Creative Mortgage Solutions

Another Obama plan that will do nothing for Everett real estate

This information will not have a major impact on homes for sale in Everett and / or Everett real estate in general. The IRS finally got around to clarifying the guidelines for the home buyers tax credits. That’s right the $8000 credit for first time buyers and the $6500 credit for move along buyers.

This is the same credit that many think, myself included, hasn’t made a single additional sale since its inception.

Think about it, if I am on the market for a home for sale in Everett I am going to buy regardless of an $8000 credit. I personally think this credit is just like so many other things the Obama administration has done in that it is completely ineffectual. I think this credit has had no affect on demand for Everett real estate or the prices of homes for sale in Everett.

Because of abuse of the original credit the IRS and Congress revised the program last November. They also extended the credit life and included the $6500 move along portion.

In a few cases IRS and Congress found phony claims and so with typical reaction they punished everyone equally. For a while they didn’t pay legitimate claims. Using a sledge hammer to kill this fly here is what Congress wanted IRS to do. Congress directed the IRS to spell out documentation standards in detail and to install monitoring systems to try to spot fraud upfront. Among the keys to the monitoring system is that all documentation accompanying credit claims must comply with IRS’ detailed rules.

Here is what IRS came up with for anyone claiming the credit:

• You must fill out the IRS form 5405 (the form is here www.irs.gov). This provides basic information supporting the claim for eligibility, appropriate dates, income information and amount of credit claimed.
• A copy of the settlement statement called the HUD-1. This proves the transaction actually took place and who was party to it.

There are problems with the HUD-1. IRS wants both the buyer and sellers to sign the HUD-1. In some states that isn’t required. On February 12, 2010 IRS loosened up that requirement and said they will allow whatever the respective state allows. That was very big of them.

Will this spur more sale of Everett real estate, I doubt  but who knows? Will this improve the outlook for homes for sale in Everett again who knows?

The form 5405 does say that both parties must sign the HUD-1 but IRS is now saying don’t worry be happy.

Nationwide, according to estimates by the National Association of Realtors, about 1.5 million repeat purchasers and 900,000 first-timers are expected to apply for credits this year.

Also don’t forget that if you are a repeat buyer you will need to prove that you lived in the home for 5 continuous years out of the last 8. They say property tax records or hazard insurance records or mortgage interest statements can help that. I say that stuff is open to abuse and doesn’t prove a thing.

I personally don’t think the credit will produce one single extra sale of any home for sale in Everett. I don’t think this credit will produce any measurable effect on Everett real estate at all.

Jim Johnson and comments are always welcome.

Everett mortgage on line.

This entry was posted on Monday, February 22nd, 2010 at 3:44 pm and is filed under Everett real estate, Homes for Sale Everett. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.