It is Tax Free Weekend in St. Louis! The details...

Here is a link of the cities NOT participating, including cities like Kirkwood, Webster, Clayton, and MORE.  Check the list out to maximize your savings, by avoiding local sales tax!

2 MAJOR Tax Changes for 2012, Homeowners...

Primary Mortgage Insurance premiums for those with less than 20% equity in their property (PMI) and energy efficiency upgrades will no longer be considered tax deductible.

More information can be found HERE on the National Association of Realtors HouseLogic website.

2012 Homeowner Tax Deductions

Yep, it is that time again... tax time!  We can all agree- necessary evil.  That being said, the news is not all bad. 

Homeowners, particularly you first-timers-  the deductions now available to you as a homeowner will likely reduce your tax bill substantially. Particularly if you have been claiming the standard deduction up until now...  the extra write-offs as a result of owning a home will almost certainly make you an itemizer. Suddenly, the state taxes you pay and your charitable gifts will earn tax-saving deductions as well, which equals money back in your pocket.  *cha-ching*

Below are the most common real estate tax deductions. For more information about these tax incentives and to determine which ones you may qualify for, please consult  your tax advisor

Mortgage interest:

For most people, the biggest tax break from owning a home comes from deducting mortgage interest. Your lender will send you Form 1098 in January listing the mortgage interest you paid during the previous year. That is the amount you deduct on the Schedule A tax form. Be sure the 1098 includes any interest you paid from the date you closed on the home to the end of that month. This amount is listed on your settlement sheet for the home purchase. You can deduct it even if the lender does not include it on the Form 1098.

Mortgage Points:

When you buy a house, you may have had to pay "points" to the lender to obtain your mortgage or buy down your rate. This charge is usually expressed as a percentage of the loan amount. And, believe it or not, you may get to deduct the points even if the seller paid them for you as part of the deal. The deductible amount should also be shown on your 1098 form.

Real-estate property taxes:
You can also deduct the local property taxes you pay each year. In the year you purchase your residence, you likely reimbursed the seller for real estate taxes he or she had prepaid for time you actually owned the home. If so, that amount will be shown on your Hud-1 settlement sheet. Include this amount in your real-estate tax deduction. You can't deduct payments into your escrow account as real-estate taxes, as these deposits are simply money put aside to cover future tax payments. You can deduct only the actual real-estate tax payments made from the account by your lender.

Private mortgage insurance premiums:
For mortgage loans with a down payment of less than 20% of a home's cost usually include a premium for private mortgage insurance (PMI), an extra fee that protects the lender if the borrower fails to repay the loan. PMI premiums can be deducted by home buyers. This write-off phases out as income increases above $50,000 on married filing separate returns and above $100,000 on all other returns.

Home improvements:
Save receipts and records for all improvements you make to your home, such as landscaping, storm windows, fences, a new energy-efficient furnace and any additions. When you sell your home, the cost of the improvements is added to the purchase price of your home to determine the cost basis in your home for tax purposes.

Energy credits:
Some energy-saving home improvements to your principal residence can earn you an additional tax break in the form of an energy tax credit. To learn more visit: www.energytaxincentives.org

Tax-free profit on sale:
Another major benefit of owning a home is that the tax law allows you to shelter a large amount of profit from being taxed if certain conditions are met. If you are single and lived in the house for at least two of the five years before the sale, then up to $250,000 of profit is tax free. If you're married and file a joint return, up to $500,000 of the profit is tax free if you lived in the house as a primary home for two of the five years before the sale.

Yes, you read this correctly...

If you donate a vehicle to the Goodwill before the 1st of the year, you will receive 1 year of free movies, compliments of Wehrenberg Movie Theaters in addition to the standard tax deduction!  Vehicle donations benefit the St. Louis community by providing vocational rehabilitation services and job placement programs for those with barriers to employment.

More information about this donation program can be found HERE.

April 15th is quickly approaching: Possible deduction tax traps

Does this sight look familiar? Unfortunately, it does to me.

