Claim the Home Buyer Federal Tax Credit with IRS Form 5405

Earlier this month, the IRS released form 5405, which allows homebuyers to claim up to an $8000 tax credit for the purchase of a home.  You can get a copy of IRS form 5405 by clicking here or check out the copy embedded below. You can find full details on claiming the tax credit on IRS.gov.

IRS form 5405 home buyer tax credit –

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First Time Home Buyer Federal Tax Credit Extended and Expanded

7 Housing Tax Laws You’ll Want To Know About

There are several new housing tax laws that went into effect recently that will help some homeowners, but not others. Whether they help or hurt you depends on your specific situation.

Here's a list of the 7 new housing tax laws…

1. Cancellation of debt income
2. First-time home buyer credit
3. PMI deduction
4. Property tax addition to standard deduction
5. Surviving spouse home sale tax deduction
6. Energy-saving home improvements
7. Second-home sale limits

Click here for an explanation of these new housing tax laws and to see how they affect you.

Note: Make sure you speak with a tax accountant to see exactly how these new housing tax laws affect you.

Loudoun Assessor Speaks About 2009 Assessment Appeal Process

The Loudoun County Assessor, Todd Kaufman, spoke about the 2009 assessment appeal process today at the Dulles Association of Realtors office in Leesburg, VA. The packed "Lunch and Learn" event was catered by Charles Fincher of Monarch Title (thank you Charles).

Here are some of the highlights I took from the presentation:

• Bank-owned properties and short-sales are "not considered" when coming up with assessed values yet, they "are sometimes" – ?!
• The appeal process is meant to "not be adversarial"
• The Loudoun Assessor's Office "welcomes more information about properties in order to get the assessed values correct"
• The Assessor's Office only has 18 appraisers that have to assess all 115,000 properties in Loudoun
• The assessor uses public data to determine assessed values (automated process)
• The goal of the Loudoun Assessor's office is to physically review 25 percent of all properties in Loudoun, but that does not mean going into the property – only seeing it from the outside.
• If you win your appeal with the Board of Equalization (BOE) and your assessment goes down, Loudoun County may take you, the property owner, to court to fight the BOE's ruling. The BOE is out of the loop, but the property owner is now on the hook and takes the heat for the BOE's ruling
• Loudoun Assessor says that his office never has nor ever will refuse to look inside of a property if asked to do so. Only home owners have refused to let Assessor's Office in 
• The online Application for Review Form has come a long way – it's much more user friendly and auto-populates once you enter your property PIN into the form

And here are the five steps to appealing your Loudoun assessment…

1. Review notice of assessment via snail mail or online. The notice will include schedule/steps regarding appeal process
2. Submit an Application for Review Form postmarked no later than March 6 (you can also complete it online). Important: If you choose to appeal the assessed value based on market value, you must have the details of three comparable properties and an opinion of true market value ready to submit along with the Application for Review Form (contact me if you need a list of comparable properties and/or a determination of market value for your property)
3. Written request for consideration on current assessment or previous assessments (up to 3 years) based on an erroneous error
4. Formal appeal to Board of Equalization (BOE). Postmark deadline for appeal consideration by BOE is June 1
5. Formal petition of appeal through Court system

Further Details

The Review Process

• Goal is to provide convenient and uniform review process allowing informal discussions regarding assessments
• Petitioners must address concerns regarding property value and provide empirical evidence why assessment may be incorrect. Burden of proof legally on property owner. Assessment deemed correct unless petitioner illustrates otherwise
• Appeals documented become part of assessement record (aka what you tell the assessor's office becomes public data). Automated Application for Review Form provides non-adversarial platform for public to communicate assessment concerns
• Property owners encouraged to discuss concerns with staff prior to filing formal appeal through BOE or courts

Reconsideration of a Prior Assessment

• Property owner requests correction to property record which may impact assessment for current and prior years
• Example: garage demolished or added several years earlier. May not have been recorded because property owner did apply for permit. Property owner can seek relief from Assessor to correct current assessment and up to three years prior assessments.
• Relief granted if sufficient evidence formally provided in writing substantiating need for change in the assessment

Board of Equalization

• Opportunity to appeal to a local, independent group that may adjust value (current year only)
• BOE has 5 member, court appointed citizens panel. Consider equity and market value. BOE prohibited from making erroneous changes without support or evidence
• Petitioner must provide evidence establishing that assessment is incorrect based on comparable sales or by establishing inequity. Application for appeal must be in writing
• Properties can be adjusted by BOE if error disclosed, even if property owner did not appeal assessment

