Tax Breaks for 2010

 By Mary Beth Franklin, Senior Editor, Kiplinger's Personal Finance

There’s no denying that 2009 was a challenging year for millions of Americans. But filling out your 2009 tax return could bring some welcome relief in the form of a big refund. There are a slew of new and expanded tax breaks for home buyers and car buyers, college students and their parents, homeowners who installed energy-efficient improvements, and the unemployed. Together, these tax savings are expected to boost average tax refunds above last year’s level of about $2,800, says IRS spokeswoman Nancy Mathis. The sooner you file, the sooner you’ll get your money back.

Here are highlights of what’s new for 2009 tax returns.

Education credit. More parents and students can use a federal education credit to offset part of the cost of college under the new American Opportunity Credit. The maximum $2,500 credit is available to eligible taxpayers who paid at least $4,000 in qualified college tuition, fees and required course materials, including books, in 2009. The full credit is available to individuals with incomes up to $80,000, phasing out above that level and disappearing completely at $90,000. (For married couples filing jointly, the full credit is available to those with incomes up to $160,000 and disappears above $180,000.) Those income limits are higher than under the existing Hope and Lifetime Learning credits.
If you claim the credit and owe no tax, you may receive a refund of 40% of the credit, up to a maximum of $1,000 for each eligible student. Other education credits are not refundable. The American Opportunity Credit can be applied only to expenses paid during the first four years of college. Graduate students are not eligible for this new credit, but they still qualify for the Lifetime Learning credit, of up to $2,000 per household, or a tuition-and-fees deduction of up to $4,000. (A credit, which reduces your tax bill dollar for dollar, is more valuable than a deduction, which merely reduces the amount of income that is taxed.)

Parents of some college freshmen and sophomores should bypass the new American Opportunity Credit and opt instead for the supercharged Hope Credit available to students in Midwestern seven states affected by 2008’s flooding disaster ( Arkansas, Illinois, Indiana, Iowa, Missouri, Nebraska, and Wisconsin). The top credit on 2009 returns for qualified students is $3,600.

Home-energy credits. If you weatherized your home or bought alternative-energy equipment in 2009, you may qualify for either of two expanded home-energy credits, regardless of your income.

You may claim a credit worth 30% of the cost of eligible home improvements on your principal residence, up to a maximum $1,500. The cost of certain high-efficiency heating and air-conditioning systems, water heaters and stoves used for home heating qualify for the credit, along with labor costs for installing them. The cost of energy-efficient windows, doors, skylights and insulation also count, but installation costs do not. You would have to spend at least $5,000 to qualify for the full $1,500 credit.

A second tax credit is designed to spur investment in alternative-energy equipment, such as solar electric systems, solar water heaters, geothermal heat pumps and wind turbines, in new and existing homes. The credit is worth 30% of the cost, including installation, with no cap on the amount of the credit.

Home buyer’s credit. If you bought your first home in 2009, you may be able to claim a tax credit worth 10% of the cost of the house, up to a maximum $8,000, subject to income eligibility rules. You are considered a first-time home buyer if you, or you and your spouse, didn’t own a principal residence for at least three years before purchasing a house in 2009.

Different income eligibility limits apply depending on when you bought the house. If you purchased it before November 7, 2009, you are eligible for the full first-time home buyer’s tax credit if you are single and your income didn’t top $75,000 or if you are married and your joint income didn’t exceed $150,000. The credit phases out for individuals with incomes up to $95,000 and married couples with joint incomes up to $170,000, disappearing above those income levels.

Income eligibility limits are higher for those who bought homes on or after November 7, 2009. And a new 10% credit, with a maximum of $6,500, is available to longtime homeowners who bought a new principal residence on or after that date. The full home-buyer credits are available to individuals with incomes up to $125,000 and married couples with joint incomes up to $225,000. The credit is phased out for individuals with incomes up to $145,000 and joint filers with incomes up to $245,000 and disappears for those with incomes above those levels.

Taxpayers claiming either credit on their 2009 returns must use the new Form 5405, “First-Time Homebuyer Credit .” If you claim the credit, you cannot file your 2009 tax return online; you must print it out and mail it to the IRS. See more details in our FAQ on the home-buyer credits.