Yes, it is that time of year again, and most of us can use all of the help that we can get?! I found this article on HouseLogic this AM and felt immediately compelled to share! It focuses on possible property tax deduction TRAPS on the Schedule A. EYE OPENING!

I highly recommend that you consider reading this article prior to filing your taxes...

Schedule A Form:

6 Home Deduction Traps

By: Barbara Eisner Bayer
Published: January 27, 2011

Get an “A” on your Schedule A Form: Dodge these tax deduction pitfalls to save time, money, and an IRS investigation.

Trap #1: Line 6 - real estate taxes

Your monthly mortgage payment often includes money for a tax escrow, from which the lender pays your local real estate taxes.

The money you send the bank may be more than what the bank pays for your taxes, says Julian Block, a tax attorney and author of Julian Block’s Home Seller’s Guide to Tax Savings. That will lead you to putting the wrong number on Schedule A.

Example:
Your monthly payment to the lender: $2,000 for mortgage + $500 escrow for taxes
Your annual property tax bill: $5,500

Now do the math:
Your bank received $6,000 for real estate taxes, but only paid $5,500. It may keep the extra $500 to apply to the next tax bill or refund it to you at some point, but meanwhile, you’re making a mistake if you enter $6,000 on Schedule A.

Instead, take the number from Form 1098—which your bank sends you each year—that shows the actual taxes paid.


Trap #2: Line 6 - tax calculations for recent buyers and sellers

If you bought or sold a home in the middle of 2010, figuring out what to put on line 6 of your Schedule A Form is tricky.

Don’t simply enter the number from your property tax bill on line 6 as you would if you owned the house the whole year. If you bought or sold a house in midyear, you should instead use the property tax amount listed on your HUD-1 closing statement, says Phil Marti, a retired IRS official.

Here’s why:

Generally, depending on the local tax cycle, either the seller gives the buyer money to pay the taxes when they come due or, if the seller has already paid taxes, the buyer reimburses the seller at closing. Those taxes are deductible that year, but won’t be reflected on your property tax bill.


Trap #3: Line 10 - properly deducting points

You can deduct points paid on a refinance, but not all at once, says David Sands, a CPA with Buchbinder Tunick & Co LLP. Rather, you deduct them over the life of your loan. So if you paid $1,000 in points for a 10-year refinance, you’re entitled to deduct only $100 per year on your Schedule A Form.


Trap #4: Line 10 - HELOC limits

If you took out a home equity line of credit (HELOC), you can generally deduct the interest on it only up to $100,000 of debt each year, says Matthew Lender, a CPA with EisnerLubin LLP.

For example: if you have a HELOC for $200,000, the bank will send you Form 1098 for interest paid on $200,000. But you can deduct only the interest paid on $100,000. If you just pull the number off Form 1098, you’ll deduct more than you’re entitled to.


Trap #5: line 13 - Private mortgage insurance

You can deduct PMI on your Schedule A Form, as long as you started paying the insurance after Dec. 31, 2006. (Also, this is also a good time to review your PMI: You might be able to cancel your PMI altogether because you’ve had a change in loan-to-value status.)


Trap #6: line 20 - casualty and theft losses

You can deduct part or all of losses caused by theft, vandalism, fire, or similar causes, as well as corrosive drywall, but the process isn’t always obvious or simple:

- Only deduct losses that are greater than 10% of your adjusted gross income (line 38 of Form 1040).

- Fill out Form 4684, which involves complex calculations for the cost basis and fair market value. This form gives you the number you need for line 20.

Bottom line on line 20: If you’ve got extensive losses, it’s best to consult a tax pro. “I wouldn’t do it myself, and I’ve been dealing with taxes for 40 years,” says former IRS official Marti.

Barbara Eisner Bayer has written about personal finance for the past 17 years. She works hard to translate IRSese into plain English. She has unbounded respect for CPAs.

.

Missouri: Vote YES on 3!

If you live in the State of Missouri, you must watch this. Period.



If Amendment 3 does not pass (and the State of Missouri opts to add a "transfer tax" to every sale within our state), it will have detrimental effects on our already-feeble real estate market and economy. Period.

