Help me walk on the moon

I need your help! I can't believe I am attempting doing this.

13 years ago I was diagnosed with Breast Cancer. I remember being told and making a little pact with myself that I would make a difference, if not for me, for my daughters. I imagined myself being a champion for the cause, spearheading the fight for a cure.

You have seen, I am sure, the ads for this wonderful day. 3 days - 60 miles. The funds raised going to the Susan G Komen search for a cure. The idea of that kind of a walk, was as foreign to me as walking on the moon. But you know... I am lucky, I have survived and others have not. I want to give this a shot.

HELP me make a difference while you make a difference to. GIVE as much as you can and know... it matters. And I...I would appreciate it.

Tax Simulus Plan and First Time Buyers....

Dear Readers,

If you are like I am, you are looking at the recent tax simulus plan and asking??? Hhhh? "Ok now what does this mean for me?!"

Despite the bigger question of improving the housing market in the country as a whole, the chances are this plan will not impact many Marin Buyers. Many are NOT first time owners. Many have incomes above the limits for inclusion in this plan. But there are those that this plan will assist in a very real way. In particular the below examines how the plan assists First Time Buyers by allowing an tax credit of up to $8000. Read below to find out more. The information was complied Alain Pinel Realtors.

If you feel the Congress should do MORE to assist in this challenging time in areas like the San Francisco Bay Area, you may want to send your thoughts to your elected officals.

In the meantime reflect on our good fortune to live in such a desirable and beautiful place. Who wouldn't want to live here?!

Frequently Asked Questions

In 2008, Congress enacted a $7500 tax credit designed to be an incentive for first-time homebuyers to purchase a home. The credit was designed as a mechanism to decrease the over-supply of homes for sale.

For 2009, Congress has increased the credit to $8000 and made several additional improvements. This revised $8000 tax credit applies to purchases on or after January 1, 2009 and before December 1, 2009. This piece is designed as an overview of the new tax credit. Prior to making any decisions regarding this new law, please contact your tax consultant.

Tax Credits -- The Basics

What’s this new homebuyer tax incentive for 2009?
The 2008 $7500, repayable credit is increased to $8000 and the repayment feature is eliminated for 2009 purchasers. Any home that is purchased for $80,000 or more qualifies for the full $8000 amount. If the house costs less than $80,000, the credit will be 10% of the cost. Thus, if an individual purchased a home for $75,000, the credit would be $7500. It is available for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009.

Who is eligible?
Only first-time homebuyers are eligible. A person is considered a first-time buyer if he/she has not had any ownership interest in a home in the three years previous to the day of the 2009 purchase.

How does a tax credit work?
Every dollar of a tax credit reduces income taxes by a dollar. Credits are claimed on an individual’s income tax return. Thus, a qualified purchaser would figure out all the income items and exemptions and make all the calculations required to figure out his/her total tax due. Then, once the total tax owed has been computed, tax credits are applied to reduce the total tax bill. So, if before taking any credits on a tax return a person has total tax liability of $9500, an $8000 credit would wipe out all but $1500 of the tax due. ($9,500 - $8000 = $1500)

So what happens if the purchaser is eligible for an $8000 credit but their entire income tax liability for the year is only $6000?
This tax credit is what’s called "refundable" credit. Thus, if the eligible purchaser’s total tax liability was $6000, the IRS would send the purchaser a check for $2000. The refundable amount is the difference between $8000 credit amount and the amount of tax liability. ($8000 - $6000 = $2000) Most taxpayers determine their tax liability by referring to tables that the IRS prepares each year.

How does withholding affect my tax credit and my refund?
A few examples are provided at the end of this document. There are several steps in this calculation, but most income tax software programs are equipped to make that determination.

Is there an income restriction?
Yes. The income restriction is based on the tax filing status the purchaser claims when filing his/her income tax return. Individuals filing Form 1040 as Single (or Head of Household) are eligible for the credit if their income is no more than $75,000. Married couples who file a Joint return may have income of no more than $150,000.

How is my "income" determined?
For most individuals, income is defined and calculated in the same manner as their Adjusted Gross Income (AGI) on their 1040 income tax return. AGI includes items like wages, salaries, interest and dividends, pension and retirement earnings, rental income and a host of other elements. AGI is the final number that appears on the bottom line of the front page of an IRS Form 1040.