New-vehicle purchases. If you bought a new car, light truck, motorcycle or motor home on or after February 17, 2009, through the end of the year, you may be able to deduct the state or local sales tax or excise tax you paid on the vehicle on your 2009 tax return. The deduction is limited to the tax you paid on up to $49,500 of the purchase price of the vehicle, but there is no limit on the number of qualifying vehicles.

To qualify for the full deduction, your income can’t top $125,000 if you are single or $250,000 if you are married filing jointly. A partial deduction is available for individuals with incomes between $125,000 and $135,000 (and between $250,000 and $260,000 for joint filers). The deduction is available whether or not you itemize your deductions. If you claim the standard deduction, file the new Schedule L (“Standard Deduction for Certain Filers”). If you itemize your deductions, you can claim the deduction for the sales tax on your vehicle purchase on either line 5 or line 7 of Schedule A.

Jobless benefits. Unemployed workers are allowed to exclude the first $2,400 of unemployment benefits received in 2009.

The Highs and Lows of Real Estate in 2009

The Highs and Lows of Real Estate in 2009. By Dan Polimino.

Posted: Monday, December 28, 2009

Category: Real Estate News

"It was the best of times, it was the worst of times; it was the age of wisdom, it was the age of foolishness; it was the epoch of belief, it was the epoch of incredulity; it was the season of light, it was the season of darkness; it was the spring of hope, it was the winter of despair; we had everything before us, we had nothing before us; we were all going directly to Heaven, we were all going the other way.”
Charles Dickens.
This is easily my favorite quote of all time and it accurately describes how many of us felt during the course of 2009. Some of you may even be thinking, “were there any high points in real estate this year?”Yes there were, and while I only have limited space I’ll try to recap the top five in each category.

 The Lowlights:

Clearly, we started the year worse off than anyone imagined. People not only contracted their buying, but they also went into hibernation mode and some agents wondered if they would ever sell a home again.

Some price points like the Luxury market saw drops in value in excess of 30 percent in less than a year. Lending has hit a new low. Never has it been so hard to borrow money for the average person. The regulations, guidelines, and qualifications are getting harder every day. At this juncture, I am not convinced that banks are remotely interested in helping Americans get back on their feet.

The mortgage industry is now being controlled by a few large banking institutions that have too much power and too much control. This is bad for consumers, bad for competition, and bad for capitalism.
The appraisal system has run amuck. It’s in complete disarray and if you wait a week, it will change again. We need stability here soon.



The Highlights:



· More people were able to buy their first home. The first-time home buyer tax credit worked and stimulated the industry.
· The fourth quarter looks to have a much stronger close in real estate sales than originally predicted. Improvements in the economy, buyer confidence, low home prices, low interest rates and incentives have brought buyers off the sideline.
· Today we have a much more qualified buyer than in many years past. People who own homes now or recently bought homes are the ones that can truly afford them.
· We made great headway in beginning to weed out fraud, deception, cheating, and people looking to take advantage of others.
· We came out of an election year, banks failing, and unprecedented amount of foreclosures and still the real estate market continued to operate. We got deals done and actually improved the forecast for everyone.

Later this week is the start of 2010. Happy New Year Everyone and let’s pray that we have more to write about in the highlights column.

Dan Polimino is a Realtor with Fuller Sotheby’s International Realty. He can be reached at DPolimino@fullerproperties.com

Happy New Year to everybody

I am going to start searching for new stuff to post. I promise this year won't be so boring, of course you all know, I will be posting financial and other relevant issues for fun, to think about, or just to consider for life.  If you have suggestions, or you are interested in a particular matter, let me know and I will try to post something on it.

I am grateful to my parents who have encouraged me to be all that I can be, and do all I want to do. Of course, my parents reminded me to be responsible, and told me to do always what is right, and please do NOT follow the herd, which I try to do, but sometimes i fail. It is ok, so they said, if i learn something meaningful from those falls. Of course, they are always right. You never forget lessons you learn in life.

Oh, well. I have been reading a book which I am about to finish very soon.  The book's title is: Millionaire Women Next Door by Thomas J. Stanley, Ph.D.  The same author that wrote The Millionaire Next Door. They are good books for being frugal, and living a modest life without bragging about your wealth.  I like it so far.

In addition, my friend Ms. Ringold gave me two books for Christmas which I promise to read once I am done with the one I am reading. The titles are: The Long Tail: Why the Future of Business is Selling Less of More by Chris Anderson. The second book is: A Random Walk Down Wall Street by Burton G. Malkiel.

