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10 First-Time Homebuyer Tax Credit Questions and Answers

As part of  new stimulus plan, the First-Time Homebuyer’s Tax Credit has increased from $7500 to $8000 with some additional improvements.  This revised $8000 tax credit applies to purchases made on or after January 1, 2009 and before December 1, 2009.

Now, for 10 basic Questions and Answers about the Homebuyer Tax Credit:

1.  What is the new homebuyer tax incentive for 2009?

The amount of the tax credit has increased to $8000 (from $7500 in 2008) and the repayment features has been eliminated for 2009 purchasers.  Any home purchased for $80,000 or more qualifies for the entire $8000.  If the house costs less than $80,000 the credit is equal to 10% of the cost, e.g. if a home is purchased for $75,000, then the tax credit would be $7500.  The  credit is available for the purchase of a principal residence only, on of after January 1, 2009 and before December 1, 2009.

2. Who is eligible?

Only first-time homebuyers are eligible.  A person is considered a first-time buyer if he/she has not had any ownership interest in a home in the three years previous to the day of the 2009 purchase.

3.  How does the tax credit work?

Every dollar of a tax credit reduces income taxes by a dollar.  Credits are claimed on an individual’s income tax return.  Thus, a qualified purchaser would figure out all of his/her income items and exemptions and make all the calculations required to figure out his/her tax due.  Then, once the total tax owed has been computed, tax credits are applied to reduce the total tax bill.  For example, if a person has a total tax liability of $9500, a $8000 credit would wipe out all but $1500 of the tax due.

4.  What happens if the purchaser is eligible for an $8000 credit but the entire tax liability due is only $6000?

This particular tax credit is what is known as a “refundable” credit.  In other words, if the purchaser’s total tax liability was $6000, the IRS would actually send the home owner a check for $2000!

5.   Is there an income restriction?

Yes.  The income restriction is based on the tax filing status the purchaser claims when filing his/her income tax return.  Individuals filing Form 1040 as Single (or Head of Household) are eligible for the credit if their income is no more than $75,000.  Married couples who file a joint return may have income of no more than $75,000.

6.  What is the definition of “principal residence?”

Generally, a principal residence is the home where an individual spends most of his/her time (generally defined as more than 50%.)  It is also defined as “owner-occupied housing.  The term includes single family detached housing, condos or co-ops, townhouses or any similar type of new or existing housing.  Even some houseboats or manufactured homes count as principal residences.

7.  Are there restrictions on the location of the property?

Yes, the home must be located in the United States.  Property located outside the U.S. is not eligible for the credit.

8.  Are there restrictions related to the financing for the mortgage on the property?

Most financing arrangements are acceptable and will not affect eligibility for the credit.  In 2008 purchasers were ineligible for the $7500 credit if the financing was obtained by means of mortgage revenue bonds but Congress eliminated that for 2009.

9.  Do I have to repay the 2009 tax credit?

NO.  There is no repayment for the 2009 tax credits.

10.  Do 2008 purchasers still have to repay their tax credits?

YES.  The $7500 credit in 2008 was more like an interest free loan.  All eligible purchasers who claimed the 2008 credit will still be required to repay it over 15 years, starting with their 2010 tax return.

For more questions and answers, plus examples, click here.

The stock market has had gains for five weeks in a row, economic indicators are increasingly positive, and houses are selling – don’t wait to take advantage of this tax credit.  The time is now!  Call me at 703.927.4554 for more information on making your buying dream a reality.

Thanks for stopping by,

Michael

Posted by Michael Bergin | Currently 9 Comments »

Alexandria’s Mt. Vernon Bike Trail Showcases Mural on the Life of George Washington

Last week, on one of our few reasonably warm days, I took off for a walk along Alexandria’s Mt. Vernon Bike Trail.  Built in 1973, the 18.5 mile long path runs parallel to the Potomac River between Mt. Vernon and Theodore Roosevelt Island, and attracts as many pedestrians as it does bikers.

