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NationalGuarantyMortgage.com

February 2009

Inside This Month’s Newsletter:

• American Recovery and Reinvestment Act of 2009
• 12 items to consider when filing your 2008 return
• The Stimulus Package's More Buyer-Friendly Tax Credit
• Recipe of the Month

TO:NAMBState Presidents & Executive Directors
FROM: NAMB Government Affairs  Today, the President signed the American Recovery and Reinvestment Act of 2009 which includes some very beneficial provisions for consumers:

*First-time buyers can claim a credit worth $8,000 or 10% of the home's value, whichever is less - on their 2008 or 2009 taxes. To qualify for the credit, the purchase must be made between Jan. 1, 2009 and Nov. 30, 2009; buyers may not have owned a home for the past three years to qualify as "first time" buyer. They must also live in the house for at least three years, or they will be obligated to pay back the credit. In addition, buyers must make less than $75,000 for singles or $150,000 for couples (higher-income buyers may receive a partial credit).

*The FHA and GSE loan limits have been increased to the 2008 levels for 2009.  Congress raised the loan limits in 2008 to reflect higher housing prices in different parts of the country, which caused loan prices and loan originations to increase.

*The Secretary of Housing and Urban Development will have discretion to set higher FHA and GSE loan limits in sub-areas for 2009.

*The bill raises FHA reverse mortgage HECM national loan limit from $417,000 to $625,500 for 2009.
 

12 items to consider when filing your 2008 return

NEW YORK – Jan. 29, 2009 – Income taxes this year will be pretty much the same as last year, but with a few exceptions. “If you just ease into the same routine when doing your 2008 taxes, you may miss out on big tax savings that could result from a number of key changes that first apply for the 2008 tax year,” says William E. Massey with Thomson Reuters, who compiled the following 12 tax-saving opportunities:

1. Economic stimulus payment. You may have received an economic stimulus payment in 2008, based on your 2007 taxes. If so, don’t include it as income on your tax return. It’s not taxable. If you didn’t receive a payment, you may be eligible for the recovery rebate credit, as explained below. You may even qualify for that credit if you did receive an economic stimulus payment.

2. Recovery rebate credit. This credit is figured like last year’s economic stimulus payment, except that the amounts are based on tax year 2008 instead of tax year 2007. The maximum credit is $600 ($1,200 if married filing jointly) plus $300 for each qualifying child. You may be able to take this credit only if you did not get an economic stimulus payment, or your economic stimulus payment was less than $600 ($1,200 if married filing jointly for 2007) plus $300 for each qualifying child you had for 2008.

The tax rebate hinged on a taxpayer’s income, and the credit dropped in 5 percent increments for yearly incomes of $75,000 and over. “Many individuals who lost all or a portion of their economic stimulus payment because of the phase out rules may now be in a position to claim a recovery rebate credit on the 2008 return they file in 2009,” says Massey. “This would be relevant to a taxpayer who, for example, experienced a job layoff, cutback in hours or reduction of salary. A recovery rebate credit may also be allowed on account of a child being born in 2008 or to someone first entering the workforce in 2008.”

3. Withdrawal of economic stimulus payment from certain accounts. You may have opted to have your economic stimulus payment directly deposited to a tax-favored account, such as an IRA, and you now realize you need the money. Don’t worry about being penalized for taking the payment back. If you withdraw it by the due date of your return (including extensions), the amount withdrawn will not be taxed and no additional tax or penalty will apply.

4. Alternative minimum tax (AMT) exemption amount increased. For 2007, you may have owed AMT or come close to owing it. (AMT is an added tax that arises when income is refigured in a special way to tax you on certain items that aren’t taxed under regular rules, and to deny certain deductions that are allowed under the regular rules.) Some individuals may not be hit with the tax for 2008 because the AMT exemption has increased to $46,200 ($69,950 if married filing jointly or a surviving spouse; $34,975 if married filing separately).

5. Standard deduction increased by real estate taxes. Suppose you own a home and pay real estate taxes but don’t have enough total deductions to be able to itemize. Good news: You can increase your standard deduction by the state and local real estates taxes you paid, up to $500 ($1,000 if married filing jointly).

6. Standard deduction increased by net disaster loss. You can increase your standard deduction by your net disaster loss. This amount is your personal casualty losses from a federally declared disaster in a disaster area less any personal casualty gains from it.

