South Philly Real Estate Blog

Tax Credits for Adding or Replacing Insulation

A federal tax credit makes adding insulation an even cheaper way to improve your home's energy efficiency and cut your heating and cooling bills.

If putting a dent in your home's heating and cooling bills is a priority, then adding insulation needs to be at the top of your to-do list. It's a relatively affordable home-improvement project, and the savings can be felt almost immediately. Some DIYers can even tackle the project themselves over a weekend.

For a 2,200 square foot home, adding insulation to an attic can cost from $1,000 to $2,500 including labor, depending on how much you put in and how easy it is to install. Effort and expense go up when you add insulation to exterior walls or around hard-to-reach ductwork. A federal energy tax credit worth up to $1,500 can help defray the cost.

It all comes down to R-value

Insulation is measured in R-value, the resistance to heat flow. The higher the number the better the insulating power. The U.S. Department of Energy recommends R-values www.1.eere.energy.gov/consumer/tips/insulation.html between 30 and 60 for most attics. Take a peek in yours. If your insulation is level with or below the attic floor joists, then you probably need more.

There are different types of insulation, including fiberglass, cellulose, mineral wool, spray foam, foam board, and cotton batting. The most familiar is pink fiberglass roll insulation. If you're not sure what's best suited for your home, check with an insulation contractor. Just about all insulation qualifies for the energy tax credit (more below) as long as its primary purpose is to insulate-insulated siding, for example, doesn't count-and it brings your home up to recommended R-value guidelines.

Energy Star www.energystar.gov/index.cfm?c=home_sealing.hm_improvement_insulation_table, a joint program of the DOE and U.S. Environmental Protection Agency, suggests R-38 insulation for most attics (or about 12-15 inches, depending on the insulation type). In colder climates, R-49 may be required. The DOE's online calculator www.ornl.gov/sci/roofs%2bwalls/insulation/ins_16.html can recommend R-values for all areas of your home's "envelope": attic, walls, floors, basement, and crawl spaces.

Generally, most homes built before 1980 have inadequate insulation. The easiest insulation to add is blown loose-fill insulation. You'll probably need to hire a contractor. Since insulating an attic isn't too complicated, you can get quotes-at least three-by phone. However, get a copy of the quote in writing before work starts, and be sure it specifies R-value. Michael Kwart, executive director of the Insulation Contractors Association of America www.insulate.org/, recommends rolled insulation for do-it-yourselfers. New insulation can be added on top of existing insulation.

Savings and sustainability can add up

Depending on where you live and how much insulation you already have, adding more can trim heating and cooling costs anywhere from 10% to 50%. A homeowner in the Northeast with an uninsulated attic, for instance, can save about $600 a year by adding about 15 inches of insulation (R-38) between the rafters, according to the Energy Department. Just 6 inches can net annual savings of about $200.

The $1,500 federal tax credit www.energystar.gov/index.cfm?c=tax_credits.tx_index can be applied toward 30% of the cost of insulation installed in your primary residence during 2009 and 2010. Let's say you spend $1,760 on enough R-38 roll fiberglass to insulate the attic of your 2,200 square foot home. That's $40 per 50 square feet retail, a fair estimate. You'll be able to subtract $528 (30% of $1,760) straight off the top of your tax bill, as long as you paid more in federal taxes than you're claiming in credits. Since a typical homeowner won't be able to use up the entire tax credit on insulation alone, the remainder can be applied to other qualifying energy-efficiency upgrades like new windows www.houselogic.com/articles/tax-credits-replacing-windows-doors-and-skylights/ or roofing www.houselogic.com/articles/tax-credits-replacing-your-roof/. Just keep in mind that the total credit claimed for all of these improvements can't exceed $1,500 for the two-year period.

Save receipts, and if a contractor did the work, get a receipt that's itemized. Labor costs, typically 25% of the total bill, according to Kwart, don't count toward the tax credit. There's no need to file receipts when you claim the credit on Form 5695, but the IRS could ask you to cough one up later. Also hold on to product stickers from packaging that show R-values and manufacturers' certification statements that attest to tax-credit worthiness. Check manufacturers' websites for a copy of the statement. If you're building a new home, you're out of luck; only existing homes qualify for this tax credit, which can't be carried over into future years.

