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Uncle Sam helps you in three ways when you own your home. By John Adams 1. The purchase When buying your own home, most of the expenses are not tax deductible. But there is one exception that is worth finding. The IRS says you can deduct interest in the year that it is paid, and that is usually part of each monthly loan payment. In addition, if the day you purchase is on any day other than the first of the month, you will likely pay a charge for "daily interest" between the day of closing and the end of the month. Look on line 901 of your HUD settlement statement. Much more importantly, the IRS says that, in most cases, loan discount points and origination fees are tax deductible to the buyer, regardless of who pays them. Look at lines 801 and 802 of your settlement statement and see if you hit the jackpot. This is a particularly unusual deduction because you get the benefit even if the seller paid your closing costs. And because origination fees of 1% and more are common, this can amount to a lot of cash. 2. Mortgage interest In general, you can deduct interest charged on a loan used to acquire or improve your principal residence in the year that it is paid. In the early years of a loan, most of your monthly payment is interest, so this can really add up. If you are in a 28% federal tax bracket, this can have the effect of lowering your borrowing costs by almost a third, depending on which state you live in. This is truly nothing more than a subsidy to home owners, and it's a very popular deduction. In addition, you can always deduct interest on an additional $100,000 of mortgage debt, which can be used for any purpose. This is called the "Home Equity Loan" exception, and it allows you to tap into your home equity for any purpose. This gives home owners the ability to do what is called "debt-shifting." For example, if you live in an apartment and have a credit card balance of $10,000 at 18% interest, none of that interest would be deductible. But if you bought a house, obtained a home equity loan for $10,000 and paid off the credit card, then ALL of the interest expense becomes automatically deductible. Furthermore, the rate on the home equity loan is likely to be around prime plus one or two, usually much lower than credit card rates. This same technique works with any and all personal debt, from car loans to consolidation loans - with only one hitch. In every home equity loan, you have pledged your house as collateral for the loan. If you fail to pay the payments as agreed, you could lose your house to foreclosure. So be careful in using this technique. 3. The sale This is the best. In fact, I can hardly believe this myself. Here's how it works: If you have owned and occupied your principal residence for at least two of the past five years, you can earn up to $500,000 on the sale of that house and pay no federal income tax whatsoever. That's assuming you are married - singles get up to $250,000 tax free. And here comes the kicker: You can do this as often as every two years for the rest of your life. This is as good an excuse for getting married as I have ever heard. Buy a fixer-upper in an up and coming neighborhood, work on it nights and weekends for two years, then sell it at a nice profit and pocket the cash, totally free of federal taxes. And most states recognize the federal exclusion, so you put the cash away totally tax free. You don't have to re-invest, you don't have to be age 55, and you can do this every two years forever. No, I'm not kidding. The one restriction is that you MUST own and occupy the house as your principal residence, so don't try this on a rental property by pretending you live there when you don't. And there are some unclear rules about how you can take a partial exclusion if you live there less than two years, but we don't really know what they mean yet, so I recommend you stay there two years. Many of these benefits came into being with the 1997 tax law, but lots of folks are just finding out about them now, so buy and sell to your heart's content. Just don't plan on staying forever!

Typically, home sales are strongest in the spring and summer months; however, there are several advantages to shopping for homes in the fall and winter. Sellers are often more motivated in the winter and may be willing to negotiate terms such as price, repairs, and even a closing date. The rule of thumb is that anyone braving the elements (or taking the time during the busy holiday season) to view a home is a serious buyer, and the same can be said for those who leave their homes on the market during this time and continue to have viewings. Fewer buyers in the marketplace during these months mean less competition and a better chance of getting a home at a lower price. Also, potential buyers in the winter months have the luxury of spending more time researching homes without as much concern of losing a house to another party. When viewing a home in the cooler months buyers get a realistic idea of a home’s energy efficiency. Pay attention to the thermostat temperature and take note of any drafts in the home. Trees without leaves give potential buyers an accurate picture of the privacy (or lack thereof) from neighbors or the street. Because the majority of moves take place in the warmer months, moving companies may be readily available when it comes to your desired move date and even flexible on their rates.

And you're certainly not alone in dealing with this...because it not only happens to home sellers in general but is also known to happen to home sellers who're real estate professionals by trade. A changing market has its stories of agents with nice homes who've spent years making them better-but when selling in a changing market, their emotional attachment outweights everything they know about what works in that marketplace.  And like any other home seller with a huge emotional investment, they overprice.  consequently, their home sits on the market with little activity because buyers have so many other opportunities.