What if I worked abroad for part of the year?
Some individuals have earned income and/or receive housing allowances while working outside the US. Their income will be adjusted to reflect those items to measure Modified Adjusted Gross Income (MAGI). Their eligibility for the credit will be based on their MAGI.

Do individuals with incomes higher than the $75,000 or $150,000 limits lose all the benefit of the credit?
Not always. The credit phases-out between $75,000 - $95,000 for singles and $150,000 - $170,000 for married filing joint. The closer a buyer comes to the maximum phase-out amount, the smaller the credit will be. The law provides a formula to gradually withdraw the credit. Thus, the credit will disappear after an individual’s income reaches $95,000 (single return) or $170,000 (joint return).
For example, if a married couple had income of $165,000, their credit would be reduced by 75% as shown:
Couple’s income $165,000 Income limit 150,000 Excess income $15,000
The excess income amount ($15,000 in this example) is used to form a fraction. The numerator of the fraction is the excess income amount ($15,000). The denominator is $20,000 (specified by the statute).
In this example, the disallowed portion of the credit is 75% of $8000, or $6000
($15,000/$20,000 = 75% x $8000 = $6000)
Stated another way, only 25% of the credit amount would be allowed.
In this example, the allowable credit would be $2000 (25% x $8000 = $2000)
What’s the definition of "principal residence?"
Generally, a principal residence is the home where an individual spends most of his/her time (generally defined as more than 50%). It is also defined as "owner-occupied" housing. The term includes single-family detached housing, condos or co-ops, townhouses or any similar type of new or existing dwelling. Even some houseboats or manufactured homes count as principal residences.

Are there restrictions on the location of the property?
Yes. The home must be located in the United States. Property located outside the US is not eligible for the credit.

Are there restrictions related to the financing for the mortgage on the property?
In 2009, most financing arrangements are acceptable and will not affect eligibility for the credit. Congress eliminated the financing restriction that applied in 2008. (In 2008, purchasers were ineligible for the $7500 credit if the financing was obtained by means of mortgage revenue bonds.) Now, mortgage-revenue bond financing will not disqualify an otherwise-eligible purchaser. (Mortgage revenue bonds are tax-exempt bonds issued by a state housing agency. Proceeds from the bonds must be used for below market loans to qualified buyers.)

Do I have to repay the 2009 tax credit?
NO. There is no repayment for 2009 tax credits, unless the property is sold prior to 3 years of ownership.

Do 2008 purchasers still have to repay their tax credit?
YES. The $7500 credit in 2008 was more like an interest-free loan. All eligible purchasers who claimed the 2008 credit will still be required to repay it over 15 years, starting with their 2010 tax return.

Some Practical Questions
How do I apply for the credit?
There is no pre-purchase authorization, application or similar approval process. All eligible purchasers simply claim the credit on their IRS Form 1040 tax return. The credit will be reflected on a new Form 5405 that will be attached to the 1040. Form 5405 can be found at http://www.irs.gov/.

So I can’t use the credit amount as part of my down-payment?
No. Congress tried hard to devise a mechanism that would make the funds available for closing costs, but found that pre-funding would require cumbersome processes that would, in effect, bring the IRS into the purchase and settlement phase of the transaction.

So there’s no way to get any cash flow benefits before I file my tax return?
Yes, there is. Any first-time homebuyers who believe they are eligible for all or part of the credit can modify their income tax withholding (through their employers) or adjust their quarterly estimated tax payments. Individuals subject to income tax withholding would get an IRS Form W-4 from their employer, follow the instructions on the schedules provided and give the completed Form W-4 back to the employer. In many cases their withholding would decrease and their take-home pay would increase. Those who make estimated tax payments would make similar adjustments

Some "Real World" Examples

What if I purchase later this year but can’t close escrow before December 1?
The credit is available for purchases before December 1, 2009. A home is considered as "purchased" when all events have occurred that transfer the title from the seller to the new purchaser. Thus, closings must occur before December 1, 2009 for purchases to be eligible for the credit.