Adding insulation is just the beginning

In conjunction with adding new insulation, conduct a whole-house energy audit www.houselogic.com/articles/professional-energy-audits-the-costs-and-benefits/ to find other ways to reduce power consumption and save even more on monthly bills. Caulk around drafty windows and doors, and stop gaps in siding and the foundation, says Matt Golden, president and founder of San Francisco-based Sustainable Spaces www.sustainablespaces.com/. Reducing a home's air leakage by 25% can lower annual energy costs by about $300, according to the Lawrence Berkeley National Laboratory (http://www.lbl.gov/).

 This article provides general information about tax laws and consequences, but is not intended to be relied upon by readers as tax or legal advice applicable to particular transactions or circumstances. Readers should consult a tax professional for such advice, and are reminded that tax laws may vary by jurisdiction.

Article From HouseLogic.com
By: Gil Rudawsky
Published: September 09, 2009

‘Tis the Season…to Buy a Home

Winter is often considered a relatively slow time of year when it comes to buying and selling real estate. In colder regions, trekking through snow and ice to visit open houses isn’t the way most people tend to spend their free time. Winter weather conditions can also make packing up and moving into a new home more difficult.

But for those who do choose to house-hunt during this time, the market can be a virtual winter wonderland of opportunity. Winter home shopping offers strong benefits that may ultimately work to a buyer’s advantage. 

There is less activity and therefore reduced competition in the winter.  Serious buyers have more room to negotiate with motivated sellers and have a solid chance at achieving some great deals.

Another key benefit of winter home buying is less competition for financing.  Fewer buyers means fewer people looking for loans.  Lenders tend to be less busy in the winter so they can often provide more personal attention to the smaller pool of borrowers.

Colder weather can help buyers determine how well a home is insulated.  If a house is drafty – a sign it might need new windows or have leaks that will need to be sealed – buyers may not notice it in the middle of summer.  While inside the house, check to see how high the thermostat is set. If it is set low and the indoor temperature is still comfortable, the house is probably well-insulated and won’t have excessively high heating bills.

Another important incentive to shop during the winter this year is the extended and expanded home buyer tax credit. Current homeowners who buy a new primary residence may qualify for as much as a $6,500 tax credit, and first-time home buyers can qualify for up to $8,000, but buyers must have a signed contract in place by April 30, 2010, and close on the home by June 30, 2010, to receive the credit.

Homeownership is an investment in your future, and there has never been a better time to be a buyer.  There are more reasons than ever to take advantage of slower activity during the winter season and shop for a home. Serious buyers should contact a Realtor^® to help them start their home search today.

 

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Realtors® Win Push for Home Buyer Tax Credit Extension

Home buyers across the country are celebrating Congress’ decision to extend the $8,000 first-time home buyer tax credit through April 30. Adding to the good news, the credit has also been expanded to include a $6,500 credit for current homeowners, provided they have lived in the home they’re selling for five consecutive years of the past eight years. If they have a binding contract on or before that date, they will have until through June 30 to close the transaction.  Realtors® praised the decision as the right measure to encourage continued economic stabilization.

As leading advocates for housing and real estate issues, Realtors^® understand that while present home sales have been rising recently, they are far from normal and well below the activity of the pre-bubble years,  The tax credit should continue to reduce inventory to acceptable levels.

Income limits for eligible home buyers have also been expanded. Single buyers with an income of up to $125,000 qualify, as do married couples with a combined income of up to $225,000. However, the purchase price of the home cannot exceed $800,000. In addition, buyers are required to attach documentation of their purchase to their tax return. 

According to data from the National Association of Realtors^® and the Internal Revenue Service, the tax credit is working very well. NAR economists estimate it has contributed approximately $22 billion to the general economy and more expect more than 2.3 million first time buyers to take advantage this year. Each home purchase generates about $63,000, the equivalent of about one new job.

Economists also attribute the tax credit to the significant upsurge in first-time buyers this year. The NAR 2009 Profile of Home Buyers and Sellers reports first-time home buyers reached the highest market share on record over the past year. Entry-level buyers accounted for 47 percent of all home sales, up from 41 percent of transactions in last year’s study.  First-time buyers are playing a major role in ensuring a real estate and economic recovery.

First-time buyers are taking advantage of the once-in-a-lifetime opportunities in the current market, investing in their future through homeownership.  These investments are in turn reducing housing inventory and helping to stabilize home prices, which is good for the future of our entire economy.

Courtesy of the National Association of Realtors®

 

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Down to the Wire for the $8,000 Home Buyer Tax Credit

Time is running out to cash in on the $8,000 first-time home buyer tax credit as the November 30 deadline approaches. Thousands of buyers have already taken advantage of this tremendous opportunity, but there are only a few short weeks left for would-be homeowners to act.

