few residential projects each year (she spends a lot of time in Cambridge, Massachusetts, where she’s a visiting professor at Harvard University’s Graduate School of Design). But the Soskins were persistent.
“I first met Robbie and Patti in their home,” says Snow. “It was a warm, sweet cottage filled up with some very nice personal collections. It had seen many additions over the years and was really a jumble of structural elements. There were even two garages, on different sides of the house. They said to me, ‘We’re into a more open, modern lifestyle.’ Well, I looked around at all their stuff and said, or thought, ‘Really? Are you sure?’”
Then, she recalls, Patti, (an amazing cook and hostess) said, “We have 50-60 people here for Thanksgiving dinner.” Snow tried to imagine where. But Patti went on to describe how the family lived-or wanted to live-in their home.
They touch and hug all the time. They cuddle on sofas. They cook and eat together every day and have guests for dinner several nights a week. Lovingly demonstrative is their lifestyle of choice. It is their way with friends as well as family, and they needed a home that would express that spirit of togetherness, of invitation, of casual, abiding celebration.
Finally, Snow was convinced they weren’t kidding, and a match had been made. The Soskins had outgrown the home-not in size (it was already almost 50,000 square feet) but in style. Enclosed rooms that keep people apart would no longer do.
The Soskins’ design team from Julie Snow grew to include designated project architect Tyson McElvain and interior designer Connie Lindor (who has also trained as an architect). The builders, Streeter and Associates, came on board early to manage budgets and structural matters, which project manager Bob Near credits with the success of the final product.
“There was a question at one point whether there should just be a new house,” says Snow, “but the Soskins were into taking the bones of their own home and reinventing it.” The plan was never to enlarge the home significantly, but to maximize the existing footprint. In the end, the living room was bumped out five feet, and only one room was added-a screened porch near the family’s media room. But the existing footprint was radically reconfigured, and every single surface was transformed.
The Soskins were intimately involved in the process. “Robbie claims to be a novice at modernism,” says McElvain, “but he helped make decisions on a few key elements.” To that, Robbie, who is a partner at Compass Marketing in Minneapolis, responds, “We laid out a standard: Design, not decoration. It was the guiding principle. We were learners. And it was an amazing process.”
Then things got personal. “We loved where they were going,” says Patti, “but Maddie kept saying, ‘Why are we changing our house? It’s perfect the way it is.” She, especially, always feels cold and needs a warm home. We needed this modern house to be warm and inviting in feeling.”
Building on themes of dark and light, the architects began to select materials to address the matter of warmth (while avoiding traditional red wood tones). They liked the dark floors, a carryover from the cottage, so they specified Brazilian walnut and stained it twice in an ebony tone for an almost opaque, paint-like finish. From the ground up, materials lighten. A single natural is wood is used throughout the home for cabinetry-wenge, known for its fine, straight grain and naturally dark, rich color. Whitewashed oak strips are used as sliding doors, particularly in the kitchen, but have the presence of a movable wall. Selected walls are finished with ethereal white Venetian plaster buy decorative painter Darril Otto.
The kitchen, which Patti helped design based on her professional restaurant experience, is long and layered. Each and every surface and utensil was given careful design and consideration. The result is handsome and efficient with lots of choices for sitting-for eating, working or socializing.
Connie Lindor worked with the Soskins on furnishings while construction was coming to a close. They began by taking an inventory of everything the family owned, from the 1940s vintage art to collections of dishes and fabrics. “I have never seen people transform so dramatically from one style to another,” says Lindor. She encouraged her clients to keep a few things they valued. The vintage glass collection that landed on the dining table and some inherited and handmade dishes displayed in the kitchen cabinets tether the Soskins to their past life.
