Real Estate News for North Pinellas County

Archive for the 'taxes' Category

New homeowner tax credit may mean tax windfall for builders

Last week, the Congress extended the first time homeowner tax credit. But what wasn’t so obvious about that legislation is that it provides some really big tax breaks for home building companies.

Big builders like Lennar and Pulte could end up with hundreds of millions of dollars in refunds from the U.S. Treasury on taxes they paid as far back as five years, according to the Wall Street Journal. Those refunds are designed to help the companies cope with the big losses they have experienced in the past two years or so.

homebuilder pictureThe tax break will apply to large companies of all kinds. But it may be of particular benefit to the country’s biggest home builders, because they have experienced some really hefty losses as the economy has tanked over the past couple of years.

Some critics say they home builders don’t really need that much help because they have been selling off assets, such as land and unsold inventory, and bargain prices and then hoarding the proceeds. One source estimates that the 10 largest home building companies are sitting on average of $1.2 billion in cash each, quite a lot more than the $616 million cash average they had just a couple of years ago.

Pulte Homes says it may receive more than $450 million in tax refunds; Lennar Homes may get refunds of as much as $300 million.

One benefit to the tax refund news: stock prices for Lennar and other builders went up last week as the legislation was announced.

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Tax credit money UP FRONT for your Pinellas County home?

  money-bagsIf you read my earlier post on the $8,000 first time homeowner tax credit, you know how you can turn the purchase of a new home into some much-needed cash.
     “But,” you wail, “I’ll have to wait until sometime next year to get the cash, and I really need it NOW — in fact, it would sure come in handy as down payment money on the new house.”
     If you live in Florida, you’re right — you do have a bit of a dilemma. You can get an $8,000 tax credit if you buy a new house, but you can’t get the house without a down payment, and you aren’t really expecting any extra cash until, well, next year, when the tax credit money comes in.
     However, if you live in a number of other states — 10, to be exact — your governor and legislature has already considered your problem, and come up with a fix.
      Let’s say you live in, oh, Missouri. In that state, you can get something called a “tax credit advance.” The state will advance you up to 6 percent of the home’s selling price, and you don’t have to pay it back until next August (That’s August of 2010.)
     If you fail to pay the money back once you get your tax credit, it is still not a mortal sin — the state of Missouri will simply roll that advance into a second mortgage with a 10-year payback.  The interest rate on that second mortgage is half a percentage point higher than the first mortgage’s interest rate.
Colorado, New Mexico, Delaware, Tennessee, New Jersey, Washington State, Ohio, Idaho and Pennsylvania now have similar versions of this bridge loan idea. Not every plan is exactly the same, but they all share the idea of providing that tax credit money sooner rather than later.
     Do you like the idea? Do you think we should have something similar here in Florida? Write or call your state representative and say so.
     “But,” you cry again, “I don’t know who my State Rep is!”
     No problemo. Go to the Florida House of Representatives web site and punch in your ZIP code — the site will tell you who you should write or call. Here’s the link:

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Pinellas County homebuyers: Don’t miss the $8,000 first time homeowner tax credit


    More than half of the people who plan to buy a home in the U.S. this year are first-time homebuyers. And ALL of them should look into the $8,000 tax credit that is being offered to first-time homebuyers this year by the federal government
      This is a pretty exciting to for first-time homebuyers to get into the market, what with very low prices and historically low interest rates. The $8,000 tax credit is just icing on the cake. It’s hard to imagine that such a “perfect storm” of home-buying advantages will come together again, at least in the lifetimes of most of us.

      Are people really aware of the first time homeowner tax credit? Apparently so – the IRS says that of all the 2008 tax returns filed by March 6, more than a half-million returns claimed the first-time home buyer credit.

      If the tax credit sounds good to you, don’t wait too long – it is only available until Dec. 1, 2009.

 Here are the nine most important things you need to know about the tax credit:

     1. The credit is available to all first-time buyers of any kind of home, new or re-sale.
 First time home buyers are defined as people who have not owned a residence during the three years prior to the purchase date.

     2. The tax credit is an amount of money equal to 10 percent of the home’s purchase price, up to a credit of $8,000.

     3. The income limit for a single taxpayer is $75,000; for married taxpayers filing jointly, income must not exceed $150,000.

     4. If you exceed the income limits, you may qualify for a partial tax credit.

     5. The tax credit does not have to be repaid. Previous tax credits were really interest-free loans.

     6. People who buy homes and claim the tax credit must use the home as a principal residence for at least three years. Those who fail to do that may have to pay the credit amount back to the government.