 

This day we started at the Washington Sailing Marina and walked south towards the Mirant Power Plant and Old Town.  As I came out of the tunnel like area at the foot of the power plant I was surprised to see larger than life trompe l’oeil renderings of all things George Washington painted on the fence.

There were coins, stamps, postcards, a dollar bill, the Medal of Honor, etc. etc.   While wondering what “artist of the night” had managed this whimsical display, I walked on to find an entire mural depicting the life of our favorite native son, George Washington.

 

Fortunately a well placed sign took us to a site that explained the history and progress of the mural.  It’s an interesting addition to the bike path and, no matter the controversy, a lot better than looking at a blank fence.

Housing along the bike path runs from the high rise Marina Towers to condominiums and townhouses in the Old Town area to lavish multi-million dollar properties closer to Mt. Vernon.  If you are interested in living close to this wonderful pedestrian/biker thoroughfare, give me a call at 703.927.4554 for available listings.

Posted by Michael Bergin | Currently 3 Comments »

Easter at Historic Christ Church Alexandria 2009

 

Happy Easter!

Michael

Posted by Michael Bergin | Currently 1 Comment »

Arlandria is an Alexandria Neighborhood to Watch

Looking for the next great neighborhood in Alexandria? A place where residents can still shape the landscape? Well, look no further than Arlandria, a triangular area bordered by East/West Glebe, Four Mile Run and Route 1, and an Alexandria neighborhood to watch.

Arlandria resident Nick Partee contacted us recently about linking t0 The Arlandrian, and after a short back and forth, we knew that Nick was just the kind of neighbor with whom we wanted to share information.  The site was actually started several ago by Arlandria resident Kevin Beekman but has recently been ‘re-energized’.

Like our friend at the Parker Gray Growl, Kevin, Nick and their fellow bloggers are homeowners who care about their neighborhood and want to have a hand in it’s current and future development.  As Nick and Kevin say, “If it happens in or near Arlandria, we intend to cover it, opine on it, or at least link to news about it.”

Arlandria is actually a conglomeration of smaller neighborhoods, some of which have semi-official names or nick names like Hume Springs, Sunnyside, Lynhaven, Chirilaguna, etc.

The area is also sometimes referred to as little El Salvador or Chirilagua because of the high concentration of immigrants from El Salvador who started arriving in the ’80′s.  Before that the area was heavily African-American but is now an extremely mixed area.

Key issues, according to Nick, include

When I asked Nick about his hopes and dreams for Arlandria, he offered this: “I hope it becomes a very urban, artsy area that retains it’s unique cultural eclecticism.  I hope it become better served by mass transportation. 

I hope that as sites are improved or redeveloped, surface parking is replaced by pedestrian oriented businesses, al fresco cafes and all-important neighborhood serving businesses – but with an emphasis on green space and making Four Mile Run Park an integrated part of the neighborhood. 

I hope the sites around the intersection of Mt. Vernon Avenue and W. Glebe Rd. are redeveloped to bring a new, lively, urban center to the neighborhood.”

My guess is that with interested citizens like Nick and his fellow bloggers, Arlandria has a bright future.  We are delighted to add you to our list of ‘blogs we trust’.

Want to know more about properties in this up and coming area?  Give me a call at 703.927.4554.

Michael

Posted by Michael Bergin | Currently 6 Comments »

4 Reasons Why Now Is the Time to Buy in Northern Virginia – Plus One

Many anxious buyers have been sitting on the sidelines waiting for the time to finally make their move.  There are  4  reasons why the time to buy is now.

First - sellers realize that correct pricing allows buyers to see value.  Those sellers who see the high level of housing inventory as reflected in the market graphs included here are offering realistic prices that get buyer action.

