Feb 102010
 

Tree Growth – also known as the Maine Tree Growth Tax Program – is Maine’s “current use” tax program for productive forestland. The program is administered in organized municipalities by town assessors and in the unorganized territories by the Maine Revenue Service’s Property Tax Division. “Current use” means that enrolled land is valued according to its ability to grow trees for commercial use, rather than according to its fair market value. This often results in a significantly reduced property tax bill for enrolled landowners.

Tree Growth can be a beneficial program for landowners who manage their land sustainably for commercial forest products. In exchange for generally lower property valuations, landowners commit to following a written Forest Management Plan prepared with a Maine licensed forester. A licensed forester must also certify that landowners are following their plan.

Landowners are only required to submit a signed Tree Growth Application and a supporting map to the assessing agent. The details of the forest management plan belong to the landowner and are not public information.

The Maine Forest Service (MFS) provides assistance and education about the Tree Growth Tax Program, and forest management and planning in general, but does not administer the Tree Growth Tax program.

Landowners should be aware of some very important requirements:

1) Land enrolled in Tree Growth must be recertified every ten years. Written management plans must be updated at least once in a ten year period. Could this be your year to update your plan and recertify?

2) In addition, when Tree Growth land is purchased, inherited, or otherwise acquired, new landowners must re-enroll within one year of the date of transfer. New landowners may not harvest timber until they have had a new forest management plan prepared or adopted a previous but still valid plan, and re-enrolled. Have you acquired or inherited forest land recently? 

Why is this important?
 
Because Tree Growth forest land that no longer complies with the program – including failure to recertify or to re-enroll on time– must be withdrawn from the program, with potentially significant monetary penalties to the landowner. Withdrawal can occur even if you were not the owner at the time the land was first enrolled, because Tree Growth status “runs with the land” – the parcel remains enrolled, even if it changes hands.

NOTE: The assessing agent is required to provide Continue reading »

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FAQ on Tax Credit

 Posted by at 5:59 am
Feb 102010
 

For complete information visit http://mainelistings.com/taxcredit. The IRS provides these answers to questions on the homebuyer tax credit.

Q. Is a taxpayer who purchases a mobile home and places the home on leased land eligible for the first-time homebuyer credit?

A. Yes. A mobile home may qualify as a principal residence and it is not necessary that the taxpayer own the land to qualify for the first-time homebuyer credit. 

Q. I purchased a duplex home with two separate dwelling units. I will live in one dwelling and will rent out the other dwelling unit and report the rental income on Schedule E. May I qualify for the first-time homebuyer credit, and what amount do I use for the purchase price to determine the amount of the credit?

A. Yes, you may qualify for the credit for the dwelling unit that you use as your principal residence. To determine the amount of your credit, you must allocate the purchase price of the duplex between the two separate dwelling units. You may not use the entire purchase price of the duplex to determine the amount of your credit.

The credit is available for eligible home purchases after April 8, 2008. You must enter into a binding contract to buy the home before May 1, 2010 and close before July 1, 2010, in order to obtain the credit. For a home you construct, the purchase date is considered to be the date you first occupy the home.

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Why Wait To Buy A Home?

 Posted by at 4:13 pm
Feb 052010
 

There are, of course some very legitimate reasons. But one big reason that would be hard to argue with is that you want your home to cost you more than it could if you buy now. There are at least three factors that nearly guarantee waiting will be expensive and you’ll get to pay more.

  1. Mortgage Rates are very likely going to increase soon. There’s a consensus among the experts supporting this because rates have been artificially low for the past fourteen months. This is due in part to assistance from the Federal Reserve though the mortgage-backed securities purchase program. The feds have consistently maintained the program will end March 31st. While predictions of the result are vague, most concur that a rise of .50 to 1.00% soon after April t wouldn’t be unreasonable.
  2. First time home buyers have been receiving tax credits of up to $8,000 and repeat buyers up to $6,500. The “catch” is buyers will need to have a home under-contract by April 3oth (that’s only two and a half months away as of this writing) and close by June 30th. Lenders are now suggesting it takes 45 days to close on all but strictly conventional mortgages. If you haven’t started looking, you might want to lay this out on a calendar. Unless you are counting on another extension of the program “times awastin’.”
  3. FHA is also promising an increase in upfront costs effective April 5th. The cost of the mortgage insurance premium (payable at closing) will increase from 1.75% of the loan amount to 2.25%. Yes, this can be financed. But remember you’ll be paying more to pay more since interest rates will likely have risen.

