Common Questions: When Do I Have to Pay Back My First-Time Homebuyer Credit?

I was asked this question recently by a home owner and thought that this would start to be a more and more common question as we near the 36 month deadline established by the government when they instituted the  Housing and Economic Recovery Act. More specifically, they asked, "What happens to my tax credit if I buy a bigger house and rent out my first home?"


Important question: When did you buy your home? If you purchased your home in 2008 as part of the Housing and Economic Recovery Act of 2008, you  have to pay the entire amount back (up to $7500) in 15 installments of $500 as part of your tax returns, starting with your tax return for the year 2010. If you sell your home or it ceases to be your "main" home (i.e. you rent it out), you have to pay the remaining balance back when you file your tax return for the year in which you convert the house from your "main" home.


If you bought your home with the First-Time Homebuyer Credit under the Housing and Economic Recovery Act of 2009 or 2010, then the rules are a little different. You do not have to repay any the tax credit you received (up to $8000) if your house remains your "main" home for 36 months. However, if you sell your house or convert it entirely to a business or rental property, you must repay the full amount of the credit. 


Please let me know if you have any questions or there is anything I can help you with in regards to this topic! For much more detailed information on this topic, please see the IRS's website on the First-Time Homebuyer Credit. 

Disclaimer: I am not a CPA and am not offering tax advice. I am not liable for your interpretation of IRS tax law based on this summary. Please consult your CPA for answers and applications for your specific situations. 


Kyle Pfaffe, REALTOR      KylePfaffe@kw.com      512-636-9707      www.AustinHomes4You.com

Customer Review - Buyer Representation

A review from Justin & Natalie, two clients of mine that I represented in buying their first home!

“We would completely recommend Kyle to anybody looking for a home. He is on top of his stuff – implicitly trustworthy and has walked us through a tumultuous process. He is a really stand-up guy to work with, a great family man and a complete professional.”

“It was our first home buying experience and what could have been a very stressful situation, Kyle made a very smooth transition and we would absolutely recommend him to anyone else looking to buy a home.”

June 2012 Market Report for Austin Real Estate

The Austin Board of Realtors just released the finalized statistics for June and the numbers showed the Austin had another great month! In June, there was a +13.5% increase in sold listings vs. June 2011. That makes June the 6^th consecutive month in 2012 that we have had an increase in sold units over 2011 – we have had a positive swing in EVERY month in 2012!

A few other numbers of interest… the average sale price in Austin is up 6.1% in June over 2011 to $278,720 and the average days on market shrunk to 55, a 25% decrease! Also, the percentage of sales price to list price is up to 97.8%. In short, homeowners are selling their homes more quickly and for closer to their asking price than last year! In total volume, over $745 million in real estate transactions were closed in June, a 20.5% increase.

Year-to-date, Austin is up 17% in number of units sold and up 21% in total sales volume. Austin’s market is HOT! Please contact me if you are interested in receiving a free market analysis of your home or interested in buying a home. With historic interest rates available, now is a great time to buy a home!

Kyle Pfaffe, REALTOR®
Keller Williams Realty
m: 512-636-9707
w: AustinHomes4You.com

Northwest Austin Real Estate Update - June 2012

The Austin Board of Realtors recently released the statistics for the month of June for Austin. This report is going to focus on the recent activity in northwest Austin (NW) which includes but is not limited to the neighborhoods of Milwood, Rattan Creek, Anderson Mill, Jollyville and Balcones. 

In June, there was one less sold listing in NW (89 vs. 90) but the average sold price increased 7.3% to $263,812.  The average days on market for a home sold in June in the northwest were 43 compared to 51 in 2011. Also, homes are selling for 98.3% of their list price, an increase from 97.4% in 2011. In summary, while about the same number of homes sold in 2012 as 2011, those home are selling on average for a higher price and more quickly than they did in 2011. The higher sale prices drove the total volume up 6% in 2012 to $23.5 million.

Year-to-date, 10% more homes have sold in the NW with over $93.2 million in real estate transactions being finalized. Austin’s market is HOT! Please contact me if you are interested in receiving a free market analysis of your home or interested in buying a home. With historic interest rates available, now is a great time to buy a home!

Kyle Pfaffe, REALTOR®
Keller Williams Realty
m: 512-636-9707
w: AustinHomes4You.com

Neighborhood Information for Austin, TX 78757

Inventory

• Number of Homes: 10,487
• Active Listings: 91
• Distressed Listings (Foreclosures & Short Sales): 1.3%

Home Ownership

• Owned: 47.78%
• Rent: 45.65%
• Vacant: 6.57%

Demographics

• Median Age: 35
• 35% Married
• Homes with Children: 2405

Household Income Levels

Highest Education Level Attained

Data from Market Insider; deemed reliable but not guaranteed.

Kyle Pfaffe, REALTOR®
Keller Williams Realty
m: 512-636-9707
w: AustinHomes4You.com
I Always Have Time for Your Referrals!

Working With Purpose - My Big Why

I was recently introduced to a concept known “My Big Why.” The basic premise is that you have a specific motivation or purpose for your work. The principle is simple but the ramifications for myself are tremendous.

Every action we do is motivated by a certain desire to one degree or another.  My desire to sleep more keeps me in bed as long as I can. My desire to spend time with my wife and two kids drives me to get home from work as soon as possible. Having and knowing my one specific, foundational motivation to be successful in my work drives me throughout my day. My personal Big Why is to create a better life for my family and have time to enjoy it with them. This motivation inspires me to forgo that afternoon nap I so much enjoy and to work late into the night when needed.