Of the furniture, Lindor says, “It was very important that it be flexible. One night they’re on the sofa watching a movie. The next night, it’s a party for 50. The furniture we chose is modular and can easily be moved.” Favorite resources included Arkitectura in Situ in San Francisco for the Italian upholstery and occasional tables. Patti had a picture of a dining table, and Lindor recognized it immediately as a piece from BDDW’s collection (the company has a showroom in New York City)-but they had it custom-sized to seat 12.
Naturally, the design team came to know the Soskins over the two years they created together-shopping for furniture, then stopping for wine and dinner in San Francisco, selecting finishes over Patti’s cappuccinos and homemade chocolate-chip cookies. They observed Robbie and Patti Soskin’s warmth for each other, counting the numbers of people who move and out of the home daily-which Robbie explains: “We don’t look at it as entertaining. It’s just how we live. We love sharing this place.” Even daughter Maddie, who hates the cold, likes the new home. Says Maddie, “It’s like living in a snow globe in the winter.”
Meanwhile, Snow had a life lesson in the intangibles of modern living that can’t be qualified in the architecture. “This place isn’t about a glass curtain wall,” she says. “Patti and Robbie gave modernism a warm name. No one is coming here to look at the art. Although it is good, this is not a museum. Here, the dog is on the sofa; there are no worries about red wine. People eat at this table every night. It is vivid living.” Clearly, change is good.
~Metropolitan Home (November 2008)
Beggar’s Delight October 17, 2008
Posted by Chris Zanger in Bay Area News, Campbell, Campbell Real Estate, Economics, Foreclosure, Home Design, Housing, Inventory, Investments, Loans, Los Gatos, Market, Real Estate, Real Estate Expert, Santa Clara County Real Estate, Saratoga, Technology, The Zanger Team, Uncategorized.add a comment
“Halloween seems wasteful. Are there ways to make it more green?”
Danny Says: You can make a difference by knowing how to recycle, reuse, and repurpose all the Halloween tricks and treats.
Pumpkins: Crack open gourds and pumpkins with a hammer, and place the broken pieces in the woods or a field far ways from your house. Deer and other animals will feast on the flesh and seeds. You can also air dry pumpkin seeds as bird feed; our feathered friends crave the high-protein treat.
Barley Hay: Buy barley hay bales to decorate your front porch. Barley hay is a natural deterrent of algae in ponds and water gardens because it releases natural oxygenators to clear the water. Just gather barley hay into small bundles, stuff them into a netted bag, add a rock for weight, drop it in your pond, and forget about it. Hay can also be used as mulch in the garden.
Candy: Give leftover wrapped candy to local charities such as Meals on Wheels or an agency that works with children. Hard candy-like peppermints and butterscotch-can be crushed with a rolling pin and sprinkled on rolled cookie dough before baking for a yummy glaze.
Costumes: Donate last year’s outfits to local Goodwill or Salvation Army stores where they’ll sell them and raise money. After this year’s festivities, ask local children’s hospitals if they would like lightly worn costumes for the kids.
~Better Homes and Gardens (October 2008)
One Splashy Bath October 17, 2008
Posted by Chris Zanger in Bay Area News, Blogroll, Campbell, Campbell Real Estate, Economics, Foreclosure, Home Design, Housing, Inventory, Investments, Loans, Los Gatos, Market, Real Estate, Real Estate Expert, Santa Clara County Real Estate, Saratoga, Technology, The Zanger Team, Uncategorized.1 comment so far
Keeping unnecessary waste out of landfills scores high in our book, and this bath does exactly that. Designed by Libby Langdon for the Better Homes and Gardens Living Green Tour, it teaches several reuse lessons.
Rehab Old Furniture
The vanity was first an antique dresser. Look for a piece that can accommodate plumbing; you may be able to reconfigure drawers to salvage storage.
Be Creative with Scraps
The original dresser top was removed, cut into strips like molding, and crafted into a simple mirror frame.
Choose Eco-Smart Surfaces
Countertops and backsplash tiles made of recycled materials are durable and decorative.
