NAR worked closely with Congressional leaders on both sides of the aisle to enact this important legislation. Extending the Tax Credit Closing deadline will help provide additional stability to real estate markets across the nation.

For additional information on the extension visit www.realtor.org/government_affairs 
 
Additionally, the United States Senate has passed the National Flood Insurance Program Extension Act of 2010 (H.R. 5569) an extension of the National Flood Insurance Program until September 30, 2010.  This will allow transactions to move forward.  The bill is retroactive and covers the lapse period
from June 1, 2010 to the date of enactment of the extension.

For more information on the flood insurance program visit www.realtor.org/government_affairs

I have one client dealing with an Eagle Idaho Short Sale that recently received a 1099-C for over $125,000!  If you are familiar with 1099’s… this is not treated as ordinary income on your tax return.  Thankfully, a 1099-C (C standing for Cancellation of Debt) may not affect you at all.

You see, thanks to the Mortgage Forgiveness Act of 2007, the tax burden for cancelled mortgage debt for primary residences may save you!  This Act which has recently been extended through 2012 is a lifesaver for people going through Foreclosures and Short Sales!  This Act allows up to 2 Million dollars (1 Million if married filing separately) to be excluded.  The key is the primary residence – this doesn’t apply to rentals, 2^nd homes, or investors.  Read more here at the government’s website.

What is “Cancellation of Debt”?

If you are going through a foreclosure or short sale, your lender is going to receive less than what is owed on your mortgage(s).  For example;

Original Purchase Price:              $300,000
10% Down Payment:                        $30,000

1^st Mortgage:                                    $243,000
2^nd Mortgage:                                    $27,000

Mortgages combined:                 $270,000

Through either the foreclosure or short sale, let’s say the lender is able to recoup $225,000 on this home.  There would be an unpaid balance of $45,000.  Nearly all the 225,000 will go to pay the 1^st Mortgage, and a small portion ($3,000) will go to the 2^nd Mortgage.

Your lender(s) may 1099-C you for $45,000, which is referred to Cancellation of Debt.

Question? Does this mean you’re off the hook for the $45,000 (even though the lender approved the foreclosure or short sale??).

Answer! NO.  You are still liable (this may depend on your state and whether you loan is a “recourse or non-recourse” loan.  Often the 1^st will be settled in the transaction, but lenders are going after homeowners for the 2^nd, HELOC’s, and if you did a loan with Mortgage Insurance… they may try to get a deficiency judgment.

In Idaho, lenders currently have 90 days for the 1^st Mortgage, and 5 years for the 2^nd to seek a deficiency judgment.

New legislation has been written to help with deficiency judgments (Program is called “HAFA”).

Like with any large decision, the discussions with a licensed real estate agent can and should get a lot more in-depth.  I hope to have gotten the ball rolling in that direction for you!

If I did, please give me a call so we can talk more about this!!  I can be reached at  208-288-2976 or at paul@Idahorealtyinfo.com.

Follow me on Facebook: homes@idahorealtyinfo.com

I look forward to talking to you soon,

Paul Wallin

Idaho Realty Info at Group One

It’s this fantasy about a house that leads to irrationality, and that drives us to make bad decisions. By that we mean decisions that cost you money needlessly. That said, buying a house and building equity is one of the best investments anyone can ever make. All things being equal, it’s better to own than to rent. With property prices down, interest rates at a low and some desperate sellers, there is no doubt that there are some excellent deals out there. But if you follow these simple rules as a guideline, and drop the sentimentality and pride, you’ll be better off.

Treat it like any other investment

So you’re thinking of buying. The first thing you need to do is lose the sentimentality. The joy of owning a house is not a factor yet. Like any analysis, we have to start with the basics. When dealing with possibly the biggest expense and investment most people will make in their lives, it’s bizarre to think that many people will put together household budgets that analyze what kind of breakfast cereal they buy, but will throw thousands of dollars away on their houses, all in the belief that it just goes with the territory. There are many additional expenses other than the mortgage payment that go hand in hand with owning a house. Get them all down on your spreadsheet when starting to think about buying.

Think about it as a buy-to-rent to gauge its relative value

The only simple way to determine if it’s a good idea to buy or rent is to not think of the house you want to buy as one you’ll be living in. If you think of it as a buy-to-rent piece of property, all of the dynamics of the market become easy to interpret, and we can leave emotions aside. Sentimentality out the way, we can get scientific and do our math.