If you have read any of these two last books, please let me know what you think. Happy New YEAR!!

Under the Sea

I went to watch this film, it was beatiful, interesting and fun!!! If you love your planet, and care about animals, this film will be the perfect one to see.
It is being shown at the California Science Center, next to USC in Los Angeles, California.

The critics LOVE Under the Sea 3D!

"A lovely excursion into another world, like a voyage to another planet; superbly filmed. Filmed for families of all ages.”

Jeffrey Lyons/NBC/Lyons & Bailes Reel Talk

“ Oceans of fun.”

New York Times

“A visual feast”

Bob Strauss/Los Angeles Daily News

Under The Sea 3D will transport moviegoers to some of the most exotic and isolated undersea locations on Earth, including Southern Australia, New Guinea and others in the Indo-Pacific region, allowing them to experience face-to-face encounters with some of the most mysterious and stunning creatures of the sea. It will offer a uniquely inspirational and entertaining way to explore the impact that global climate change has had on ocean wilderness.

FHA LOANS

With FHA Help, Easy Loans in Expensive Areas

by David Streitfeld

Friday, November 20, 2009

provided by THE NEW YORK TIMES

SAN FRANCISCO -- In January, Mike Rowland was so broke that he had to raid his retirement savings to move here from Boston.

A week ago, he and a couple of buddies bought a two-unit apartment building for nearly a million dollars. They had only a little cash to bring to the table but, with the federal government insuring the transaction, a large down payment was not necessary.

"It was kind of crazy we could get this big a loan," said Mr. Rowland, 27. "If a government official came out here, I would slap him a high-five."

In its efforts to prop up a shattered housing market, the government is greatly extending its traditional support of real estate, including guaranteeing the mortgages of middle-class and even upper-class buyers against default.

In 2007, the government did not insure a single mortgage in this city, one of the most expensive in the country. Buyers here, as well as in Manhattan, Santa Monica and every other wealthy area, were presumed to be able to handle the steep prices and correspondingly hefty down payments on their own.

Now the government is guaranteeing an average of six mortgages a week here. Real estate agents say the insurance is such a good deal that there will soon be many more.

Policy changes like the shift in insurance, while often introduced on a temporary basis, are becoming so popular that they could prove difficult to undo. With government finances already under great strain, the policy expansions are creating new risks for American taxpayers.

The Internal Revenue Service is giving tax rebates to first-time buyers, and soon to move-up buyers, in a program beset by accusations of fraud. And the government agency that issues mortgage insurance, the Federal Housing Administration, is underwriting loans at quadruple the rate of three years ago even as its reserves to cover defaults are dwindling. On Thursday, the Mortgage Bankers Association said more than one in six F.H.A. borrowers was behind on payments.

F.H.A. insurance was created for minority and low-income families who could not come up with the traditional down payment of 20 percent required by private lenders. Buyers receive loans from government-approved lenders and are required to document their income and assets. They must pay a substantial insurance premium of 1.75 percent of the loan. But in return, their down payment can be as low as 3.5 percent.

For decades, most F.H.A. loans were in low-cost states like Texas and Michigan. Under the agency's loan limits, houses along the coasts were usually too expensive to qualify. In 2007, fewer than 4,400 F.H.A. loans were made in California, according to the research firm MDA DataQuick, and none were in San Francisco.

The Economic Stimulus Act of 2008 helped change that by temporarily doubling the maximum loan the F.H.A. insured, to $729,750. A two-unit property like the one bought by Mr. Rowland and his friends can be insured for up to $934,200.

"F.H.A. financing was a lost language in San Francisco, the real estate equivalent of Aramaic," said Michael Ackerman, the agent who represented Mr. Rowland and his friends. "Once the limits were raised, smart buyers started calling."

The F.H.A. has insured more than 107,000 loans so far this year in the state, according to DataQuick, about 270 of them in San Francisco.

Condominium buildings approved for F.H.A. financing -- a relative handful -- trumpet the news on their Web sites. The Soma Grand, a new 246-unit building downtown where one-bedrooms cost in excess of $500,000, received F.H.A. certification early in the summer. A half-dozen buyers since then used F.H.A. insurance.

At Guarantee Mortgage Corporation, which has 150 mortgage brokers in the Bay Area, Seattle and Portland, Ore., F.H.A. loans have grown to about 15 percent of its business, from less than 3 percent a few years ago.

