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$8,000 Tax Credit Fraud Under IRS Scrutiny
October 27, 2009 by dbradley · Leave a Comment
Monday, October 26, 2009
$8000 Tax Credit Fraud under IRS Scrutiny
According to the Wall Street Journal, the IRS is reportedly examining more than 100,000 suspicious claims for the $8000 dollar tax credit and is investigating 167 “criminal schemes” involving the credit. IRS officials declined last week to describe the suspected schemes or provide additional details. However, they did say they have identified the different types of potential fraud and matched them against their compliance program.
We could speculate about how people are trying to commit fraud with the $8000 tax credit. Perhaps they are modifying closing statements, commonly known as HUD-1′s to make it appear the house was purchased in the correct tax year. Perhaps they are taking incorrect tax advice from their accountants. Perhaps people are modifying HUD-1′s to make it appear that they bought a house — when in fact they did not. Regardless, the IRS taking it very seriously.
The IRS says it has received more than one million claims for the $8000 tax credit. Housing industry experts estimate the credit helped to generate at least 350,000 additional home sales. The $8000 tax credit to set to expire on November 30, 2009 but leaders in the housing industry are lobbying Congress to extend it.
It would seem that widespread abuse would be relatively easy because of the loose standards for claiming the credit. In other words, the IRS never set anything in place with title and escrow companies to document the tax credit at time of sale. Free money has had a history of attracting people with dishonest intent, and $8,000 is a good deal of money. This is just the kind of trouble that will delay or eliminate the proposed extension of the program, or even it’s conversion to the much talked about “$15,000 tax credit.” It’s always sad when dishonest people potentially destroy a good program they can benefit the masses.
On the other hand, does our country really need an extension of the $8000 credit, or even a new $15,000 tax credit? Has our country, which already has enough debt to choke 20 medium-sized countries, need to be giving out more money it doesn’t have? It does seem that many citizens have developed an attitude of “entitlement” and expect the government to just keep giving out more and more money. But I digress…
According to the IRS website , the IRS successfully prosecuted its first fraudulent tax credit case in July 2009. A Jacksonville, Fla. tax preparer, James Otto Price III, pled guilty to falsely claiming the $8000 tax credit on a client’s federal tax return. Price faces the possibility of up to three years in jail, a fine of as much as $250,000, or both.
A quote from the IRS’s website:
“We will vigorously pursue anyone who falsely tries to claim this or any other tax credit or deduction,” said Eileen Mayer, Chief, IRS Criminal Investigation. “The penalties for tax fraud are steep. Taxpayers should be wary of anyone who promises to get them a big refund.
Homebuilder Shares Mixed
October 27, 2009 by dbradley · Leave a Comment
(AP) – 31 minutes ago
NEW YORK — Shares of homebuilders were mixed Tuesday after a report showed home prices rising in 20 major metropolitan markets for a third straight month, while one analyst suggests the improvement is only temporary.
The Standard & Poor’s/Case-Shiller home price index gained 1 percent in August from July to a seasonally adjusted reading of 144.5. While prices are down 11.4 percent from August a year ago, the annual declines have slowed since February.
Prices are at levels not seen since August 2003 and have fallen almost 30 percent from the peak in May 2006.
Still, economists are concerned home prices cannot withstand falling consumer confidence, rising unemployment and foreclosures and the looming deadline for a first-time homebuyer tax credit. A separate report Tuesday from The Conference Board showed consumer confidence sliding unexpectedly.
Deutsche Bank analyst Nishu Sood wrote in a note to investors that foreclosures are the main reason home prices fell so fast and so far, and said he expects further pressure on home prices in 2010.
“Demand was boosted by investors and tax credits, supply was constrained by foreclosure moratoriums (and) modifications, and (Federal Housing Administration) financing was flowing freely,” he wrote. “This entry level stabilization was real, but it is principally government sponsored and therefore tenuous.”
Shares of homebuilders were mixed in afternoon trading. Hovnanian Enterprises Inc. added 21 cents, or 5.2 percent, to $4.28; Lennar Corp.’s stock rose 13 cents, or 1 percent, to $13.70; Meritage Homes Corp. gained 23 cents, or 1.2 percent, to $19.44; and shares of MDC Holdings Inc. advanced 34 cents, or 1 percent, to $34.59.