Let’s say you bought the place you’re looking at with cash. What can you rent it for? What are the taxes, the insurance, the maintenance costs and the management fees? Deduct these from your annual rental income. This magic number (less a month or two’s rent in case of vacancy) is your net rental income. Divide this net rental income by the cash price of the house, and you’ve got your return, called the capitalization rate by people who write for The Wall Street Journal.

That’s it — we’re done. If this capitalization rate is less than the rate you could get on a less risky investment, like a high-grade bond, we suggest you either sell (if you already own the property), or keep being a renter. That’s the simplest way to look at it. Now we can consider some twists.

What’s the market doing?

This is unfortunately not as simple as people make it out to be. If prices go down, more people buy. This pushes prices up. The more people are buying, often the cheaper rentals become. Thinking about your investment on the buy-to-rent basis as described above help makes sense of this all, if only because you can, to a large extent, ignore these dynamics. If the values of properties are going up, rental incomes should too. And if they aren’t, you’re at risk of floating around in another bubble.

Can you make the deposit?

Start by talking to a Lender!  This is key!!  There are so many programs, including Government  backed incentives (tax, etc…) that can help you at the start!!!  If you have zero down, low paying job – then reality needs to set in!  Maybe the idea of buying a home is there, but resources are not.  A great measure if you are ready to buy is how much can you put down?  As a rule of thumb, if you can’t put down at least 10% of the purchase price as a down payment on the house, you shouldn’t really be thinking about buying today… but start planning and looking towards tomorrow!

buy smart

Like with any investment, the discussions can and should get a lot more in-depth.  I hope to have gotten the ball rolling in that direction for you!

If I did, please give me a call so we can talk more about this!!  I can be reached at  208-288-2976 or at paul@Idahorealtyinfo.com.

I look forward to talking to you soon,

Paul Wallin
Idaho Realty Info at Group One

Making Work Pay Credit

If you have earned income, such as from W2 wages, you may have noticed you had less withholdings.  This was because of the Making Work Pay Credit enacted last year as part of the Stimulus Act of 2009.  Instead of giving you one lump sum (like the year before), you had less withholdings throughout the year.  To offset this “underpayment”, you will receive a credit on your tax return.  It is 6.2% of your earned income but cannot be more than $400 ($800 if married filing jointly).  You will find this on line 63 of your 2009 tax return.

Unemployment Compensation

You do not have to pay tax on unemployment compensation of up to $2,400 per recipient.  Amounts over $2,400 are still taxable.

COBRA Subsidy

The 65% subsidy for payment of COBRA health care coverage continuation premiums is not taxable for federal income tax purposes.

Home Mortgage Principal Reductions

Any Pay-for-Performance Success Payments that reduce the principal balance of your home mortgage under the Home Affordable Modification Program are not taxable.

American Opportunity Credit

The Maximum Hope education credit has increased to $2,500 for most taxpayers.  The increased credit is now called the American Opportunity Credit and can be used for 4 years of college instead of 2.  Part of the credit may be refundable.

IRA Deduction Expanded

You may be able to take an IRA deduction if you were covered by a retirement plan and your 2009 modified adjusted gross income (AGI) is less than $65,000 ($109,000 if married filing jointly or qualifying widow(er)).  If your spouse was covered by a retirement plan, but you were not, you may be able to take an IRA deduction if your 2009 modified AGI is less than $176,000.

Deduction for Motor Vehicle Taxes

If you bought a new motor vehicle after February 16, 2009, you may be able to deduct any state or local sales or excise taxes on the purchase.  In states without a sales tax, you may be able to deduct certain other taxes or fees instead.  Take the deduction on Schedule A if you are itemizing deductions and are not electing to deduct state and local general sales taxes.  If you are not itemizing deductions, these taxes increase your standard deduction and are claimed on Schedule L.

First-Time Homebuyer Credit

The credit increases to as much as $8,000 ($4,000 if married filing separately) for homes bought after 2008 and before May 1, 2010 (before July 1 2010, if you entered into a written binding contract before May 1, 2010).  Did you buy a Meridian Idaho Short Sale?  Or did you sell your House for sale in Eagle Idaho last year??  You can choose to claim the credit on your 2009 return for a home you bought in 2010 that qualifies for the credit.  You generally must repay any credit you claimed for 2008 if you sold your home in 2009 or the home ceased to be your main home in 2009.

