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10 Ways Tax Code Benefits Parents

March 16th, 2010 Categories: Real Estate Tools

Raising kids is expensive, but the tax laws can ease that burden, according to CCH, a Wolters Kluwer business and a leading provider of tax, accounting and audit information, software and services. From birth through college graduation, there are breaks that reduce taxes and help defray the costs of education. Here are ten ways that tax codes can benefit parents:

Personal Exemption – A reduction of taxable income of $3,650 ($3,650 in 2010) for each dependent child under age 19 or, if a full-time student, under age 24. For divorced parents filing separately, generally the exemption goes to the parent who has custody for the greater part of the year.

Child Credit – A reduction of tax of $1,000 per child, beginning to phase out when adjusted gross income (AGI) exceeds $75,000 for single filers and $110,000 for joint filers. May be partially refundable, depending on income.

Childcare Tax Credit – A credit based on childcare expenses for children up to age 13, or older children if they are physically or mentally incapable of caring for themselves. Credit taken against maximum qualifying expenses of $3,000 for one qualifying dependent and $6,000 for two or more. Credit equals 35% of qualifying expenses for taxpayers with AGI up to $15,000 and decreases with income to 20% of allowable expenses for AGI of $43,000 or more.Read the rest of the story at Valerie Fitzgerald Group.

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3 Tips to Buy or Sell Your Home in Today’s Market | Valerie Fitzgerald Real Estate

March 9th, 2010 Categories: Real Estate Tools

Valerie Fitzgerald joins Fox 11 Los Angeles and shares tips for buying or marketing your home.

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Homeowners’ equity is again on the rise after three years of unprecedented shrinkage

February 16th, 2010 Categories: Real Estate Tools

Reporting from Washington – With all the bad news about underwater homeowners and strategic walkaways, you might think that U.S. homeowners’ equity holdings are continuing to slide.

But a little-publicized recent statistic on real estate is that home equity is again on the rise.Is that some piece of rosy propaganda put out by housing lobbyists to stimulate more home buying? Not unless you consider Federal Reserve economists to be shills for the real estate industry. The Fed conducts massive ongoing research into mortgage balances and home-value changes in hundreds of local markets around the country, and reports its findings quarterly.

According to the Fed’s most recent “flow of funds” survey, homeowners’ net equity grew by nearly $1 trillion from the recession’s nadir in the first quarter of 2009 through the third quarter.

From June 30 through Sept. 30, equity rose by $418 billion.That’s not impressive compared with the quarterly increases registered during the hyperinflationary housing boom years, but it could signal something important: After three years of unprecedented shrinkage in home equity — and three years of rapid expansion in the number of underwater borrowers with negative equity — there are signs the down cycle may be shifting.Last week, online real estate valuation researcher Zillow.com released its latest quarterly numbers on negative equity in major markets. The findings were sobering, but the study also offered some hints of improvement.

The overall negative equity rate among U.S. homeowners remained flat in the fourth quarter at 21.4%. But like the Fed’s numbers, that represented a decrease from the first two quarters of last year, when 22% and 23% of owners owed more on their mortgages than the estimated market value of their real estate.Zillow’s study found that in dozens of housing markets — including Washington, Los Angeles, San Francisco, Detroit, Miami, San Jose, Seattle and Tampa-St. Petersburg — the percentage of homeowners with negative equity appears to be on the decline.Some of the largest declines occurred in cities hardest hit by the recession and the housing bust — Ann Arbor, Mich. (down 9 percentage points), Riverside (down 5.7 points) and Phoenix (down 2 points). Florida markets that have struggled with major devaluations also saw significant improvement in negative equity ratios in the fourth quarter.

On the other hand, Zillow’s study found historically high rates of negative equity continuing to prevail in key cities. In Las Vegas, for example, 81.3% of homeowners — 256,000 households — were still underwater on their mortgages in the fourth quarter. This number is down from 82.5% in early 2009, but that’s no consolation to the affected owners.

In Phoenix, 61.5% of borrowers were in negative territory — 2 points lower than in the previous quarter, yet still high.Which major markets have the lowest underwater rates? As you might guess, they tend to be areas where the equity boom never quite boomed, and where toxic mortgages and fog-the-mirror underwriting by lenders were never the rage: Tulsa, Okla. (4.2%), Harrisburg, Pa. (5.7%), Binghamton, N.Y. (5.6%), and Peoria, Ill. (8%).Negative equity rates are crucial barometers of local housing markets’ propensity to experience high rates of default, foreclosure and strategic walkaways.

Communities with single-digit negative equity rates tend to have lower rates of walkaways and foreclosures.The reverse is the case in areas where large numbers of underwater homeowners see no economic rationale for continuing to send in their monthly mortgage payments on properties worth tens or even hundreds of thousands of dollars less than the principal balance owed to the bank. They believe they are throwing away money on albatross real estate.

