California is a virtually bankrupt State with the 3^rd worst educational system in the Country.

To be allocating $200 million to such a program, while simultaneously imposing huge cuts on education, seems to me the height of irresponsibility.

In practice this program will chiefly benefit people who would be buying anyway, and steer them toward new construction. I don’t see this as anything Realtors should be cheering about.

Banks and Builders however are welcoming it with huge sighs of relief.

Just my opinion.

Our dangerous levels of Public Debt are going to have to be dealt with and The Mortgage Interest Tax Deduction is an obvious and inevitable target.

Even as I type this I can hear the screams of “No Way” they’d never dare touch it.

Having lived through the British “phase out” of mortgage tax relief, and observed it’s results, I am convinced that this unfair tax break will soon join the Dodo, and our society will be the better for it’s going; Indeed, the process has already started, as limits on the total dollar amounts, and number of properties eligible have already been implemented over the past few years. Not all at one go, but little by little, so that in a few years it will, just like the smile on the face of the “Cheshire Cat,”  have totally faded away.

What we currently tell our taxpayers is that if they agree to take on one particular type of debt ( a mortgage) we will lower their taxes. If not we will have to increase their income taxes to make up for what we are losing to their more affluent fellow citizens i.e. Mortgage holders.

Is it good to have a high level of home ownership YES. Should it be done by this type of Social Engineering (Socialism) NO.

Could it be posible that one or more of our currently troubled States might be the 1st to take this path?? Perhaps the one that put in that other masterpiece of tax malpractice, Prop 13.

Details here are for Santa Clara County but other Counties and Cities also operatate these programs.

The County of Santa Clara has been awarded a new MCC Allocation in the amount of $3,031,944.

This award should serve approximately 70 Households.

MCC Applications will be accepted beginning February 12, 2010, until the allocation is depleted.

MCC PROGRAM: The Mortgage Credit Certificate Program is available for first-time home-buyer’s purchasing their first home in participating cities in Santa Clara County. The Mortgage Credit Certificate Program gives first-time home-buyer’s a federal income tax credit of up to 15% of the interest paid on their first mortgage loan each year the home-buyer keeps the same mortgage loan and lives in the same property as their primary residence.

The Maximum Income Limits for 2010:

Effective February 12, 2010:

1 or 2 person household = $102,500

3 or more person household = $117,875

The Maximum Purchase Price Limits are:

Resale/Existing Units = $570,000 and for,

Newly Constructed Units= $630,000

When John Rothenhoefer, 70, found out that he could increase his Social Security benefits by about $1,000 a month by taking advantage of a do-over strategy, he thought he’d struck gold. As it turns out, he might as well have won a mega lottery. Out of the 32 million retirees who collect Social Security benefits, Rothenhoefer was one of just 71 people this fiscal year to take advantage of an obscure option that lets you halt your current benefits, pay back all you have collected interest-free, and restart your benefits at a new, higher rate based on your current age.

It’s perfectly legal, says Mark Lassiter, a spokesman for the Social Security Administration. But don’t expect the claims representatives at your local Social Security office or the employees who answer the agency’s toll-free number (800-772-1213) to be familiar with the details. “Our service representatives can go an entire career and never encounter this situation,” says Lassiter. He recommends that you download Form 521 (“Request for Withdrawal of Application”) from the agency’s Web site (www.ssa.gov) and visit your local office in person.

This strategy is just one of four little-publicized ways we uncovered to help you maximize your Social Security benefits. Each tactic applies to a specific situation; if one of them is yours, you could be in the money.

A “sweet deal”

For someone like Rothenhoefer, who had been collecting monthly checks for eight years, the price of repaying Social Security benefits can be steep — $100,000 or more in some cases. But he thinks it’s well worth it. Not only will his monthly check be about 75% larger than his previous benefit, but it will also increase with inflation each year for the rest of his life. And if John dies first, his wife, Charlotte, 67, will collect the same monthly amount as a survivor benefit for as long as she lives.