I haven’t even filed my 2008 tax return yet. If I buy in 2009, do I have to wait until next year to get the benefit of the credit?
You’ll have a helpful choice that might speed up the process. Eligible homebuyers who make their purchase between January 1, 2009 and December 1, 2009 can treat the purchase as if it had occurred on December 31, 2008. Thus, they can claim the credit on their 2008 tax return that is due on April 15, 2009. They actually have three filing options.

If they purchase between January 1, 2009 and April 15, 2009, they can claim the $8000 credit on the 2008 return due on April 15?
They can extend their 2008 income-tax filing until as late as October 15, 2009. (The IRS grants automatic extensions, but the taxpayer must file for the extension. See www.irs.gov for instructions on how to obtain an extension.)

If they have filed their 2008 return before they purchase the home, they may file an amended 2008 tax return on Form 1040X. (Form 1040X is available at www.irs.gov)
Of course, 2009 purchasers will always have the option of claiming the credit for the 2009 purchase on their 2009 return. Their 2009 tax return is due on April 15, 2010.

I purchased my home in early 2009 before the stimulus bill was enacted. I claimed a $7500 tax credit on my 2008 return as prior law had permitted. Am I restricted to just a $7500 credit?
No, you would qualify for the $8000 credit. Eligible purchasers who have already claimed the $7500 credit on a 2008 return for a 2009 purchase may file an amended return (IRS Form 1040X) for the 2008 tax year. This amended return will enable them to obtain the additional $500 credit amount.

If I claim my 2009 $8000 credit on my 2008 tax return, will I have to repay the credit just as the 2008 credits are repaid?
No. Congress anticipated this confusion and has made specific provision so that there would be no repayment of 2009 credits that are claimed on 2008 returns.

I made an eligible purchase of a principal residence in May 2008 and claimed the $7500 credit on my 2008 tax return. My brother, who has never owned a home, wishes to purchase a partial interest in the home this spring and move in. Will he qualify for the $8000 credit, as well?
No. Any purchase of a principal residence (or interest in a principal residence) from a related party such as a sibling, parent, grandparent, aunt or uncle is ineligible for the tax credit. Since you and your brother are related in this way, he cannot qualify for the credit on any portion of the home that he purchases from you, even if he is a first-time homebuyer.

I know there is no repayment requirement for the $8000 credit. Will I ever have to repay any of the credit back to the government?
One situation does require a recapture payment back to the government. If you claim the credit but then sell the property within 3 years of the date of purchase, you are required to pay back the full amount of any credit, including any refund you received from it. A few exceptions apply. (See below, #24). Note that this same 3-year recapture rule applies, as well, to the $7500 credit available for 2008. This provision is designed as an anti-flipping rule.

What if I die or get divorced or my property is ruined in a natural disaster within the 3 years?
The repayment rules are eased for many circumstances. If the homeowner who used the credit dies within the first three years of ownership, there is no recapture. Special rules make adjustments for people who sell homes as part of a divorce settlement, as well. Similarly, adjustments are made in the case of a home that is part of an involuntary conversion (property is destroyed in a natural disaster or subject to condemnation by eminent domain by an authorized agency) within the first three years.

I have a home under construction. Am I eligible for the credit?
Yes, so long as you actually occupy the home before December 1, 2009.

WITHHOLDING EXAMPLES:
Note: The impact of estimated tax payments would be the same.

Situation 1: Sally plans her withholding so that her withholding is as close as possible to what she anticipates as her income tax liability for the year. When she fills out her 1040, her liability is $6000. She has had $6000 withheld from her paycheck. She also qualifies for the $8000 homebuyer credit.
Result: Sally’s withholding satisfies her tax liability and reduces it to zero. She will receive a refund of the full $8000.

