Only 2 Months Remain!

For certain members of the military, and for certain federal employees, there’s just 2 months remaining to get use the federal home buyer tax credit.

Eligible persons include members of the uniformed services, members of the Foreign Service, and intelligence community employees who served at least 90 days of qualified, extended duty service outside of the United States between January 1, 2009 and April 30, 2010.

Spouses of persons meeting the above criteria are eligible as well.

The federal home buyer tax credit ranges up to $8,000 for first-time home buyers, and up to $6,500 for existing homeowners. Existing homeowners must have lived in their “main home” through 5 of the last 8 years to be eligible.

Claiming the federal tax credit is a two-step process. First, eligible persons must be under contract for a new home on or before April 30, 2011.  The home’s closing must then occur on or before June 30, 2011.

IRS Does Not Make Date Exceptions

Furthermore, both the buyer(s) and the subject property must meet certain minimum eligibility requirements:

• The home may not be purchased from a parent, spouse, or child
• The home may not be purchased from an entity in which the seller is a majority owner
• The home may not be acquired by gift or inheritance
• Each buyer must meet tax credit eligibility standards
• The home sale price may not exceed $800,000
• Buyers may not earn more than $125,000 as single-filers; $225,000 as joint-filers

The complete program description is published on the IRS website.

Another important note is that the IRS is giving eligible buyers a tax credit as opposed to a deduction.  This means that a taxpayer qualifying for the full $8,000, and for whom the “normal” 2011 federal tax liability is $8,000, will have zero federal tax liability in 2011.

For additional information regarding your tax credit eligibility, call an accountant. Speaking with a tax professional is often worth the cost.

If you or someone you know is considering using the tax credit as a military person, please let me know!  I’d love to help them out (all of my contact information is on the top right hand corner).

Headlines Can Be Misleading at Times

This week gave us a terrific example of the common theme.

On Wednesday, the US Commerce Department released its Housing Starts data for January 2010. The data showed starts at a 6-month high.

A “Housing Start” is a privately-owned home on which construction has started.

Some of the Headlines on the Housing Starts story included:

• U.S. Housing Starts Hit 6-Month High (Reuters)
• U.S. Economy Receives Home Building Boost (Shepparton)
• Housing Starts Post Sharp Rebound (ABC)

Based to the headlines, the housing market looks ready for rapid growth through the Spring Market.

The real story, though is that although Housing Starts increased by close to three percent last month, the growth is mostly attributed to buildings with five or more units.  This includes apartments and condominiums — a sector of the housing market that’s notoriously volatile.  Sort of unfair, right?

Home Sales Expected to Spike in March & April

If we isolate Housing Starts for just single-family homes, we see that starts grew by just 7,000 units last month.  More interestingly, they have failed to break a range since June 2009.  January’s tally is slightly below the 8-month average.

Even more interesting (lots of interesting, right?!) than the Housing Starts, is the Commerce Department’s accompanying data for Housing Permits. After a five-month plateau that ended in November, Housing Permits posted multi-year highs for the second straight month.

According to the US Census Bureau, 82% of homes start construction within sixty days of permit-issuance.

In my opinion, one major reason permits are up is that home builders want to capitalize on the federal homebuyer tax credit’s short time frame.  Sales are expected to spike in March and April and more homes will become available to deal with that demand.  Home buyers in Urbandale should shop carefully, but with an eye on the clock.

As the tax credit’s April 30, 2010 deadline approaches, competition for homes may be fierce.

If you’re considering making a home purchase and need a loan, I’d be happy to throw my hat in the race.  I respond to email very quickly, and, our rates are really good.