Opportunities in the New Economic Stimulus Bill

From Diane Kennedy, DKTaxServices.com

This new Economic Stimulus Bill is a doozy! I counted over 50 business opportunities and tax saving strategies that anyone can use in its final version of over 1000 pages.

Join me on Sunday, February 22, 2009 at 11 am Pacific, Noon Mountain, 1 pm Central and 2 pm Eastern for a No Cost! teleseminar, “Opportunities in the New Economic Stimulus Bill“. Please send an email to Teleseminar@DKTaxServices.com to receive call in information.

I’ll go through specific strategies for business owners and investors, where the possible pitfalls are and how this new law will change how you want to file your 2008 tax return.

Remember the teleseminar is No Cost!

Opportunities in the New Economic Stimulus Bill Sunday, February 22, 2009

11 am Pacific, Noon Mountain, 1 pm Central and 2 pm Eastern

Register at Teleseminar@DKTaxServices.com

Warmly,

Diane Kennedy

P.S. Please don’t file your tax return until you learn what this bill could mean for you! Register today.

Some good from the Obama stimulus package

Well, the Obama stimulus package has been signed. Yes there is a ton of pork in there that our kids will have to pay for long after we are gone, but there is some good in it for the real estate market.

In the latest status report from the National Association of Realtors, Charles McMillian, 2009 NAR President, listed some of the achievements that are outlined in the package are:

1) the loan limits will be raised to $727,000 in high cost areas
2) the tax credit will be raised to $8,000 with NO payback [a true credit]
3) interest rates have come down 125-150 basis points
4) the bill has over 50 billion in it for foreclosure mitigation, with Geitners Treasury plan signaling that the second half of TARP and TALF will be used to mitigate foreclosures through a government guarantee, drive down interest rates by buying another 200-300 billion of mortgage paper from the GSES's thereby freeing them up to do the same with new mortgages, and Fannie has just agreed to lift the cap of 4 investment properties eligible for loans and raise it to 10.

"In addition mortgage interest deductability, real estate tax deductability, and the $250,000/$500,000 cap gains exclusion (an overall package worth more than $100 billion and for some a very attractive funding source for their pet projects)."

The NAR will continue to study the specifics of the stimulus package as it relates to the housing market and I will try to keep you updated here.

I have written about the interest rates, $7500 credit and the foreclosure tidal wave that is crashing down on top of us but now is the time to learn how to surf. Only when we learn to get ontop of the trouble and help others out, will we also begin to profit from the greed and stupidity of the markets that got us into this mess.

Now is the time to buy property if it is at all possible and the deals we make today will be well worth it in the years to come. It is a Buyer's market and if we are careful in our research and preperation in looking for the right properties to buy, our purchases will pay off in the end.

Waiting for the rates to drop? Avoid this costly mistake.

Interest rates have been at historic lows for months. This is because the Fed has been buying Mortgage Backed Securities to fight off inflation and they will continue to do this as needed. The problem with this is that the Fed is buying 5.0% to 5.5% Bonds and the mortgage rates of these outstanding home loans are 6.0% to 6.5%. The loans that the Fed is buying are good loans that are likely to be paid back. Bonds and home loan rates have weakened and lost some ground in recent weeks.

I believe that if you have been sitting on the fence waiting to purchase or refinance, now is the time. Yes, another 1/4 of a point could save you $60/month, but think of it this way. If you refinance or purchase now, the savings that you will have over waiting another month or two could well be worth acting now verses waiting and taking the chance that the rates will indeed start to reverse and go upward, costing more money.

Today, the homeowner with a $220,000 mortgage could buy a larger or newer home with only a slight increase in payment, or refinance and save hundreds of dollars off their current mortgage payment whereas waiting until the summer, thinking the rates could keep falling, could end up costing hundreds of dollars.

Also, another thing to keep in memory is that the credit score needed to qualify for these great rates keeps going up making it harder for some buyers to qualify for a loan to get that bigger house.

Bottom line is NOW is the time to make that decision to buy or refinance that home. If you are selling to move up. think about making your asking price more attractive. Then you can get out sooner and a potential buyer will also be able to get into a house that they believe is a good deal.

Do I need to use a Realtor?

YES! You should always use a Realtor for Buying or Selling real estate for several very important reasons. An experienced Realtor understands the house buying and selling better than anyone else you could find. They will have up-to-date knowledge and values about the area you are looking to purchase houses in.

Another advantage of using an experienced Realtor, which many people overlook, is that you will be able to get access to new properties coming on the market before they are listed. This means you will be able to get a jump on your competition which can mean even greater profits or savings for you when were talking about buying property. A Realtor is able to help you put together the purchase deal and get through escrow, which can be a hassle sometimes. They can advise you on the selling price and when is the best time to market your new property. They know the good home inspectors, mortgage lenders and don't forget about the termite inspection. All these things you cannot put a price on.

A good Realtor is a great intermediary between the buyer and seller with no emotional ties to the property. This is a big plus when negotiating a selling price. They also understand the time line from contract to close and all the little things that need to be taken care of in the correct order.

Everyone knows a Realtor. Take your time and find a good Realtor that you can work with. Your relative may not be your best choice just because they are family. When it comes to selling houses, an experienced Realtor is a priceless commodity that can speed the process up for you and you will value all the input and time they will save you. Ask your friends, relatives, and other people you trust who would be a great fit for what you are doing. You can do it without a Realtor, but going it alone just to save 6% will end up costing you more time and money.

Who wants a $7500 tax credit?

The $7500 Tax Credit for first time home buyers authorized by The Housing and Recovery Act of 2008 will expire on July 1, 2009.

A first time home buyer (as defined by the IRS) is:
Neither spouse can have owned a primary residence in the last 36 months. This can include Homes, Townhouses, Condos, Mobile Homes and House Boats.
Income phaseouts to qualify for the entire amount are $75,000 for single filers and $150,000 for married filing joint. Partial credits are available up to $95,000 for single and $170,000 for married.
The home is purchased between April 9, 2008 and July 1, 2009

The tax credit is just that, a credit against the taxes owed the IRS not to exceed $7500. Basically it's an interest free loan. After the credit is claimed, beginning 2 years later your federal tax refund will be reduced by $500 per year for 15 years.

If you sell the house within the next 15 years, you must pay back the balance owed from the gain on the sale of the home. If the home is sold at a loss, the debt is canceled.

Always count the cost before committing. Check out all of the financing options before locking in on a specific mortgage. In essence, this is an interest free loan that has to be paid back.

You can find out more information by visiting http://www.federalhousingtaxcredit.com/