Get Real Tacoma

The President of the Washington Realtors, Greg Wright just shared this interesting article on Facebook. I know, he’s so hip!

Answering criticisms that all of the relief for the housing and economic crisis have been targeted at big banks and other large corporations, lawmakers are working on a bill that would make it possible for buyers to apply their $8,000 tax credit to their downpayment.

The proposal would make a federal tax credit for first-time homebuyers go farther by allowing it to be put toward the actual home purchase. A provision of the federal stimulus package offers a credit of up to $8,000 to buyers who haven’t owned a home in the past three years — buyers must also have incomes of no more than $75,000 for an individual or $150,000 for a married couple to qualify — but it’s a refundable credit. In other words, you don’t get the money until weeks or months after the home purchase has closed.

A budget proviso authored by the state Treasurer’s Office and pushed by Sen. Steve Hobbs (D-Lake Stevens) and the state Realtors would set up a mechanism to get the tax-credit money to buyers at closing, removing the lack of a sufficient down payment as an obstacle. 

This is really exciting news.  The article goes on to talk about how the state will be ensuring that they get their money- but I thought this was interesting:

The state Realtors would put up $400,000 as security against unforeseen losses.

Now I know why my Realtor Dues are so high. Ah well, that’s a good use for them!

UPDATE:  Today it was decide that REET does not apply to Short Sales. THANK GOODNESS!

Washington Realtors Association sent out a notice to it’s members this morning, saying that “The Department of Revenue (DOR) recently sent a letter to the Escrow Association explaining its position that in short sales, the Real Estate Excise Tax (REET) applies not only to the selling price of a home, but also any debt forgiven by the seller’s lender.” 

Of course, this is total crap.  Why should you pay taxes on a price the market wouldn’t bear out?  NWMLS broke it down like this:

 

For example, if a seller owes $350,000 on its mortgage, the property sells for $300,000, and the lender agrees to forgive the remaining $50,000 in debt (i.e. the seller will not be held liable for the $50,000 difference) - there are tax implications for the seller related to the $50,000 debt forgiveness.

The seller is already potentially having to report that $50k that the bank forgave as income, now the state is saying they must also pay excise tax on that? 

Realtors are not allowed (by law) to give tax or legal advice in this situation.  If you are selling your home in a Short Sale, make sure to talk to a Real Estate Attorney and a CPA.

 With Pierce County apparently claiming the dubious honor of #1 in the state for home foreclosures, I find it shocking that there isn’t a greater effort underway to educate homeowners about Washington State’s Free Homeowner Counseling Line. 

Just so you know, when a person falls behind in their payments and the forclosure process is started, it becomes a matter of public record.  This means that homeowners are baraged with mail, phone calls, sometimes even personal visits from people wanting to charge them money to get them out of their situation.

Depending on what kind of services are being offered, it might be just the help the homeowner needs.  Real Estate agents might be able to help them sell the home before it is foreclosed.  Bankruptcy attorneys may be able to help the homeowner keep their home.  Unfortunately some of the time, desperate homeowners are paying for help that is available to them for free.

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