Counties pushed for revenue, get creative and Short sales could come to screeching halt!

specialed — Mon, 11 Jan 2010 21:40:09 +0000

Urgent Tax Issue Affecting Short Sale Transactions

On Friday, January 8, the Montgomery County Finance Department’s Transfer Office put forth a memo regarding how they process and charge recordation and transfer taxes on Short Sale Transactions. The position the County has taken has caused some grave confusion and concerns for many in the real estate industry because it is contrary to how short sale transactions have been charged recordation and transfer taxes to date. The following is the excerpt from the County’s memo:

We tax on the unpaid principal balance of the mortgage as if the excess debt over and above the sale price is being waived/cancelled.

We will rely on your assertion of the unpaid principal balance and WILL NOT typically require a copy of a payoff statement or a seller’s last mortgage bill.

We will tax on the Short Sale price ONLY IF evidence is presented to us that the excess debt over and above the sale price is being paid off by the debtor or pursued by the lender.

GCAAR as well as the Maryland Association of REALTORS® (MAR) have taken the position that this interpretation of the Maryland State law is clearly against the plain language, which states that the taxes can ONLY be charged on the amount of “consideration.” It has always been our understanding that consideration is interpreted to mean the sales price. Therefore, on short sales, the taxes paid should not include the amount of the mortgage not being paid off.

GCAAR is working directly with MAR since this is an interpretation of Maryland state law. We are going to be speaking with Montgomery County’s Finance Department regarding GCAAR’s concerns and how this will put a halt to short sale transactions throughout the county. MAR is speaking with the state legislators to look into the possibility of an Attorney General’s opinion on the law or a possible legislative change and/or codification of the current law.

New Home Buyer’s Tax Credit is now in effect!!

specialed — Mon, 09 Nov 2009 18:51:29 +0000

Tax Credit for Homebuyers (First Time and Previous Home Owners)

First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000. Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years. Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines?

In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

Tax Credit Versus Tax Deduction

It’s important to remember that the tax credit is just that… a tax credit. The benefit of a tax a check for the remaining $4,000!

Higher Income Caps

The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible. Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

Maximum Purchase Price

Qualifying buyers may purchase a property with a maximum sale price of $800,000.

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Remember, the new tax credit program includes a number of details and qualifications. For more information or answers to specific questions, please call or email me today. In addition, you may be able to benefit from additional housing related provisions, including the following:

Tax Incentives to Spur Energy Savings and Green Jobs

This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

Landmark Energy Savings

This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy

Efficiency Retrofits To HUD-Assisted Housing

This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs. Specifically, it establishes a new program to upgrade HUDsponsored low-income housing (for elderly, disabled, and Section to increase energy efficiency, including new insulation, windows, and frames.

Expanding Housing Assistance

This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.

As always, if you have any questions about your specific situation or would like to discuss how you may benefit from this program, please call or email me. I’ll be happy to sit down with you.

Maryland Real Estate Blogsite » Certified Distressed Property Expert

Counties pushed for revenue, get creative and Short sales could come to screeching halt!

New Home Buyer’s Tax Credit is now in effect!!