Toll Bros. lost 25 cents, or 1.4 percent, to $18.11, while DR Horton Inc. lost 7 cents to $11.86 and Ryland Group Inc. slipped 4 cents to $20.04. Pulte Homes Inc. edged down 4 cents to $9.66 and KB Home’s shares fell 13 cents to $15.32.
Copyright © 2009 The Associated Press. All rights reserved
Believe in Yourself
October 28, 2009 by dbradley · Leave a Comment
“Every achiever that I have ever met says, ‘My life turned around when I began to believe in me.’”
Dr. Robert Shuller
Minister and Author
First Time Homebuyer Tax Credit Extension
October 28, 2009 by dbradley · Leave a Comment
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The Senate’s top Democrat and top Republican each voiced support on Wednesday for extension of a soon-to-expire $8,000 tax credit for home buyers, but left unclear when the chamber would act.
“There has been general agreement by a significant number of senators, Democrats and Republicans, to get this done,” Senate Majority Leader Harry Reid, a Democrat, said on the Senate floor.
The chamber’s top Republican, Senator Mitch McConnell, also said most senators support the measure. “I certainly share his view,” McConnell said.
The tax credit for first-time home buyers, which has helped lift the housing market out of its worst slump since the Great Depression, is set to expire on Nov. 30 and senators have been negotiating over how best to extend it.
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Under an agreement reached by key senators, the tax credit would be extended through the end of April and be expanded to cover repeat buyers who have been in their homes at least five years, sources familiar with the plan said.
First-time buyers would continue to get an $8,000 credit, while repeat buyers of primary residences would be eligible for a credit of $6,500, the sources said.
They said the credit would be available for individuals making up to $125,000 a year and couples earning up to $225,000 per year.
Timing of a Vote Uncertain
While extending the credit enjoys widespread support, its fate is caught up in a spat between Reid and McConnell over unrelated issues.
Reid had wanted to attach a bill to extend the homebuyer credit as an amendment to legislation to lengthen insurance benefits for unemployed workers. The Senate voted to take up the insurance benefit bill on Tuesday, but did not attach the homebuyer tax credit to the measure.
Despite that apparent roadblock, Senate Finance Committee Chairman Max Baucus, who has been involved in negotiations over the tax credit, told Reuters late on Tuesday that he expected the Senate would vote on the bill sometime this week.
“There are various paths and whichever works first is the one that is going to be” followed, he said, referring to the possibility that the Senate could vote on the bill independently or as part of separate legislation.
A spokeswoman for Reid said the unemployment insurance measure could get pushed to next week as lawmakers try to resolve differences over unrelated issues, which would delay consideration of the homebuyer credit extension.
“We will get this extension passed,” she said.
A report last week showed sales of previously owned homes hit a two-year high in September as buyers rushed to take advantage of the credit before its expiration date. However, a report on Wednesday showed new home sales, a much smaller segment of the market, tumbled unexpectedly last month.
Separately, a report from the Mortgage Bankers Association on Wednesday that demand for mortgages has fallen for the past three weeks as buyers move to the sidelines.
A buyer would have to close on the purchase of a home before Nov. 30 to take advantage of the current tax credit.
Praise Others
October 29, 2009 by dbradley · Leave a Comment
There is no investment you’ll ever make that will pay you so well as the effort to scatter sunshine and good cheer where ever you go.
The deepest principal in human nature is the craving to be appreciated.
If you treat someone as if they were what they ought to be and could be, they will become what they ought to be and could be.
Everyone thrives on being appreciated, loved and needed.
There is no stimulus like that which comes from the consciousness of knowing that others believe in you.
Applaud others when they do something well. Console them when they fall. And cheer them when they recover.
As water is to a flower, so is praise to the heart of another.
Have an Awesome Day!!
When The Student Is Ready
October 30, 2009 by dbradley · Leave a Comment
Chance is turned into good fortune by successful people. We are surrounded by all kinds of opportunity.
Luck is being at the right place at the right time. Taking advantage of opportunity is always under your control.