7. First-time homebuyer credit. Qualified homebuyers can subtract the credit amount from their federal income tax when they buy the home and even get a refund if the credit exceeds the tax. However, they must pay the credit back over 15 years. The result is that the credit resembles an interest-free loan that must be repaid to the government. Here are the details:

• The home must be located in the U.S. and must be your principal residence (main home). You (and if married, your spouse) must not have owned another principal residence in the U.S. in the three-year period before purchasing the new home. Thus, the home doesn’t literally have to be your first home.
• The home must have been purchased from April 9, 2008 through June 30, 2009, inclusive.
• A special rule allows taxpayers who purchase a principal residence in the first six months of 2009 to treat the purchase as if made on Dec. 31, 2008. This allows the taxpayer to claim the credit for 2008 rather than 2009.
• The credit is equal to 10 percent of the price paid for the home, up to a maximum of $7,500. The $7,500 maximum credit applies both to individuals and married couples filing a joint return. A married individual filing separately can claim a maximum credit of $3,750.
• The credit is phased out for individual taxpayers with modified adjusted gross income (AGI) between $75,000 and $95,000 ($150,000 and $170,000 for joint filers) for the year of purchase. Taxpayers with modified AGI over $95,000 ($170,000 for joint filers) can’t claim the credit.
• In the second year after purchase, taxpayers who took the credit must start paying back the credit in equal installments over 15 years, with no interest charge.
• No credit is allowed if: the taxpayer or the taxpayer’s spouse was ever entitled to a D.C. homebuyer credit; the home purchase was financed through tax-exempt mortgage revenue bonds; the taxpayer is a nonresident alien; or the taxpayer disposes of the residence (or it ceases to be a principal residence) in the year of purchase.

8. Rollovers to Roth IRAs. Subject to conditions, you can roll over distributions from an eligible retirement plan to a Roth IRA. The rollover is not tax-free; but with lowered account values, the tax may not be onerous. Also, you may be able to use other available tax breaks to eliminate or reduce the tax arising from the rollover.

9. Standard mileage rates. The 2008 rate for business use of one’s vehicle is 50 1/2 cents a mile (58 1/2 cents a mile after June 30, 2008). The 2008 rate for use of one’s vehicle to get medical care or to move is 19 cents a mile (27 cents a mile after June 30, 2008).

10. Personal exemption and itemized deduction phaseouts reduced. Taxpayers with adjusted gross income above a certain amount may lose part of their deduction for personal exemptions and certain itemized deductions. The amount by which these deductions are reduced in 2008 is only 1/2 of the amount of the reduction that otherwise would have applied in 2007.

11. Tax rate on qualified dividends and net capital gain reduced. The 5 percent tax rate on qualified dividends and net capital gain that applied for 2007 is reduced to zero for 2008.

12. Tax on child’s investment income. Form 8615 is required to figure the tax for a child with investment income of more than $1,800 if the child: (1) was under age 18 at the end of 2008; (2) was age 18 at the end of 2008 and did not have earned income that was more than half of the child’s support; or (3) was a full-time student over age 18 and under age 24 at the end of 2008 and did not have earned income that was more than half of the child’s support.

SOURCE Tax & Accounting business of Thomson Reuters

The Stimulus Package's More Buyer-Friendly Tax Credit
By Kenneth R. Harney Saturday, February 21, 2009; F01

Now that Congress has fixed a crucial flaw in last year's home-purchase tax credit, who will be able to make use of the new version? And what about timing: How long do buyers have to locate a house and close the deal?

These are just two of the flurry of questions surrounding the $8,000 housing credit for 2009 authorized by Congress's sprawling $787 billion stimulus plan. So here's a quick rundown on the credit and several other real-estate-related measures in the package.

Although the Senate version of the bill would have created a much more generous and costly tax credit -- up to $15,000 per purchase with no limitation to first-time buyers -- it was quickly rejected in the conference committee. Negotiators added $500 to last year's $7,500 credit and for the 2009 version lifted the requirement that it be paid back.

There's still widespread misunderstanding on the issue, but qualified purchasers who closed in 2008 will not benefit from the 2009 amendments. They're stuck with the old model, and will have to pay back the credit -- more precisely an interest-free loan from the government -- over the coming 15 years.

People who buy homes between Jan. 1 and Dec. 1 of this year may qualify for the $8,000, no-repayment credit. But they'll still have to pass most of the key eligibility tests imposed under the 2008 program.

For example, they must be "first-time" buyers under the 2008 definition: Either they have never owned a house before, or they haven't owned or co-owned one during the three years preceding the date they close on their 2009 purchase.

Carefully planning the timing of your closing could be worth thousands of dollars to you. Say you once owned a house but sold it on March 25, 2006. If you close on a house in 2009 but before March 25, you lose eligibility for the $8,000 credit. Push settlement back to March 26 or later -- anytime before Dec. 1, when the new credit program's eligibility period expires -- and you're $8,000 to the better.