When the real estate "bubble" burst a couple of years ago, it took with it thousands of dollars of equity from the average homeowner. In a real estate climate laden with short sales and foreclosures where inventory is at an all-time high, Buyers remain conservative, and Sellers are struggling to walk away from their properties with any cash in their pocket after inspection predications and standard closing costs ... an additional 2-4% fee at closing would be devastating. On an average $200,000 sale, that is 8K of YOUR home equity going to the Missouri government in taxes. Period.

I beg that you vote "YES" on Amendment 3 in November and that you spread the word about this initiative. It is vital to the continued growth and rejuvenation of our local economy and real estate market. If it doesn't pass, it will affect all of us in a negative way. No one in the State of Missouri will be immune.

Still falling!

I said it a few weeks ago, but wanted to reiterate...
If you have been considering a loan refinance OR your current interest is at 5% or above... the time is NOW!! Do not wait. The rates are at historical lows, yet again, and they will not last.

According to the latest Freddie Mac survey, the average interest rate for a 30-year home loan dropped to 4.4% last week.

I have received almost a 1/2 dozen phone calls and emails from past clients over the past 2 weeks, all inquiring the same thing: Is a refi worth the hassle at this point? Here is a basic interest rate calender...




That being said, there are many other factors to consider during the loan restructuring process, as well: your current rate, how long you plan to stay in the house, how much equity you have, and the fees associated with the loan restructuring.

My best piece of advice on how to proceed to ensure a refinance is favorable to your current financial situation? Make a call to your lender, crunch the numbers, and see how the cards fall. It can't hurt and you can always change your mind. If it works out in your favor, however, it could save you a LOT of money.

Much to my kids' dismay...

... we just received the annual school supply list from their school.

That's right kids of St. Louis... just a few shorts weeks before it is back to the grind =(. For parents, that means just a few short weeks to snatch up the ever-growing list of necessary school supplies!

If looking for some financial relief, the State of Missouri is offering a back-to-school sales tax holiday weekend, as they do every year.

Nitty Gritty:

August 6 through August 8, the state’s 4.225 percent sales tax will not be assessed on certain purchases made in **Missouri, including clothing, school supplies and computers.

Missouri sales tax holiday items include...

■Clothing that does not have a value of more than $100. The state’s definition of clothing includes traditional apparel, including footwear, which is worn on or about the body. It also includes material to make school uniforms or other school clothing. It does not include accessories such as watches, jewelry, handbags, handkerchiefs, umbrellas, scarves, ties, headbands and belt buckles.

■School supplies, not exceeding $50 per purchase, that are used in a standard classroom for educational purposes. School supplies include, but are not limited to, textbooks, notebooks, paper, pens, pencils, crayons, art supplies, rulers, book bags, backpacks, handheld calculators, chalk, maps and globes. The definition for school supplies does not include watches, CD players, headphones, sporting equipment, portable telephones, copiers or other office equipment.

■Personal computers that don’t cost more than $3,500 and computer peripheral devices that don’t exceed $3,500. A personal computer can be a laptop, desktop or tower computer system which consists of a central processing unit, random access memory, a storage drive, display monitor, keyboard and other related devices. Peripheral devices include items such as a disk drive, memory module, CD drive, microphone, modem, motherboard, mouse, speakers, printer, scanner, sound card or video card. Computer software is considered a school supply and is free from sales tax if its value is less than $350.

**NOTE: some cities have chosen NOT to participate and opt out of the holiday. Check this list prior to your shopping excursion to ensure savings.

Savings alert...

Considering a purchase or refi?


The time is NOW, NOW, NOW! Lock in your rates/loans quickly.

This week, mortgage rates plummeted to their lowest point in 40 years. The average for a 30-year fixed-rate loan sank to a ridiculously low 4.69 percent. Rates for 15-year and five-year mortgages hit record lows, as well.

That means MAJOR savings and more house affordability. If you have any questions regarding the rates and the pros/cons/logistics of refinancing and/or purchasing a home in this market, email me at cdnandthecity@charter.net.

Show Me the Moneeeyyyy...