Mortgage market analyst Laurie Goodman, senior managing director of Amherst Securities, recently warned lenders to be especially vigilant about borrowers in markets where negative equity ratios are high. Once underwater borrowers miss just one payment on their mortgage, according to Goodman, there is a 75% to 80% probability that they will chuck the whole deal.Borrowers with even minimal positive equity, on the other hand, are far less likely to do the same.kenharney@earthlink.net.Distributed by the Washington Post Writers Group.

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Market Forecast: Trends to Watch | Valerie Fitzgerald | Beverly Hills & West L.A. Real Estate

February 5th, 2010 Categories: Real Estate Tools

FROM REAL ESTATE MAGAZINE

Jobs, foreclosures, option-adjustable-rate mortgages, and interest rates are among the top trends that could dictate what will happen in California’s housing markets this year. Here’s what you need to know to make sense of how these trends could affect the real estate market.

1. Market Fundamentals
Three market fundamentals that turned positive in 2009 could be good indicators this year as well. First, home prices have fallen lower than replacement costs in many markets. This means a home can be bought for less than the cost to build it.

Second, home prices are “a lot more attractive” relative to rents than they have been in many years; and third, inventory of for-sale homes has “dropped very dramatically,” says Richard K. Green, director of the USC Lusk School of Real Estate in Los Angeles. That suggests some markets have stabilized, although
homes priced at more than $1 million may be an exception. “There is still a lot of pain left to come” in that segment of the market, Green warns.

2. Jobs
“Painful” describes the employment picture and the outlook for wage hikes and job security. Moreover, housing may now be less sensitive to traditional jobmoving patterns, observes Stefan Swanepoel, a real estate trends expert, author, and speaker in Aliso Viejo. Home sales that involve corporate relocations or year-end job changes may be moribund until the employment situation improves.

3. Foreclosures
Jobs are an important factor in foreclosures, though “not everyone who has lost a job has lost their house yet,” Swanepoel says. Homeowners who’ve lost a job may have had to live on lower wages or one income, or may have had to tap into their savings or retirement accounts to get by. “If they don’t get a decent job or a good job soon, I can see their houses still coming on the market in foreclosures or short sales,” he says.

Another trend to watch is that some homewners have dodged foreclosure even though they haven’t made their mortgage payments, according to Sean O’Toole, chief executive of ForeclosureRadar.com.
“We don’t have the political or societal will to foreclose on [that many] people, but nor do we have the will to bail out those homeowners who can’t afford their payments,” O’Toole says. That stalemate has slowed the pace of foreclosures, which may mean fewer opportunities for REALTORS® to list and sell those homes, he suggests.

4. Lenders and Loans
Home loans are crucial to healthy housing markets, so REALTORS® need to keep an eye on national lenders that originate loans locally, Swanepoel suggests. “As they digest the companies they’ve acquired and find out what loans they have, what loans they are servicing, and what their exposure in certain markets is, they might change their rules and terms and conditions,” he warns. Tougher requirements for loans insured by the Federal Housing Administration (FHA) could have an effect on housing as well.

5. Interest Rates
Interest rates could turn out to be the ultimate wild card. How long the Federal Reserve will keep interest rates low is an unanswerable question on which hangs the future of housing. The Fed’s ability to maintain low interest rates is “the greatest risk to the real estate industry right now,” says O’Toole. “If interest rates go to 8 percent, this market is over.”

6. Option-ARM Recasts
Low interest rates have taken the sting out of adjustable-rate mortgages (ARMs), but the payment option variety is still watch-worthy because a recast to make up negative amortization can result in an enormous payment shock, Green notes. “You could set up a fairly simple example where interest rates don’t go up at all, but the payment doubles,” he says. “If that loan was originated with a 90 percent
loan-to-value ratio and you are piling up principal, you could be deeply underwater and unable to make the payment.” Aggressive loan modification programs have blunted the expected blow from option-ARM recasts, but many homeowners still owe more than their home is worth and 30-day delinquencies
have continued to climb, O’Toole observes.

That suggests more homeowners may throw in the towel. “Strategic walk-aways from negative equity and/or due to job loss are going to be a bigger issue because modification programs and low interest rates likely have taken up the slack from the reset/recast issue,” he explains.

The Valerie Fitzgerald Group specializes in luxury residential real estate in Beverly Hills, Bel Air, Brentwood, Santa Monica and Malibu. Valerie has more than 20 years of real estate experience and is known for her solid reputation in the West Los Angeles brokerage community. She’s also the author of the book published by Simon and Schuster Heart and Sold: How to Survive and Build a Recession-Proof Business. Buy it here.

