IRS Publishes New Homebuyer Tax Credit Form 5405

Barbara Novitsky, ABR,ASP,CRS,e-PRO,GREEN, GRI,SFR,SRES,REALTOR

FROM IRS TAX-TIP IR-2010-006:  The Internal Revenue Service today released the new form that eligible homebuyers need to claim the first-time homebuyer credit this tax season and announced processing of those tax returns will begin in mid-February. The IRS also announced new documentation requirements to deter fraud related to the first-time homebuyer credit.

The new form and instructions follow major changes in November to the homebuyer credit by the Worker, Homeownership, and Business Assistance Act of 2009. The new law extended the credit to a broader range of home purchasers and added new documentation requirements to deter fraud and ensure taxpayers properly claim the credit.

With the release of Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, and the related instructions, eligible homebuyers can now start to file their 2009 tax returns. Taxpayers claiming the homebuyer credit must file a paper tax return because of the added documentation requirements.

The IRS expects to start processing 2009 tax returns claiming the homebuyer credit in mid-February after it completes the updating and testing of systems to meet the law’s new requirements. The updates allow the IRS to put in place critical systemic checks to deter fraud related to the homebuyer credit.

Some of these early taxpayers claiming the homebuyer credit may see tax refunds take an additional two to three weeks.

In addition to filling out a Form 5405, all eligible homebuyers must include with their 2009 tax returns one of the following documents in order to receive the credit:

• A copy of the settlement statement showing all parties’ names and signatures, property address, sales price, and date of purchase. Normally, this is the properly executed Form HUD-1, Settlement Statement.
• For mobile home purchasers who are unable to get a settlement statement, a copy of the executed retail sales contract showing all parties’ names and signatures, property address, purchase price and date of purchase.
• For a newly constructed home where a settlement statement is not available, a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.

In addition, the new law allows a long-time resident of the same main home to claim the homebuyer credit if they purchase a new principal residence. To qualify, eligible taxpayers must show that they lived in their old homes for a five-consecutive-year period during the eight-year period ending on the purchase date of the new home. The IRS has stepped up compliance checks involving the homebuyer credit, and it encouraged homebuyers claiming this part of the credit to avoid refund delays by attaching documentation covering the five-consecutive-year period:

• Form 1098, Mortgage Interest Statement, or substitute mortgage interest statements,
• Property tax records or
• Homeowner’s insurance records.

The IRS also reminded homebuyers that the new documentation requirements mean that taxpayers claiming the credit cannot file electronically and must file paper returns. Taxpayers can still use IRS Free File to prepare their returns, but the returns must be printed out and sent to the IRS, along with all required documentation.

Start 2010 Off Being Green

Barbara Novitsky, ABR,ASP,CRS,e-PRO,GREEN, GRI,SFR,SRES,REALTOR

2009 is all but finished and 2010 is around the corner.  If you haven’t realized it yet, 2010 is the start of a whole new decade.  Yes, a brand new 10 year period for you to make an impact and start Green Living. What a terrific New Year’s resolution!

Remember the following key words:

- Reduce

- Reuse

- Recycle

I extend my very best wishes to everyone for a wonderful and joyous Happy New Year 2010 and start of a new decade.

Make Your Property More “Appealing”?

Barbara Novitsky, ABR,ASP,CRS,e-PRO,GREEN, GRI,SFR,SRES,REALTOR

2009 is about to come to an end and it’s still not too late for you to decide if your property is “Appealing”.

Every year, thousands of homeowners fail to consider a money-saving opportunity only presented in times of economic downturn.  Well, it’s still not to late to consider submitting a Petition to Review for your property tax assessment for 2010.  You have until January 1 to get your appeal filed.

As home prices have declined, tax assessments have not because they are done on a three-year cycle.  By default, assessments rise by a rate determined at the time of the three-year cycle.

This year, the number of appeals have increased from approximately 5,200 to more than 15,000.  Why?  It’s simple.  People want to have their property value assessed based on current market conditions.

Remember, July 1 brings a new property tax bill.  You have until January 1 to file an appeal that may lower your taxes.

You have the option to request a hearing or simply to ask the State to reconsider and take anohter look at your assessment.  The State may not agree with lowering your assessment, but it cannot rise based on the appeal. 

Much more information is available at the following location:  www.dat.state.md.us/sdatweb/appeal.html

Don’t forget, on January 1 it’s too late to impact your July 1 tax bill. 

Short Sales and Foreclosures – I Can Help

Barbara Novitsky, ABR,ASP,CRS,e-PRO,GREEN, GRI,SFR,SRES,REALTOR

I’ve recently earned the nationally recognized Short Sales and Foreclosure Resource certification. The National Association of REALTORS^® offers the SFR certification to REALTORS^® who want to help both buyers and sellers navigate these complicated transactions, as demand for professional expertise with distressed sales grows.