Without getting too complicated, let’s use a property requiring a $100,000 mortgage purchased after these programs run out. A 1% increase in mortgage rates will create a $62 increase in the monthly payment and will cost nearly $6,000 more during the first seven years. If the mortgage is an FHA loan, the .5% increase in the mortgage insurance premium adds $500 (we’ll assume it’s not financed—that would add more cost). A first time homebuyer has missed the $8,000 and proved the value of “waiting” a few months was worth nearly $15,000 in total.

Smart move?

The only financial argument would be that it’s a good bet home prices are going to drop further and offset the additional costs. In this example, you’d be betting the home price will drop at least 15% in the next few months.

Smart bet?

Obviously your numbers may be different, but one thing that would be smart is to sit down and figure them out—or get some help from a real estate or banking professional to see what makes sense for your situation.

The sooner, the better!

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I Saw It on TV!

 Posted by at 12:51 pm
Feb 032010
 

I’ve been reading a book based on a TV series about real estate. It’s actually fairly well written and in many cases downright funny.  But there are also a number of places where it is just plain wrong. That’s one of the joys of receiving advice (whether it’s from a book, TV show, or the agent you are working with). Sometimes it’s just plain wrong. (I chuckled a bit when a potential buyer called me recently to announce that she was ready to buy a house because she’d been watching all the real estate programs on TV and knew “how it worked.”

I envied her because I’ve been at this for a while and I still don’t know how it works. Not every time anyway.

Students in my real estate classes learn to remember that we have two hands and that should remind us to consider both sides of a question when giving clients advice. When a buyer asks, “Should I make a really low offer?” we do well when we consider both possible answers.

“Yes, because the seller might accept it. But on the other hand… there are some risks associated with really low offers…” In other words, you should be getting all the information necessary to make a decision that is ultimately yours.

If I could give a buyer only one “tip” it would be just that. Get all the information—the pros and cons—before making an informed decision. In simplest form the tip is “be a smart buyer” and that includes surrounding yourself with professionals willing to educate you.

In addition to being a smart buyer, here are some other recommendations—many of which will apply to sellers as well.

  • Read every piece of paper and take everything seriously. This is especially important regarding the offer you sign. Don’t be intimidated into just signing and don’t be too proud to ask questions about any points you don’t understand. Keep legible copies of all paperwork in an organized file.
  • Remember that a real estate transaction is complex. Be prepared to consult professionals: lenders, home inspectors, attorneys, accountants.
  • Don’t just look for a house; look for a community or neighborhood. Unless you are a hermit, what’s around you will have importance. You can add a family room. Changing a community isn’t quite so easy.
  • Be prepared to act quickly and be available to do what needs to be done. Taking a few days off to go to the islands might sound good, but remember your priorities. It’s actually a good idea to set a timetable. I once worked with a buyer who had been looking for seven years.
  • It will sound self-serving, but have some loyalty to the agent you choose. In Maine, you should be given a one page “Real Estate Relationships Form” that describes various types of relationships the law permits and requirements for them. Selecting the agent and type of relationship is an important decision that should be made early in the process.
  • Understand that there is an emotional and financial component to selecting a home to purchase. In the ideal world, these will be in balance. In the real world they’ll require some juggling. The home you fall in love with may not make the best economic sense. That doesn’t mean you should reject it. (Think, “On the one hand—on the other hand.”)

A study of economics usually reveals that the best time to buy anything is last year.
Marty Allen

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