Should you wait to buy your home?

Ignore the Headlines
That's no easy thing. How do you tune out all the chatter and ink on recession, housing, subprime woes, the credit crunch, rogue traders, insolvent bond insurers, $100 oil and nukes in Iran? It's enough to make you sit on your thumbs and wait before making any big moves. But what, exactly, are you waiting for?.....continue

Know the Tax Implications of owning a home!

Top 10 Tax Breaks From Buying/Owning/Selling a Home

1. Mortgage Loan Interest: Mortgage loan interest is deductible for both Federal and NJ State income taxes. Since interest makes up the largest portion of the monthly mortgage payment, especially in the early years, this deduction can result in a huge tax savings.

2. Property Taxes: Property taxes (the second largest piece of most mortgage payments) are also fully deductible. Between interest and taxes, almost all of a buyer's mortgage payment will be deductible in the early years of the mortgage.

3. Points: Points, when charged by lenders as part of the cost of the loan are deductible. You can deduct points associated with a home purchase mortgage, but not a mortgage broker's commission. Refinanced mortgage points are deductible too, when they are amortized over the life of the loan. If you refinance a second time, the balance of the old points from a refinanced loan offer an immediate write off, as you begin to amortize the new points.

4. Home Improvement Loan Interest: The interest on a home improvement loan is also deductible. You can deduct all the interest on a home improvement loan provided the work is a "capital improvement" rather than repairs, maintenance or cosmetic upgrades.

5. Moving Costs: A move required for a new job comes with some deductible moving costs. To qualify, you must meet certain requirements including, moving within one year of starting your new job, moving 50 miles farther from your old home than your old job was and working full-time at the new job for 39 of 52 weeks following the move. Deductions include travel or transportation costs and expenses for lodging and storing your belongings.

6. Energy Tax Credits: The newest home-based tax credits were made possible by the Energy Policy Act of 2005. Tax credits of up to $500 are available for upgrading heating and air conditioning systems, insulations, windows, doors and thermostats, caulking leaks, installing pigmented metal roofs and for otherwise decreasing energy waste in your home.

7. Mortgage Tax Credit: Mortgage Credit Certificates (MCCs) allow qualifying low-income, first-time home buyers to take a mortgage interest tax credit of up to 20 percent (the amount varies by jurisdiction) of the mortgage interest payments made on a home. This credit is available every year you keep the loanand live in the house purchased with the certificate. Unlike a deduction that reduces your income, the credit is subtracted, dollar for dollar, from the income tax owed.

8. Home-Based Business Deduction: Home offices that use a portion of your home exclusively for business could qualify you to deduct a percentage of costs related to that portion. Included are a percentage of your insurance and repair costs, utility bills and depreciation.

9. Selling Costs and Capital Improvements: When you sell your home, you can reduce your taxable capital gain by the amount of your selling costs, which include real estate commissions, legal fees, advertising and inspection fees. Costs typically stemming from decorating or repairs -- painting, wallpapering, maintenance, and the like -- are also selling costs if you complete them within 90 days of your sale and with the intention of making the home more saleable.

10. Capital Gains Exclusion: The Home buying investors' best tax shelter comes from provisions in the Taxpayer Relief Act of 1997 which allows married taxpayers who file jointly to keep, tax free, up to $500,000 in profit on the sale of a home used as a principal residence for two of the prior five years.


THIS ARTICLE CONTAINS GENERAL INFORMATION
AND DOES NOT CONSTITUTE LEGAL ADVICE.

CONSULT YOUR CPA OR TAX PROFESSIONAL
FOR YOUR SPECIFIC SITUATION.

Find the home you love!!