The other day, the website for Missouri's Unclaimed Property came to my attention. Apparently, the State of Missouri has 600 MILLION in unclaimed assets. The average return is $360 and 1 in 10 Missourians has Unclaimed Property.

Seriously? How did I not know about this before?!

I immediately hopped on and searched all of my long-lost relatives to no avail. Next, for giggles, I searched my name and lo and behold... FOUND MYSELF. I have no idea where or when I lost the $10-$20 the State of Missouri claims it owes me (assume an old account from college or something)... but it is being processed right now.

Click HERE to see if the State of Missouri owes you money too...

Save green by going green...

It's tax time, ladies and gents. *sigh* That's right, the time to pull all of your statements/receipts and get all of your deductions in order.

What some of you may not know, is if you did any energy-saving upgrades this year to your principal residence... you may be eligible for extra tax deductions! Not only are these home upgrades great for the environment and your pocket book when paying your monthly bills... they may also put more money back in your pocket at tax time.

Specifics:

Consumers who purchased and installed specific products, such as energy-efficient windows, insulation, doors, roofs, and heating and cooling equipment in existing homes can receive a tax credit for 30% of the cost, up to $1,500, for improvements "placed in service" starting January 1, 2009, through December 31, 2010.

Consumers who installed solar energy systems (including solar water heating and solar electric systems), small wind systems, geothermal heat pumps, and residential fuel cell and microturbine systems can receive a 30% tax credit for systems placed in service before December 31, 2016; the previous tax credit cap no longer applies.


Make sure to ask your accountant about your eligibility. Additional info may be found here.

NOTE: Any of you first time home buyers of 2009- remember to take your final HUD closing statement to your accountant, as well. A portion of your closing costs may be deductible , as well =).

Obama Tax Credit Extension Specifics...

I have had SEVERAL clients contact me over the past 2 weeks, inquiring about the specific guidelines for the new tax credit extension. Particularly in regards to current home owners.

The new guidelines are as follows:

Who Qualifies for the Extended Credit?


First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010.
Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.

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.If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see: 2009 First-Time Home Buyer Tax Credit.


Which Properties Are Eligible?

The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.


How Much Is Available?

The maximum allowable credit for first-time home buyers is $8,000.

The maximum allowable credit for current homeowners is $6,500.


How is a Buyer's Credit Amount Determined?

Each home buyer’s tax credit is determined by two additional factors:
1. The price of the home.
2. The buyer's income.

Price: Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.


Buyer Income: Under the Extended Home Buyer Tax Credit, which is effective on November 7, 2009, single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit.

These income limits have changed from the 2009 First-Time Home Buyer Tax Credit limits. If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see 2009 First-Time Home Buyer 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 $125,000 and $145,000 for single buyers and between $225,000 and $245,000 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 $145,000 for singles and over $245,000 for couples are not eligible for the credit.

Can a Buyer Still Qualify If He/She Closes After April 30, 2010?

Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.


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 this three-year period, the full amount credit will be recouped on the sale.

Attention Move-up buyers...

Tax Credit Legislation update...

The Senate passed a bill to extend the tax credit.

The House will need to vote on it and then the President needs to sign it.


Senate throws a lifeline to the jobless
Lawmakers pass bill extending unemployment benefits by up to 20 weeks. Legislation also extends homebuyer tax credit into next year.

By Tami Luhby, CNNMoney.com senior writer
Last Updated: November 4, 2009: 6:25 PM ET

NEW YORK (CNNMoney.com) -- After weeks of partisan debate, the Senate voted on Wednesday to lengthen unemployment benefits by up to 20 weeks and to extend the $8,000 homebuyer tax credit.

The closely watched legislation would extend jobless benefits in all states by 14 weeks. Those that live in states with unemployment greater than 8.5% would receive an additional six weeks. The proposal would be funded by extending a longstanding federal unemployment tax on employers through June 30, 2011.

The measure would apply to those whose benefits will run out by Dec. 31, which is nearly two million people, according to Senate estimates. Those whose checks have already stopped would be able to reapply for another round. The vote was 98 to 0.

