HOT OFF THE PRESS!

The US Department of Housing and Urban Development has released a letter today regarding all eligible for the First Time Home buyer Tax Credit of $8,000 as defined in The American Recovery and Reinvestment Act of 2009 (Recovery Act).

The letter goes on to give information on how the credit works and the latest update, per FHA defining its position, allowing it to be used towards the downpayment requirement for a home. This is achieved through several different ways – through a secondary lien on a property for the amount of the credit, this would mean that when the borrower received their credit check they use it to pay off the secondary lien. Another method discussed is the Purchase of a Tax Credit – this means that an entity can purchase the credit (subject to regulated fees and conditions) – this entity could be a local government organization, Federal or State level organization or private company. FHA will carry out strict due diligence on every organization.

This letter is of the greatest importance as statistics show that in 2008, 41% of all home purchases were made by first time homebuyers. In the first quarter of 2009, that number was 53% (according to NAR).

These new guidelines are definitely welcome allowing first time home buyers to take advantage of the credit in the most flexible way. Additionally, this document clears up any uncertainty and creates a structure to deal with the process with checks and balances.

Make sure to read a copy of the letter here.

We will bring you more detail as it is released!

Click here to search Ann Arbor Real Estate using our complimentary Ann Arbor Real Estate MLS Search service. Alternatively please contact Kathy Toth and the team if you need more specific assistance in your Ann Arbor Real Estate needs.

Ann Arbor Real Estate Podcast & $7500 Buyer Credit Update

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January 2009

This month’s edition covers Ann Arbor real estate market activity and then we’ll discuss recent market trends and strategies for getting the best loan possible.

The economic Stimulus Bills in the House and Senate were marked up yesterday to delete the repayment provisions of the First Time Buyer Credit!  This makes it a $7,500 gift from Uncle Sam!  Based on some calculations I ran yesterday, this means that using FHA financing, Uncle Sam covers the entire down payment on homes up to $215,000!   The Senate bill also extends the termination date out until September, 2009.  Find out more at our Buyer Seminar Feb 10th.  We look forward to helping more of our first time Buyers close and take advantage of this.  Please call if you have any questions. ..

Related Links
The Ann Arbor Real Estate Podcast | Click here
Visit our website to listen to previous podcasts

Loans, Mortgages and Finance Options | Click here
Do some research to find the BEST loan

Current Local Market Conditions | Click here
See what is going on in the Ann Arbor Market

Update: $7500Tax Credit is turning into a gift from Uncle Sam. This is a significant piece of regulation to boost the housing market, which has been signed into law by the president, clearly now is a time to consider buying, Ann Arbor Real Estate. Usually the bottom hits when properties at the low end of the market start moving. In this bill there are several initiatives to do just that.  When first time buyers enter the market, everything else moves up the ladder. This bill will now encourage lenders to make loans, which in my opinion has been the single most important reason for the slow recovery, the availability of credit. Many, many deals in the last few months have fallen apart because borrowers, even really good borrowers with excellent credit, etc, could not get loans.

Call our team, if you’re interested in Ann Arbor Michigan Real Estate or come to our

First Time Home Buyer Seminar on:

Feb 10th at 6:30 PM.

Call Vicki at 734-216-2172 for details.

Provisions of Housing-Mortgage Relief bill signed into law

Gives the Federal Housing Administration $300 billion in new lending authority and relaxes standards to provide affordable, fixed-rate mortgages to an estimated 400,000 debt-ridden homeowners. Any losses would be covered by an affordable housing fund financed by Fannie Mae and Freddie Mac, the government-sponsored companies that finance mortgages.

Here’s some great news for the thousands of real estate investors and brokers who use “Section 1031″ (ten thirty-one) tax-deferred real exchanges every year: Congress has backed off its latest plan to narrow the definition of “like kind” for real estate swaps.

