2009 First-Time Home Buyer Tax Credit


Source: realtor.org/realtormag

The homebuyer tax credit is one of 10 key provisions of the American Recovery and Reinvestment Act signed by President Obama into law on Feb. 17, 2009.

The bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The credit does not require repayment. Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser’s income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.

Who Qualifies?
First-time home buyers who purchase homes between January 1, 2009 and December 1, 2009.
To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

Which Properties Are Eligible?
The 2009 First-Time Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Will the Credit Be?
The maximum allowable credit for home buyers is $8,000. Each home buyer’s tax credit is determined by two factors:
The price of the home—the credit is equal to 10% of the purchase price of the home, up to $8,000.
The buyer’s income—single buyers with incomes up to $75,000 and married couples with incomes up to $150,000—may receive the maximum tax credit.

If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?
Yes, some buyers may still be eligible for the credit.
The credit decreases for buyers who earn between $75,000 and $95,000 for single buyers and between $150,000 and $170,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $95,000 for singles and over $170,000 for couples are not eligible for the credit.

Will the Tax Credit Need to Be Repaid?
No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during the three-year period, the credit will be recouped on the sale.

The Comfort Zone

Sometimes in life there is a point when we reach certain stability. Maybe we are not rich or we do not have a perfect job but we say that: “it is ok for now”. We have money to pay bills and do some of the things that we like. We not extremely delighted about our life but we say that it is ok for us. I call it a “comfort zone” because this is not ideal but is the minimum that we accept as a happy life. For some people this point is represented for a $50K year salary, for other people means a stable relationship (not great… but mmm…ok), maybe own a nice car, homeownership, or a mix of those things. This is good because you are at a point were finally you feel that you enjoy life and are quite happy. The problem is that many people want to stay in this “comfortable” place only and not move any forward.
Why try to make $100K if you are ok with $50K? Why own a home when you are renting and this is quite ok? Why look for a more fulfilling relationship if our current spouse “is not so abusive” and it is not too bad? Why exercise when you are not too fat? Why having an MBA when a Bachelor’s is “good enough”?

Why take any further risk?
I have the theory that you either go up or you go down in life. There are no middle points. Let’s say that you are a Tech professional with a bachelor who has a good job with Microsoft and you make $120K a year. You are already working 5 years in the company doing the same job and plan to do this for the rest of your life. 1 year later you get “laid off” because the economy turned down not because you are lazy or stupid. You were among the “unlucky” 20% to get fired. You go back home and say: “I am a good guy, why I was so unlucky?”.

If you ask me I will tell you this, if you are making money for any company in the world unless they are nuts, they would never get rid off you. Nobody (in their right mind) throws gold into the garbage and no company lay off employees that are productive and valuable. If you got fired is because they did not saw value in your activities. You thought that being on time everyday and doing what they tell you to do you were going to be fine. When you have an idea to improve a process or develop a new line of business at work you “played safe” and kept it for yourself. After all trying something new implies certain level of risk and you do not want to take it. You were quite happy doing the same old thing and thought that will make it. That is wrong my friends, remember you either go up or go down you can not stay in the middle so you became to attached to the idea of the “comfort zone”.

We reinvent ourselves and all that we do everyday just to keep up. Please understand this is just to keep up. If you want to excel you will probably will need to go more miles than the “extra mile” (between you and me, everybody go the extra mile already).

Instead of thinking about this like overwhelming you need to think this as challenging. I see life like a journey, dynamic and with a lot of new things everyday. If you think that is static then you will see yourself going lower and lower. In this New Year let’s commit to get out of jails of our “comfort zones” and let’s challenge ourselves to do things that were challenging or new. Let’s commit to go to the gym 4 times a week and run that marathon that before looked impossible, let’s start that’s business that we have been postponing forever so we can be our own boss, let’s propose our new ideas to our management at work and let’s get them done. Let’s look for a promotion. Let’s try to make more money so we can build some savings in case we get sick or lose our jobs. We saw many people become rich with Real Estate, we see the news: rates are low, prices are amazingly cheap but we have been procrastinating because the more we analyze, the more we paralyze. Let’s build that passive income for those rainy days when we will not be able to work 80 hours a week.