Second – historically low interest rates that allow a buyer to get more house with the same monthly income.  The March publication of the Housing Affordability Index by the National Association of REALTORS® stated, “the relationship between home prices, mortgage interest rates and family income is the most favorable since tracking began in 1970.”  More homes are now more affordable for more buyers.

Third - the newly announced 2009 U.S. government tax credit of up to $8,000 for buyers who have not owned a home in the last three years.  The principal residence must be purchased before December 1, 2009.

Four – current homeowners who must move, and need to sell before they can buy, will quickly realize that even though their current property may decreased in price, they will be buying a home at a lower price than the previous market.  This fourth factor helps level the playing field between buyers and sellers and we consider it a plus one.

For more information on how these 4 reasons play out in each of several close in Northern Virginia areas,  click on the specific cities or counties below:

Alexandria

Arlington

Fairfax

Fauquier

Loudoun

Washington, DC

Want more information in general or on specific properties? Call me at 703.927.4554 for the most accurate information available.

Michael

 

 Plus Fours

 

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Cherry Blossom Festival is Ideal for Romance

The national Cherry Blossom Festival, a Washington institution since 1935 (although the trees arrived in 1912), is one of the great spring highlights of life in Northern Virginia.  Last year we wrote a lot about the history of the festival so this year I thought I would share a personal memory of why the Cherry Blossom Festival is ideal for romance – and how you might want to take advantage of the occasion.

Some 20+ years ago when Virginia and I were in the early “courting” stage and she was traveling Monday thru Friday, I decided to surprise her in a burst of romantic enthusiasm.  I didn’t give her many details – just that she had to be vertical, dressed warmly and ready to be picked up at 5:30am on a Saturday morning.  That in itself was almost enough to kill the deal but, happily, she agreed.

The next  step was gathering a thermos, a blanket and deciding on a breakfast menu.  I settled on fresh croissants, grilled sausages, a wedge of cheese, dewy strawberries and, of course, lots of hot coffee.  Smart guy that I am, I also took along a plastic sheet to put under the blanket in case of heavy dew.

Our Saturday dawned foggy and cool but nothing was going to detour my plan.  With no real traffic between Old Town and the District, we zipped down to the Tidal Basin and found a parking place along side one of the tour buses.  By this time my surprise was all around us in glorious living color.

 

May I tell you that sitting under a bower of blooming cherry trees in the early quiet hours of sunrise is an amazing experience?  We sipped our coffee, luxuriated in our breakfast and reveled in the beauty that all began with a gift of friendship in 1912.

And now,  I think it’s time to do it all again . . .

Michael

Posted by Michael Bergin | Currently No Comments »

Loan Modification Scam Artists Are Latest Threat to Homeowners in Northern Virginia

Just when you hope that we’re seeing the decline (and fall?) of unscrupulous practices in the mortgage industry, along comes another scam to threaten homeowners.  Fraudulent companies offering to help renegotiate loans, or “loan modification” are on the rise in Northern Virginia according to government officials and housing advocates.

Although there are legitimate companies that offer this service, the fraud is perpetuated when clients are urged to stop paying their mortgage and instead pay upfront fees for services they could get for free.  Maryland already has a law against this practice and just this past week, Virginia Gov. Timothy Kaine signed a bill into law that clarifies that the practice is illegal.  The Virginia bill does allow though for legitimate companies to be paid after they help save a home.

We are particularly sensitive to this subject because of a do-it-yourself loan modification workbook put together by friend and fellow Realtor Rocky Rockwood.  In addition to being a real estate agent in Southern California, Rocky had also invested in a number of properties over the years.  But he, like many others,  found himself in a precarious financial position this past year.  Rather than going to a company, Rocky decided to tackle it head on and his 60 Minute Loan Modification Workbook is the result.

We’ve written about Rocky before but this latest article in the Washington Post was just one more reminder of how careful homeowners need to be about paying “up front” for goods and services.

Thanks for stopping by,

Michael

Posted by Michael Bergin | Currently 1 Comment »

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