Nancy\’s Notes

Buyers who are considering the purchase of a condominium should inspect the health of the home owner™s association before they close.

The seller should provide the buyer all financial documents relating to the association in time for an attorney for the buyer to review them before closing.

Here™s some advice from Leonard Baron, professor of finance at San Diego State University, about the information that the seller should consider:

• Does the association budget include money for operating expenses such as water, lights, elevator maintenance, and landscaping?
• Is there extra money set aside in a reserve fund for long-term maintenance? If there is an outside reserve study, that should be provided. If not, there should be adequate money in the reserves right now to cover 50 percent of the estimated cost of repairs over the next 30 years.
• Do the condo™s expenses exceed revenues due to a high foreclosure rate or other reasons that owners™ debts go unpaid?
• If there is a shortfall, does the association have a plan besides cutting back on services for making it up?

Source: The Wall Street Journal, June Fletcher (10/17/2009)

Congress is considering expanding and extending the $8,000 first-time homebuyer tax credit, which expires Nov. 30.

More than 1.8 million home buyers will have used the credit by the end of November, including an estimated 355,000 who wouldn™t have bought a home without it, according to the National Association of REALTORS ® and other analysts.

Extending the credit through the end of 2010 and making it available to single filers earning up to $150,000 and joint filers earning up to $300,000 would cost an estimated $16.7 million. Some in Congress propose using unspent money from the $787 billion stimulus bill to pay for it.

Source: CNNMoney.com, Les Christie (10/14/2009)

The government is offering an $8,000 tax credit for first-time homebuyers – that is, folks who haven’t owned a home during the past three years. According to the plan, first-time homebuyers who purchase a home may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit.However, the program is scheduled to end soon. In fact, the Internal Revenue Service recently reminded potential first-time buyers that they must complete their first-time home purchases before December 1, 2009 to qualify for the special credit, which means the last day to close on a home and qualify for the credit is November 30, 2009. In other words, right now is the time to take advantage of this opportunity.Here’s some information to help you understand what the tax credit benefits are and who qualifies.Benefits of the Tax CreditIt’s important to remember that the $8,000 tax credit is just that… a tax credit. It’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if you were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, you would owe nothing.Better still, the incentive is refundable, which means you can receive a check for the credit even if you have little income tax liability. For example, if you’re liable for $4,000 in income tax, you can offset that $4,000 with half of the tax incentive… and still receive a check for the remaining $4,000!  

Bills to extend the maximum $8,000 tax credit for first-time home buyers, which expires Nov. 30, are pending in both the U.S. House and the Senate.

Sen. Christopher J. Dodd, a Connecticut Democrat and chairman of the Senate Banking, Housing, and Urban Affairs Committee, is co-sponsor of a bill with Georgia Republican Sen. Johnny Isakson that would raise the credit amount to a maximum of $15,000.

Senate Majority Leader Harry M. Reid of Nevada favors an extension of the current credit. He was quoted by the Las Vegas Sun saying, “It’s something we can get done.”

Odds are that the credit will be extended and broadened to cover all buyers next year, but the chances of the amount increasing aren’t as good, observers say.

Source: Washington Post Writers Group, Kenneth R. Harney (08/22/2009)

Effective June 15, 2009 Minnesota state law allows homeowners that have fallen behind on their mortgage payments to delay, or postpone,  the Foreclosure Sale (also known as the œSheriff™s Sale or “Sheriff’s Auction”) of their home by five months.    

Postponing the Foreclosure Sale gives you five more months to bring your mortgage current. The tradeoff – is that it also reduces the redemption period to five weeks.   (Standard MN redemption period for a foreclosure by advertisement is 6 months).

The Minnesota Home Ownership Center has created a fact sheet and sample affidavit to assist homeowners that might be interested in postponing their Foreclosure Sale.   The FAQ covers the basic steps that need to be taken in order to postpone the sale.
 http://www.hocmn.org/foreclosurepostponement.cfm

Before deciding to delay or postpone a Foreclosure Sale, homeowners should consult with a foreclosure specialist to understand the pros and cons of a postponement.   To find your local foreclosure specialist, click here.

Property tax Minnesota has two property tax refund programs. You may qualify for one or both, even if you haven™t qualified in previous years.

• Property tax refund eligibility requirements
• Homeowners refund
• Renters refund

If you are a property owner with questions about your property’s assessed value or tax, please contact your county assessor’s office for more information. Click here for a list of county web sites (from the Minnesota Web portal).

Forms and instructions are available from the department™s website at: http://www.taxes.state.mn.us/taxes/prop_refund/forms.shtml. You can request forms to be mailed to you by calling the department’s 24-hour forms order service: 651-296-4444 or 1-800-657-3676.

Filing due date is August 17, 2009. Returns can be filed up to a year after the due date. After that, you cannot claim a refund. The deadline for the 2008 return is August 16, 2010. The due date for the 2007 property tax return was August 15, 2008 but you have until August 17, 2009 to file.

This is time sensitive and you will need to move quickly.   The government is actually paying cash towards your new vehicle.   The money will run out fast.   This  is a federal program passed by Congress and signed into law by President Obama on June 24. The program is meant to encourage consumers to trade in older, less fuel-efficient vehicles for new vehicles that get better fuel economy by providing a credit worth up to $4,500. Go to http://www.cars.gov/how

The City of Minneapolis is offering a good product to help homebuyers in Minneapoliswith a relatively new program called Take Credit!   What the Take Credit! program offers is a federal income tax credit equal to 20% of the borrower™s annual mortgage interest paid and this credit is available to take for the life of the original loan.   This means that each year the borrower can receive this 20% credit toward their federal income taxes owed.  As an example, let™s assume that the borrower paid $8,000 in interest through the end of the year.   Normally they would put that $8,000 on Schedule A of their federal income tax return which then reduces their taxable income.   Now, if they go through the Take Credit! program and receive a certificate, they can then take 20% or $1,600 of that total mortgage interest paid as a direct deduction against their federal income taxes.  The remaining 80% or their interest goes on Schedule A to reduce their taxable income.  So why is this good?   Because as their personal income taxes are reducing, they can adjust their W-4 withholdings and have additional money on each paycheck.   This additional money provides them with more income to make their house payments.  So tell people you know and tell your friends who want to buy a home to go to www.cityliving.org and click on the Take Credit! tab for more information and a list of the participating lenders.  One last word, the best news of all is that this credit is in addition to the $8,000 federal income tax credit available to buyers purchasing before December 1, 2009.  

Mark S. AndersonSenior Contract Management SpecialistCity of MinneapolisCommunity Planning & Economic Development105 Fifth Avenue South, Suite 200Minneapolis, MN 55401-2534Office: (612) 673-5289Fax: (612) 673-5297Website:  www.ci.minneapolis.mn.us/CPED

Legislation introduced in Congress Wednesday would expand the tax credit now limited to first-time homebuyers to any purchaser of a home and increase the maximum available to $15,000.

The tax credit passed earlier this year is limited to $8,000 and has income caps.

U.S. Sen. Johnny Isakson, a Georgia Republican, introduced the legislation, and Senate Banking Committee Chair Christopher Dodd, a Connecticut Democrat, quickly stepped up to co-sponsor.

The National Association of REALTORS ® and the National Association of Home Builders have said they would like to see the tax credit improved.

Source: The Wall Street Journal, Jessica Holzer (06/10/2009)