Note: The Living Green Tour has traveled coast-to-coast this year, sharing ideas and inspiration on green living at home. It makes its final three stops this month, but you can see photos of the entire exhibit anytime at BHG.com/livinggreen.
~Better Homes and Gardens (October 2008)
A Recipe for a Better Credit Rating October 7, 2008
Posted by Chris Zanger in Bay Area News, Campbell, Campbell Real Estate, Economics, Foreclosure, Housing, Investments, Loans, Los Gatos, Market, Real Estate, Real Estate Expert, Santa Clara County Real Estate, The Zanger Team, Uncategorized.add a comment
The only way to recover from bad credit is to start rebuilding as soon as possible. You don’t need a miracle to prep your finances for a mortgage application-just a little discipline and organization.
Television Chef personalities Rachael Ray and Giada De Laurentiis, for example, have earned their fame by providing how to instructions for the preparation of virtually everything edible from spring salads to sautéed pork chops. Even if you don’t’ know much about cooking, you can whip up these delectable dishes just by following a recipe. Believe it or not, the same holds true for credit repair-if you can follow instructions, you can successfully rebuild your credit profile.
A Recipe for Better Credit
The primary ingredients in the recipe for overhauling bad credit are a dash of discipline, a pinch of organization, both sprinkled with a little time. Follow these steps to be on your way towards achieving a higher credit score.
- Make a Plan
Write down your income and expenses, including a detailed list of required debt payments. Decide realistically what you can afford to pay monthly on each account. If you have access to an automatic bill-paying system, set up your checking account to make these payments automatically. Otherwise, create an alternate system to keep all of your accounts current and up to date.
- Check your Credit Report
Improving your credit score may be as easy as reviewing your credit report for errors and omissions. Pay particular attention to credit limits-in other words, where the credit limit hasn’t been updated because your credit score might be understated. Then, look at the type of credit listed and the number of accounts shown on your report. If you have only one revolving charge account, get one or two more to satisfy your credit worthiness needs. A gas card or department store card are good options. Make small purchases and pay off the balances every month or at least within a few months. The addition of an installment loan to your credit profile can also raise your score. Always remember to incorporate any new debt payments into your budget and bill-pay plan. Continue to pay your bills on time and begin building a reputation for financial responsibility.
- Pay Down or Transfer Your Charge Card Balances
Ideally, the outstanding balance on each charge account should be less than 30 percent of that account’s credit limit. If you can’t pay off balances right away, consider transferring debt from a maxed-out account to an under-utilized account. This strategy can actually raise your credit score, but be sure to consider the fees and long-term costs before proceeding. Also, keep in mind that robbing Peter to pay Paul will only get you in further credit trouble down the road.
- Be Patient
It might take several weeks or a few months for corrections, credit limit updates, and balance transfers to be reflected on your credit report and FICO score. Let this process run its course as you continue to make your debt payments on time.
Once you have optimized your credit score and funded your mortgage, you can focus your attention on perfecting Gianda’s or Rachael’s spring salad. Maybe you can even serve it, along with those delicious pork chops, when you invite friends over for dinner to celebrate y our newly mortgaged home.
~Brian Thornton
FHA Updates and 203k Rehab Loan October 7, 2008
Posted by Chris Zanger in Bay Area News, Campbell, Campbell Real Estate, Economics, Foreclosure, Housing, Investments, Loans, Los Gatos, Market, Real Estate, Real Estate Expert, Santa Clara County Real Estate, Saratoga, The Zanger Team, Uncategorized.add a comment
Over the past few months, I’ve maintained one article regarding FHA and its importance in today’s real estate market. Several developments in the past few weeks and months further underscore the importance of this amazing program. You may be interested to know that this is not the first time FHA lending saved the day. In fact, the Department of Housing and Urban Development and FHA lending programs were developed in response to the financial crisis surrounding the Great Depression. Recent modernization of the program will certainly help to reestablish stability in the mortgage marketplace. The Housing and Economic Recovery Act of 2008 implemented the following changes to FHA lending provisions.