Court

• Last element in appeal process
• Adversarial process which typically requires petitioner to hire an independent fee appraiser and legal counsel
• Formal appeals such as these are expensive and time consuming for both the property owner and the County

2009 Loudoun County Assessments Coming Out Tomorrow (1/23)

Ahhhhh…it's that time of year again – time for Loudoun County real estate property assessments! It's when everyone rushes online or to their mailbox to find out what their their 2009 Loudoun County real estate property assessments came in at.

And, of course…to see how accurate (or inaccurate) they are.

If you're biting your nails in anticipation, you only have to wait less than 24 hours because 2009 Loudoun County real estate property assessments are being mailed out tomorrow (1/23).

If you really can't wait a few days for the snail-mail, you can go online to view your assessment tomorrow. Assessments will be available on the Loudoun County Assessor Office's website sometime after midnight tonight.

Want to appeal your assessment?

Follow these instructions, fill out the "2009 Real Estate Assessment Review" form (not available online until tomorrow, 1/23) and send it to the Loudoun County Assessor's office. Make sure it's postmarked no later than March 3, 2009 otherwise it won't be accepted.

If you have questions, check out the FAQ section of the Loudoun County Assessor Office's website or drop me a line.

Note: According to some, Loudoun assessed values are supposed to drop an average of 12.8 percent in 2009. So how much did your assessed value drop (or increase) in 2009?

UPDATE 1.23.09 – The 2009 Assessment Review Form (for appealing your assessment) is now available – just click here.

2009 Loudoun Residential Property Assessed Values Set to Drop 12.8%

2009 Loudoun County residential property assessed values are estimated to go down an average of 12.8 percent, according to a Jack Brown, Economist for Loudoun County, during a presentation he made at the DAAR Economic and Housing Forecast Summit.

Mr. Brown did say that these were preliminary estimates from the Loudoun County Assessor's Office and that they could change. But I doubt the average percentage drop will be much different once the 2009 assessments come out early next year.

Wonder what the Loudoun County tax rate will end up being with a 12.8 percent drop in assessed values…Loudoun residential taxes are already the highest in Virginia.

Loudoun County Tax Rate Increasing for 2010

 

Loudoun County's real estate property tax rate will increase in 2010 to meet the current and future needs of the county's school system and other programs. There is a large budget shortfall due to an average drop of 8 percent in residential values and 2 percent in commercial values. In reality, it's due to poor planning on the part of Loudoun County, but that's a discussion for another time…

According to the Loudoun County school system and county officials, the county needs to raise the tax rate to at least $1.26, if not $1.35 per $100 of assessed value. The current rate is $1.14, which is a 19% increase from $0.94 just two years ago.

Should the tax rate be raised to $1.26, that would be a 34 percent increase in just three years. If the tax rate were raised to $1.35, that would be a 44 percent increase.

On a side note…in this area, only the Town of Leesburg and Manassas Park have higher tax rates than Loudoun County ($1.32 and $1.27). Should the increase to $1.35 occur, Loudoun would have the highest tax rate in the area. Remember when Loudoun was attractive to home buyers due to having a lower tax rate than Fairfax? So much for those days…

The Loudoun County school system posted an article on their web site about this issue. Here's an excerpt:

Loudoun County Deputy Chief Financial Officer Ben Mays detailed the budget outlook that was presented by County Administrator Kirby Bowers to the Board of Supervisors and the School Board earlier in the week. Figures contained in this analysis include:

• At the current real estate tax rate of $1.14 per $100 of assessed value, the county government would face a revenue shortfall of $27 million and the school system a shortfall of $70 million in Fiscal Year 2010. That shortfall would come from the funding level of this year's budgets.
• A tax rate of $1.26 is necessary to get the county government and school system back to the same funding level as this year.
• A tax rate of $1.35 would be needed to accommodate the anticipated increase in budget items, including school enrollment growth. (This rate would not fund raises or new programs, but would cover things such as increased insurance and retirement costs on current county employees.)

Will Loudoun County home owners pay the higher tax rate? According to some, they will because they want a higher level of service and are willing to pay for that. But it may affect the decision of future home buyers who may view Loudoun as less attractive than before due to higher taxes and a higher monthly house payment.

