UPDATE: Tax Credit Extension Signed by the President

On Friday President Obama signed into law the extension of the Home Buyer Tax Credit extension. The act includes expanding the tax credit to homes bought by certain existing homeowners who are moving up. It also includes a new Net Operating Loss Carryback Provision that will benefit home builders who have recently had operating losses in the businesses.

Below are details of the new tax credit, which is effective immediately. More on the Net Operating Loss Carryback Provision will be posted soon.

Who is Eligible

First-time home buyers, who are defined by the law as buyers who have not owned a principal residence during the three-year period prior to the purchase, may be eligible for a tax credit of 10% of the home purchase price, up to a maximum of $8,000.

Existing home owners who have been residing in their principal residence for five consecutive years out of the last eight and are purchasing a home to be their principal residence (“repeat buyer”), may be eligible for a tax credit of 10% of the home purchase price, up to a maximum of $6,500.

All U.S. citizens who file taxes are eligible to participate in the program.

Income Limits

Home buyers who file as single or head-of-household taxpayers can claim the full credit ($8,000 for first-time buyers and $6,500 for repeat buyers) if their modified adjusted gross income (MAGI) is less than $125,000.

For married couples filing a joint return, the combined income limit is $225,000.

Single or head-of-household taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000 are eligible to receive a partial credit.

The credit is not available for single taxpayers whose MAGI is greater than $145,000 and married couples with a MAGI that exceeds $245,000.

Effective Dates

The eligibility period for the tax credit is for homes purchased after Nov. 6, 2009, and before May 1, 2010. However, home purchases subject to a binding sales contract signed by April 30, 2010, will qualify for the tax credit provided closing occurs prior to July 1, 2010.

Types of Homes that Qualify

All homes with a purchase price of less than $800,000 qualify, including newly-constructed or resale, and single-family detached, townhomes or condominiums, provided that the home will be used as their principal residence. Vacation home and rental property purchases do NOT qualify.

Tax Credit is Refundable

A refundable credit means that if the amount of income taxes you owe is less than the credit amount you qualify for, the government will send you a check for the difference.

For example:
o A first-time buyer who qualifies for the full $8,000 credit who owes $5,000 in federal income taxes would pay nothing to the IRS and receive a $3,000 payment from the government. If you are due to receive a $1,000 refund, you would receive $9,000 ($1,000 plus the $8,000 tax credit).
o A repeat buyer who owes $5,000 would pay nothing to the IRS and receive $1,500 back from the government. If you are due to get a $1,000 refund, you would get $7,500 ($1,000 plus the $6,500 tax credit).

All qualified home buyers can take the tax credit on their 2009 or 2010 income tax return.

Payback Provisions

The tax credit is a true credit. It does not have to be repaid unless the home owner sells or stops using the home as their principal residence within three years after the purchase.

Tax Credit Extension and Expansion Passes in Congress

In a major victory for NAHB that will boost the fledgling housing recovery and help struggling business owners nationwide, Congress today approved legislation that will extend the first-time home buyer tax credit beyond its Nov. 30 deadline and expand it to a wider group of home buyers. The bill also provides relief to cash-strapped home builders by providing broader tax benefits for businesses with net operating losses (NOLs).

The legislation, which will be signed into law shortly by President Obama, will extend the $8,000 credit for first-time home buyers for sales contracts entered into by April 30, 2010 and closed by June 30. Further, it has been expanded to include a new $6,500 credit for owners of existing homes who are purchasing a new principal residence. An existing home owner can claim the $6,500 tax credit if they have been residing in their principal residence for five consecutive years out of the last eight.

In more good news, the income eligibility limits to claim the full credit amount for both groups of home buyers have been raised from $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return to $125,000 for individuals and $225,000 for married couples. NAHB’s consumer-oriented Web site, www.federalhousingtaxcredit.com, will provide complete details on the enhanced home buyer tax credit after the bill is signed into law by the President.

Thank you to all who wrote or called your Congressional representatives to let them know how important this legislation is to the housing industry!

For more on this from NAHB, click here.

Remodeling Activity Remains Relatively Stable

According to a report by Construction Week, Remodeling has remained a relatively stable component of the Upstate Housing industry. For the year ended September 30, 2009, the number of permits pulled for Remodeling Projects exceeding $25,000 has dropped just 15 percent from the same period the previous year. And remodeling activity in 2009 is ahead of the pace of activity in 2006, 2005, and 2004.

For Greenville, Anderson, Spartanburg, Pickens, and Oconee counties, remodeling permit activity for the year ended September 30 is as follows:

2004 — 497 permits
2005 — 456 permits
2006 — 557 permits
2007 — 626 permits
2008 — 669 permits
2009 — 571 permits

Customer Service Course Scheduled for December 10

Your HBA of Greenville will be offering a Customer Service course via webcast on Thursday, December 10 at the HBA office.