"With 15 million Americans still unemployed and vying for just three million available jobs, we did the right thing today by passing this bill and doing it in a fiscally responsible way," said Sen. Max Baucus, D-Mont., who helped craft the bill. "Today, we gave unemployed Americans the chance they need to get back on their feet, get through this tough time and get working again."
The measure now moves to the House, which passed its own benefits extension in September, giving an additional 13 weeks in high-unemployment states. The two bills must now be reconciled, though the House is expected to support the Senate's version.

"Now that this legislation has passed the Senate, I will bring it to the House Floor for a vote as early as tomorrow," said House Majority Leader Steny H. Hoyer of Maryland.
The bill would then move to the White House for the president's signature. Last week, the administration said it supports extending benefits.

7,000 a day losing benefits

The Senate has been bickering over the details since September, and that cost more than 200,000 people their benefits. Some 7,000 unemployed Americans run out of benefits each day, according to the National Employment Law Project.

Millions of Americans are now depending on unemployment benefits, as the unemployment rate continues to soar. The unemployment rate hit a 26-year high of 9.8% in September, and is expected to go even higher when the October numbers are released on Friday.

More than one in three people who are unemployed have been out of work for at least six months, according to the law project. Lawmakers twice lengthened the time people can receive checks to as much as 79 weeks, depending on the state. But at least one Republican warned this would be the final extension.

"The public needs to ... know, this is the last extension," said Johnny Isakson, R-Ga.
Tax break for buying a home. The legislation also would extend the $8,000 homebuyer tax credit to contracts signed by April 30 and closed by June 30. The controversial credit, which many say has boosted home sales in recent months, was set to expire after Nov. 30.

The Senate's bill also created a $6,500 credit for those who buy a home after owning one for the last five years. That measure would apply to contracts signed by April 30 and closed by June 30. The current credit defines a first-time homebuyer as someone who has not owned a residence within the past three years.

The Senate bill would raise the adjusted gross income cap to$125,000 for single filers and $225,000 for joint filers. The amount of the credit currently begins to phase out for taxpayers whose adjusted gross income is more than $75,000, or $150,000 for joint filers.
"It's gonna put people back to work, the home builders, put people in the real estate business," said Sen. Chris Dodd, D-Conn. "The kind of jobs that can make a difference." The extension will cost $10.8 billion over 10 years, according to the Joint Committee on Taxation.

Through mid-September, 1.4 million tax returns had qualified for the credit, according to the IRS. Some portion of those returns, which the IRS couldn't specify, represents buyers who took advantage of an earlier version of the tax credit, which was only worth $7,500 and has to be repaid over time.

By the end of November, the credit will have been used by 1.8 million homebuyers, at least 355,000 of whom would not have bought a house without the tax break, according to estimates by the National Association of Realtors.

"The data on the present home buyer tax credit show that the credit has had its intended impact -- sales have jumped in recent months to a projected 5.1 million for the year and housing inventory has been trimmed, thus stabilizing home prices noticeably," said Ron Phipps, the association's first vice president, in Senate testimony last month.

The credit, however, has also posed many problems. Critics say it's a waste of money because most of those claiming the credit would have bought homes anyway.

It's also been the target of fraud. Some 74,000 people claimed more than $500 million in credits even though they may not be first-time homeowners, according to Treasury officials. And more than 580 children, including some as young as 4-years-old, have claimed the credit.

"Some key controls were missing to prevent an individual from erroneously or fraudulently claiming the Credit and receiving an erroneous refund of up to $8,000," said J. Russell George, Treasury inspector general for tax administration, before a House subcommittee last month.

CNN Radio Capitol Hill correspondent Lisa Desjardins contributed to this report.

Interest rates plummeted...

Still more good news for 1st time home buyers: the 8k tax credit, record low prices, and now super low interest rates...
If in need of a refinance... the time is NOW!

Deal Alert...

Though perhaps at the expense of financial hardship for many, this market is a Buyer's dream. With the current government Buyer incentive, 1st time home buyers have their pick of the crop and are making AMAZING investments with instant equity.