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FHA Revises ‘Anti-Flipping’ Rule | Valerie Fitzgerald | Beverly Hills & West L.A. Real Estate

February 5th, 2010 Categories: Real Estate Tools

January 31, 2010|By Kenneth R. Harney

Reporting from Washington — Call it three birds with one stone: The federal government hopes simultaneously to help low-down-payment home buyers, investors who fix up foreclosures, and local communities burdened with too many bank-owned and foreclosed homes — all with one potentially far-reaching policy change.

The Federal Housing Administration is revising its long-standing “anti-flipping” rule starting Monday and just might score a hit with all three target groups.

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IRS publishes rules for $6,500 repeat home buyer tax credit | Valerie Fitzgerald | Beverly Hills & West L.A. Real Estate

January 25th, 2010 Categories: Real Estate Tools

If you’ve been holding back on the new $6,500 federal tax credit for repeat home purchases, you now have all the official IRS guidance you’ll need to buy a house, qualify for the credit and pocket the $6,500.

That’s because the Internal Revenue Service finally published the rules for the repeat purchase credit along with key details for taxpayers that had been missing since President Obama signed the legislation creating the program Nov. 6.

The IRS posted its revised Form 5405 on its website ( www.irs.gov) on Jan. 15, six weeks after the agency warned taxpayers not to file claims for the $6,500 credit without using the revised form and new instructions.

The repeat buyer credit — inelegantly dubbed the “long-time resident of the same main home” credit by the IRS — supplements the popular $8,000 credit for first-time buyers. Homeowners who have occupied the same property as a principal residence for any five consecutive years during the previous eight years may now be able to claim a tax credit on a purchase of another home they intend to use as a principal residence.

The credit is for as much as 10% of the price of the replacement home, capped at $6,500. The purchase contract must be dated from Nov. 7, 2009, to April 30, 2010, and the closing must occur no later than June 30. Members of the armed forces and federal diplomatic and intelligence personnel stationed overseas get an extra year to claim the credit.

The maximum purchase price on homes eligible for the credit is $800,000. Buyers are not required to sell their previous home, but they must be able to demonstrate that the replacement home they buy is or will be their principal residence.

The new IRS guidance answers key questions that had been uncertain from the legislative language alone. For example, they describe what documentation home buyers must submit along with their $6,500 credit claim. On 2009 and 2010 tax returns, buyers should attach:

* A copy of the signed HUD-1 settlement sheet, including contract sale price and date of closing. This is to document that the timing of the transaction meets the program’s requirements.

* Evidence of long-term ownership and occupancy of the previous home to meet the five consecutive years’ test. This can be property tax records, homeowners’ insurance records or IRS Form 1098 interest statements for the five-year period.

* For buyers claiming a credit on a newly constructed home, where a HUD-1 settlement sheet is not available, the IRS will accept a copy of the certificate of occupancy showing the buyers’ names, the property address and date.

* For buyers of mobile homes who are not able to get a settlement statement, the IRS will accept a copy of the executed retail sales contract showing the property’s address, purchase price and date of purchase.

All this extra documentation was required by Congress after reports that audits had uncovered widespread abuses by those seeking the $8,000 credit for first-time buyers. Among these were fictitious home purchases in which taxpayers or tax preparers sought — or obtained — credits on properties that never were sold or bought. This time around, the IRS says, it is going to rigorously investigate all claims filed, starting with a review of the documentation submitted.

The new IRS guidance also spells out the revised income limits for home buyers claiming credits: Your modified adjusted gross income must be $125,000 or less if you are single, or $225,000 or less if you are married filing jointly. Above these limits, the allowable credit amount begins to phase down in increments, and it is eliminated once incomes reach $145,000 for singles and $245,000 for married joint filers.

There are pitfalls as well: An advisory posted by the IRS this month spelled out situations in which recipients of tax credits may have to repay them to the government. These include taxpayers who sell their homes within a 36-month period after purchase. Recipients must also repay the credit if they convert their principal residence to a rental or business property, or if their lender forecloses on the home.

With all the rules now available, here’s the action message to potential tax-credit seekers: Speed up your search for the home you want to buy. There are only 14 weeks to sign a contract and five months to close.

kenharney@earthlink.net

Distributed by the Washington Post Writers Group. On L.A. Times

Valerie Fitzgerald specializes in luxury residential real estate in Beverly Hills, Bel Air, Brentwood, Santa Monica and Malibu. She’s the author of Simon & Schuster release Heart and Sold: How to Survive and Build a Recession-Proof Business.

Valerie has more than 20 years of real estate experience and is known for her solid reputation in the West Los Angeles brokerage community. Contact her to sell or purchase your home or property at 310-285-7515 or visit Valerie Fitzgerald Group.

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This tax season, know the available deductions for homeowners

January 19th, 2010 Categories: Real Estate Tools

“Tax reform is taking the taxes off things that have been taxed in the past and putting taxes on things that haven’t been taxed before.”