The surprising Way Home Sellers Unwittingly Sabotage Selling Their Home. Faulty logic isn't the only thing leading home sellers astray these days. Emotions, too, play a key role in keeping the "For Sale" sign planted firmly in their yard.  And as much as most people would like to think of themselves as purely rational beings, when it comes to selling their home, this simply is not the case. And here's why... Home ownership is at the heart of the American Dream...you home is your castle. And it's filled with cherished memories of inestimable worth. Your home is also a huge chunk of your financial wealth. If you like your home, it has features that made it especially attractive to you at the time of purchase. And you've probably spent untold time and effort getting it just right-not to mentioned your expense. Overestimating value becomes easy... Understandably, such an investment makes it easy for you to overestimate the value your personal upgrades will have for buyers. Consider, for example, a seller who builds a wood entertainment center in the family room exactly the way she wants it...the wood color, the design-both are what she wants. And it's the exact size for her TV. Maybe it cost her $10,000.00.  As a seller, she may think, "well, I should at least get the 10,000 plus the buyers wont have to go through the weeks of mess it took to build it and it makes the house so much more livable, they really should pay me 15,000 for it," Fast forward to a showing: a buyer comes in, sees the entertainment center and says, "Gee, that's nice... too bad they didn't use a lighter wood (or darker wood). That's a real negative to me.  I may have to tear it out."  or it doesn't fit their TV, or the design is too contemporary, etc. Nor does emotional value translate to monetary value... The line between emotional value and real monetary value can easily become blurred once you decide to sell. For instance, a seller who lives next to a school might say, "I love living right by the school." And some people may pay a little extra for that, but for the just as many people, being next to a school is a huge disadvantage because they imagine the noise, the traffic and people in their yard. So you may be surprised to discover that for every advantage you see in your home, buyers can see a disadvantage. Right about now, an objective viewpoint becomes crucial because... When it comes time to put a price tag on the"brick and mortar" structure that's safeguarded your very life and the lives of those you love, rational reasoning usually takes a hike... CHAUTAUQUA LAKE REAL ESTATE

And your certainly not alone in dealing with this...because it not only happens to home sellers in general but is also known to happen to home sellers who are real estate professionals by trade. A changing market has its stories of agents with nice homes who've spent years making them better-but when selling in a changing market, their emotional attachment outweights everything they know about what works in that marketplace.  And like any other home seller with a huge emotional investment, they overprice.  Consequently, their home sits on the market with little activity because buyers have so many other opportunities Search for Homes

The Biggest Blunder Home Sellers Make that Keeps for "For Sale" Sign in their Yard Way Too Long. When you're serious about selling your home in a changing market, what's better than getting your asking price? Consider these important points: In many foreclosure and short sale ridden markets, the supply of homes for sale today is higher than it's been in many years. History teaches that the supply of homes for sale always increases and the number of people wanting to buy them always decreases when market force decimate American's real income and buying power. No thinking person could possibly believe that things will turn around on a dime. These really are uncertain times. This means it's safe to assume the buyers market will continue for the foreseeable future. But judging from the number of homes remaining on the market for very long periods in many regions of the country, it's apparent most home sellers today just arent's thinking straight. Nor are they adapting their selling strategy to the changed marketplace.

These buyers are very price conscious and with all the uncertainty afoot, they can and do take their own sweet time to shop and compare.  Plus, these price-conscious buyers composing the current market have taken on a special importance. They and they alone determine your home's real market value (defined as the highest price a qualified buyer is willing to pay for your home right now). But despite the buyer's relative influence on the market, once your're armed with the up to date information in this guide's Market Smarts for home Sellers, YOU can avoid the marketplace pitfalls other-less savvy-sellers succumb to.

Houses are still selling, and although prices are soft, most are holding steady with some decline, and some are even gaining in many markets, albeit very slowly. This means your home is probably still worth more than you paid, if you've been in it a sufficient amount of time. And be careful not to fall into the trap so many sellers fall into: they use the price their homes command in the current market as the sole driving force in their decision whether to sell or not. They forget to look at the big picture. Yes, you may not have as much value in your home as a few years ago, but neither do all other home sellers. That is, homes in your move up target range-or even if you're looking to downsize-are attractively priced and great values are out there. But to cash in on these opportunities and real any equity from your home sale, you do have to venture out and sell in today's changing and uncertain market. And all those other "For Sale" signs in your neighborhood mean you'll be competing with your neighbors for the attention and interest of a smaller group of skittish buyers who have less money to spend on monthly mortgage payments.

Are Americans ready and able to buy a home? It's hard to get perspective in this changing market. Many buyers who signed on the dotted line have lost or are losing their homes to foreclosure (and no one is sure what the true trend here will be). Things are different from market to market.  What are buyers thinking? The truth is, mortgage rates continue to hover at historic lows, but for how long?  Due to the free fall the market had gone through, home prices have "adjusted" dramatically, to be sure. There is real value to be had if buyers are willing and able to venture out into the market place. But will buyers start truly having the confidence and resources to start buying?

These are very good questions, and home sellers all across the country are asking themselves these questions.  But like Bob Dylan suggested in his classic song, the true answer feels like it's "blowing in the wind."  Just read the papers, scan the news on your favorite news website, read the blogs or watch the nightly news.  A glimmer of hopeful news is countered with the pall of uncertain news on the labor front. Some say we're in recovery, some aren't so sure. There are plenty of conflicting view points, perspective and proclamations to go around. It's all about change and uncertainty. More to follow....