 

Today’s home buying process takes time. Lenders are being more cautious about approving loans and are scrutinizing borrowers’ financial information more closely. This means that the days of settling on a home in two weeks are long gone. The typical closing process now takes at least eight weeks – about 60 days. Home appraisals are taking longer, and home inspections and title searches must also be factored into the process. According to Frank Jacovini, Broker of Philator.com Realtors®, home buyers need to be realistic about the time it will take between searching for a home and closing on the deal.

 

Homeownership is an investment in your future and shouldn’t be rushed.  Buyers who want to take advantage of the tax credit can save themselves a lot of stress and anxiety by getting the ball rolling sooner rather than later.

 

Those who assume the government will extend the tax credit beyond the November 30 deadline could be disappointed and miss out, since Congress has not indicated that the tax credit will be extended. The wisest choice qualified buyers can make is to take advantage of current market conditions – high inventory, low interest rates and affordability – while the $8,000 tax credit is still available.

 

The tax credit may not be the only thing buyers miss out on by waiting. Recent statistics and trends show signs the market has already hit bottom and is rising again. Prices have stabilized in many areas and while interest rates remain historically low, there is no guarantee they’ll remain low. Current conditions may not last much longer.

 

“There has never been a better time to achieve the dream of homeownership,” Jacovini said. “Delaying the process could jeopardize obtaining the home you want for the price you want and receiving money from Uncle Sam in return. The clock is definitely ticking”

 

courtesy of the National Association of REALTORS

Appraising Appraisals

A home appraisal is a vital part of a real estate transaction. Appraisals help sellers list their homes appropriately and assure lenders and buyers of a home’s worth. Unfortunately, Realtors^® across the country are reporting unusually low home appraisals, including some homes estimated to be worth less than replacement construction costs.

 

Many have even experienced delayed and lost sales due to poor appraisals conducted by inexperienced appraisers not familiar with the area. These reports seemed to intensify after the new Home Valuation Code of Conduct was implemented on May 1.

 

The HVCC establishes standards for solicitation, selection, compensation, conflicts of interest and appraiser independence. In many cases however, the HVCC has slowed the appraisal process and increased the use of out-of-area appraisers who may not be familiar with the local real estate market.

 

Determining correct property value is a difficult task in today’s market.

 

Buyers are purchasing more foreclosed homes and short sales that typically sell for 20 percent less than traditional homes in the same area,  this makes it challenging for appraisers to identify comparable homes and make appropriate value adjustments.

 

Appraisers are also concerned about the issue. According to a recent survey by the National Association of Realtors^®, 70 percent of appraisers have noticed an increase in the amount of fees paid by consumers. It doesn’t stop there. A reported 36 percent saw a severe decrease in appraisal quality. Although the reason for this decrease has yet to be identified, it is essential that appraisers are fully qualified and experienced with the areas in which they work. They must also be independent of any outside influences that would improperly influence the appraisal procedure. There are certain measures that can strengthen the process.

 

Allowing other parties involved in the transaction to ask the appraiser to consider additional property information and provide further detail can help isolate the appraiser from improper influence.  In addition, buyers and sellers should discuss the unique conditions of a home and its neighborhood with the appraiser if he or she is not familiar with the area.

 

The Federal Housing Finance Agency recently took a step forward in dealing with the issue when mortgage giants Fannie Mae and Freddie Mac clarified two important guidelines. The government-sponsored enterprises stated that lenders should use appraisers with clear experience in the geographic area they are appraising and explained that appraisers are not prohibited from talking to real estate agents.

 

Realtors^Ò share unparalleled knowledge of local markets.  They are a trusted and valuable resource for consumers and are ready to help appraisers determine accurate property values.

 

Courtesy of the National Association of Realtors®

 

 

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Green Home, Greener Wallet: Tax Incentives Abound for Energy-Efficient Homes

 Thanks to Uncle Sam and some temporary tax credits, it pays right now to go green. Although a lot of attention has been paid to the $8,000 home buyer tax credit that was established earlier this year by the American Recovery and Reinvestment Act of 2009, that legislation also established a number of tax breaks for current homeowners who want to improve their home’s energy efficiency.

The Residential Energy Property Credit increases the energy tax credit for homeowners who make certain energy-efficient improvements to their existing homes, in many cases giving the homeowner a credit of up to 30 percent of the cost of the project. Most of the improvements must be made from January 1, 2009 through December 31, 2010, but some projects will be eligible for a tax credit through 2016.  These additional tax breaks reinforce the value of going green.

