Posts Tagged ‘taxes’

You have to admit one thing, confusion always seems to abound when the federal government is involved! That’s why it is important to keep connected to professionals that cut through the confusion to help sort things out for you. That is why I am bringing you this update to the new FHA approved first time home buyer tax credit of $8000.

According to the newest Mortgagee Letter from HUD, the $8000 tax credit provided for First Time Home Buyers can be applied towards the purchase of a home using an FHA mortgage. However, this must be clarified a bit. FHA mortgage loans require a 3.5% investment on the buyer’s behalf, and this can not be provided by any third party entity, including the Federal Government! This means that as a buyer, you still need to have your own funds for this 3.5% investment in your purchase!

You can still use gift funds and any other acceptable option provided by HUD and the FHA. However, you can not use the tax credit for the minimum downpayment.

There is another item one should be worried about when using this credit… fraud. There are specific ways to use the credit and get the funds, and in some cases not knowing the difference can result in fraud. I will share more information on that in a future article very soon.

So to summarize, the newest Mortgagee Letter from HUD clarifies that a borrower can NOT use the $8,000 tax credit to satisfy the 3.5% minimal investment for an FHA mortgage loan. It CAN be used as further downpayment on a home, just not for the minimal.

Hillary Clinton and John McCain offer a Joke to Voters

Hillary wants to use a “windfall tax” on the oil companies (which will increase their expenses and thereby our gasoline prices - DUH!) so that she can use that money to suspend the gasoline tax for the summer. McCain also wants to suspend the gas tax to save us money!

Ok.. you ready for the joke? You just got it… this gas plan is a joke.

Real Life Example:

The federal gas tax is only 18.4 cents per gallon. My Acura TL holds roughly 15 gallons of gas and I fill up about 6 times a month. 15 x 18.4 = $2.76 saved per fill up. That’s not even ONE GALLON OF GAS! Ok, so 6 fill ups a month would be $2.76 x 6= $16.56 a month. Over 3 months I would save $49.68, roughly one fill up!

So Hillary and McCain’s Plan on Gas: Vote for me and I will save you about $20 a month on your overall gas bill. Hmmm. Sounded better the other way: Suspend the Gas Tax and save Americans “millions of dollars” this summer. (Of course, we won’t take office until next year, so you do understand this is all talk, don’t you?)

Although my savings would be $50, somehow I believe the gas prices would continue to go up as a result of the “windfall tax” as to erode my savings. And when that gas tax comes back, OUCH!

I hope others are seeing past these political jokes as well. This is nothing more than smoke and mirrors and when the smoke clears and the whole thing fails, these politicians will simply blame the oil companies again.

So does this mean we simply vote Obama? Not so fast… I just bring you this reality of the joke to make you think in reality when considering who you will vote for. Don’t just listen to their words. Discover for yourself what they are really saying.

90,000 Union County Properties Notified of Revaluation

Around March 17, some 90,000 Union County property owners will be notified of the new property values by which the county will base their taxes. For many people, this could be mixed news. While a higher tax value on a property can be a good indication of the real estate’s appreciation, this can also mean higher taxes will be charged to the owner.

In North Carolina, counties are required to reassess the value of real estate every 8 years. In some counties with fast growth, counties are doing it more often. Union county is one of the fastest growing counties in the state and currently are reappraising the value after only 4 years.

Union County’s growth is due to the lower real estate taxes, great school reputations and the proximity to Charlotte. Some of the major towns in Union County include Monroe, Waxhaw, Weddington, Marvin, Indian Trail, Stallings, Wingate, and Wesley Chapel. There are over 80 communities within Union County. The Union County real estate market is solid right now and offers a great value and alternative to buying a home in Charlotte.

Property owners in Union County are permitted to challenge the assessment if they feel the value on their property is too high. For more information on how to challenge your property’s value, call Union County at 704.283.3546.

Its almost that time of year again. TAX SEASON! Just after the Ho Ho Ho’s are done, for many people its the Woe Woe Woe’s of tax time. This is especially a crazy time for the self employed. Most business owners take advantage of all kinds of write-offs and tax breaks to eliminate most, if not all of their tax liablility. While that is awesome, it may not be the right move!

If you are thinking of buying a home this next year, be careful with your taxes. Just because you grossed $250,000 last year does not mean you get to use that for your income level. Lenders are not looking at your gross sales. They are looking at your net taxable income on your Schedule C. For many people this could be a problem.

Many business owners pay a professional to handle their taxes. These professionals have one goal in mind… to bring your net taxable income as low as possible so that your tax liability is small. But this also will affect any income that you can use to qualify for a home (or any other loan.) And with lender’s tightening up their loan programs, the old “stated” income deals are hard to find!

Here is a real life scenario I just went through…

A business owner filed taxes last year with gross income revenues of over $250,000! He had a fantastic year! He also had a fantastic accountant that was able to get his taxable income down to $2,500.00. Yeah, that’s right… $2,500.00. But even if it was $25,000, he would have had the same problem…. This year when he decided to buy his family a home, the lender is qualifying him off the NET income of $2,500! That means with no other debt at all, he could afford a house payment of roughly $75 a month. Oh, that also includes taxes and insurance. Not much home huh?

Lenders are figuring that if you are able to write off these expenses, then you are not holding that as cash. They can only go by your net income… and that is what you pay taxes on.

So what do you do? Either pay lots of taxes or keep renting? NEITHER! You can have the best of both worlds IF you know how to do it…

This year when you file your taxes, have your accountant show as much income as possible on the Schedule C. Yes, I know, that means you have taxes due… don’t worry about that right now. You have until April 15th to pay anything. Once you have FILED you taxes (and it does need to be filed) you can apply for a mortgage and be qualified on that income. Then GO FIND A HOME! Get started right away in finding the right home. Once you close on your home, have your accountant go back and AMMEND your tax returns, taking all the deductions you “forgot” to take the first time. Get this ammended return in by April 15th, and any check you may need to write Uncle Sam will be much less.

In doing this, you have achieved both goals… buying a home and reducing your tax bill.

ADDED 12/21/2007

I have recieved a few emails from folks concerned that this might be considered fraudulent. Please understand that I am not in any way promoting any type of fraudulent activity. However, we all know that when a good accountant is done with all the allowable write-offs that the IRS allows, the taxable income that a business owner may be left with is NOT the useable income they have lived off of for that past year. Majority of the time, the taxable income is dramatically less than what that individual actually used to live and pay bills. So using the Schedule C net income is not a totally accurate representation of a borrower’s income producing ability; however, it is the number lenders use to qualifying a self-employed borrower for a mortgage. So if you are self employed and plan to buy a home, I guess the best advice is to show your taxable income as what you actually lived off of last year when you first file, and then you can go back to ammend your taxes to take advantage of the additional items the IRS allows you to write off. Self employed individuals take the most risks in life and we all benefit from that. They should also be given the most opportunity as well. Is it working the system? I guess it is… but in my humble opinion, it is no different than what the accountant can work the system for in finding additional writeoffs.

_______________________________

This is just one of the many creative solutions you will find when you work with a professional in the mortgage industry. If you are thinking about buying a home, you really need to work with those that know the in’s and out’s of the business. To get pre-approved, contact the Carolina Mortgage Connection at 877-411-9327 or apply online to pre-qualify.