Housing's mixed bag
While N.J. market is holding up, U.S. sales and prices are still down
Friday, February 15, 2008
BY SAM ALI
Newhouse News Service
No doubt, the New Jersey housing market has seen better days.
But while home prices across the country continued to plunge during the last three months of 2007, New Jersey has shown surprising resiliency, according to quarterly housing data released yesterday by the National Association of Realtors.
Atlantic County was one of only 11 metro areas in the country (out of the 150 areas surveyed by the NAR) that showed a double-digit annual price gain, rising more than 10 percent in the fourth quarter, to $278,800, compared with last year. And Mercer County was one of only 12 that showed an increase of 6 percent or more.
"We have the second-highest income in the country, which creates a higher level of earnings," said Jeff Otteau, president of the Otteau Valuation Group, a leading real estate research firm based in East Brunswick. "The demand for housing in New Jersey, even in a down market, is much higher than other parts of the country because we have the highest population density in the world.
"And we are at Manhattan's doorstep."
Nationally, existing-home sales -- which generally account for 85 percent of all home sales -- dropped nearly 20.9 percent in the quarter from October through December, while the median price of a home dipped 5.8 percent, to $206,200, from $219,300, according to the National Association of Realtors.
It was the steepest price drop ever recorded by the national real estate trade group, which has been compiling the report since 1979. In the Northeast, home sales fell 18.2 percent during the fourth quarter, and the median price of a home fell 4.8 percent.
But while New Jersey looked strong in the report issued yesterday, there are some skeptics. Otteau said the housing picture in New Jersey is not quite as rosy as the NAR numbers seem to reflect.
A few weeks ago, Otteau released his own market data, which showed home prices in New Jersey were flat in the fourth quarter of 2007 compared with last year.
To confuse matters even further, the S&P Case Shiller Home Price Index, another popular and widely used home price metric, painted an even gloomier picture of New Jersey's housing market.
According to that index, for example, home prices in Atlantic County and Mercer County actually fell 6.5 percent and 7.66 percent respectively during the third quarter, while the NAR showed a rise of 5.6 percent and 6.16 percent during that same time. (The S&P Case Shiller index lags the NAR numbers by one quarter)
"How does that old saying go? A man with two clocks never knows what time it is," said James Bednar, a real estate expert and author of the popular housing blog the New Jersey Real Estate Report. "It seems the current issue is which index should we use to measure the market. They all seem to be telling a different story."
Sean Maher, a housing analyst with Moody's Economy.com, said the S&P Case-Shiller index is constructed by matching the prices of homes sold in the latest month with their sales prices when they previously sold in the past. The NAR index simply aggregates the median home sales price and is influenced by underlying mix of properties being sold.
As a result, the two indexes measure two very different things, Maher said.
"Basically, the NAR data looks stronger because you are not comparing the same basket of houses from year to year," Maher said. "Lower-income households are in less of a position to buy right now, so only the more expensive homes are really selling."
Still, while New Jersey's housing market has seen better days, it has generally faired much better than the national average.
Home prices in the Newark-Union area, which includes Essex, Hunterdon, Morris, Sussex and Union counties, for example, rose 5.3 percent, to $435,800, according to the latest home-price data released by NAR. And in the Edison area, which includes Middlesex, Monmouth, Ocean and Somerset counties, home prices rose 0.5 percent, to $370,300.
The NAR groups counties and municipalities into metropolitan statistical areas.
"I honestly believe, as we sit here today, we've reached a floor in pricing," said Dominick Prevete, the regional vice president for northern New Jersey market at Morris Plains-based Weichert Realtors.
Prevete said the stockpile of homes for sale is lower today than it was this same time last year -- a sign the housing market may be stabilizing. He also said the number of attendees at Weichert's weekend Open Houses has increased by 20 and 25 percent compared to last year.
Nationally, however, the picture was mixed.
Of the 150 metropolitan statistical areas in the NAR's latest survey, 73 showed price gains from a year ago, and 77 had price declines.
Lawrence Yun, the chief economist at NAR, blamed the liquidity squeeze that began last summer for much of the drop. Homebuyers had trouble obtaining mortgage financing, especially for more expensive properties, he said.
"The continuing crunch in the jumbo loan market that began in August has disproportionately reduced the number of transactions in higher price ranges," Yun said.
© 2008 The Times of Trenton
© 2008 NJ.com All Rights Reserved.