Realtors^Ò understand the long-term investment and savings associated with greener homes.  As green building issues become more important to buyers, sellers and businesses, more and more Realtors^Ò are adding value to the real estate transaction by developing green business practices and educating themselves and their clients about the benefits of energy-efficient home and building features.

Most energy-efficient improvements to existing homes now qualify for a tax credit of 30 percent of the project cost, up to $1,500. Exterior windows, skylights and doors with a qualifying U-Factor (which measures how well it insulates) and Solar Heat Gain Coefficient (which measures how well it blocks heat caused by sunlight) are eligible, as are certain metal and asphalt roofs. In addition, the credit covers installation costs for HVAC, gas, oil and propane water heaters and biomass stoves.

 

The deal gets even sweeter for owners who enhance their home with geothermal heat pumps, solar energy systems or small wind energy systems. They qualify for 30 percent of the entire cost – including installation – and the credit doesn’t expire until December 31, 2016.  

There are no upper or lower income limits on energy efficient tax credits. For detailed information about all eligible projects, visit energystar.gov/taxcredits.

This is an opportunity homeowners looking into “greening” their houses should consider.  

Realtors^® know what features add value to a home, and many of today’s consumers want homes that are sensitive to the larger environment.  This isn’t just a fad. Energy efficiency and the cost savings that come along with it will never go out of style.

Courtesy of the National Association of Realtors®

 

 

Today’s Buyers Have 8,000 Reasons to Become Homeowners

The federal government gave many potential home buyers a big incentive to become homeowners earlier this year with an $8,000 tax credit for qualified home purchases through November 30, 2009. Now the Federal Housing Administration has sweetened the deal. Instead of waiting to file their taxes to receive the $8,000 credit, qualifying buyers who use FHA loans can access the funds immediately through short-term bridge loans.

 

Under the FHA program, buyers can add the amount of their tax credit to their 3.5 percent downpayment, which is required for FHA-insured mortgages; use the money to help cover closing costs; or buy down their interest rate. This new measure should meaningfully impact home sales and values.

 

Realtors^® have advocated monetizing the $8,000 tax credit and are excited about FHA’s actions. This program will increase housing demand, help reduce inventory and allow more families to achieve the dream of homeownership.

 

The credit is available to first-time buyers and people who have not owned a home in the past three years, with certain income limitations. If the buyer is married, their spouse must also meet those requirements. Only people who purchase a primary residence – including single-family homes, condos, townhomes and co-ops – qualify.

 

Single buyers who earn up to $75,000 and married couples who earn as much as $150,000 may receive the maximum tax credit. The credit decreases for single buyers earning between $75,000 and $95,000 and between $150,000 and $170,000 for home buyers filing jointly.

 

A buyer’s first step should be to contact a Realtor^® who can help them determine if they qualify for the tax credit under IRS guidelines and assist them through the purchase process.

 

The buyer must occupy the home for at least three years to realize the full benefit of the tax credit. If the property is sold during the three-year period, the entire credit must be repaid upon sale.

 

Early summer will be a critical indicator of how home buyers are responding to the tax credit.

 

The home buying process takes time, and as word continues to spread about the credit, more buyers will likely take advantage of the tremendous opportunities in today’s market and decide to become homeowners.

 

For more information about the $8,000 home buyer tax credit, visit www.realtor.org/taxcreditbasics.

 

This article is courtesy of the National Association of Realtors®

 

 

 

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The Online Business of Being Social

 There’s no question that the Internet has revolutionized the business of real estate. According to the 2008 National Association of Realtors® Profile of Home Buyers and Sellers, nearly nine out of 10 recent buyers used the Internet in their home search.  But now, a new revolution is taking place. A small but growing number of home buyers are taking advantage of social networking Web sites like Facebook and MySpace, as well as video hosting sites such as YouTube when searching for a home, and Realtors^® are using these tools to reach today’s home buyers and sellers.

 

Realtors^® are industry innovators.  At its core, real estate is grounded in relationships, and social networking combines the high-tech of new technologies with the high-touch of real estate. It makes sense that Realtors^® are leveraging these new resources to help them connect with buyers and sellers.

 

A recent Harris Poll revealed that 48 percent of adults who are online have a Facebook or MySpace account. While many maintain these accounts for personal use, others use them for professional networking. For example, the National Association of Realtors^® has its very own Facebook page with just under 15,000 fans. NAR’s research department also has a Facebook page where both Realtors^® and consumers can access the latest research and data findings.