When you are mentally prepared, the right opportunity will present itself.
Talent alone won’t make you successful. Neither will being at the right place at the right time unless you are ready.
When the student is ready, the teacher appears.
Have an Awesome Day!
Fed Pledges to Hold Rates Steady
November 4, 2009 by dbradley · Leave a Comment
Fed Again Pledges To Hold Rates At Record-Lows
Policymakers Hope Rates Will Encourage More Spending
POSTED: 12:08 am EST November 4, 2009
UPDATED: 5:17 pm EST November 4, 2009
The Fed said economic activity has “continued to pick up” and that the housing market has strengthened — a key ingredient for a sustained recovery.
But Fed Chairman Ben Bernanke and his colleagues warned that rising joblessness and tight credit for many people and companies could restrain the rebound in the months ahead.
“Economic activity is likely to remain weak for a time,” they said.
Against that backdrop, the Fed kept the target range for its bank lending rate at zero to 0.25 percent. And it made no major changes to a program to help drive down mortgage rates.
Commercial banks’ prime lending rate, used to peg rates on home equity loans, certain credit cards and other consumer loans, will remain about 3.25 percent, the lowest in decades.
Still, some credit card rates have risen over the past several months. In part, that reflects rate increases by lenders in response to escalating defaults on credit card loans. Lenders also pushed through increases before a new law clamping down on sudden rate hikes for credit card customers takes effect early next year.
On Capitol Hill, the House voted Wednesday to accelerate the enactment date of the new rules to protect consumers from many such surprise changes. Credit card companies would have to comply immediately, rather than starting in February, unless they agreed to freeze interest rates and fees. But the proposal’s chances in the Senate are considered dim.
The average rate nationwide on a variable-rate credit card is 11.5 percent, according to Bankrate.com. Lenders charge more and credit card customers pay rates higher than the prime because the debt they run up is riskier.
On Wall Street, the Dow Jones industrial average at first held onto an increase of more than 100 points after the Fed’s announcement. But stocks eventually gave up most of their gains in a late-day slump. It wasn’t clear how much of a role the Fed’s statement played. Some analysts noted that investors are nervous as the release of the government’s October jobs report on Friday approaches.
In normal times, the Fed controls only short-term rates. But after the financial crisis erupted, the Fed began buying longer-term Treasuries. Its purchases kept those rates lower than they’d otherwise be.
This is good news for borrowers with auto loans, some student loans, 15- and 30-year fixed-rate mortgages and some adjustable-rate mortgages. But it hurts savers and people dependent on fixed incomes who would normally be enjoying higher yields.
On Wednesday, the Fed stuck with its pledge to keep rates at “exceptionally low” levels for “an extended period.” Most analysts don’t think the Fed would begin to boost rates until next spring or summer.
Fed policymakers “believe they need to keep rates low to ensure that the recovery doesn’t falter,” said Joel Naroff of Naroff Economic Advisors.
The central bank hopes low rates will encourage consumers and businesses to boost spending, which would invigorate the recovery. The Fed signaled that it can continue to hold rates low because inflation is all but nonexistent.
The Fed has now entered a new phase: Managing the recovery rather than fighting the worst recession and financial crisis to hit the country since the Great Depression.
The economy began growing again last quarter for the first time in more than a year. But much of that growth came from government-supported spending on homes and cars. The strength and staying power of the recovery are uncertain, especially once government supports are removed.
In such a fragile recovery, a rate increase by the Fed is unlikely anytime soon, said Chris Rupkey, an economist at the Bank of Tokyo-Mitsubishi.
“Growth does not mean a rate hike,” Rupkey said.
As with past rebounds, the budding recovery won’t likely stop the unemployment rate from rising. The rate, now at a 26-year high of 9.8 percent, is expected to hit 9.9 percent on Friday, when the government releases the unemployment report for October. The jobless rate could rise as high as 10.5 percent around the middle of next year before declining, analysts said.
At some point, once the recovery is firmly rooted, the Fed is likely to start signaling that higher rates are coming. One hint of an eventual rate hike would be the Fed’s changing or dropping its pledge to hold rates at record-low levels for an “extended period.”