That’s important because under current tax law, real estate investors have broad flexibility in choosing properties and structuring exchanges. For example, they can exchange a rental house for farmland, an apartment building for a commercial shopping strip. They can even exchange office buildings for mineral rights.

Given the tight statutory timetables to choose qualified properties for exchanges, that flexibility can be crucial.

Other types of investment assets, by contrast, get much stricter treatment under the tax code — and that difference in treatment opens the door to periodic attempts by green-eyeshade tax reformers on Capitol Hill to raise federal revenues by cutting down the number of eligible real estate exchanges.

If you could only swap a rental condo for another rental condo, cornfields for cornfields or commercial buildings for commercial buildings, there’d be a lot fewer exchanges every year — and probably a lot more IRS audits of taxpayers to make sure the properties swapped met all the “like kind” requirements.

So when tax reformers tucked away a tiny, technical amendment deep inside the massive federal farm bill pending in Congress, they apparently hoped they could sneak it through with nobody looking. But instead, alarm bells went off among real estate lobbyists who get paid to read through thousand-page bills like the farm legislation to make sure there are no unpleasant surprises lurking for real estate.

That’s precisely what they found. The tax reformers had inserted a provision that would have only affected only certain agricultural property exchanges by narrowing the window for what constitutes “like kind.”

But any restriction on “like kind” for real estate would be the proverbial “camel’s nose in the tent.” It would open the door to still further revenue-driven restrictions that could seriously limit the utility of tax-deferred exchanges for all real estate owners.

Linda Goold, chief tax lobbyist for the National Association of Realtors and a leader in the effort to get the 1031 amendment dropped from the final legislation approved by Congress, confirmed the successful deletion. In comments to Realty Times earlier this week, she said:

“Yes, we killed that obnoxious farm bill 1031 provision. (And) it felt good, I might add.”

Real estate investors nationwide should share that sentiment.

Written by Kenneth R. Harney

Related Links
Real Estate Update
            For more information and articles from our July 2008 edition.

Buyer’s Special Reports
           Visit our website for much more useful information for home buyers.

Seller’s Special Reports
            Visit our website for much more useful information for home sellers.

Search all listings in Michigan with pictures and tours…Free!

Kathy Toth & Team: Ann Arbor Area Real Estate Experts

www.KathyToth.com

Keller Williams Realty

What are the Realities and Pitfalls of Renting in Michigan?

With slower home sales in the Ann Arbor Real Estate market, significant numbers of sellers are choosing to rent out the homes they truly want to sell. Before becoming a landlord, people need to be aware of the realities and pitfalls.

To determine market rent, you can research what other similar properties are commanding in the area.  Sellers/Landlords need to know what the monthly costs are.  Know the principal, interest, insurance and property taxes.  Consider any rise in property taxes that may ensue by not being a primary homestead.  (For more detailed information on the “Homestead Tax” follow this link.)  There are other costs they may incur as a result of vacancy, repairs, utilities, legal, accounting, etc.  Try to cover your outflow.

With each tenant comes a story, make sure you have a credit report, application and lease for review before wasting your time in the interview.

A standard 5 percent is used as a cost figure for vacancy rates.  You will also need the advice of a CPA and an attorney.  I suggest the latter before entering into a contract with a tenant.  It is wise to have the attorney review the lease before it is signed and perhaps prepare the lease so it is complete with all occupants’ names.  Do you have a water softener that requires salt?  Who mows the grass?  What happens if the grass is not mowed?  Plan on having a cushion for late pays and rent collection delays.

Landlords should take time stamped photos of the property before turning it over to the tenants to establish condition.  They should also consult the insurance agent to change coverage from complete contents to facility coverage.

Landlords might buy a home warranty and split the deductible with the tenant for repair items. They should have access to local vendors (take a local phone book) for plumbing leaks, etc.

I always suggest that the Landlord pretend Mr. and Mrs. Satan will occupy the home and anything better than that should be a bonus.  Consider smokers and pets.  What will you allow?  What is the lease term?  Will you be putting the house back up on the market in Spring selling season?  Will the tenants cooperate with showings?  Will the lease change to a month to month so you can actually sell to a new owner and terminate the lease with ease?