 

Blogs are another popular social networking tool Realtors^® use to share information and keep themselves informed on the latest news affecting the industry. On sites like ActiveRain, Realtors^® can share useful tips and industry insights with potential buyers and sellers. Realtors^® also post blogs on REALTOR.com; consumers can find blogs from Realtors^® across the country at http://talk.realtor.com/.

Given the Internet’s convenience and round-the-clock accessibility, it’s not surprising that more and more consumers and Realtors^® are connecting online.  As the social networking universe expands, Realtors^® will continue to find innovative ways to serve their clients and customers, and build their businesses.

 

The best thing about social media is it can be tailored to fit the needs of the user.  At its most fundamental, online networking is simply another way to communicate, and Realtors^® have an opportunity to make it work for their businesses and lives.

 

Courtesy of the National Association of Realtors®

 

 

 

 

Tax Credit Advance Loan Program

Congress has enacted legislation providing a federal tax credit of up to $8,000 for first-time home buyers purchasing (and occupying in the case of custom construction) their principle residence between January 1 and November 30, 2009. This credit is available to single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000. A first-time home buyer is defined as a buyer (and his/her spouse) who has not owned a principal residence during the three-year period prior to the purchase.

 

For more information on the Federal First-time Homebuyer Tax Credit click here.

 

In Pennsylvania the Pennsylvania Housing finance Authority’s Tax Credit Advance Loan Program (TCA) allows Keystone Home Loan and Keystone Home Loan PLUS borrowers to apply a portion of their 2009 first-time homebuyer tax credit towards the purchase of their home. The program offers an advance in the form of a subordinate loan to those filing for the 2009 First-Time Homebuyer Credit (IRS Form 5405) on their 2009 tax returns. Due to limited funding, the program will be available to homebuyers on a first-come, first-served basis.

 

In New Jersey the First-Time Home Buyers Tax Credit Loan (“TCLP”) Program provides a loan to pay down payment and/or closing costs to Agency Home Buyer Program first-time home buyers who meet all of the requirements of the Home Buyer Program and who are eligible for

the credit as permitted by the federal law establishing the credit and the guidance provided by the IRS in the General Instructions that accompany IRS Form 5405 and who close on a home purchase between the start of the TCLP program and December 1, 2009. The loan will not exceed $5,000 ($4,000 in the case of married filing separately) and will be secured by a second mortgage. The borrower will pledge to apply the refunds received from the first-time home buyer tax credit toward the repayment of the TCLP loan.

 

For PA Program Eligibility and Details click here.

For NJ Program Eligibility and Details click here.

 

Realtors® Celebrate Fair Housing Month

 April marks the 41^st anniversary of the 1968 Fair Housing Act, which strives to ensure equal housing opportunity for all. Realtors^Ò  are dedicated to advancing fair housing laws and eliminating discrimination, and can give their buyer and seller clients a wealth of resources and information about their rights and responsibilities under the act.

Realtors^® are community builders who understand the importance of giving all Americans the opportunity to fulfill their homeownership dreams. With all the stress and excitement of the home buying process, the last thing a buyer should have to worry about is if they’re being treated fairly. Although we celebrate Fair Housing Month in April, for Realtors^®, every month is Fair Housing Month.

 

According to U.S. Census data, more than 75 percent of white households own their home, but only about 50 percent of African American and Hispanic households are homeowners. Minority buying power stands at over $1 trillion and minorities are projected to account for more than 50 percent of first-time buyers by 2010.

 

Realtors^® know that diverse neighborhoods and schools strengthen communities, and minority population growth is vital to sustaining housing markets. National Association of Realtors^® members have access to educational tools like the “At Home with Diversity” program. The course teaches Realtors^® about being sensitive to and aggressive in meeting the homeownership needs of a multicultural society. More than 25,000 Realtors^® have completed the program.

 

NAR also provides Realtors^® with funding for programs that support its Housing Opportunity Program, helping those who need greater access to quality, affordable homeownership and rental opportunities. This May, NAR will co-sponsor the HOPE Awards, which honors individuals and organizations who are working to increase minority homeownership. Award winners receive $10,000 and the opportunity to share their programs and expertise during a minority housing symposium at the Realtors^® Midyear Legislative Meetings & Trade Expo, May 11-16 in Washington, D.C.

 

People have a right to live wherever they can afford to live. For many families, homeownership is a stepping stone to prosperity and represents the American way of life. Fair housing means opening those doors for everyone in this country whose goal it is to own a home.

 

Courtesy of the National Association of REALTORS.