Move Up Credit

Long-time resident homebuyers can claim the Homebuyer Credit, but they must have lived in the same principal residence for any consecutive five-year period during the eight-year period that ended on the date the new home is purchased. Additionally, your settlement date must be after November 6, 2009

Credit for Non-Business Energy Property

You May be able to take this credit for qualifying energy saving items for yourhomeplaced in service in 2009.

Standard Mileage Rates

The 2009 rate for business use of your vehicle is 55 cents a mile.  The 2009 rate for use of your vehicle to get medical care or to move is 24 cents a mile.

Earned Income Credit (EIC)

The EIC has increased for people with three or more children and for some married couples filing jointly.  You may be able to take the EIC if:

• Three or more children lived with you and your earned less than $43,279 ($48,279 if married filing jointly).

• Two children lived with you and you earned less than $40,295 ($45,295 if married filing jointly).

• One Child lived with you and you earned less than $35,463 ($40,463 if married filing jointly).

The maximum AGI you can have and still get the credit also has increased.  You may be able to take the credit if your AGI is less than the amount in the above list that applies to you.  The maximum investment income you can have and still get the credit has increased to $3,100.

Tax on Childs Investment Income

The amount of taxable investment income a child can have without it being subject to tax at the parent’s rate has increased to $1,900.

Limit on Exclusion of Gain on Sale of Main Home

In certain cases, gain from the sale of your main home is no longer excludable from income if it is allocable to periods after 2008 when neither you nor your spouse (or your former spouse) used the property as a main home.

Electric Vehicle Credits

You may be able to take a credit for:

• A plug-in electric drive motor vehicle placed in service in 2009
• A plug-in electric vehicle bought after February 17, 2009.

Conversion of a vehicle to a plug-in electric drive motor vehicle place in service after February 17, 2009.

So in looking at this, there are lot’s of small deductions for this or that.  But the biggest deduction you’ll have is from your home!  If you bought or sold a home in Meridian, Eagle or Boise Idaho – or looking to buy or sale a home- contact me at 208-288-2976 or visit my website at www.idahorealtyinfo.com.

Need tax assistance… call Jodi at;

Jodi Whittaker, CPA, MST
Whittaker&Associates, Inc.

Certified Public Accountants

155 E. 50th Street
Boise, ID 83714

208.373.7890 p

Here’s to hoping you receive a LARGE REFUND!!!

Paul Wallin
208-288-2976paul@idahorealtyinfo.com
http://www.idahorealtyinfo.com

A look back at September

1.  Pendings vs. Closings: We wrote 59% more new contracts in Ada and Canyon counties in the third quarter of ‘09 than we did in the third quarter of ‘08 but our closings were only 8% higher.  The market has improved, but for the trailing twelve months, we have only closed 55% of our pending sales compared to 72% in the twelve months ended September 30, 2008.  This is testimony to how hard it is to obtain a loan and how hard it is to close transactions on financially distressed properties.

2.  Prices down: The median price for both Counties combined for the trailing twelve months was $157,900, 16% less than the median for the twelve months ending September 2008.

3.  Financially Distressed Properties: Approximately one-third of all properties closed in Ada County and 60% in Canyon County this year were listed as financially distressed.

4.  Inventory: Inventory levels are down approximately 30% in both Counties in the last year and, based on closing activity in the last twelve months, Ada County has 8.4 months of supply on the market and Canyon county has 9.6.  A balanced market is said to have 6 months of supply. Visit our Group One Market Stats by logging into the intranet and following this link:

I passed on this information to a recent homeowner whose house sold in less than 60 days in Meridian Idaho… he was amazed what a difference the kitchen looked after a little effort.

Here’s what I told him;
Inevitably, sugar, grease and skin oil collect on your cabinet faces and shelves. Not only does the dirt mar the beauty of your cabinets, it can deteriorate the finish and harbor germs. Follow these steps to safely scrub them away.

Steps
1. To clean your cabinet hardware, unscrew the knobs and pulls from your drawers and doors.
* Soak plastic hardware in warm, soapy water.
* Clean metal hardware with a mild metal polish, following label directions.
* Wash wooden knobs and pulls with oil soap, following label directions. Don’t soak them.

2. Dilute oil soap with warm water according to label directions and then wipe each door and drawer thoroughly, using a dishrag or sponge. Dry each area before moving on to the next one.

3. Dip a scouring pad in warm, soapy water, then gently scrub stubborn grease spots.

4. To clean the shelves, first remove all dishes, glassware and packaged goods from the shelves. Then use a dishrag to wipe shelves with warm, soapy water.