According to a recent NAR survey, nearly one-third of all existing homes sold recently were either short sales or foreclosures.  For many real estate professionals, short sales and foreclosures are the new “traditional” transaction.  REALTORS^® who have earned the SFR certification know how to help sellers maneuver the complexities of short sales as well as help buyers pursue short sale and foreclosure opportunities.

“As leading advocates for homeownership, REALTORS^® believe that any family that loses its home to foreclosure is one family too many, but unfortunately, there are situations in which people just cannot afford to keep their homes, and a foreclosure or a short sale results,” said 2009 NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth. “Foreclosures and short sales can offer opportunities for home buyers and benefit the larger community, as well, but it’s extremely important to have the help of a real estate professional like a REALTOR^® who has earned the SFR certification for these kinds of purchases.”

The certification program includes training on how to qualify sellers for short sales, negotiate with lenders, protect buyers, and limit risk, and provides resources to help REALTORS^® stay current on national and state-specific information as the market for these distressed properties evolves.

Expanded First Time Homebuyer Credit for 2010

Barbara Novitsky, ABR,ASP,CRS,e-PRO, GREEN,GRI,SRES,REALTOR

I hope you have seen the news concerning recent action taken by both the Congressional and Executive branches of our Government.

Congress has decided to extend the First Time Home Buyer Credit.  With this extension, they have added a new credit allowing you a $6,500 refund if you owned and occupied a primary residence for 5 of the last 8 years and are now purchasing a different home. 

To take advantage of the new credit, you must contract for your new home by April 30, 2010 and must close on it no later than June 30, 2010. 

Maximum income limits have also increased.  The tax credit starts to phase out for single filers at $125,000 and $225,000 for married couples.

Also the purchase price of the new home may not exceed $800,000.

So, there’s help on the horizin for those of you who may have thought you were plain out of luck with selling and buying.  It looks like your wishes have come true.

I have more specific information on the tax credit for anyone who wishes to receive it.  Just give me a call or send me an Email.

Have You Heard of Maryland’s Green Building Institute or Enviro-Center?

Barbara Novitsky, ABR,ASP,CRS,e-PRO, GREEN,GRI,SRES,REALTOR

As the first Howard County woman Realtor to earn the National Association of Realtors GREEN Real Estate Designation, I make it my business to to stay in touch with Maryland’s Green movement.

Many people ask me where they can learn more about Green Real Estate, Green Mortgages and how they can save money on energy costs.

There’s a truly wonderful “Hidden Resource” located in Howard County, where Green Real Estate is taken quite seriously.  I know because I volunteer my time there.

It’s called the Green Building Institute and it’s in Jessup, Maryland at the Enviro-Center located at 7761 Waterloo Road.  This is where Green gets real and it has been highlighted on Channel 4.

Check out this Channel 4 NBC TV story:

http://www.youtube.com/watch?v=GJuuPwdV260&feature=player_embedded

If you want to know more about what it means to be Green, there are plenty of great, inexpensive courses that will provide you with a plethora of information.  The Institute is all about helping everyone, whether citizens, homeowners, builders or businesses.  There’s something special for everybody.

It’s also a fascinating place to tour and well worth your time.  You won’t believe how many innovative Green ideas have been implemented at the Enviro-Center.

Check out the Green Building Institute’s web site at:  www.GreenBuildingInstitute.org.

Interested in learning more about the Enviro-Center?  Here is an overview video:

http://www.youtube.com/watch?v=9oCjTjhRjsc&feature=related

Have a Green Day!

55+ Housing: What Builders are Building and Buyers Want

Barbara Novitsky, ABR,ASP,CRS,e-PRO, GREEN,GRI,SRES,REALTOR

Home builders are now seriously catering to the Boomer generation, representing a high-growth buying population.  Builders are adding many special features to make later life experience more pleasant for those planning to stay in place for the long-term.

A recent survey of 1,522 households in the Boomer age group was conducted by the Mature Market Institute (MMI) and their report is dated September 2009.  It is available for viewing here:

http://www.metlife.com/assets/cao/mmi/publications/studies/mmi-55+-builderes-buyers-beyond.pdf

It’s not clear that the respondents fully appreciated the many “Age-in-Place” features that builders are proactively putting into new homes.  Many want a home the same size as they currently have, bucking conventional wisdom.

If you are, or know someone, in the Boomer Generation planning to sell an existing home to move into a new retirement home, this report is worth reading.