As an Ann Arbor Real Estate market investor, I have unique business perspective that provides insight to many clients. Renting is certainly advisable in some situations, but before executing this strategy, understanding the total package and ultimate home selling goals is important.

Related Links
What is the POP UP TAX?        
           And who does it benefit?

How Can Michigan Home Sellers Avoid State Transfer Tax?
          A seller may seek an exemption from paying the state transfer tax if specific criteria 
          are met.

Search all listings in Michigan with pictures and tours…Free!

Kathy Toth & Team: Ann Arbor Area Real Estate Experts

www.KathyToth.com

Keller Williams Realty

Watch Catherine McClary, Washtenaw County Treasurer youtube video explain

Attorney General Mike Cox issued an opinion about the State Transfer Tax
Exemption that may help troubled home sellers in Michigan. The full act is
included at the very bottom of this blog. The point is that an exemption
from the requirement imposed by the State Real Estate Transfer Tax to pay
state real estate transfer taxes upon the transfer or sale of real property
may be claimed if, on the date a principal residence is transferred, its
state equalized value is less than or equal to its state equalized value on
the date the owner purchased or acquired the parcel and the property is sold
for not more than its true cash value at the time of sale.

Exemption “t”, as designated in the Michigan Transfer Tax Act, sets forth
that a seller may seek an exemption from paying the state transfer tax if
the following criteria are met:

1. The property must have been occupied as a principle residence,
classified as homestead property;
2. The property’s State Equalized Value for the calendar year in which
the transfer is made must be less than or equal to the property’s SEV for
the calendar year in which the transferor acquired the property; and
3. The property cannot be transferred for consideration exceeding its
true cash value for the year of the transfer.

Our Ann Arbor Real Estate market is hopefully nearing bottom and in an
effort to lessen the negative effects on Sellers, please get the word out
that there is some relief from the State (not the County) in this act.

Please take a minute to watch our Washtenaw County Treasurer, Catherine McClary
explain the effect in the YouTube video above.

We are helping our sellers interpret qualification by using this
Work Sheet supplied by Liberty Title Company included below. And we have helped several sellers avoid over paying.  Is your agent making sure to save you every penny?

Click Image to see in Full Screen

Opinion No. 7214 April 3, 2008 from Mike Cox

Click Image to view in Full Screen

Will a temporary freeze on the MI "pop-up" tax help fuel the market?

Recently the Senate passed several bills that would provide tax credits to help offset increasing Michigan property taxes.  Property taxes can increase dramatically upon scheduled reassessment.  Buyers could avoid this “pop-up” tax by purchasing a primary residence between April 1, 2008 and January 1, 2011.  Last year the tax-free window created was 18-months in a bill drafted by the House of Representatives.  These two legislative entities are expected to collaborate in coming weeks to finalize the effort to carve something into Michigan history.

The Michigan Association of Realtors is looking forward to some simple solutions for the real estate consumer.  You shouldn’t have to be a tax expert to understand the benefits.  Real estate sales averages continue to be down somewhat – this in large part to foreclosed home discounts. There seems to be mixed reviews on the idea of a property tax moratorium.  Some believe people may become trapped in their existing homes while others think the initiative would help to move inventory and boost prices.  Still others believe the move wouldn’t affect the economy favorably either way.

Home builders are worried that the moratorium could hurt the sale of new homes as they wouldn’t receive any preferential tax treatment from the legislative committees.

In all, many are looking for bold tax reforms to bring Michigan to competitive national levels.  Do you have thoughts about the proposed moratorium?  Let us know by leaving a comment!

Search all listings in Michigan with pictures and tours…Free!

Kathy Toth & Team: Ann Arbor Area Real Estate Experts

www.KathyToth.com

Keller Williams Realty