Make your business grow by keeping your clients happy during and after the sale. This course teaches you how to manage every phase of customer interaction from the initial contact through construction, the warranty period and beyond. Keep your customers satisfied with planning, execution and follow-up of your projects and they'll be spreading good news about you and your company for a long time to come. As a graduate of this course, you'll be able to:

Understand customer expectations and behaviors
Set appropriate service criteria
Establish quality standards and communicate them
Administer the customer service process
Know your obligations for warranty service and fulfill them
Enhance your repeat and referral sales

The course will be taught via webcast by Beverly Koehn, CGA, CGB, GMB, CAPS, CSP, MIRM.

It counts toward designation credit for CGA, CGB, CGR, MSCP, and SCCMB. Continuing education credit for: CAPS, CGA, CGB, CGR, GMB, MIRM, CMP, CSP, MSCP and SCCMB.

This course is $155 for members of the HBA of Greenville or other NAHB-affiliated associations. Non-members are $245. Fee includes course materials, lunch and light snacks during the day. You also will have access to open Wi-Fi at the office so you can work while you learn.

Download the course brochure at www.hbaofgreenville.com/pdfs/custservice.pdf, or register online at www.hbaofgreenville.com.

IRS to Audit Large Companies on Tax, Independent Contractor Issues

U.S. tax authorities will start to audit 6,000 randomly selected companies to focus on employment tax issues ranging from executive compensation to fringe benefits, Internal Revenue Service officials said.

The audits will begin in February 2010 and stretch across all types and sizes of companies. The exams will be deeper than typical audits, and also look at the use of independent contractors and other worker classification issues, a spokesman for the IRS said on Friday.

IRS Commissioner Douglas Shulman has said the agency will focus on the wealthy and large corporations as it seeks to recover billions that go unpaid in taxes each year.

About $345 billion goes uncollected from individuals and corporations from U.S. tax authorities each year, according to the U.S. government.

"A significant portion'' of this so-called tax gap comes from unpaid employment taxes, Faris Fink, an IRS deputy commissioner told an accounting conference this week.

Asked how many years the IRS would look at when conducting an audit, Fink said there was no defined time period.

The IRS has not zeroed in on employment tax issues for two decades, according to Anne Batter, an attorney who previously worked in the office of chief counsel at the IRS.

Although the program has not officially started yet, Batter says some of her clients who are large employers have begun to get document requests from the agency.

"The first round of questions we got in this last audit involved deferred compensation, equity, all these fringe benefits,'' said Batter, now with law firm Miller Chevalier, defending clients before the IRS.

"We have definitely had some taxpayers out of the blue (who) have gotten these really big, cumbersome requests for information about their compensation,'' she said.

Source: Insurance Journal

Eisenberg Presents Economic Impact Study to HBA of Greenville Members

Elliot Eisenberg, Senior Economist with NAHB, presented a study on the economic impact of home building in Greenville last Friday at the Fall Southern Home & Garden Show Preview Luncheon. Here's a brief synopsis:

For citizens of Greenville County, housing equals jobs. Here's why:

The home building industry generates substantial local economic activity, including new income and jobs for residents and additional revenue for local government. According to a recent economic impact study presented by Elliot Eisenberg of the National Association of Home Builders (NAHB) in October of 2009, the home building industry's footprint on Greenville County goes far beyond the construction itself. When income earned from construction activity is spent and recycles in the local economy, everyone benefits.

New homes create new jobs, and new opportunities for new residents to move into the Upstate.

The report estimates that 5,388 local jobs are created from building 1,852 single-family homes, based on construction activity from 2008. Multifamily housing (apartment units, downtown condos, etc.) create an additonal 1,193 local jobs, based on building 532 multifamily units. The initial economic impact of building these homes is nearly $378 million. The additional, reoccuring annual impact of these homes is $59 million per year.

Nationally, according to economists at NAHB, three full-time jobs are created for every new single-family home built. These jobs help all of us gain job security and enjoy a healthier economy.

For more, and a copy of the study on the economic impact of home building in Greenville presented last Friday, click here.

Greenville in Top Third of Nation's Affordable Housing Markets

Greenville's home prices remain more affordable than in two-thirds of the cities in a national housing index.

The 2009 Coldwell Banker Home Price Comparison Index ranked Greenville in the top one-third of affordable housing markets in the nation with an average home price of $214,116 for a 2,200 square foot home.

The Coldwell Banker data affirms the observation in last summer's S.C. Housing Market Report from the Moore School of Business that "the high affordability of housing in South Carolina will mean that the housing industry will be among the first industries to experience growth as the economy recovers."

The HPCI is an annual study released by Coldwell Banker Real Estate LLC that provides a comparison of similar 2,200 square foot, four-bedroom, 2.5 bath homes among 310 U.S. markets.

Coldwell Banker Caine of Greenville participated locally in the study that provides insight into the affordability of homes nationwide. This year's study ranked Greenville No. 103 in affordability, almost $150,000 below the national average of $363,460.

"The Upstate continues to provide a wide range of affordable housing options," said Brad Halter, president of Coldwell Banker Caine. "This affordability, along with low interest rates and tax incentives, provides first-time home buyers and move-up buyers with a unique opportunity to take advantage of Greenville's current housing market." Halter said the study also shows that Greenville's homes are maintaining their value.

Source: GSA Business