Good article on the new tax provisions in the housing bill

I finally found a good article about the new tax provisions in the big housing bill that was signed last week. Although each of the provisions targets a very select audience, I thought I would try to summarize:

1) If you are a first time home buyer (did not own a primary residence for 3 years prior to this purchase) between April 9, 2008 and July 1, 2009, you can get an interest free loan of 10% on the house up to $7,500. It comes in your next years taxes as a tax credit and must be repaid starting in the second year for 15 years. You can't make more than $95,000 for singles and $170,000 for couples and the credit is reduced for those above $75,000 and $150,000.

2) If you own a home but don't itemize your deductions and therefore take the standard deduction, you can property taxes on your home above the itemized deduction of up to $1000 for couples and $500 for individuals.

Those are the "helping" provisions. To pay for this, there is a third provision which is a tax hike. Here is a quote from the article describing that tax hike:

To pay for the new breaks, Congress adopted some revenue raisers, otherwise known as tax hikes, including one that affects homeowners. At present, taxpayers who own a vacation or rental property can begin using it as their principal residence and then sell it after two years, taking advantage of the break that excludes from income capital gains from the sale of a principal residence. The excluded amount is up to $500,000 for a couple or $250,000 for a single.

But thanks to the new law, after January 1, any time a house isn't used as a principal residence it reduces the gains eligible for exclusion on a pro rata basis. So, if a couple uses a house as a vacation or rental home for five years and then as a principal residence for five years, only half their gain will qualify for the exclusion.

If the couple has a $100,000 gain, they can only exclude $50,000 of that gain from their income. But if the same couple owns a mansion and sells at a $1 million gain, they can still claim the maximum $500,000 exclusion, because it's just half of their gain.

An odd result from a law that was supposed to help struggling, ordinary homeowners.

Well, it looks like that hurts people also that maybe haven't been able to sell their home because of the bad market. For example, if they moved from a house they lived in for 4 years and established another primary residence, and didn't sell their home for 1 year after that, they would only be able to exclude 80% of their gains regardless of the fact the last year of house taxes have been dismal. That's how I read it, but I am no tax professional. I think this is going to hurt a lot of people who already were hurt by the housing market.

Part 3 os Anna's playplace

Anna's playplace is almost complete. Today I installed the weed barrier as discussed in my last post. We also purchased the Step2 Naturally Playful Woodland Climber at Woodplay of the Carolinas today. Amazingly enough, the box fit into my Toyota Matrix with the back seats down.


Unfortunately, The Mulch Masters where I planned to buy the playground mulch from won't deliver less than a 5 cubic yard group of mulch and I don't have a pickup truck. The first time I could borrow a friend's pickup between the hours of 7 AM and 5 PM when they are open was on Friday...so no mulch yet means Anna can only play on the weed barrier...hence the pictures above :-)

New rooms

Much of this weekend has been spent redoing two of our bedrooms for new usage. Prior to this weekend, we had a nursery, office, and guest bedroom beyond our master bedroom. With another sweet baby girl on the way, we decided to reorganize into a nursery, Anna's room, and a guest bedroom/office combo. So, my mother-in-law and I spent Friday afternoon and Saturday morning painting the two rooms and Saturday afternoon rearranging furniture. My mother-in-law is the real skill when it comes to painting, no tape needed...so I just do the rolling and she does all the edging. We painted Anna's room a green to match her new linens, Banana Fish Bubble Gum. Anna seemed to love her room!


The guest room/office was a dark green on the blueish side...it is now more of a warm milk chocolate or mocha.



Still have to hang art and curtains, but you get the picture :-)

Our Year of Maintenance

2007 will thus be deemed in the Burckart household, the year of maintenance. Not anything to do with our daughter or the conception of our next child...but the year of maintenance. Coincidental that our house was built 10 years ago in 1997? I think not. Here is what we have had to do in the past year:
1) Change the torsion spring in the garage door.
2) Replace the boots around the plumbing vents on the roof
3) Replace the mailbox
4) Replace the upstairs AC unit and coil
5) Replace the water heater
6) Replace the cabinets, counters, appliances, floors AND subfloors because the dishwasher leaked and caused the subflooring to rot, mold, and buckle underneath the cabinets into the breakfast nook and throughout the kitchen.

And today, the furnace stopped working upstairs. Not to mention that a friend of ours has told us that our downstairs AC unit/gas pack unit is going and will need replaced next year. Incidentally, in July before #4 and #5 happened, I looked up this article from USA Today about when things will go bad and what preventive maintenance needs done. Here are some things that jump out at me:

• Water heater expectancy: 15-18 yrs
• AC units: 15 years
• furnaces: 20-25 years

You'll notice that we are 5-10 years ahead of schedule for things falling apart. That is why this year is the year of maintenance.

**updated because I forgot about the most expensive kitchen expense :-(

Cool website: Zillow.com

I was checking out this website, Zillow.com, and it is by far the coolest new power tool I have seen in a long time. It shows you all those things previously unavailable to the common purchaser without going through a real estate agent, estimate values of homes, "Make Me Move" prices, recent sales, and houses for sale on a Google Map like easy to use interface. I am amazed...great job Zillow!