"It sure has helped us put a lot of deals together," said Guarantee's chief sales officer, Bob Siefert. He predicts that a quarter of Guarantee's deals will soon be guaranteed by the F.H.A.

Some F.H.A. borrowers here say they have the cash for a full down payment but would rather invest it in the stock market or use it for remodeling. Others, like Mr. Rowland and his friends, simply do not have the money required by private lenders -- which would have been nearly $200,000, in their case.

"We were resigned to waiting another year," said a second partner, Michael Bedar, 31. "Then we read about the F.H.A. I had never heard of it before, and couldn't quite believe it. But it was the answer to our problems." They put down about $33,000, split among the three of them.

While the F.H.A. is certainly strengthening the high-end market in the Bay Area by prompting more sales, there are growing concerns that it might become a destabilizing force.

Kenneth Donohue, inspector general for the Department of Housing and Urban Development, the parent agency of the F.H.A., said the higher loan limits were increasing the potential risk to the F.H.A. Last week, the agency said its cash reserves had fallen below their Congressionally mandated minimum because of the large volume of foreclosures.

"If one of these higher-limit loans fail, that's equivalent to two or three cheaper loans," Mr. Donohue said. "You have to ask yourself, was the F.H.A. ever intended to address these markets?"

He sees another risk: larger loans will be a greater draw for those who want to commit fraud. That would exacerbate a problem already besetting the agency.

Even some San Francisco agents who are doing F.H.A. deals worry about the long-term consequences. Real estate commissions are 6 percent. If the value of a property were to hold steady, a seller who put down the F.H.A. minimum would suffer a loss after fees. And while the Bay Area has traditionally been an excellent investment, the last few years have proved a big exception.

"Is this going to be the next wave of the housing downturn?" asked Eileen Bermingham, an agent with Pacific Union. "With such a minimal down payment, how do we make sure people don't get in over their heads?"

The F.H.A. commissioner, David H. Stevens, said recently that its loans were relatively safe because the buyer was required to live in the property. They "are for shelter. They aren't speculative-type investments," Mr. Stevens said.

But the idea of a house as an investment dies hard. Mr. Bedar, Mr. Rowland and the third partner in their property, Jordan Kurland, are all in the technology field, but their dreams of wealth do not feature stock options.

"We're banking on real estate," said Mr. Kurland, 24. "Everyone expects prices to keep going up."

Mr. Kurland and Mr. Bedar, who are employed full time, are the buyers of record. Mr. Rowland, a freelancer, will have his interests protected by a legal agreement.

Their building, for which they paid $963,000, is on a quiet street in the up-and-coming Hayes Valley neighborhood, close to fashionable restaurants they have already been trying out. The friends plan to live in the bottom unit and rent out the top. Thanks to rock-bottom interest rates, none of them will pay much more than a thousand dollars a month. "Everyone should have the chance to do this," Mr. Kurland said.

Everyone may get a chance.

A few weeks ago, Congress extended the higher lending limits for another year. Representative Barney Frank, the Massachusetts Democrat who is chairman of the House Financial Services Committee, said in an interview that he planned to introduce legislation next year raising the maximum F.H.A. loan by $100,000, to $839,750.

His bill would make the new limits permanent.

Louise Story contributed reporting.

FAQs on the New Home Buyer Tax Credits - Kiplinger.com

I guess some people still have questions re: the IRS tax credit for 1st home buyers, so I found a great site which has a lot of financial savy, intelligent, and knowledgeable individuals. I hope after reading this from Kiplinger website, there are no more questions left unanswered.
FAQs on the New Home Buyer Tax Credits - Kiplinger.com

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Credits: Kiplinger website

New Health Care Plan

I just can't believe all the nonsense of politicians! I was reading a report from Yahoo today re: this health care plan, it would only cover 2% of the population with the public plan. Unbelievable!!! It would cost a lot and would only benefit a few. I just dont get this nonsense. The only thing we are doing is putting more debt in tax payer's shoulders, burning all of our good workers and consumers by adding more deficit to our already weak economy. Can somebody stopped printing some much money????? I guess there are people out there who want the US to be bankrupt. It gets me really upset to see how people are being deceit.

The US is the best country in the world, there is no other country were people live better. Look around and see how many people in 3rd world countries live?  I just can believe how many people would give away what they have for just fantasies that somebody else comes up with.