December 2009

Investment Exchange

An educational real estate newsletter

TAX BREAKS AND FORECLOSURES

Yes, tax breaks are still around and, for a limited time, they're even better than ever.

That's right, new homebuyers can still take advantage of tax credits worth as much as $8,000 on their home purchases until April 30, 2010. It never has to be repaid if you remain in the home for at least three years. And if you owe less than $8,000 in taxes, the government will issue you a check for the difference.

It gets better.

The government recently introduced a new $6,500 tax credit that rewards existing homeowners who have lived in their homes for at least five years and decide to purchase new residences.

Keep in mind that these tax breaks won't be around for much longer, so take advantage of them while you still can.

In case you need a little help, this month's newsletter is geared toward helping you understand these tax incentives and figure out how to find that dream house worthy of your hard-earned money.

The clock is ticking ... let's get cracking!

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Site feature spotlight

WERE YOU LOOKING FOR ... ?

Foreclosure.com's patented platform just got easier to use.

Introducing the "Were You Looking For" feature. Now part of every Foreclosure.com search, "Were You Looking For" helps you pinpoint exactly what you wanted ... even if you weren't quite sure yourself.

Let's say you've heard there were lots of great foreclosure deals in Jacksonville, but you weren't sure how to spell "Jacksonville." Or you didn't know what state it was in. Or you accidentally made a little typo.

No problem. Our search engine will figure it out for you.

As you enter text into the search box, a list of potential options will pop up. If none of those match, no problem. Just type away and hit "Search." If you aren't immediately taken to the page you wanted, there will be even more suggestions waiting for you on the other side.

This handy feature can help make your searches even faster, which is essential in a market where time is of the essence. With so many great deals to be had and so many incentives to buy, our new "Were You Looking For" feature is just what you need to make your search that much simpler.

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Web site search tips

TAX LIENS REFRESHER

A tax lien is an investment opportunity (not a tax break) that can potentially generate great returns for investors. We feel it's important, and fitting, to once again discuss their value in this edition of "Investment Exchange."

So what is a tax lien, exactly?

Essentially, a tax lien is an encumbrance placed on a property when the owner is behind on his or her taxes or other household debt.

We all know we must pay our property taxes every year. If we don't, a lien is placed on our property, which means that the taxes will be collected as soon as the property is sold, if not sooner.

By purchasing a tax lien certificate, you become the entity that is entitled to recoup the taxes, plus interest. If you aren't repaid within a certain timeframe, you may initiate foreclosure proceedings on the property.

When a property with tax liens is up for auction, the seller's goal is normally to collect the money that he or she is owed, which means that often very valuable properties can be acquired for very little money.

These situations represent tremendous profit potential. In fact, in some states you are guaranteed a minimum return on your tax lien (Florida, for example, is 5 percent).

The first step on the road to tax lien profits is visiting Foreclosure.com. It's easy to search for tax liens — just click on your state and county of interest, then click on the "Tax Liens" tab at the top of your search results page.

Navigating tax lien investments is not always simple, so once you've found one that appeals to you, get in touch with the expert listed on that listing's details page. With an agent's advice and assistance, you'll be off and running in no time.

As with any type of investment, getting involved in tax liens does carry associated risks. Talk to your agent about which tax liens are worthwhile and which should be passed up. You'll save yourself a lot of headaches and dramatically increase your income potential.

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Hot off the press

TAX BREAK EXTENSION KICKS IN

Well, if you were hoping to cash-in on the original $8,000, you have run out of time.

The good news is that all of you who didn't act fast enough should be excited about the April 30, 2010, extension!

It's true — until the end of April, new homebuyers still have time to receive $8,000 back on their taxes. Unlike the 2008 version, this money never has to be repaid. And if you happen to owe less than $8,000 in taxes, you'll be mailed a check for the difference.

More good news: The upper income limits have been raised, so many people who were not eligible for the 2009 tax break may now be able to apply. You can now make up to $125,000 a year if you're single and $225,000 a year if you're married — almost twice the original limits.

Even better news for those of you who are already homeowners: If you purchased your property five years ago or more, you may now be considered for a similar credit, valued at $6,500, on any new property purchases.

That means you no longer have to be a new homeowner to benefit from these latest government incentives to buy.

Yes, the April 30 deadline is still several months away, but in real estate terms it's just a blink of an eye.

It takes time to find good potential purchases. It takes time to negotiate with sellers. It takes time to close on those deals. In fact, it's very common for the entire process to take a minimum of three months, which isn't far at all from April 30.

There are still thousands of deals waiting to be snapped up and now more people than ever have up to 8,000 very good reasons to buy.

Get a move on before it's too late!

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Our success stories

More Happy Homebuyers

With thousands upon thousands of happy customers, we at Foreclosure.com can't help but feel proud of all the success stories that pour into our customer service department.

It never gets old. In fact, hearing your stories is what has motivated us to keep improving our award-winning Web site for more than a decade.