For those who already own a home, this is not the ideal time to move and upgrade for everyone. That being said, in the case where a home owner has plenty of equity, all projects are complete, the home shows well, and the location is decent... this is an AMAZING time to upgrade to a larger and/or more expensive home.

The deals out there are endless. I try to convey this phenomena to clients and friends everyday, but it's almost impossible to illustrate the extent of the percentage of listing price markdown as compared to 5-10 years ago. Daily, as I pull and tour listings city wide... I STILL can't believe some of the current prices. For example, I showed this listing to a Buyer almost a year ago:

This 4 bedroom, 2.5 bath, 3000 sq foot property is in the Brook Hill subdivision in Chesterfield (Parkway West school district)...
3- 5 years ago, listings in Brook Hill were comfortably selling above 850K. Homes in more ideal locations within the neighborhood and/or with higher end upgrades, sold for as much as a million within weeks.

This subdivision is extremely desirable among those in West County and is the home to numerous local sports players and community business leaders / executives. Homes in Brook Hill are currently listing between 630K and 850K, and selling between 530K and 800K.

Per the current MLS listing, this particular Seller is a corporate transferee for Anheuser-Busch. As part of the relocation package, AB apparently purchased the property from the Seller back in August of 2008 for $585,000 (after several standard relocation appraisals determining that was the current market value). The property's current county tax assessment stands at $565,300. With a WHOPPING 494 days on market, this home is currently LISTED for $499,000.

WOW.

Now granted, this property boasts inexpensive finishes, that are NOT neighborhood norm or standard. The stock oak cabinets, laminate counter tops, and other discount store finishes are possibly the reason why this home hasn't budged, even at the current discounted price. That being said, the Buyer EASILY has over 200K in equity once the market rebounds. PLENTY of equity to make updates and renovations and STILL turn a HUGE profit.

With the current amount of days on market, the future Buyer will likely negotiate a purchase price significantly below the current list price. Meaning, the property will more than likely sell for less than the bulk of the neighborhood paid to BUILD their home, over 12 years ago.

Unbelievable. More so as this home is one of thousands, city wide.

Tax Talk...

Property taxes are an icky subject. I realize that.

No one, in their right mind, wants to talk about taxes. Period.

That being said, as St. Louis real estate market values continue to decline... a large number of area home owners are left living in a property that is assessed by the city/county to be worth a WHOLE lot more than it actually is. I see it every day.

EXAMPLE: A property is currently listed at $575,000 with 200 days on the market. It last sold for $675,000 in 2004. Sure enough, you pull up the current taxes... currently assessed by the county at the 2004 purchase price of $675,000. Meaning, the homeowner is currently paying taxes on the value of $675,000 when the home is obviously worth SIGNIFICANTLY less.

So what can you do to remedy the issue?

APPEAL! APPEAL! APPEAL!

Though it's not exactly the most SIMPLE process as hello, you are dealing with a government entity here... with a little bit of time and patience, you can drastically reduce the amount of annual taxes that you pay. Click here for St. Louis County's brochure explaining the process and here for the actual appeal forms. St. Louis City residents- click here for more information regarding the city appeal process.

Before you jump through the government hoops, I HIGHLY recommend contacting a Realtor for a current market value, including a CURRENT set of comps within a 1/4 mile radius and over the past 12 months. A super valuable tool in your fight!

Like sands through an hourglass...

Though the lenders have been stressing this fact for months, I just received this press release from CNN Money reiterating the fact that the Obama $8,000 first time home buyer tax credit is soon drawing to a close.

For months, a rumor circulated that the government was considering an extension. However, most lenders forecast that this will not indeed happen due to the current economic conditions.

Between the low property values and the opportunity to take advantage of the tax credit... there is NO BETTER TIME THAN NOW to be a first time home buyer.

If you are contemplating your first purchase, or know someone else who is, the time is now!

The tax credit deadline is November 30, 2009. Meaning your new property must be CLOSED by November 30th to actually utilize the credit. As the average transaction is 5-8 weeks in length... time is of the essence to locate your dream house and write a contract. Email me with any questions...