Situation 2: Nick and Nora file a joint return. Nick is self-employed and makes estimated payments; Nora has taxes withheld from her salary. When they compute their taxes, their combined withholding and estimated tax payments are $11,000. Their income tax liability is $9800. They also qualified as first-time homebuyers and are eligible for the $8000 refundable tax credit.
Result: Ordinarily, their combined estimated tax payments and withholding would make them eligible for a refund of $1200 ($11,000 - $9800 = $1200). Because they are eligible for the refundable tax credit as well, they will receive a refund of $9200 ($1200 income tax refund + $8000 refundable tax credit = $9200)

Situation 3: Cesar and LuzMaria both have income taxes withheld from their salaries and file a joint return. When they file their income tax return, their combined withholding is $5000. However, their total tax liability is $7200, generating an additional income tax liability of $2200 ($7200 - $5000). They also qualify for the $8000 first-time homebuyer tax credit.
Result: Cesar and LuzMaria have been under-withheld by $2200. Ordinarily, they would be required to pay the additional $2200 they owe (plus any applicable interest and penalties). Because they are eligible for the refundable homebuyer tax credit, the credit will cover the $2200 additional liability. In addition, they will receive an income tax refund of $5800 ($8000 - $2200 = $5800). If they owed penalties and/or interest, that amount would reduce the refund.

Mi casa - su casa? Equity Sharing

Loans have become more difficult for many people to receive. The rates are GREAT but the new guidelines mean that you may not qualify to buy the house of your dreams on your own. What about equity sharing?

Imagine this scenario, your child has gone off to college and you want to downsize to manage your costs. You have a friend who also wants to downsize. How can you manage to refinance and perhaps have someone take on part of the commitment.

A client of mine posed this question... have any ideas? I encourage you to share stories, of success and failure when to come to equity sharing.

Think I was alone????

Here are just a few of the open house signs left at PU for recycling.

New adventures!

I am very excited to report I have joined Alain Pinel Realtors !

For the last several years I have been hoping that they would come to Marin, and this week as a series of fortunate events, my manager was hired to build Alain Pinel here. Currently I and about 50 other agents have decided to turn a page.

My daughters used to love choose your own adventure books. Turn a page and you are on a deep sea adventure , turn another you are on safari. Your ending depends on the page you turn to. This is a new adventure and I am thrilled to be on board.

I encourage you to follow this adventure because it is sure to have happy ending with you along!

Friends, Family, Health and Home

Here it is... 2009!

This year more than any other I think it important to keep our focus on what is truly important. I have been a news "junkie" for many years and increasingly the news seems strained and anguished. Wars, a shaky economy, the seedier side of life displayed in living color. This could get you down... no doubt about it.

I met a colleague in the hall just now and she commented on a challenging year ahead. My response is we are some very lucky people and each day should begin with that affirmation.

My reflections for January.

Friends. I have an incredible collection of friends and associates. They are warm and generous and funny and smart. Having them in my life encourages me to be all those things in return. I am very very lucky.

Family. My family is my foundation. From my sisters and brother, father and in-laws, to my most incredible husband I am surrounded with love. We move through the phases of our lives accepting the awkwardness of transitions, revelling in the welcome of new little ones, mourning together our mutual loss when one passes from us. Like all families we have our disagreements, but we are strengthened by the knowledge that family lasts. It is the constant. It forms us as we help form it. I am blessed with everyone one of them.

Health. This is a precious gift. The New Year is a time that people focus on how they can keep that gift. Gyms, diet, stress relief and the other multiple resolutions made on December 31 are as habitual as breaking those resolutions. When you have a life threatening illness, it give us pause to think what we could have done to avoid the situation. Sometimes, these instances are simply life's reminders that our time here is limited and should not be taken for granted. Each day is a day to celebrate and cherish.

Home. Whether home is an apartment, a mansion or a cottage in the woods, it is all just living arrangements unless you fill it with love. Home is a place where you can be yourself with all your idiosyncrasies. It is place where you can celebrate all the gifts of your life. When you welcome someone to your home you are welcoming them to your life. Home is not a luxury item, it is a necessity. This year, perhaps more than any in the past, honor your home. If you haven't found that special place yet, make 2009 the year when you do. Because there's no place like home.

I wish for you this year a year where you honor, friends, family, heath and home.

Happy New Year.

If you like homey houses, houses that feel like comfort food... take a peak at my friend and client's house featured in the Wall Street Journal. Also featured in Pottery Barn and soon in the SF Chronicle!

http://online.wsj.com/article/SB122670283553229665.html

If you would like to make this dream come true for you, let me know. I can hook you up with all the resources to make this possible!