Take Sheila C. from New Paltz, N.Y., as just one of many satisfied customers.

She was looking for a newer home and turned to Foreclosure.com for help. She loved how easy our site is to navigate. Every last bit of information she needed to make an informed decision was right there at her fingertips.

Using the addresses she found on our site, Sheila drove around to check out a few of her favorites. It wasn't long till she found her dream condo at a dream price. Good job, Sheila!

And how about Shannon P. from Decatur, Georgia?

Shannon and her husband were first-time buyers who had been looking on and off for that perfect place for eight long years. Now they're happy homeowners.

What happened? Simple: Foreclosure.com.

Shannon signed up for our FREE 7-day Trial and almost immediately found an enticing property that she and her husband really liked. All it took was a call to their agent. And because Foreclosure.com gets those listings to you fast, their bid was the first on the house.

The deal closed in just 30 days and Shannon only paid about 60 percent of the home's market value. Way to go, Shannon!

It's success stories like these that motivate us here at Foreclosure.com. We take pride in giving you the latest and greatest in distressed property listings so that you can enjoy your own success.

If you're ready to buy a home, your timing couldn't be better. There are thousands of undervalued properties throughout the nation waiting for your bids and, until April 30, 2010, there's also that nice little incentive from Uncle Sam to the tune of $8,000.

Sign up for your FREE 7-day Trial to get started.

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Real estate tips

BUY LOW, BUY SMART

We are living in a buyers paradise. It's an exciting market with lots of great deals coupled with mega-bargaining power on the buyer side.

It's exciting, but that doesn't let you off the hook for doing your homework before you buy. After all, one of the big reasons there are so many foreclosure deals right now is because people bought more than they could afford.

To avoid your own foreclosure nightmare in the future, make sure you crunch the numbers. Calculate what your mortgage would be, add it to your other expenses and contrast it with your monthly income.

You want to give yourself enough breathing room that you're not having to choose between eating and paying your mortgage. Aim for a mortgage that takes up no more than 35 percent of your take-home pay and an overall debt load — including your mortgage, car payments, student loans etc. — that's no more than 45 percent.

Of course, keep in mind that you've still got time to take advantage of the tax savings extension. It's an easy way to give yourself a cushion of several thousand dollars to make your home buying experience that much more comfortable.

The math of real estate investment is not always super straightforward. That's why we've compiled a list of handy calculator tools to help you figure out what you can — and can't — afford.

We have loan calculators, down payment calculators, home equity calculators, rent vs. buy calculators and more. It's everything you need to start doing the math on your next property acquisition, all on one page.

To check out the Foreclosure.com calculators click here.

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Deals of the Month

HOT FORECLOSURE DEALS!

Centerville, IA
$21,000
6 beds/1 bath
2,938 sq. ft.

Grenada, MS
$191,900
6 beds/3 baths
3,286 sq. ft.

Metamora, MI
$123,000
4 beds/3 baths
1,986 sq. ft.

Linda's Learning Lane

NOW IS THE TIME

When we selected the editorial calendar for the 2009 "Investment Exchange" newsletter in late 2008, we had a pretty good idea that Congress would come out with tax incentives to boost the flagging housing industry.

What we didn't see coming, however, are those incentives being extended well into 2010.

The first time homebuyer credit extension is a powerful motivator, which is perhaps the small push you need to take that big leap and purchase a property. If you are like most buyers, it's important to find the best possible deal out there, so searching our data makes "cents."

Literally.

Not to be outdone, Congress also introduced a $6,500 incentive for existing homeowners, which is being dubbed the "move up" credit. Current owners who have lived in their homes for at least five years will also enjoy tax breaks.

Now is definitely the time to buy.

The key for purchasing a move up property will be pricing your current property for sale. Foreclosure.com has great resources just for that, including our Broker Network. There are savvy agents all across the United States listed in this helpful directory. When you access one of those agents be sure to let them know you saw their information on Foreclosure.com.

As the year is ending and you are trying to strategize on your tax planning remember to review the following items:

• Retirement planning — Fund your existing retirement plans with an extra amount and, if possible, the full amount allowed for the year. This will help your Adjusted Gross Income (AGI).
• Alternative minimum tax — This is a planning technique that may save you a significant amount under the "regular tax." It may be worthless if you fall unexpectedly into the AMT.
• Energy-efficient vehicles — Consider purchasing a hybrid vehicle for business or personal use. The IRS is constantly updating the list of qualifying vehicles.
• New vehicle tax credit — Any state, local sales tax and/or excise taxes paid on a new vehicle can be deducted.
• Mortgage considerations — Accelerate personal tax deductions by prepaying your January home mortgage payment before year-end. Make sure you get the payment in soon enough for the mortgage company to process your payment before Dec. 31, 2009.

Hope these tips are helpful. You should reach out to a local certified public accountant for any questions regarding areas mentioned in this article and/or visit IRS.gov to continue your research.

Have a wonderful holiday season and happy investing!

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