It’s a delicate task. Boosting rates and removing supports too soon could short-circuit the recovery. On the other hand, holding rates low and keeping government supports intact too long could unleash inflation.
Though it didn’t change a program to help drive down mortgage rates, the Fed did say it will trim its purchases of debt from Fannie Mae and Freddie Mac to $175 billion, from $200 billion, because the supply of that debt has declined.
At its previous meeting in late September, the Fed agreed to slow the pace of a $1.25 trillion program to buy mortgage securities from Fannie Mae and Freddie Mac. It decided to wrap up the purchases by the end of March instead of at year-end. So far, the Fed has bought $776 billion of the mortgage securities.
Its efforts to lower mortgage rates are paying off. Rates on 30-year loans averaged 5.03 percent, Freddie Mac reported last week. That’s down from 6.46 percent last year.
Though the Fed will slow its purchases of mortgage securities, rates for home loans should remain low — in the 5 percent range– as long as the purchases continue, analysts say.
Copyright 2009 by The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Retirement Alert
November 13, 2009 by dbradley · Leave a Comment
Retirement Alert: Let the Downsizing Begin
Friday, November 13, 2009provided by
New home buyer credit is a boon for boomers and retirees looking to move or trade down.
For boomers and retirees, the big news is this: The home buyer credit extension President Obama signed into law last Friday inserts them into the credit bonanza too.
The original $8,000 credit, which was set to expire Nov. 30, was available only to first-time home buyers and those who hadn’t owned a home during the three years prior to closing on a new house.
But the new law adds a $6,500 credit for “longtime residents of the same home,” making it a boon for retirees and those nearing retirement who want to trade down to smaller homes or perhaps move to a sunnier locale.
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Both the $8,000 and $6,500 versions of the credit are refundable–meaning if you don’t owe that much in taxes, you get a check back from Uncle Sam.
“It’s a windfall for those already set on downsizing,” marvels Timothy W. Wyman, a financial planner with the Center for Financial Planning in Southfield, Mich.
Even if you’re not set on downsizing, it’s something to consider if you’re nearing retirement. Recent research suggests that the happiest retirees are those who move to new homes while remaining in their longtime communities.
To claim either the $8,000 or $6,500 version of the credit, you must close on a new home, or be locked into a contract to close on one, before May 1, 2010. The closing itself must occur before July 1, 2010.
The new law still gives first-time home buyers a more generous credit: 10% of the purchase price of the new home up to $8,000. But taxpayers who have lived in their olds home for five out of the eight years prior to closing on a new one, can claim 10% of the purchase price on a new home, up to $6,500.
That could help downsizers on both ends–their new smaller digs will snag them the $6,500 credit and prospective buyers of their old homes are more likely to qualify for a credit too. After all, if an older couple is downsizing, they’re probably not selling a starter home. So prospective buyers are likely to be trading up from an existing residence themselves.
Congress did put some limits on this. Under the new law, homes that sell for more than $800,000 won’t qualify. (Previously, they did.) But outside of a few of the priciest markets, that shouldn’t exclude too many properties. The national median existing-home price for all housing types was $174,900 in September, which is 8.5% lower than September 2008, according to the National Association of Realtors. Of the 4 million properties for sale on Realtor.com, only 5% are listed at $800,000 or more.
As with the earlier version of the credit, there are income limits. But they are much higher than under the old law. A single with modified adjusted gross income of up to $125,000 can qualify for the full credit. That’s up from $75,000 under the old law. For couples filing jointly the full credit is available for MAGI of up to $225,000, compared with $150,000 under the old law. The credit then phases out over the next $20,000 of income for either singles or couples. The new higher income limits also makes it more likely that potential buyers–and pre-retirees themselves–will qualify to claim a credit.
Importantly, there is no requirement that the new home be more expensive or bigger than the old one. That makes the credit a good fit for folks downsizing into smaller homes for retirement. There is also no requirement that you sell your old home to claim a buyer’s credit.
So some retirees might want to rent out their old homes–if they don’t like the price they can get for them. But if you take this route, keep track of the rule that allows a taxpayer to exclude $250,000 (or $500,000 per couple) of capital gains from tax when selling a principal residence, provided they’ve lived in that residence for two of the past five years. This provision generally means that if you have gains in your house, you won’t want to rent it out for more than a few years.