The things Boomers want are surely going to be showing up in many new builder communities; especially, in 55+ developments.

IRS Announces New Materials Available to Promote Awareness of Recovery Act Tax Benefits

Barbara Novitsky, ABR,ASP,CRS,e-PRO, GREEN,GRI,SRES,REALTOR

Ignorance of the law is no excuse.  How many times have you heard that phrase mentioned?  Well, I’m not pulling you over to give you a ticket, so don’t fear.

To be informed is to be empowered!  Let me help empower you.

The IRS has issued new materials to help Citizens understand the Recovert Act Tax Benefits and some of those benefits are real estate related (First-time Homebuyer and Energy Credits).

Here’s a bit of information from IRS Newswire IR-2009-082:

WASHINGTON — As part of a larger effort to increase the awareness and use of tax benefits available through the American Recovery and Reinvestment Act (Recovery Act), the Internal Revenue Service today announced the availability of a vast array of products that help explain several tax benefits currently available to American Families.

With time running out to qualify for some of the Recovery benefits, the IRS has unveiled new YouTube videos, radio public service announcements (PSAs) and multi-lingual informational flyers that provide basic information for taxpayers. The items are available on IRS.gov for partner groups, the media, web sites and other organizations whose audience could benefit from the new tax changes.

These products are in addition to earlier IRS efforts on YouTube (www.youtube.com/irsvideos) and iTunes to increase public awareness about the tax credits. The IRS.gov official web site also contains links and complete information about ARRA at www.irs.gov/recovery. The PSAs are in English and Spanish in either 30-second or 60-second formats. The flyers and posters are in English, Spanish, Chinese, Korean, Russian and Vietnamese.

Topics covered include:

• The first-time homebuyer credit which provides a maximum $8,000 tax credit to people who meet eligibility requirements and complete the purchase of their homes before December 1;
• The American Opportunity Credit expands education tax credits to $2,500 for tuition and a change in 529 plans allows for the purchase of computers for college use;
• The energy credit expands to a maximum of $1,500 for certain energy-saving upgrades;
• A new deduction for the sales or excises taxes paid on the purchase price of new vehicles;
• The Making Work Pay tax credit, which many American workers received in April through reduced tax withholding in their paychecks. The Making Work Pay credit is $400 for single taxpayers and $800 for married taxpayers who meet certain income guidelines. However, some people, such as married spouses, workers with two jobs, pensioners, some Social Security recipients and dependents, should check their tax withholding to ensure they are not having too little withheld. 

What’s Your FICO and How Can You Improve It?

Barbara Novitsky, ABR,ASP,CRS,e-PRO, GREEN,GRI,SRES,REALTOR

I’m no accountant and don’t play one on TV; however, I do pay attention to things that may impact my credit.

The most commonly used credit scoring system is known as FICO and it ranges from a low of 300 to a maximum of 850.  The higher, the better.

Today, you need a FICO score about 50 points higher to receive the same credit treatment you got just two years ago.  The economic environment has changed and I’m sure that’s not news to you.

I recommend reading a very good CNN Money article called “Winning at the Credit Scoring Game“.   It’s available online at:

http://money.cnn.com/2009/08/24/pf/credit_score.moneymag/index.htm

After reading this very important explanation of FICO and the things that can positively or negatively impact it, be sure to focus on your specific situation.

A good FICO score brings with it many benefits; especially, when you need a loan.  It’s never too late to improve your FICO score.  As Nike says “Just Do It”.

Save Energy in Your Kitchen

Barbara Novitsky, ABR,ASP,CRS,e-PRO, GREEN,GRI,SRES,REALTOR

Kitchens can be an important room in which to save energy.  Think about it.  We use our Kitchens every day and anything we can do to save a small amount of energy there mounts up over time.  Think of it as “compounding interest”.

So what can you do to start saving energy in your Kitchen?

• Move the 32 degree refigerator setting up to between 35-38.  This allows food to stay sufficiently chilled without wasting energy.
• Change your over-the-sink light from incandescent to CFL or LED.
• Use convection cooking more.  Convection cooking provides a 25-30% faster cooking time.
• Instead of running your dishwasher during the day, try running it during non-peak electricity hours.  If you have a timer setting, engage the timer and set it to come on after hours.
• Consider changing the way you boil foods such as potatoes, corn or pasta.  Bring the water to a boil, put a lid on your pot and then switch to “passive boiling”.  Water stays hot long after the burner is off.
• Don’t let the water in your sink run while you visit other Kitchen areas, such as going to the refrigerator and back.

Of course, you can do more, but the above steps are a good start to becoming more energy conscious in the Kitchen.  The more you do, the lower your energy footprint becomes.