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Archive for the ‘tax credits and incentives’ Category

It’s no big secret that Michigan residents in general have been going through some rough economic times. I say in general, because not everybody is hurting. But with unemployment/underemployment at 20% or more many Michiganders have felt a financial pinch.

Some of that financial pinch shows in many of the houses that have sold in the past few years. Not as well maintained and some foreclosures are downright destroyed. For those who have taken advantage of our buyers’ market, you will more than likely need/want to make repairs and improvements on those homes. And while making those repairs and improvements you may want to consider the fact that the cost of energy has been on the increase with no end in site at this time. Personally, my electric use is down, but my electric bill is higher than for the same period last year.

We can only tackle the cost of power itself with constant contact with Congress people (Cap and Trade, etc) and in the voting booth this fall. But we DO have some control on the amount of electricity and gas we use and get some of our tax dollars back in the process via tax credits and rebates.

There are Federal tax credits that don’t expire until 2016 for items such as Geothermal Heat Pumps, Residential Wind Turbines and Solar Energy Systems- 30% of cost with no upper limit.

And there are Federal tax credits that expire December 31, 2010 for 30% of the cost up to $1500 for items such as “biomass stoves” known to the rest of us as wood stoves (or corn, or pellets), central air, heating, water heaters, insulation, windows, doors, and roofing. You should go to the federal government web site for details and exclusions and consult with your accountant before purchasing anything.

Not covered are items like ceiling fans, CFL’s- those swirly light bulbs made in China (the last American light bulb factory just closed down), toilets, electric furnaces/boilers (like we all have natural gas available), clothes washers and dryers….

You state may have it’s own credits or rebates. Some of the rebates for the state of Michigan have run out of money (but there is sill money in the budget to promote breast feeding), but there is still some money left for the purchase of refrigerators, clothes washers and dishwashers. Check this web site for details.

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Haven’t owned a home in the past 3 years? You may qualify for the first time home buyer tax credit (up to $8000).

Owned the same home for at least 5 of the last 8 years? You may qualify for up to a $6500 tax credit.

In a nut shell:

1st time home buyer (haven’t owned in the past 3 years) can get a credit of 10% of the sale price (up to $8000)

Current home owner can get up to $6500 if the home they are selling or vacating was used as their principal residence for five consecutive years within the last eight years.

Dead line: So long as a written binding contract to purchase is in effect on April 30, 2010 and closes by July 1, 2010. 

There are income limitations and rules about what exactly a first time home buyer is.

A tax credit is real money. If you owe $2000 that $8000 tax credit would get you a refund of $6000. (disclosure- I’m not an accountant and this is not tax advise)

Something to consider when timing your real estate purchase:

  • A short sale can take up to 6 months (possibly longer)
  • If your lease is up this fall- will it cost you $8K to break the lease or is that double payment for a few months equal to $8K?
  • If you don’t qualify for the tax credit, don’t sweat it- prices are low and interest rates are great. Both reason enough to purchase.

Please contact me for more information about buying or selling real estate in North Oakland or Lapeer Counties.

Jackie Hawley
Keller Williams Realty
cell: (248)736-6407
email:
Jackie@JackieHawley.com
web:
www.MiRelocation.com
lake blog:
http://SoutheastMichiganLakefrontHomes.wordpress.com

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If you are a first time home buyer (defined as someone who hasn’t owned a principle residence in the past 3 years) and you bought a home on or after April 9, 2008 you may qualify for up to a $7500 tax credit.

There ARE a few conditions and caveats. The tax credit is refundable, which means you have to pay it back. So it’s more like an interest free loan that gets paid back over the next 15 years starting for the 2010 tax year for houses bought in 2008, 2011 for homes bought in 2009. Houses must be bought between April 9, 2008 and July 1, 2009.

The amount of the tax credit is dependent on the price of the house – 10% of the cost of the home with a maximum credit of $7,500. And there are income restrictions which are explained quite thoroughly in the link below.

All in all, it’s worth looking into and worth discussing with your accountant. If you’re thinking about buying a house, but not quite sure if this is the right time, this is something else to consider along with low housing prices and low interest rates.

Click here for more details about the first time homebuyer tax credit

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