- Maximum loan amount of $625,500 for high-cost areas (San Francisco Bay Area is “high-cost”)
- Financing up to 100% of the property value.
- Moratorium against risk-based pricing that makes lending to low credit borrowers more costly.
In a practical sense, borrowers with a troubled credit history and no money available for down payment can use the FHA loan to buy a home with the same interest rate as borrowers with 20% down payment and spotless credit. This program brings home ownership within reach for many Americans who would otherwise be unable to purchase a home.
Is this risky, you ask? There is no comparison between FHA lending and the Wild West of Lending we experienced for the past several years. FHA loans are fully amortizing requiring principal interest payments. Borrowers are qualified with full review of income and asset documentation. Succinctly put, FHA programs require that borrowers demonstrate the ability to repay the loan, a fundamental lending principal that was overlooked for several years resulting in the market turbulence we are now experiencing. Additionally, FHA offers financing of repairs to the property as part of the purchase money loan. With many properties coming to market from distressed sellers, this provision is more important than ever. Here are some highlights:
- Work may be completed over a 6 month period after closing escrow.
- Property is appraised “subject to” completion of the repairs allowing higher loan amounts.
- Work may include roofs, heating, electrical, room additions, flooring, window replacement, kitchen remodel, paint, and many other improvements.
- Owner may complete some or all of the work subject to approval of qualifications.
~Brian Thornton
NAR Pushes for Passage of Federal Plan to Right Financial Markets October 7, 2008
Posted by Chris Zanger in Bay Area News, Campbell, Campbell Real Estate, Economics, Foreclosure, Housing, Investments, Loans, Los Gatos, Real Estate, Real Estate Expert, Santa Clara County Real Estate, Saratoga, The Zanger Team, Uncategorized.add a comment
The National Association of REALTORS is urging the Treasury not to reward Wall Street by handing out “free money,” but to ensure that all actions keep the interest of taxpayers at the forefront. These activities need to be about Main Street, not just Wall Street, according to NAR.
NAR is urging Congress, which is taking up legislation on the Treasury plan, that the goal is to ensure mortgage money be made more available and accessible to home buyers and homeowners who need to refinance. Home sales have always led the way to economic recovery in America. In a letter sent to Congress, NAR pledged support for responsible government intervention benefiting homeowners, potential home buyers, financial institutions, the economy, and ultimately taxpayers.
NAR expects the legislation, a massive $700 billion bill, will be fast-tracked through Congress to give the U.S. government the authority to buy problematic mortgage securities from Wall Street firms. Although some are referring to this action as the biggest bailout in history, NAR sees this plan and the legislation under consideration as a means for the Treasury Department to help many more property owners avoid foreclosure.
In a statement by NAR President Richard Gaylord, NAR pledged support for efforts to stabilize financial markets and expedite refinancing and relief efforts for homeowners, as well as other measures to reestablish confidence in housing and the housing credit markets.
NAR has initiated meeting with Congress and the administration to ensure quick implementation of the daring plan announced by U.S. Treasury Secretary Paulson.
NAR has issued the following statements on the association’s position:
- NAR and its members support the ongoing bipartisan efforts to address the current crisis in the financial and secondary mortgage markets.
- It is vital to enact and implement legislation promptly to restore confidence in the financial markets and for market liquidity.
- It is crucial that Congress act soon to restore confidence in the mortgage markets so non-government mortgage lending returns as an option for a full range of qualified borrowers.
- A goal of the legislation must be to free up more mortgage money for home buyers and home owners.
- NAR supports efforts to restore a level of confidence in the housing credit markets.
- NAR will work diligently with Congress and the administration to achieve these goals, as well as the broader goal of reforming the housing finance system.
