It has finally happened. Minneapolis residents have been waiting patiently since April to see if H.R. 3648, the “Mortgage Forgiveness Debt Relief Act of 2007 would pass and head to the Hill for a final vote. Just a few days ago, the miracle happened and homeowners now facing foreclosure will be saved (well, at least in this example)!
The Act provides a permanent exclusion for any discharge of indebtedness (on or after Jan. 1, 2007) that is secured by a principal residence and incurred in the “acquisition, construction or substantial improvement of the principal residence.” No longer will the bank issue a 1099 for the unpaid balance of a loan due to a short sale or foreclosure. And no longer will the IRS be able to view that “unpaid” amount as taxable income.
A couple months ago I had a homeowner call me wondering if he would be included if this passed. His home was foreclosed on in the Spring and he was going to owe alot of taxes on the unearned income reported on the 1099 issued by the bank. At the time, I didn’t have an answer for him. I wish had his phone number to call him and let him hear the good news. The Act will be in affect going back to January 1st of 2007.
Some of you may not have heard of the Energy Policy Act of 2005, where homeowners can qualify for tax credits if they make energy related home improvements from 2006 to 2007. To get the credit improvements must meet certain standards set by the IRS and be to your primary residence.
Of course if you snooze, you lose. The credits are only available to the end of this year so you better get you act together and get those projects started as soon as possible.
A max of $500 applies to the following items:
- heat pumps
- exterior windows and doors
- insulation
- central air conditioning
- certain roofing material…and more
To find out more information, go to the government website.
Well, of course you know that I am joking. Who would want to be taxed more? Oh, that’s right, Hollywood. I think it was Ben Affleck who said he would give up more of his paycheck to the government if it helped out others.
Well, sorry, but I whole heartily believe that the redistribution of wealth that is currently under way in the this country is against everything it was founded on. Read the article below from the Money vs. Debt blog on how the Dems are trying once again to “save” the middle class from more taxation, by taxing those who “can afford” to give more to taxes.
Democrats Seek Formula To Blunt AMT
One Plan Would Impose Surtax Of 4.3% on Richest Households
House Democrats looking to spare millions of middle-class families from the expensive bite of the alternative minimum tax are considering adding a surcharge of 4 percent or more to the tax bills of the nation’s wealthiest households.
Under one version of the proposal, about 1 million families would be hit with a 4.3 percent surtax on income over $500,000, which would raise enough money to permit Congress to abolish the alternative minimum tax for millions of households earning less than $250,000 a year, according to Democratic aides and others familiar with the plan.
Rep. Richard E. Neal (D-Mass.), chairman of the House subcommittee with primary responsibility for the AMT, said that option would also lower AMT bills for families making $250,000 to $500,000. And it would pay for reductions under the regular income tax for married couples, children and the working poor.
All told, the proposal would lower taxes for as many as 90 million households….
Read the rest of this great post.
Since the Democrats took over the Minnesota House of Representatives this year, all I keep seeing in the news is how they want to raise taxes. Let’s see, they want to add a 10 cent tax to gasoline, increase the state deed tax on home sales by 50%, and now they want to increase the income tax rate on local Minnesotans. Folks, we have a $2.2 Billion surplus in this state, so why are we increasing taxes? To play politics, plain and simple.
Local legislators want you to think they are great. The scam is to get residents to believe in the Robin Hood method, take from the “evil” rich and give that money to the poor. I am sorry, but this is NOT what America was founded on. If the House and Senate have their way, the new tax bill will go into effect in 2008, just weeks before the next election. They want the middle class public to see how “great” they have treated us by taxing the wealthy, only so we will cast our votes for them.
The House tax bill will raise the top income tax rate from 7.85% to 9%, and the Senate version would increase it to 9.7. The income generated would then be given back to non-wealthy home owners via a property tax credit. I am sure that sounds great to some, but not to me. I am not wealthy and I do not think it is correct to tax someone who works hard for their money more just “because they can afford it”. The only person who can stop the constant drafting of bills further taxing Minnesotans is the Governor, who has declared he will veto any such bill that comes across his desk. He is encouraging the Dems to come up with an alternative solution to solve their spending habits, instead of taxing the locals.
I was born and raised in Indiana, so I have Midwestern blood. It pains me to see our Midwest population move to the coasts or to places like Arizona because the cost of living is cheaper. Minnesota currently has the third highest income tax rate in the nation. If the House and Senate get their way, we will be #1. I don’t know about you, but I take better pride in being the 5th best “Green City” in the world. If I was a wealthy Minnesotan, I just might join the crowd and take my chances in Florida…they don’t have a state income tax!
Last week I wrote a post about Minnesota’s transfer tax on the deed anytime a property sells. On Luxury Homes, this can be quite expensive. Well, if the Senate Finance Committee votes the wrong way, it could become more expensive for every home owner. This Wednesday, April 25th, the committee will be voting on Senate File 442 to increase the state deed tax by 50%. That’s right, 50%!
The Minnesota Association of Realtors is asking for your help. Send a letter to your state senator saying:
“Please vote NO or ask members of the Senate Finance Committee to vote NO on Senate File 442, “The Housing Solutions Act”.With the real estate market going through significant difficulties it is not an appropriate time for legislators to increase the price of housing.Below are a few concerns we have with the 50% tax increase”:
- A Deed Tax increase adds significant burden to those facing foreclosure or short sales. People close to foreclosure will now be further in debt because of this “housing solution.” This bill raises the cost of selling for families facing foreclosure, adds significant tax burden to rental property when sold increasing rents, and ultimately makes all housing less affordable – what kind of solution is that?
- Deed Tax makes housing less affordable. By increasing the state deed tax, sellers will need to adjust their sales price up or receive less equity at closing. Increasing a tax on housing only raises the price of housing to everyone.
- Deed Tax is Regressive. Federal Government abandoned this type of tax in 1976 because it was felt that the tax was discriminatory and inequitable.
- Minnesota has the nation’s highest home ownership rates. More Residents of Minnesota own homes than in any other state. Government should focus its attention on prioritizing current revenues already being generated by the economy and not burden property owners and businesses with more hidden, regressive taxes.
I feel any “Housing Solutions Act” that raises taxes on homeowners is only solving the governments failure at spending money wisely, buy squeezing residents pocket books even more. Instead they should find ways of cutting the fat and frivolous spending too common in the state government. Hopefully this bill is defeated, or else the state Senate might see a lynch mob on its doorsteps.
It has finally happened. Minneapolis residents have been waiting patiently since April to see if H.R. 3648, the “Mortgage Forgiveness Debt Relief Act of 2007 would pass and head to the Hill for a final vote. Just a few days ago, the miracle happened and homeowners now facing foreclosure will be saved (well, at least in this example)!