Finally, when we are kids we dreamt about many things… it has been years since then… when all those dreams are going to become reality? Life is not endless. The time my friends is now. Please let’s stand up, get out of our “comfort zones” and let’s start living the life that we truly deserve. Let’s start to work and fight for that.

Condos en Florida: 10 consejos para inversionistas que van a comprar

Esta semana la he tenido muy ocupada. Muchos inversionistas siguen comprando fuerte en Florida. Despues de responder muchas de las mismas preguntas sobre inversiones de condo en Miami y el sur de la Florida quiero publicar algunos puntos que me parecen esenciales. Por favor ver el video de 8 minutos donde me expando.

1. Assesments (gastos de mantenimiento). Al momento de hacer la suma de gastos considerar que los gastos de mantenimiento son mas caros en la Florida debido a la cantidad de ammenities: doorman, valet parking, piscinas (albercas), internet, cable, fitness room, steam y sauna rooms, etc.
2. Impuestos patrimoniales (Real Estate Taxes). Cuando los edificios son mas nuevos se pagan mas. Muchos edificios fueron construidos alrededor de la burbuja inmobiliaria (2005, 2006)
3. Muchos edificios vienen con parking! Esto a diferencia de NY, Boston o Chicago donde no solo se compra el parking aparte sino que se paga assesment mensual y taxes anuales.
4. Como inversionista busca: Locacion y Vistas. Vale la pena pagar un poco mas en esto.
5. Si inviertes para largo plazo y vas a tener inquilinos, entonces que sea cerca a los centros de trabajo. Ejemplo: Brickell.
6. Busca estar cerca a la bahia, la playa, restaurantes, bares. Al momento de revender esto te dara mas ingresos.
7. Los inquilinos y futuros compradores de tu inversion van a buscar estos ammenities.
8. Algunos bancos no estan financiando edificios que tengan un porcentaje de unidades en foreclosure y/o short sale. Llamame si quieres discutir las diferencias. (847-962-0923)
9. Los precios de las rentas subiran de aca a 3 anos. La casi nula nueva construccion a partir del 2007 va a determinar que una vez que los inventarios se agoten haya un nuevo deficit de vivienda en 5 o 8 anos. Ahora casi ningun banco esta o va a financiar construcciones nuevas. Segundo tema: Inflacion con Obama poniendo trillones de papel moneda la economia, que no te extrane que lleguemos a una hiper inflacion como en Peru y Argentina en los 80’s (ojala me equivoque). Si tienes pagos fijos a 30 anos o propiedades pagadas vas a ver como sube la renta exponencialmente y te llenas los bolsillos pues tus pagos son fijos.
10. Finalmente, Warren Buffet invierte cuando el mercado asustado y los agentes economicos creen que es el fin del mundo… ese escenario se parece mucho a lo que estamos viviendo.

Si tienes mas preguntas llamame 847-962-0923
o escribeme german@24hourschicago.com
24 Hours Miami Real Estate LLC

How you can take advantage of the Inflation?

If you lived in Peru or Argentina by the second half of the 80’s beginning of the 90’s you know what it is. It means that every month your salary is reduced not because of wage cut because your purchase power decreases due to the increasing prices.

I came to the US on 2000 and I remember buying a gallon of milk in Wallgreens at $2. Sometimes It came down to $1.90 so I used to buy a couple on the corner of Church and Skokie Boulevard in Skokie, IL. Now like the Bob Dylan’s song “Times are A-changing”… in the Publix of Brickell in Miami, FL or in Tony’s of Humboldt Park Chicago, IL you find Dean’s or Prairie Farm gallon in between $4 till $6. It took 50 years to get from 30 cents of dollar the gallon until $2. It took 9 years to get to $6.
I am not a hardcore milk fan, so what is the problem with this? The problem is that if you are the average American your income did not grow 300% in 9 years. Further more it looks to me that this is just the beginning.