George Jones, a senior tax analyst with tax publisher CCH, a Wolters Kluwer business, has a warning for seniors considering moving into retirement communities which include assisted living services. Review the contract you’re signing carefully: If you’re not getting outright ownership of your living unit, it may not count as a new home purchase for purposes of claiming the credit.
Clint Stretch, managing principal of tax policy with Deloitte Tax offers another caution: If you’ll have taxable gain on the house you sell, that will be added to your other income and could give you too much income to claim the credit on the purchase of a new home. (Remember, an individual can exclude $250,000 of capital gains on the sale of a primary residence and a couple $500,000, so you’ll only have taxable income if your gains are greater than that.)
Fortunately, for those in the know, there’s often a way around the trap Stretch flags. You can claim the credit for the year before you sell your house. That means, for example, that if the capital gain from the sale of a house in February 2010 pushes your 2010 income above the limit, you can claim the credit for 2009 while reporting the gains for 2010. Got that? It may sound too good to be true, but the same trick was allowed under the original first-time home buyer credit. So first-time home buyers who purchased a house in 2009, were able to get quick refunds by claiming the credit on amended 2008 returns, based on their 2008 income.
In fact, in most cases it will make sense to claim the credit for a 2009 purchase on your 2008 return and the credit for a 2010 purchase on your 2009 return, even if this requires you to go back and amend the prior year’s return, because you’ll get the money faster, says Kaye Thomas, a tax lawyer who offers advice at www.fairmark.com.
Since the credits are designed for buyers, not flippers, you may have to pay back the credit if you move within 36 months after your new purchase. (If you die, however, your heirs won’t have to pay it back.) More than 1.4 million taxpayers have claimed a home buyers credit so far and there have been enough abuses uncovered that Congress has tightened the rules this time around. For example, buyers under age 18 or buyers who are dependents of another taxpayer may not claim the credit and you must attach a copy of the settlement statement for your new home to the tax return for the year you buy.
In addition to retirees, military personnel stand to benefit from the new law. Military personnel serving outside the U.S. for at least 90 days in 2009 or 2010 get an additional year to claim the credit, and don’t have to pay back the credit if they are forced to sell because of service assignments. They get another break too: the exclusion from tax of any payments to compensate them for loss in their home values due to base closures.
Weekly Dallas Real Estate Update
July 9, 2011 by dbradley · Leave a Comment
DFW NEW HOME STARTS INCREASE
DALLAS (Dallas Business Journal) – The Metroplex’s housing market had its first quarterly increase in home starts and closings in a year, according to Metrostudy.
Starts during second quarter 2011 were up 18 percent from the first quarter. Closings were up 9 percent from the first quarter as well.
These increases are the first since the end of the homebuyer tax credit in April 2010.
NEW DALLAS DESIGN DISTRICT RESIDENCES
DALLAS (Dallas Morning News) – Dallas’ Design District will get new neighbors with the addition of new residential space.
Phoenix-based Alliance Residential will start work next month on a 303-unit urban-style apartment complex on Market Center Blvd.
Employment Report & Mortgage Rates
July 9, 2011 by dbradley · Leave a Comment
The monthly jobs report came out yesterday showing a gain of only 18,000 jobs. This caused a turnaround in interest rates for home loans to the tune of .125%. Rates have been steadily rising since June 27th and were not looking too favorable for new home buyers.
Good news and bad news. The bad news is, the U.S. labor market is in a slump for the forseeable future. This weighs on housing, especially in the purchase market. The good news is, a slow economic recovery supports the argument for stable to lower interest rates through the end of the summer.
Make sure that you lock in your interest rate when you have contracted on a property. Do not try and time the interest rate market because you will eventually lose the bet.
Let us know if we can help you with your loan needs. Call our office right now at 214-710-1258. We can get your loan closed within 30 days or less!
My name is David Bradley. I want to thank you for taking the time to visit my website, where I guarantee you'll find plenty of helpful information to assist you in purchasing your new home or refinancing your current mortgage. I am a Mortgage Consultant serving Dallas, Texas and the surrounding areas.