Here’s how it works: Let’s say you qualify for full benefits of $1,600 a month at your normal retirement age of 66, but you decide to begin collecting your benefits at 62. Your retirement benefits will be reduced by 25% for the rest of your life — to $1,200 a month, in this example — because you’ll be collecting a smaller benefit for a longer period of time.

On the other hand, if you delay collecting benefits, you will receive an 8% credit for every year beyond your normal retirement age until you reach 70, when your maximum benefit will be 132% of what you would have received at age 66. In this example, you would receive about $2,100 a month at 70 — a $900 difference.

Maybe you decided to collect benefits early out of fear that you wouldn’t live long enough to collect the larger delayed benefit. But now that you’ve made it to 70, you may regret your decision and wish you were receiving a larger check.

In order to get one, you must first file Form 521 at your local Social Security office to request a withdrawal of your application for benefits. Your retirement benefits will stop almost immediately — and if your husband or wife receives spousal benefits based on your work record, his or her benefits will stop, too. Then the Social Security Administration will send you a letter telling you how much you need to repay (including any spousal benefits). That process may take several weeks. Once you repay the benefits, you can reapply for new, higher payments based on your current age.

If, for example, you received $1,200 a month starting at age 62, plus annual cost-of-living adjustments through age 70, you would have to repay about $130,000. That’s a lot of money, but for some people it’s worth the price to get an additional $900 a month in retirement. By comparison, it would cost a 70-year-old man about $190,000 to buy an immediate annuity that would provide $900 a month initially, plus annual inflation adjustments and a 100% survivor benefit. That’s 46% more expensive than “buying” a lifetime annuity from Social Security.

Rothenhoefer thinks it’s a “sweet deal.” He concedes the strategy could backfire if both he and his wife were to die before they recoup their investment, which will take about ten and a half years. Still, he says, “it’s worth the gamble,” particularly because his wife stands a good chance of living into her nineties, as her mother and grandmother did.

There’s another financial downside: You may have to go without Social Security benefits for a few months while the agency sorts out how much you have to repay and you reapply for benefits. When your benefits stop, so do the automatic deductions that cover your Medicare premium. You’ll have to pay the Part B premium yourself — currently $96.40 a month for most retirees — until your Social Security benefits resume.

Crunch the numbers

Boston University economics professor Laurence Kotlikoff says repaying and reapplying for Social Security benefits is a “fantastic option” for some people. But it can involve a lot of number-crunching to determine whether it’s the right decision for you. Kotlikoff offers case studies on his Web site, www.esplanner.com. For $149, you can access his sophisticated financial-planning software, which lets you create your own comprehensive retirement plan, including an analysis of the pros and cons of a decision to pay back your Social Security.

John Greaney, who started the Retire Early Web site (www.retireearlyhomepage.com), says that members of his online community were aware of the repayment strategy but treated it as an urban legend. When Greaney took the time to research it last summer, he realized that it was an even better deal than he had first thought. That’s because when you repay your Social Security benefits, you can claim either an itemized deduction or a tax credit (whichever results in bigger savings to you) for the taxes you paid on your benefits in previous years. The calculations are complicated, but you can get all the details in IRS Publication 915, Social Security and Equivalent Railroad Retirement Benefits, at www.irs.gov.

A mortgage is the cheapest form of debt for the average homeowner. This is partly because it has a low interest rate, but also brings with it enormous tax benefits. For most people this lowers the actual interest rate by more than a third. The real after tax rate on a 5.5% mortgage is actually 3.625%.

The vast majority of consumer debt is much higher than this. It seems clear to me that no one should be trying to pay off the mortgage with money which would be far better used to pay off a credit card.

Another major consideration should be whether tying up more money in your house is good for your on-going financial security. Once you make that payment you can never get it back without either selling or refinancing the house. Unless you have enough other assetts to handle job loss or other family emergencies you would probably be better served by investing that money where you can quickly get at it in such circumstances.