My Big Why also creates tremendous focus in my life. I remind myself of it numerous times throughout my day to help me avoid distractions that cause me to waste my time. Other tasks might be good things to do, but ultimately hurt my productivity and prevent me from getting the most important things done first.

I encourage you to take a few moments today to think about exactly why it is that you do what you do. Evaluate your motivations discover your one driving purpose and use that to stimulate you and bring focus to your work when you need it.


Kyle Pfaffe, REALTOR®
Keller Williams Realty
m: 512-636-9707
e: KylePfaffe@KW.com
w: AustinHomes4You.com

2011 Housing Recap with 2012 Implications

Home Prices

• Historic Appreciation is 4% Nationally, but was -4% in 2011
• We were 24% below the trend line
• Current Rate of Depreciation is NOT Sustainable
• Gary Keller - "If you go above or below the trend line, there WILL be a correction."

Mortgage Rates

• This is THE Moment in History that rates are at their lowest
• NY Times called 2009 the "Golden Age" at 5%...Now as low as 3.87%!
• The rates could maybe drop only 1%, if lenders eliminated all profit. Odds of that happening?
• If money is a driver of when you buy...

The Affordability Index

• Affordability Index - percent of income needed to pay mortgage
• Homes have never been more AFFORDABLE in history of recorded time.
• "Why should I buy when prices are down 30%?" Think Price vs Value.
• Timing & Patience seperates Investors from Speculators

Perspective

• Have Perspective. Study History.
• Average Home Prices are +77%
• Average Monthly Payments are +1%

Kyle Pfaffe, REALTOR®

Keller Williams Realty

m: 512-636-9707

w: AustinHomes4You.com

Understanding Tax Deductions for Rental Properties

Under the current economic distress, many U.S. households again see the benefit of renting versus home ownership. Others, unfortunately, have been forced to surrender their homes to financial institutions that hold their mortgages and return to their former status as contented tenants.


These challenges can represent opportunities for investors in residential rental properties. Tax laws favor investors in these properties who can often benefit from tax deductible losses, while maintaining positive cash flows on their properties.


In order to avoid jeopardizing these write-offs under the scrutiny of an Internal Revenue Service audit, it is good to know what an agent will be looking for. The IRS does not hide this information. Numerous audit technique guides are available not only to IRS personnel; they are published on the IRS website for public use. Of interest to investors in residential rental real estate is the Passive Activity Loss Audit Technique Guide. It offers guidance to agents as they consider the appropriateness of loss deductions, the calculation of gains or losses on disposition of investment property, and low-income housing credits, among other chapters.


This Guide may be found at http://www.irs.gov/pub/irs-mssp/pal.pdf.


Prepared by Corey A. Pfaffe, CPA, LLC
www.MinistryCPA.org


IRS Circular 230 Disclosure: To comply with IRS rules, I am required to advise you that, unless expressly stated otherwise, any federal tax advice contained in this communication, including attachments, is not intended or written to be used, and cannot be used, by the recipient for the purpose of (i) avoiding penalties that may be imposed under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.


September 23, 2011


Kyle Pfaffe, REALTOR®

Keller Williams Realty

m: 512-636-9707

w: AustinHomes4You.com

I Always Have Time for Your Referrals!

Lesson's from Coca Cola's Arctic Home Promotion Gone Awry

Last month, Coca-Cola began turning all of its “red” Coke Classic cans “white” in a partnership with the World Wildlife Federation (WFF) to raise awareness for polar bears and their natural habitat. The polar bear effort seemed a perfect fit with Coca-Cola’s annual use of the animal in their holiday advertising. Their decision to turn their “red” cans into “white” received considerable backlash, to the point that the company decided to transition the can to another, mostly-red design earlier than intended during the promotion (See the Wall Street Journal’s article for more information). I think that there are two powerful lessons we can learn from the customer backlash and Coca-Cola’s response.



First, listen to client feedback and respond quickly. Coca-Cola was keenly aware of the customer response to their promotion through a variety of social media platforms and took quick action. Customer’s strong positive and negative response to the “white” can promotion did not go unnoticed. The company decided to transition the four-month-long promotion earlier than first planned to a mostly-red design to appease angry customers and put out FAQ sheets and other information to try to remove any more confusion in the minds of its consumers. For us practically, be aware of the various avenues for client feedback and LISTEN to their concerns. Actively reach out to clients for feedback and respond quickly to any issues they bring to your attention. Whether you like it or not, you are developing a word-of-mouth and online reputation and you must take the lead in managing it.



Second, focus on client concerns instead of on defending your actions or intentions. Coca-Cola took a bold step in their holiday marketing and had good intentions of raising awareness for polar bears and their natural habitat. The company could have responded to the customer backlash by trying to turn the tide of public opinion about their promotion and sticking to their plan. They could have tried to educate the customers more about their efforts and justify their advertising campaign. Instead they saw that as a no-win situation and turned their efforts to making the change back to more predominantly “red” can and assuaging customer concern. For us practically, when dealing with criticism, look for the quickest and easiest solution for your clients instead of wasting valuable time trying to defend your actions or motives. There are certainly times when more than our reputation is at stake (i.e. integrity) and we must defend ourselves, but be wise about choosing the best response to criticism. Even our good intentions and actions are misinterpreted and criticized and you much chose the best response in each instance.



There are many other lessons that can be learned from Coca-Cola’s most recent fiasco, but I hope that these two lessons can help each of us become more successful and better handle customer criticism as it arises.
Kyle Pfaffe, REALTOR®

Keller Williams Realty

m: 512-636-9707

w: AustinHomes4You.com

I Always Have Time for Your Referrals!