~Silicon Valley REALTOR
What Freddie, Fannie Bailout Means to Realtors, Home Buyers October 7, 2008
Posted by Chris Zanger in Bay Area News, Campbell, Campbell Real Estate, Economics, Housing, Investments, Loans, Los Gatos, Market, Real Estate, Real Estate Expert, Sales Statistics, Santa Clara County Real Estate, The Zanger Team, Uncategorized.add a comment
Prompted by growing concern regarding the losses both companies have been experiencing, the federal government took over secondary mortgage giants Fannie Mae and Freddie Mac on Sunday, September 7, 2008. The government takeover of the two companies has been described as one of the most sweeping interventions in the financial market since the Depression, because it essentially puts government in charge of helping finance mortgages
As government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac buy loans from lenders to provide more money for housing finance. They own or guarantee five trillion dollars in outstanding home mortgage debt and securities. They keep some loans, but resell others as mortgage-backed securities. These are held by central banks and other investors worldwide. As the housing and credit crisis deepened, Fannie and Freddie had trouble raising capital to cover bad loans. The government saw a risk to the financial system and worried the two companies would follow in the footsteps of other mortgage and lending sources and fall by the wayside.
Under the takeover, the federal government replaced the companies’ chief executives and shifted management control to their regulator, the Federal Housing Finance Agency. The government is authorized to take up to an 80 percent stake in the companies, review both Fannie’s and Freddie’s financial condition quarterly and inject money into the operations as needed. Also, as part of the rescue, the U.S. Department of Treasure plans to buy at least five billion dollars of Fannie and Freddie’s mortgage-backed securities. And it plan to buy up to one hundred billion dollars of preferred stock in each company.
The National Association of REALTORS supported the move. NAR president Richard F. Gaylord stated, “The plan will help restore confidence in the secondary mortgage market.”
The federal government’s takeover of the GSEs has caused a drop in mortgage rates in the short-term, which is good for home buyers, but REALTOR officials note the long-term outlook is too early to call. The California Association of REALTORS is worried the Treasury will change the mission the role of the GSEs. C.A.R. Executive Vice President Joel Singer said Fannie and Freddie have been a constant source of capital to mortgage lenders, providing the most optimal rate possible in both up and down markets.
“Without an institutionalized mortgage-backed securities market, mortgage capital will be less predictable and more expensive, and adjustable-rate mortgages and become the standard loan for home buyers, as could higher down payment requirements,” Singer explained. “The 30-year, fixed-rate mortgages as we know it will no longer be readily available for most home buyers and may effectively disappear. The result could be a dramatic decline in homeownership rates in California and across the nation.”
Describing these two institutions as having historically promoted homeownership and affordability, Singer warned, “For the GSEs to be eliminated in their present form, we could see for at least some period of time, a dramatic loss in mortgage capital, and that loss would dramatically reduce the volume of sales in the housing market, and affect the economy adversely in a very significant way.”
As the leading advocates for homeownership and housing issues, NAR, C.A.R. and SILVAR believe the mission of these two government-sponsored enterprises is crucial to the economy to make fair and affordable mortgages available to homeowners and home buyers, and that mission must not be interrupted.
“The federal government needs to reiterate its continued support for these institutions in their current form and the public should keep involved in the public policy process and urge their elected representatives to support Fannie and Freddie,” Singer said.
At press time, a massive $700 billion bill was being fast-tracked through Congress to give the U.S. government the authority to buy bad mortgages off the books of Wall Street firms in order to stem the financial crisis in the banking sector and on Wall Street. NAR Chief Economist Lawrence Yun said the outcome of this other bailout will all depend on the price the Treasury buys these debts and on future mortgage default rates.
“The return on the taxpayer gamble depends on two things: at what price the Treasury will buy bad mortgage debts off Wall Street books, and the future mortgage default rate. The default rate, in turn will depend on the housing market recover. Knowingly or not, the 75 million homeowners and 100 million taxpayers have now become the key stakeholders on the side of housing market recovery.”