5. Rinse the knobs and pulls that have been soaking and then dry them with a clean cotton dishrag. Reattach the hardware to the drawers and doors.

The Federal Reserve’s program of purchasing a total of $1.25 trillion of mortgage-backed securities is supposed to come to an end on March 31^st of this year.  The general consensus is that the Fed’s involvement in the market means that conforming fixed-rate mortgages are perhaps 75 basis points (0.75%) below where they would be if the program did not exist.

This means that you should expect interest rates to rise somewhat when the program expires.  For example, if you bought a House for sale in Eagle Idaho, with a $400,000 loan over 30 years, a .75 increase could result in as much as $70,000 additional in interest!  How much rates rise will depend on whether or not private investors will want to buy these investments, and how strong that demand will be – is all quite foggy at this time.  It’s best to plan for at least some increases in interest rates as the end of the program approaches and for a period of time after March 31, with perhaps as much as a half-point rise to start.

Want more information, give me a call at 208-288-2976 or email me at paul@Idahorealtyinfo.com and we can talk how this can affect your long term real estate plans.  Or, visit my website at www.idahorealtyinfo.com for more information.

Boise Home Sales, Eagle Home Sales, Meridian Home Sales… it’s doesn’t matter where!

Let’s talk plain English here… as I think you’ll agree, it’s simple to see;

• A few years ago, loans were given out like candy… just ask and you could get it!  Too many people were allowed to purchase homes that were far beyond their means should life change.

• When the economy dipped many of those people either lost their job or had their salaries slashed.  Life changed.

• Home values continued to slide down, mainly because new homes coming on the market were “Short Sales and Foreclosures”.  The volume of clearance rack homes reduced the overall average… and home prices slid fast!

So these three big factors;  Bad Loans, Economy Dropped, and Home Values Sank created a correction, a much needed one (but not wanted!)

Here’s a fantastic graph that shows this to you visually.

Look at that graph (click on it to make it larger) and notice the Yellow Box.  This graph goes back to the 1890’s… but in recent times (we’ll say 1970 and forward), you can see that every 5 years there is a correction.  It’s very noticeable with the peaks in 1979, 1989, and obviously in 2006 (give or take a year there).

The economics behind making money is simple:  Buy Low, Sell High.

Real Estate over the course of time has been a solid investment! But, if you bought in 2005 and want to sell now… that’s the problem.  And if you can afford it now, even a bigger problem!

So ask yourself again.. What state are we in – in Idaho Real Estate??

I can tell you… WE ARE IN THE HOME BUYING MODE!!! The time to buy is now!!  Why?

• LOW Interest Rates
• TAX Credits
• Opportunities to purchase homes at reduced values with a selection of inventory to choose from!

If you’re a homeowner: In years to come you’ll make up the loss on the property you sell today, you’ll live in possibly a newer home, maybe a nicer home, and most likely will pay less which to me equals… you’ll make out better in the long run!!!

If you’re an investor: Take advantage of great properties in areas that have rebounded and I’ll show you the cash flow!!  For those who have the opportunity, now is the time to buy for your future retirement!

I buy and sell homes in Meridian, Eagle and Boise Idaho!  I’m a keen observer to trends , to analyzing values, and the especially paying attention to detail!!

Call me at 208-288-2976, or email me at paul@idahorealtyinfo.com to set-up a “REAL REVIEW” and let me help you find out where your next Real Estate opportunity lies!

A new market will soon open to those individuals who want to buy the low cost Meridian and Eagle, Idaho Homes with the purpose of fixing them up and selling them!!  There is plenty of inventory of Meridian, ID foreclosures in disrepair and repairing them could be made easier!!

There will be new rules in place to prevent predatory practices. First of all, deals must be “arms-length:” The parties in the sale can’t have the same interest.

This is designed in part to prevent homeowners from defaulting on a loan, then bringing in a friend to buy it from the bank at a rock-bottom price and return it to the homeowner at a slightly higher-than-rock-bottom price. In that scenario, the friend/flipper would make a profit and the homeowner would have a cheaper mortgage, all at the lender’s expense.

Another notable restriction prevents sellers from knocking the new price up more than 20 percent from its purchase price, unless an independent appraiser says the renovations justify that increase.

As long as you are renovating and selling houses is a “legitimate business activity, as long as they’re not turning around and making a substantial profit after beating up the bank for a low price.”

And since FHA loans have come to play an ever-more-important role in homebuying in the last two years, being allowed to sell to FHA buyers makes house flipping a lot more attractive.