Economic times are changing. The real estate marketplace is changing too and so must your home-selling strategy.  It's simple logic, really-but so many sellers just don't "get it."  You don't have to be one of the pack. Follow my blog and I will update you on: What to expect in a marketplace where change is the new "constant" The biggest blunder today's home sellers make that keeps the "For Sale" sign in their yard months too long. How to avoid the stress and frustration brought by insulting offers from low-balling buyers, long months with strangers trekking through your home and poking through your closets and the worst possibility of all-the money-draining strain of two mortgage payments. The surprising way home sellers unwittingly sabotage selling their home. The single most powerful tactic home sellers miss for attracting qualified buyers who will find their home a perfect fit. The #1 reason bad sales happen to good people. How to prevent the buyer-seller tangle from becoming dog-eat-dog so you get your asking price the first time around. If selling y our home has been on the horizon, you've probably paid attention to conflicting and confusing housing reports and lots of uncertainty: Neither buyers nor sellers are sure about today's market Signs of improvement are clouded by uncertainty in job market What is happening with the REO and short sale properties? ...And like so many other homeowners throughout the country this leaves you wondering: Is this a good time to sell or is it a bad time? Prices are still historically lower (but in some areas rising) Mortgage rates are generally historically low, but for how long? Stay posted for more....

$8,000 First time home buyer credit On February 25th, The Internal Revenue Service announced that taxpayers who qualify for the first-time homebuyer credit and purchase a home this year before Dec. 1 have a special option available for claiming the tax credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year. Qualifying taxpayers who buy a home this year before Dec. 1 can get up to $8,000, or $4,000 for married filing separately. "For first-time homebuyers this year, this special feature can put money in their pockets right now rather than waiting another year to claim the tax credit," said IRS Commissioner Doug Shulman. "This important change gives qualifying homebuyers cash they do not have to pay back."The IRS has posted a revised version of Form 5405, First-Time Homebuyer Credit, on IRS.gov. The revised form incorporates provisions from the American Recovery and Reinvestment Act of 2009. The instructions to the revised Form 5405 provide additional information on who can and cannot claim the credit, income limitations and repayment of the credit. This year, qualifying taxpayers who buy a home before Dec. 1, 2009, can claim the credit on either their 2008 or 2009 tax returns. They do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date. They can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately. The amount of the credit begins to phase out for taxpayers whose adjusted gross income is more than $75,000, or $150,000 for joint filers.  For purposes of the credit, you are considered to be a first-time homebuyer if you, and your spouse if you are married, did not own any other main home during the three-year period ending on the date of purchase. The IRS also alerted taxpayers that the new law does not affect people who purchased a home after April 8, 2008, and on or before Dec. 31, 2008. For these taxpayers who are claiming the credit on their 2008 tax returns, the maximum credit remains 10 percent of the purchase price, up to $7,500, or $3,750 for married individuals filing separately. In addition, the credit for these 2008 purchases must be repaid in 15 equal installments over 15 years, beginning with the 2010 tax year. Use the $8,000 credit for your down payment!  Certain restrictions apply, call one of our agents or your lending institution for details. Consumers across the country can now take advantage of a Federal Housing Administration program to allow qualified home buyers to apply the $8,000 tax credit when purchasing a home. FHA will now permit its lenders to provide a short-term bridge loan that will let qualified home buyers use the tax credit to either make a larger down payment above the FHA required 3.5 percent, cover closing costs, or buy down their interest rate. "A true housing recovery depends on buyers returning to the market and reducing inventory," said National Association of Realtors® President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth. "Since many of the homes available are lower priced starter homes, the ability for individuals to use the tax credit at closing should have a meaningful impact on home sales and values and will allow thousands of families to achieve the dream of homeownership." Shaun Donovan, secretary of the Department of Housing and Urban Development, announced the change today. In an address to several thousand Realtors® gathered two weeks ago at NAR's Real Estate Summit: Advancing the U.S. Economy, Donovan announced HUD's plan to offer the tax credit as down payment assistance. Donovan detailed the modifications to that original proposal and announcement. "We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans," Donovan said. According to Donovan, the FHA's approved lenders will be permitted to "monetize" the tax credit through short-term bridge loans allowing eligible home buyers to access the funds immediately at the closing table. NAR has supported monetization of the tax credit, which was part of an Obama administration housing stimulus plan enacted earlier in the year. NAR petitioned HUD to allow home buyers to use the $8,000 tax credit to help them cover down payment or closing costs to bring new home buyers to the market and stimulate home sales. "We think this is a good program; our members have been getting many inquiries from potential buyers about it," McMillan said. "NAR is pleased that this enhancement has been made to the administration's housing recovery program. As we have heard before, there can be no economic recovery without a housing recovery. With an abundance of inventory, reduced home prices, historically low interest rates and now the availability of the tax credit at closing, we expect to see the housing market further stabilize and improve." Below is a list of FAQ's from the IRS website:

See all of Chautauqua Lakefront properties. With interest rates at all time lows, Chautauqua Lakefront properties have never had a better value. Put your hard earned investments into bricks and mortar. Call Tom for any of your Chautauqua Real Estate Needs  716-640-3912