What do the bailouts mean for REALTORS and consumers? According to Yun’s analysis:
- Mortgage lending criteria will not be as overly stringent. Mortgage rates will remain low.
- Home sales will pick up.
- The Treasury has made a bet with taxpayer funds, which could turn a loss or profit.
~Silicon Valley REALTOR
Fannie, Freddie Bailout to Help Mortgage Consumers October 4, 2008
Posted by Chris Zanger in Bay Area News, Campbell, Campbell Real Estate, Economics, Foreclosure, Housing, Investments, Loans, Los Gatos, Market, Real Estate, Real Estate Expert, Santa Clara County Real Estate, Saratoga, The Zanger Team, Uncategorized.add a comment
The government takeover of Fannie Mae and Freddie Mac is designed to put downward pressure on mortgage rates and to ensure that home loans remain available. Officials say the government has three objectives: “market stability, mortgage availability, and taxpayer protection.”
Impact of Fannie & Freddie takeover will:
- Lower Mortgage Rates: An economist with the Center for Economic Policy Research believes, “the immediate impact will be somewhat positive. You’ll see some drop in mortgage rates because it’ll decrease the uncertainty.” It won’t be a huge decrease, maybe as small as one-hundredth of a percentage point, but it’s something.
- Increase Availability of Financing for Consumers with Good Credit: Fannie and Freddie guarantee the mortgage-backed securities that they issue, and those securities are deemed quite as safe as investments. Not as safe as Treasury notes, but relatively safe. Fannie and Freddie are government-sponsored enterprises, and for decades have had implicit government backing. That backing is now explicit. Now that the Treasure will buy mortgage-backed securities, their prices should rise, yields drop-so mortgage rates should follow. The Department that run Fannie and Freddie describes this perfectly, “As the government-sponsored enterprises (GSE) have grappled with their difficulties, we’ve seen mortgage rate spreads to
Treasuries widen, making mortgages less affordable for homebuyers. While the GSEs are expected to moderately increase the size of their portfolios over the next 15 months through prudent mortgage purchases, complementary government efforts can aid mortgage affordability.
A Little Fall Maintenance Eliminates Winter Headaches
Fall is a great time to finish any necessary maintenance to your home and yard. You’ll want to consider a few useful maintenance tips before settling in for the winter in from of that cozy fireplace.
- Fall Yard Cleanup Starts with Clean Gutters: Dirty, clogged, gutters can cause a lot of problems during the winter months including flooding and damage to your foundation and landscaping. Use a blower to blow leaves and debris out of the gutter, then clean out where the gutter meets the downspouts. Once gutters are clear of debris, take a hose and pour water into the gutter. Watch where the water goes…make sure it doesn’t pool at the foundation of the home as it could cause damage.
- Trees and Yardwork: Trimming back your trees during the Fall decrease your chances of any potential damage to your home from fallen branches during a storm. It will also mean less leaves to rake up. Since roots are actually growing deeper to prepare for winter, now is a good time to fertilize and reseed your lawn.
- House Maintenance: Install weather stripping or caulking around windows and doors to prevent drafts and lower heating bills. Replace the filter in your furnace as well as consider having the heating ducts cleaned. Doing so will not only better your heating efficiency, but will reduce household dust to provide relief to those with respiratory problems. Schedule your fireplace for inspection and cleaning to prevent dangerous chimney fires.
~Homeowner’s News (October 2008)
Rental to Residence Change September 30, 2008
Posted by Chris Zanger in Bay Area News, Campbell, Campbell Real Estate, Economics, Housing, Investments, Los Gatos, Market, Real Estate, Real Estate Expert, Santa Clara County Real Estate, Saratoga, The Zanger Team, Uncategorized.add a comment
I wrote a month ago about the Housing Economic Recovery Act of 2008. The main purpose of this new law was to help ease our housing crunch by providing more liquidity to the lending market and help some homeowners in bad loans. The jury is out as to how successful this law will be. Whenever a law like this hits the books, the question usually surfaces, “How are we going to pay for this?” Often you will find in the fine print that some other pet program or loophole will be closed.
