HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTIAL real estate MARKET

DOES THE HOMEBUYERS’ TAX CREDIT ‘COST’ THE GOVERNMENT TOO MUCH ???

As we approach the end of the federal tax credit for Homebuyers (April 30 will be the deadline for signing a contract under this program), the explanation given by the government for not extending the program is, “Continuing this program would cost us too much money.”

This glib explanation sounds reasonable to people who don’t understand how the free market economy works. i.e. people who don’t understand who pays taxes and where they get the money to pay them. Let’s look at some of the various types of benefits to the government that are generated by the sale of a home:

  1.  Federal income taxes
  2. State income taxes
  3. Capital gains taxes
  4. Local Sales taxes
  5. And, last, but certainly not least, JOBS, JOBS, JOBS

The following is a partial list of individuals and companies that typically receive income (and thus become liable for additional tax revenues) whenever someone buys a home:

  • The Seller of the home
  • The companies that the Seller hires to prepare the home for resale. E.g. the decorator, the stager, the remodeler, the landscaper, etc.
  • The companies from whom the people named above purchase their supplies
  • The Moving company
  • The appliance stores
  • The providers of services that the Buyer will hire. E.g. internet, TV, alarm services, etc.
  • The Mortgage broker
  • The Lender
  • The Accountant
  • The Realtor.
  • Etc., etc., etc.

In other words, because this program produces more tax revenues to local, state and federal governments than it ‘costs’ , the Homebuyers’ tax-credit program should not be looked at as a “loss” to the government, rather, it should be viewed as a method for ‘priming the pump’  for additional tax revenues for all levels of government.

If this way of evaluating the benefits of the Homebuyers’ tax credit seems revolutionary, consider that the state of California has now passed similar tax-credit legislation that offers $10,000 to Homebuyers. Their legislature has recognized that the best way to increase tax revenues is to offer incentives to taxpayers. (Golly. It almost seems like Reagan was right. ..The best way to increase income to the government is to lower taxes. Whooda thunk it ?!!! )

Colorado, take note.   

HERE’S ANOTHER EXAMPLE OF HOW GOVERNMENT CAN STIMULATE THE ECONOMY

During the first week of the Governor’s Energy Office’s new rebate program, more than 22,000 Coloradans signed up to receive energy rebates. The office’s phone lines were overwhelmed on April 19, when the program launched and there are now waiting lists for rebates for dishwashers, refrigerators and tankless water heaters.

The rebates are available for energy-efficient appliances and energy-efficient improvements, such as insulation. Here’s a sample of the available rebates:

  • Clothes washer              $75
  • Furnaces                       $500
  • Hot Water heaters          $200-$300
  • Insulation and sealing    Up to $400
  • Duct sealing                  Up to $75
  • Energy audit                 Up to $100

We encourage our readers to take advantage of these rebates for several reasons. First of all, the result of these home improvements will be that your utilities bills will go down. Secondly, the energy-efficient upgrades to your home will improve the eventual marketability of your home. Prospective Buyers are often persuaded to buy because of low utility bills or a shiny new refrigerator. Keep in mind, however, that, if you are interested in applying for these rebates, be sure you register with the program before you make the purchase. They are not retroactive.

Again, the benefits of this type of program to the state of Colorado in terms of increased tax revenues and jobs are similar to the benefits from the Homebuyers’ tax credit program discussed above. This program was funded by $18 million from the American Recovery and Reinvestment Act

Let’s hope that our legislators are learning the lesson that when they let us have more of our money, their revenues go up.

THE COLORADO SPRINGS ECONOMY, LIKE THE ANNUAL HOT-AIR BALLOON FESTIVAL, IS SINGING, “UP, UP AND AWAY”

On Sunday, April 25, 2010, the Gazette reported the following encouraging data about our local economy:

  • Hotel occupancy moved up to 51.7%
  • Initial unemployment claims were down 43.3%
  • Single-family home permits were up 111.3%
  • Taxable retail sales were up 3.4%
  • Foreclosure filings were down by 33%.

It’s good news like this that keeps our spirits up as we dig ourselves out from under our annual April blizzards. But, look at it this way. At least the chiropractors are getting rich.

NEW HIRING INCENTIVE SIGNED INTO LAW

Under the Hiring Incentives to Restore Employment Act of 2010 which was signed into law on March 17, 2010, employers that hire new workers after February 3, 2010, and any time during the rest of 2010, will be exempted from the employer’s 6.2% share of FICA for those workers, provided the workers were unemployed for the 60 days before starting work or worked less that full time (40 hours per week) for someone else during that period.

The IRS will be providing necessary forms and instructions within the next few weeks but, in the meantime, employers should obtain from each new employee a statement indicating that he/she meets the requirements of the Act.  

To learn more about this new law, visit the Government Relations section of the Worldwide ERC® website.

YOU ONLY HAVE UNTIL APRIL 30TH TO SIGN YOUR CONTRACT TO BUY

If you want to take advantage of the Federal tax Homebuyer’s tax credit, you must be under contract by April 30, 2010. Give us a call today, or you will miss out on this terrific opportunity to put money in your pocket !!!

And, please remember, I would be honored to serve as your Broker for all of your residential real estate needs. I want to help you, my reader, make the most prudent and accurate Real Estate business decision.

Also if you know of anyone who desires to buy or sell local real estate, or, who is moving in or out of the Pikes Peak region, remember that, with over 37 years of providing relocation and Real Estate services to clients throughout the country, I am uniquely qualified to assist them with the relocation process, including buying and/or selling their homes on both ends of their move. Please allow me to implement my negotiating skills on your behalf.

Just click on the icon at the top of this email to listen to my latest podcast. ….And, if you would like to learn more about our Job Loss Protection Program, or, about our CyberHomes Complete Market Analysis of a property, please contact us. 

JOKE OF THE WEEK

The difference between the short and long income tax forms is simple. If you use the short form, the government gets your money. If you use the long form, your accountant gets your money.

A fine is a tax for doing something wrong.
A tax is a fine for doing something right.

A couple of weeks after hearing a sermon on Psalms 51:2-4 [knowing my own hidden secrets] and Psalm 52:3-4 [lies and deceit], a man wrote the following letter to the IRS:

'I have been unable to sleep, knowing that I have cheated on my income tax. I understated my taxable income, and have enclosed a check for $150.
If I still can't sleep, I will send the rest.'

Making sausage and making tax laws have much in common. They both involve bloody processes, they both require that an innocent animal be slaughtered, and those of a squeamish disposition should not get involved in the making of either. Anonymous

The avoidance of taxes is the only intellectual pursuit that carries any reward. John Maynard Keynes

My problem lies in reconciling my gross habits with my net income.  Errol Flynn