As with the 2008 credit, there's a household income test, as well. The 2009 version phases out eligibility for the credit starting at $75,000 adjusted gross income for single taxpayers, and $150,000 for couples filing jointly. The 2009 program also removes last year's prohibition against purchases financed with state and local tax-exempt mortgage revenue bond programs, which are popular among moderate-income home buyers in many parts of the country. This year such loans won't eliminate your eligibility for the $8,000 credit.

Under the 2009 program, the house you buy must be used as your principal residence, not a second home or investment property. But that residence can take a wide variety of forms, including "houseboats, housetrailers, cooperative apartments, condominiums," among others, according to IRS rules.

Congressional sponsors of the revised tax credit program offered no projections of how many home sales are likely to be stimulated this year by the no-repayment feature, but the National Association of Realtors has weighed in with its own estimates: 300,000 more houses will sell during 2009 as a direct result of the credit. Add in the so-called "ripple effects" -- spending on furnishings, appliances, remodeling materials, brokerage commissions, moving costs, etc. -- and the economic jolt could be significant over a relatively short period.

Other sections of the stimulus package that haven't received much attention, but still could benefit large numbers of owners and buyers, include:

• An increase in the maximum mortgage amounts permitted for funding by Fannie Mae, Freddie Mac and the Federal Housing Administration -- essentially a rollback to 2008's high-cost-area limits, which range as high as $729,750 in the most expensive markets of California and portions of the East Coast such as metropolitan Washington. That's potentially important for all buyers -- not just first-timers -- in those areas because it should open the door to lower interest rates on the big loans they need to purchase even median-priced houses. The current high-cost-area limits top out at $625,500.
• Hefty increases and extensions for tax credits to stimulate "qualified energy efficiency improvements" in existing homes. The expanded credits cover improvements to air-conditioning systems, or natural gas and propane furnaces and water heaters.
• $2 billion in additional funds for local governments and nonprofit groups to enable them to acquire and renovate foreclosed and vacant dwellings that are depressing property values and raising crime rates in neighborhoods hit hard by the housing and mortgage messes.
   

Grilled Chicken Tostadas

INGREDIENTS
MARINADE:
 1/2 cup fresh lime juice (about 3 to 4 limes)
 1/4 cup soy sauce
 1/4 cup vegetable oil (plus more for brushing the tortillas)
 1 tablespoon honey
 2 teaspoons minced garlic
 1 1/2 teaspoons chili powder
TOSTADAS
 6 boneless, skinless chicken thighs (about 4 ounces each)
 8 small corn tortillas (5 to 6 inches in diameter)
 1 1/2 cups (6 ounces) shredded Monterey Jack, or more if desired
 1 1/2 cups shredded lettuce
Optional toppings: salsa, guacamole, sour cream, cilantro, green onions

1. Place the chicken thighs in a gallon-size zip-lock bag and add all the marinade ingredients. Press the air out of the bag and seal it. Turn the bag to thoroughly coat the chicken, place it in a bowl, and refrigerate it for at least 4 hours (preferably overnight), turning the bag occasionally. Remove the meat from the refrigerator 20 minutes before you want to start grilling.

2. Prepare a charcoal fire or set a gas grill to medium-high, close the lid, and heat until hot -- about 10 to 15 minutes.

3. Remove the thighs from the bag and discard the marinade. Grill the chicken until it's no longer pink inside, about 4 to 5 minutes per side on a gas grill. Transfer the chicken to a cutting board and let it rest for about 5 minutes before cutting it into 1/2-inch strips.

4. Lightly brush both sides of the tortillas with vegetable oil. Grill them on each side until they turn slightly brown, about 1 minute on a gas grill. Before removing the tortillas from the grill, sprinkle each one with 1 tablespoon of cheese.

5. To serve, layer the tortillas with shredded lettuce, the chicken strips, the remaining cheese, and any additional toppings. Serves 6 to 8.

CONGRATULATIONS NATIONAL GUARANTY! 

The GAMB, Georgia Association of Mortgage Broker’s recognizes a few of its outstanding members by presenting awards to the individuals who are active in the association and exemplify the finest standards and accomplishments.  National Guaranty was nominated (one of three nominees, nominated by the general membership) for Broker of the Year. The nominees will then vote on, again by membership, for the actual award of Broker of the Year.  We feel fortunate and proud that the National Guaranty team would be one of the three honored for our hard work and professional accomplishments, especially during a year when there has been such industry mayhem and controversy.