Without getting deep into Economic concepts. If you increment M1 (supply of money) in the economy, (this means paper dollar bills in plain English) without and increase in good and services of the economy then prices will increase. More simple, if Uncle Sam start printing too many dollars, the green buck will depreciate. Simple law of offer and supply… too many paper bills then they are less worthed.
It would be nice if your salary would be indexed so every month you will have an increase in your salary just to keep up your purchase power. Purchase power is how much you can buy with a certain amount of money. But it is not and it probably will not be.

The inflation will hit Main Street America. Milk will probably increase 8% a year consistently as soon as the economy starts moving again. Same with other prices in the economy. I wish I can be wrong about but I lived in the 80’s in Peru, I lived in a Hyper Inflation environment and it is not fun. My dad used to own a hardware store and he used to need bags of paper bills to pay suppliers. He needed two drawers in the cash register and it was sad to see my old man being nervous next to the 30’s of each month with a package of cash ready for other people.

How can you take advantage?
See the environment now and project yourself economy 10 years ahead. Let’s identify an opportunity:
– Rents are cheap because there was built too much housing inventory during the last years. Will not be like that forever since population keeps growing and there is still a lot of immigration not only from other countries also from countryside.
– Interest Rates are still low now: 5% 30 years fixed average. This is not normal! Rates were around 18% during the 80’s and yes people still borrowed money.
– Home prices are at the historic bottom. Also this will not be like this forever.
So what about if you buy a property with several units on it and lock it in a 30 years fixed loan. Your payments will be fixed for 30 years and…… YES!!!! Rent prices will go consistently up just with the inflation effect. If you do not see it yet… let me a do a quick example:
A 3 flat in Humboldt Park (Chicago, IL) with easy access to public transportation will give you a monthly rent roll now of ($800+$700+$600) = $2100 and your mortgage $1300 plus ins and taxes $400 so you make $400 a month. After the recession your payments will increase BUT YOU PAYMENT of $1300 will remain the same. Taxes and Insurance will go up too but the inflation effect will be much higher on the rents.

Please take advantage of the inflation factor, give me a call and let’s make some money for your future!

The good side of the economical crisis

german_11This crisis made me rethink the ways that I was living life. First of all I started to save. I remember when I wanted to buy anything in the past. I used to wait some time and then save some money and then buy. During the last two decades the “I want it now mentality” was busted by all the credit available… just charge it to your Visa or your Amex… you will pay it later. Well, there is no free lunch so many people are deep in debt now. I stopped spending so my revolving balances are going lower and lower. It really feels like a cleaning diet… and this is a good thing.

I stopped wasting so much. From food to clothing I started thinking that we only can drive one car at a time so we might not need so many toys. In my garage there is a Toyota now which replaced an expensive BMW… which is almost worse as a high maintenance bad girlfriend. I save tons of money in gas and the parts are also cheaper. My company feels the difference too. I stopped spending in costly conference trips to Vegas and started to review all my expense accounts. The result is a much efficient performance of the operation. I tell you this: you do not review your expenses much during good times but during bad times it is good to tight the belt a little bit.

Finally I started to appreciate walks in the park with my wife, cooking at home and having a good cup of coffee with friends. Guess what? This crisis made me lose weight since I am not going to too many fancy restaurants anymore and also my personal relations improved.
This crisis will not be forever and soon we will see that sales will come back and we will be facing a new economical expansion, we do not need to be economists to understand that but I want to get the best teachings of these hard times though: build reserves for the bad times, do not spend in stuff that you do not need and enjoy the simple things in life… usually those are free.
My friends have an amazing week! Thanks for reading the blog!