For a more detailed conversation on this topic check the following link to the New York Times.

http://www.nytimes.com/2010/03/20/your-money/mortgages/20money.html?ref=realestate

1. Purchased their homes on or after November 7, 2009,

OR

2. Will claim the housing tax credit on their 2009 tax returns, regardless of when the property was purchased.

The new form was due to be published last December. The old form (currently the only one available on the IRS website) will not be accepted for claiming the tax credit under the extended rules.

NOTE: At this time the IRS requires that owners claiming this tax credit 0n their 2009 tax returns must file on paper. Be sure to check this beforehand if planning to file electronically. It may have changed by then.

Consider a 68 year old Grandmother living alone in the old family home in North San Jose. All her children and grand children are living in Pleasanton, about 30 minutes freeway driving away. She would love to sell up and move closer to the family, and could afford a suitable house using her sale proceeds. However, the price of the house in Pleasanton would be higher than the sales price of the San Jose house, so thanks to California’s Proposition 13 www.hjta.org/node/320 and the incomplete Propositions 60 and 90, www.boe.ca.gov/proptaxes/faqs/propositions60_90.htm she would not be able to carry her existing Property Tax payment over to the new house. This would increase her Property Taxes by $600 per month. This makes the whole thing impracticable as she cannot afford this extra expense. and her children are unable to subsidize her, even if she would accept it.

Here’s how the numbers work:

Grandma’s house, bought in 1980 for $50,000, is now worth $600,000 and has no mortgage.

Thanks to Prop 13 her property taxes are only $90/month.

The replacement house in Pleasanton will cost $750,000 and she can easilly handle the small mortgage needed.

However, thanks again to Prop 13, her new property taxes will be $781/month. This she cannot manage.

Using the Property Tax Postponement program she is able to make the move and simply allow the accrued Property Taxes to reduce her final estate. A result with which the whole family can be happy.

This double whammy is the major cause of the increased number of foreclosures and short sales.

While there is no easy answer for many in this situation there is one thing they can do to at least reduce the cost of owning their home.

California Proposition 8 allows for a reduction in Property Taxes when the current value of the house is now lower than the assessed value (usually the purchase price in this scenario.)

For example. You paid $450,000 in December 2006 for a beautiful 4 bed 3 bath home in Elk Grove.

The Builder is now selling the same house in phase 3 of the development for $380,000.

Your property taxes are $5,628 per year.

The buyer at $380,000 is paying $4,752 per year. That’s $868 per year less than you.

Prop 8 allows you to file for a “reduction in assessed value” in the County where you live. Example: www.acgov.org/forms/assessor/decline_market.pdf for Alameda County. There is some paperwork required but nothing you cannot handle yourself.

There is no need to fall for the flyer in the mail offering to take care of this for you at at a  price.

Simply call the County Assessors office and explain you want to apply for a “Reduction in Assessed Value” for your home. They will send you the required forms which you complete and send back. It may take a couple of months before they respond but respond they must.

Also evidence of the benefits of being a Realtor and having the support of the California Association of Realtors.

IRS TO EXPEDITE TAX LIEN RELIEF FOR HOMEOWNERS
The Internal Revenue Service (IRS) recently announced it will expedite its process of providing relief from federal tax liens for distressed homeowners. With over one million current federal tax liens against real and personal property, the IRS announcement should help REALTORS® and their clients resolve federal tax lien issues in their sale and loan transactions.

As background, a homeowner seeking to sell or refinance a property must generally pay off an existing federal tax lien. However, during the current economic downturn, many homeowners don’t have the cash or equity to do so. Hence, for a refinance, the homeowner may request that the IRS makes its tax lien subordinate or secondary to the lien of the refinancing lender. For a sale, the homeowner may, under certain circumstances, request that the IRS discharge its claim. The IRS’s processing time for subordination or discharge requests has been about 30 days. The IRS is currently working to expedite that time frame to help distressed homeowners. For IRS instructions on requesting relief from federal tax liens, go to the IRS Publication 783 for discharges and Publication 784 for subordinations at www.irs.gov.

C.A.R. provides REALTORS® with many legal articles covering a wide range of topics of interest. Some of the new or newly revised legal articles available at http://qa.car.org are as follows