To that end, there is a very popular tax strategy that is about to go away. In the past, investors with large gains in rental properties would move into the properties (or do a 1031 from a multiple-unit property into a single family home and then move in after a “reasonable” amount of time) and claim them as their principle residence. Then two years later, they would sell the property and be able to have $250,000 to $500,000 in gain and be tax free. This would work even if the gain didn’t happen during the time they lived in the property as their principal residence.
Starting next year, investors that implement this strategy will have to pro-rate gain based on the percentage of time the property was owned as an investment vs. time owned as a principal residence. I don’t have the space in the column to get into the finer points, or even examples of this change. But what’s important for you to know is that if you had planned on using this strategy to lower you capital gains taxes on selling a rental property by moving into it, you need to contact your tax professional ASAP to see how this change may impact your plans. The difference for an investor could be in the hundreds of thousands of dollars in gain moving from non-taxable to taxable, so this is a MAJOR change. [Please see a tax professional for specifics to your situation.]
~Realty Times
Government’s Newest Interested Free Loan: $7,500 Credit for First-Time Homebuyers September 30, 2008
Posted by Chris Zanger in Bay Area News, Campbell Real Estate, Economics, Housing, Investments, Real Estate, Real Estate Expert, Santa Clara County Real Estate, The Zanger Team, Uncategorized.add a comment
The single largest provision in the $15.1 billion package of housing tax incentives in recently enacted Housing Assistance Tax Act of 2008 (the “Housing Act”) is a measure allowing individuals buying their first home to take a tax credit of up to $75,000 of the purchase price. Qualified homebuyers can subtract the credit amount from their federal income tax when they buy a home and even get a refund if the credit exceeds the tax. However, they are then required to pay the credit back over 15 years. The result is that the credit resembles an interest-free loan that must be repaid to the government. Here are the details of the new credit.
- The home must be in the U.S. and the taxpayer’s principle residence. Tax payer and spouse, if married, must not have owned another principle residence within the previous 3-year period.
- The home must have been purchased from April 9, 2008 through June 30, 2009. Purchases from related persons, acquisition by gift, or inheritance do not qualify, nor do houses constructed by taxpayers.
- A special rule allows taxpayers who purchase a principle residence in the first 6 months of 2009 to treat the purchase as if made on December 31, 2008, allowing a taxpayer to claim the credit for 2008 rather than 2009.
- The credit is equal to 10% of the price for the home, to a maximum credit applies to both individuals and married couples filling a joint return. A married individual filling separately can claim a maximum credit of $3, 750.
- The credit is phased out for individual taxpayers with modified adjusted gross income (AGI) between $75,000 and $95,000 ($150,000 & $17,000 for joint filers) the year of purchase. Taxpayers with modified AGI over $95,000 ($170,000 joint) cannot claim the credit.
- The credit is refundable, that is, households with income too low to owe income tax can benefit from it.
- In the second year after purchase, taxpayers who took the credit must start paying it back in equal installments over 15 years, at no interest. (For example, a first-time homebuyer purchases a home for $100,000 this coming December and claims $75,000 credit on his 2008 tax return. He would be required to pay back $500 [1/15 of the credit] on his 2010 tax return and for the subsequent 14 years, through 2024.)
- If the taxpayer sells the house, or the home ceases to be the primary residence, before total repayment of the credit, any remaining credit is due on the tax return for the year in which the home is sold or ceases to be primary residence. But, if the home is sold at a loss to an unrelated person the remaining credit is forgiven to the extent of the loss.
- No credit is allowed if: the taxpayer was ever entitled to a D.C. homebuyer credit, the home purchase was financed through tax exempt mortgage revenue bonds, the taxpayer is a non-resident alien, or the taxpayer disposes of the residence (or it ceases to be the principle residence) in the year of purchase.
~Realty Times