– Art Buchwald

A mere 96 days remain before your federal income tax return must be sent to the Internal Revenue Service.
Now is the time to start preparing so you can take all of the deductions and credits authorized by law.

True, you can file IRS Form 4868 and receive a six-month filing extension, but you still have to pay the full amount of the tax you owe for last year, which means you at least have to prepare a careful estimate of your liability.

A good first step in determining your tax obligation is to go to the IRS Web site, where you will find a host of publications to download. Perhaps the most comprehensive publication is No. 17, a 280-page booklet titled “Your Federal Income Tax for Use in Preparing 2009 returns.”

Read the rest of the story at Valerie Fitzgerald Group.

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First-Time Homebuyer Credit Questions and Answers: Basic Information

January 11th, 2010 Categories: Real Estate Tools

Updated Nov. 6, 2009, to note new legislation. The new legislation extends and expands the first-time homebuyer credit allowed by previous Acts.

The new law:

Extends deadlines for purchasing and closing on a home
Authorizes the credit for long-time homeowners buying a replacement principal residence
Raises the income limitations for homeowners claiming the credit

Q. What is the credit?
A. The first-time homebuyer credit is a new tax credit included in the Housing and Economic Recovery Act of 2008. For homes purchased in 2008, the credit operates like an interest-free loan because it must be repaid over a 15-year period.
The credit was expanded in 2009 for homes purchased in 2009, increasing the amount of the credit and eliminating the requirement to repay the credit, unless the home ceases to be your principal residence within the 36-month period beginning on the purchase date. It was further expanded in late 2009 to extend deadlines and to allow long-time homeowners buying replacement homes and people with higher incomes to qualify for the credit. (11/12/09)

Q. How much is the credit?

A. The credit is 10 percent of the purchase price of the home, with a maximum available credit of $7,500 ($8,000 if you purchased your home in 2009 or early 2010) for either a single taxpayer or a married couple filing a joint return, but only half of that amount for married persons filing separate returns. The full credit is available for homes costing $75,000 or more ($80,000 in 2009 or early 2010). Long-time homeowners who buy a replacement home after Nov. 6, 2009, or in early 2010 may qualify for a credit of up to $6,500, or $3,250 for a married person filing a separate return. (11/19/09)

Q. Which home purchases qualify for the first-time homebuyer credit?

A. Any home purchased as your principal residence and located in the United States qualifies. You must buy the home after April 8, 2008, and before May. 1, 2010 (with closing to take place before July 1), to qualify for the credit. For a home that you construct, the purchase date is considered to be the first date you occupy the home.

Normally, taxpayers (including spouse, if married) who owned a principal residence at any time during the three years prior to the date of purchase are not eligible for the credit. This means that you can qualify for the credit if you (and your spouse, if married) have not owned a home in the three years prior to a purchase. However, a long-time homeowner can also get the credit for a qualifying replacement home purchased after Nov. 6, 2009. To qualify, you must have owned and used the same home as your principal residence for at least five consecutive years of the eight-year period ending on the date you by your new principal residence.

If you make an eligible purchase in 2008, you claim the first-time homebuyer credit on your 2008 tax return. For an eligible purchase in 2009, you can choose to claim the credit on either your 2008 or 2009 income tax return. For an eligible purchase in 2010, you can choose to claim the credit on either your 2009 or 2010 return. (11/19/09)
Read the rest of the story at http://budurl.com/1stTimeBuyerCredit.

Valerie Fitzgerald has been in West Los Angeles real estate for 20 years and specializes in luxury markets and developments in neighborhoods like Beverly Hills, Bel Air, Brentwood, Santa Monica and Malibu.

Learn more about Valerie at http://thevaleriefitzgeraldgroup.com/valerie-fitzgerald.

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Best Real Estate Agents in Los Angeles

January 7th, 2010 Categories: Real Estate Tools

L.A. 10: The Best In Los Angeles…

From luxurious estates in Beverly Hills to fun-filled beach homes in Santa Monica, Los Angeles has distinguished itself as a leader in the US when it comes to real estate.

And with miles upon miles of homes cascading the LA hills, you will be happy to have an experienced Realtor to assist you in your home buying or selling process. Below are the ten best real estate agents in Los Angeles:

1. Valerie Fitzgerald – Coldwell Banker Real Estate

Website http://thevaleriefitzgeraldgroup.com

Phone 310-285-7515

Address 301 N Canyon Dr Suite #21 Beverly Hills, CA 90210

2. Todd Michaud – Keller Williams Realty

3. Bob Hurwitz – Hurwitz James Company

4. Bill Chin – Re/Max Tri-City Realty

5. Your LA Properties Real Estate

6. Century 21 Excellence

7. Fran and Rowena Los Angeles Real Estate – Dilbeck Realtors GMAC

8. ABM Realty Group

9. Accord Interests