     7. Claim the tax credit on your federal income tax return by using IRS Form 5405. No other application or form is necessary.

     8. The credit may be claimed even if you have little or no federal income tax liability. An example: You had withholding in the amount of $4,000, but ended up owing taxes totaling $5,000. Normally, you would owe the government another $1,000 on top of what was withheld. However, if you purchased a home and claimed the tax credit, the IRS would send you a check for $7,000 – the $8,000 tax credit minus your $1,000 tax liability.

     9. The tax credit is a dollar-for-dollar reduction in your tax liability. In other words, if you owed the IRS $8,000 in income taxes for 2008 and you claimed the $8,000 tax credit, you would owe the IRS nothing.

Want to know more? Take a few minutes to listen to an expert – Robert Dietz, the tax economist for the National Association of Home Builders. Click on the YouTube icon above.

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Columnist sees a better way to tax cuts

orange-county-registerA columnist for a newspaper in California says he thinks he has a better way to, in effect, cut taxes while stimulating the housing market.
Jonathan Lansner writes a column for the Orange County REGISTER. Here’s what he suggests: Double the mortgage interest payment deduction that you can claim on your income taxes.
Under the current tax law, you can deduct a dollar for every dollar you pay out in mortgage interest. Lansner says doubling that allowance to $2 would pay a number of benefits: It would lower the effective mortgage interest rate; it would lower the cost of borrowing no matter what the interest rate of one’s loan; and it would be a de facto tax cut for the middle class, giving them more spending power.
Lansner says the move might be enough to turn skitterish lookers into actual buyers, since home ownership would be the way to reap the benefits of the plan. Adding another benefit of home ownership over renting also might make more people think about finding ways to stay in their homes, rather than succumb to foreclosure.
According to Lansner, his idea ought to cost around $80 billion — a lot of money, but not so much when you compare it to some of the recent bailout numbers that have been bandied about.
Lansner also says that if you like his idea, you may want to consider re-instituting some of the interest deductions we used to enjoy — deductions for interest paid on auto loans, credit cards, student loans and the like that went away in the mid-1980s.
Want to learn more? Visit his column:
What do you think — are there benefits that would apply here in Pinellas County?

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More taxes, this time from Dunedin again

Back in late July I wrote about the city of Dunedin, and how the City Commission there had overruled city staff and had rolled the city’s tax rate back a bit. City staff wanted to keep the tax rate the same and enjoy the benefits of more tax revenue via higher property values.

Now, the City Commission has reduced the tax rate even more, in response to angry local taxpayers who are upset (like everyone else) about increasing property taxes.

Throughout Tampa Bay and across Florida (and beyond Florida, as well), taxpayers are getting up in arms about property tax rates. In this area, at least, the culprit is exploding property values. Home valuations have shot up, and that increase in value results in higher property taxes.

Here’s an example of what that means locally; Pinellas County will rake in $148 million more in tax revenue this year without having to increase tax rates one bit — the huge increase in property tax valuations is at fault.

Anyway, back to Dunedin: A few days ago the City Commission voted to drop the millage rate by 5 percent in response to angry taxpayers. Scores of taxpayers showed up at a commission meeting and pleaded with commissioners to provide some relief. And the commissioners said at the meeting that they will consider additional tax rate cuts, even thought the result may be cuts in city services.

Across the region and the state, it is looking more and more like a full-fledged taxpayer revolt in the making. Stay tuned.

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Are lower taxes in Pasco County’s future?

pasaco-county-seal-pictureCould property taxes actually be headed down in Pasco County?

That’s the way it looks, even though most property owners have experienced recent tax increases as the value of their properties has gone up.

So why should property taxes be headed down? Because the county’s tax base has been headed steeply up, driven by the continuing upswing in development. All that new construction has resulted in a much more valuable tax base, up an estimated 27 percent in 2006 over 2005.

Mike Wells, the Pasco County tax appraiser, says the tax base was $19.9 billion in 2005, but will be an estimated $25.3 billion this year. That is the biggest one-year tax base increase ever recorded in the county.

When the tax base has grown in the past, county officials have responded by dropping the millage rate, and many of them are predicting that another drop in the tax rate should be coming up, thanks to the expanding tax base.

County officials say that if the millage rate is not dropped, the broadened tax base should generate an additional $87 million or more in new tax revenues.

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