Hi guys,
I thought it would make a great topic to discuss ways we can all benefit from the bailout and give each other ideas. Get what you can from it because we will pay dearly from the bailouts in the future.
I’m going to list a few that I know of that we can benefit from. Please list what you know as well.
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In the Stimulus Package we have energy tax cuts. A 30% cap on tax credit for energy efficiency purchases by homeowners, up to $1,500 per residence. This could benefit landlords or flippers. The government has 2 billion set aside for this.
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Energy efficiency retrogrades to low-income housing including new insulation, windows and furnaces. Landlords and flippers can benefit on this one as well and they have around 2.25 billion set aside for this.
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2009 Tax credit. This is great for selling property to low income people. Fantastic for flippers, lease options or lease purchases wouldn’t work well because they have to purchase in 2009. It is an $8,000 Refundable tax credit of up to 10% of the purchase price. So if the property is $75K the credit is only $7,500. Sell for over $80K and they will get the whole deduction.
The refundable part means that if your total tax liability in the given year is less than $8K, The IRS will send a REFUND for the balance.
Example:
A single filer would need $46,600 in taxable income to have $8,000 in tax liability.
A couple would need $58,600 in taxable income to have $8,000 in tax liability.
Those with less tax liability will in most cases get a refund meaning they get the full value of the credit.
They can’t get this credit if you are buying from a relative, they pay it back if they sell prior to 3 years, the phase out point is if they make more than 95K single or $170K for joint filers.
You can be considered a first time home buyer if the last time you owned a house was 2005 or earlier. If you owned a home or had ownership interest in a home between 2006 and 2008 you don’t qualify.
It has to be your primary residence where you spend 50% or more time.
You can amend your tax return and get the money right away.
This is a real tax credit unlike the 2008 so called tax credit.
Anyone else know of ways we can use the bailout to our benefit?
Unfortunately the homeowner bailout program was not designed to be “investor friendly.” There was a quote from Timothy Geinther awhile back saying, almost verbatim: “This program will not help people trying to make a quick buck on real estate.” Too bad Mr. Geinther doesn’t understand the world of REI, maybe if he had, the RE market could be recovering faster than it is…
Your list is probably about as comprehensive as its gonna get.
Documentation to item 1 on your list specifically states that is applies to the primary residence.
It’s amazing that this is all we can get out of it and number 1 is now crossed off. The bailouts were supposed to be putting the market back on track and in reality it seemed to just push the Democrat agenda and money for social programs to the degree we have never seen.
Yeah , but the question is 'do we want the re market to recover quicker than it is?" If you are looking to buy and hold you want the market to remain low/slow for a while. Otherwise you will start getting priced out again.
But I don’t see the type of environment where it is easy to flip and make a bunch of money happening again for a while anyways. I’m sure the time will come again though. There are cycles to everything, and there have always been real estate booms and busts.
The people that say something won’t happen again, haven’t read up on the history.
I too have wondered how investors can benefit from this bailout/stimulus money. But I think the only investors that will profit from it are the BIG institutional investors/Hedge funds.
I guess just taking advantage of REOs at what might be very low prices is enough of an advantage of the bad economy. I’m not sure ‘mom and pop’ investors will see any type of programs geared towards them…and they/we have been vilified and the cause of the whole mess.
You are right. Times are great right now for buying. It looks like that is our primary benefit. About a year ago I tightened my buying criteria to Rent times 30 minus repairs and any necessary costs of splitting the utilities with exception of water. I now have all I can handle in this price range. Not through MLS though. Primarily through looking for hardship situations.
Great news for any of you who haven’t heard. The 8K for first time home buyers can now be used as a down payment. Previously it had to be filed on your taxes to get it which drove many to not take advantage of it.
So, you can now use this tool to sell flips.
I just read about the change towards using it for down payment…it should motivate a lot of buyers to buy.
I’m guessing you mean to sell flips to owner occupants right?
Yes, Good to sell flips to owner occupants. This bailout modification will open up a nice market for flipping starter homes in the 80-150K price range.
Yeah definitely, looks like the days of “No money down” might be coming back thanks to the
U.S GOV! haha :smile
Good post and info.We need all the help we can get since being falsly tagged as part of the reason in this.Even though that was mostly california’s terribly overpriced real estate(along with the everything else there,since they want a bailout).I don’t understand why they shot down the republican proposal of more tax credit and to ALL buyers.That would’ve been alot better.Oh well,when does govt make economic sense? :rolleyes
What do you mean the republican tax proposal to ALL buyers?
Were the Republicans proposing to give a tax credit to investor buyers?
This was basically the proposal by my fellow Republicans in March.
$15000 Home Buyer Tax Credit
The proposal includes a $15,000 home buyer tax credit. Details of the tax credit include:
* Purchases of all primary residences, not just first time home buyers.
* Purchased before July 1, 2010.
* 5% minimum down payment.
Tax Credit to Refinance
In addition to buyers, they propose a refinancing tax credit. It’s a $5,000 tax credit that could be used to cover closing costs, buy down points, or reduce principal. It would include refinances that take place by July 1, 2010.
Investors:
“”“An equalizing of the treatment of a home purchased for occupancy with a home purchased for rental purposes (defined as being rented to the same tenant for at least 181 days out of the year). The same exclusion from taxes for any future appreciation in the home value applies. This covers purchases made before July 1, 2010.”“”
I agree that it is too bad that the Democrats crapped on the American public again. At first, the entire bailout, every penny, was supposed to be helping the people from the bottom up. How quickly that changed to Democrat social programs and hundreds of billions to be spent just prior to the 2010 elections. Dirty bastards they are. Every single one of them need to be voted out.
Yes, your congressmen too. Too many people out there saying, “it’s not my guy” its the other clowns in office. Guess what, it is all of the dirty bastards. Including the Republicans. We need fresh blood in office. These old school boys have been screwing us over for long enough. The corruption needs to come to an end and we don’t need to change our Conservative values further to the left as that is the exact reason we lost the last elections.
hooch,
I agree 500%.This dumb blame game benifits both parties to move us further in the wrong direction.Most of the country has conservative values,they just need to have someone that will be honest to vote for.We really did’nt have that opportunity last election.I think alot is gonna change the next time.A good example of people catching on to the never ending spending was californians today voting down raising their taxes yet again to pay for massive waste.Come on people if liberal california can get it,why can’t you?This administration is putting our country in the same position california got itself into.
I too have wondered how investors can benefit from this bailout/stimulus money. But I think the only investors that will profit from it are the BIG institutional investors/Hedge funds.