Whatever the Loudoun County tax rate increase for 2010 will be, there is sure to be one and it will go into effect July 1, 2009.

Loudoun Assessor Releases Forecast of 2009 Assessed Values

According to the Loudoun Times-Mirror, the Loudoun County Assessor's office released a report that says that assessed values throughout Loudoun will be an average of 11 percent below 2008's assessed values. In addition, here are some of the other stats they released:

Single-family homes on parcels of less than 1 acre in Sterling are being assessed on average 25 percent below the previous assessment, while townhouses are down 36 percent and condominiums are down nearly 57 percent.

Also seeing big drops are homes in Sugarland Run, with single-family homes, townhouses and condos experiencing declines between 15 percent and 20 percent; Potomac (including Cascades and CountrySide), which is seeing declines between 12 percent and 20 percent; and Leesburg, which is seeing declines between 16 percent and 28 percent, depending on the type of home.

Meanwhile, values in the Dulles District, which includes communities in the southeast corner of the county, are seeing the smallest drop in values, with 2009 assessments trending about 2 percent to 8 percent below 2008.

Sounds like they did more homework than last year, which is great. But there are a few things they could clarify some more:

1. Is the Assessor's office factoring in whether a property that sold was a bank-owned or short-sale property when it comes to comps/market value?
2. How exactly did the Assessor's office come up with an 11 percent average drop in values throughout Loudoun County?

On a side note…The drop in assessed values along with other issues is sure to send the Loudoun County budget shortfall and deficit much higher than expected. This will create even greater financial turmoil for the county than projected. I'll be writing more about that shortly…

Related Articles

"Assessor's Concerns Go Public" – LoudounExtra.com

"Loudoun County Home Assessments Drop by 12%" – Channel 8 News

Eat Out In Loudoun To Help Pay For Schools?

Eat out in Loudoun County in order to help pay for schools? Sounds odd, doesn’t it… Well, that’s what Loudoun is proposing – a 4 percent meal tax on "prepared meals" that will go directly to Loudoun County public schools.

Loudoun County officials are even saying that the money generated from the meal tax could replace property taxes. (Do Loudoun residents really eat out that much?!)

The referendum will be on the ballot in November so you have plenty of time to chew on it before voting on it.

Source: NBC4.com

Tax Rates May Be Eroding Loudoun’s Appeal To Home Owners

The Loudoun County Board of Supervisors recently approved a tax rate increase of 19 percent setting a tax rate of $1.14 per $100 in property value. Fairfax County announced today that the tax rate will only increase by 3 percent to 92 cents per $100 in property value. This means that Loudoun’s tax rate is 20 percent higher than Fairfax’s.

Perhaps the Loudoun County Board of Supervisors raised the tax rate to help curb budget short-falls, something they perceive as important to Loudoun’s short-term survival. But, by doing so, they may be eroding Loudoun’s appeal to home owners, a serious long-term issue.

Let’s not forget that two of the big reasons Loudoun County grew so quickly were lower taxes and the ability to get more house for your money. At least one of those two is still true today – more house for your money. As for the other – not so much.

With taxes being as high as they are, a huge chunk has been taken out of the overall appeal of Loudoun County. If people start looking to Fairfax or surrounding counties rather than Loudoun, then we’ll have more than just one year’s worth of budget short-falls. That’s a viscious cycle that none of us want to see start.

-Danilo

How To Request A Refund On Your Grantor’s Tax

Governor Timothy M. Kaine signed House Bill 1578 which establishes procedures to return taxes and fees collected by the Northern Virginia Transportation Authority (NVTA). The Clerks of the Circuit Courts will work with settlement agents to return the congestion relief fee (real estate grantor’s tax) to the affected settlement agents within 60 days. The settlement agent will in turn refund the individuals or entities that paid the congestion relief fee. The Clerks will jointly develop uniform guidelines for the return of the fee within 60 days.

Sellers who sold their property (settled) on or after January 1, 2008 and paid the higher tax rate should call their settlement agent or the NVTA at 703-766-4650 for additional information. Additional information on the return of taxes and fees collected can be found at www.hb3202.virginia.gov and www.thenovaauthority.org.

(via Dulles Area Association of Realtors®)

Related Articles

Grantor’s Tax Update – Court Rules NVTA Taxing Powers Unconstitutional

-Danilo

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