ENERGY TAX DEDUCTIONS: 2011 Energy Tax Credits: What You Need to Know to Collect

Washington is giving you less green for going green, as the feds reel back the 2011 energy tax credits from a lavish $1,500 to a paltry $500.

2011’s federal energy tax credits of up to $500 for various home improvements are a far cry from what they were last year. But if the limits and other fine print—which we’ll get to—doesn’t dissuade you and you really need to upgrade one or more of the following systems, take advantage of the energy tax credits.

• Biomass stoves
• Heating, ventilation, air conditioning
• Insulation
• Roofs (metal and asphalt)
• Water heaters (non-solar)
• Windows, doors, and skylights
• Storm windows and doors

The energy tax credits are small, but at least a credit is better than a deduction:
Deductions just reduce your taxable income.


With a credit, you get a dollar-for-dollar reduction in your tax liability: If you get the $500 credit, you pay $500 less in taxes.


Other limits on energy tax credits besides $500 max. Credit only extends to 10% of the cost (not the 30% of yesteryear), so you have to spend $5,000 to get $500.


$500 is a lifetime limit. If you pocketed $500 or more in 2009 and 2010 combined, you’re not entitled to any more money for energy-efficient improvements in the above seven categories. But if you took $300 in the last two years, for example, you can get up to $200 in 2011. With some systems, your cap is even lower than $500.


$500 is the max for all qualified improvements combined. Certain systems capped below $500

THE ECONOMY: Renting Out Government-Owned Homes

Renting out REO properties would be a drop in the bucket -- it wouldn't clear much of the housing inventory and wouldn't ease rising urban rents, but it would help shore up neighborhoods where housing prices took the biggest slide, and that makes it worthwhile.

The Federal Housing Finance Agency (FHFA), the regulator for Fannie Mae and Freddie Mac, is considering proposals for selling government-owned homes to investors, who would then turnaround and sell or rent them out. (The official request for policy ideas is here.) It's hoped that this move would help government agencies earn some much-needed revenue, boost neighborhood home values by getting buyers or renters into vacant homes and ease tight rental markets by expanding the supply of rental housing.

Even though Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA) are national agencies, housing markets are local, which means that the vacant, foreclosed properties they own are concentrated in regions that were hit hardest by the housing crisis. Among larger metro areas, these agencies own the most foreclosed property - known as REO (real estate owned) - in Las Vegasand Atlanta, after adjusting for metro area size. Several metros in Arizona, Michigan and California are also among the top 20 metros where the government owns a lot of homes.

http://www.huffingtonpost.com/jed-kolko/renting-out-governmentown_b_1119060.html

BUYING A HOME: Should vets get a credit to buy foreclosures?

Veterans from Afghanistan and Iraq could in a way serve the country once again -- this time stateside on the economy -- if one federal official can push his idea forward.


Richard Peach, senior vice president at the Federal Reserve Bank of New York, said thinks there should be incentives for the veterans to buy government-held foreclosures. At a recent conference of the National Association of Realtors, he suggested giving down payment help or some type of tax break to veterans for buying foreclosures owned by mortgage finance giants Fannie Mae and Freddie Mac.

"We had a tax credit for first-time home buyers, then we had a tax credit for anyone who could qualify to buy a house," Peach said. "Why not have a perhaps even more generous credit for people who have served us and simultaneously do something that's good for the economy overall?"


He said he can imagine an incentive structured like the home buyers tax credit, perhaps $16,000 that can be applied to the down payment of a veteran who qualifies for a mortgage.


This will help absorb the huge inventory of foreclosures that many experts predict will be unloaded onto the market in the coming years, he said. A flood of for-sale homes would further depress property values and the economy.

MARKET TRENDS: November 30, 2011 3:55 PMtext size: TT Stable Housing Seen as Home Depot-Lowe's Lead Market: Retail

Shares of Home Depot Inc. and Lowe's Cos. -- the two largest U.S. home-improvement retailers -- are outperforming other consumer discretionary stocks as the worst of the declines in the housing market may be over.


Americans are on pace to spend $337.3 billion on their homes, with annualized private-residential fixed investment rising 3 percent from 2010 for the three months ended Sept. 30, Bureau of Economic Analysis data show. This is only the second such increase since 2006 and unlike 2010, wasn't boosted by government tax-credit stimulus programs including one for appliances, said Scot Ciccarelli, a New York-based analyst at RBC Capital Markets.


Same-store sales for the two retailers -- which track residential investment -- have started to improve and may pick up even more because “there's been some industry stabilization,” said Ciccarelli, who upgraded Home Depot to “outperform” earlier this month and maintains the same recommendation on Lowe's.


Comparable-store sales rose 4.2 percent at Atlanta-based Home Depot and 0.7 percent at Mooresville, North Carolina-based Lowe's in the three months ended Oct. 30 and Oct. 28, respectively, the companies said earlier this month.


Homeowners likely deferred repair projects for several years and now are spending on “necessary upkeep” so their residences remain livable, Ciccarelli said. As a result, “upside earnings revisions are more likely,” and shares of Home Depot and Lowe's may rally more than the market, he said.


Rising Stocks


The Standard & Poor's 500 Home Improvement Retail Index, comprised of the two retailers, hit a peak on Nov. 25, 2008, on a relative basis and then underperformed the Consumer Discretionary Select Sector Index by 68 percent through Aug. 10, 2011. Since then, the home-improvement index has risen 37 percent as of 10:30 a.m. in New York, compared with a 13 percent increase for the consumer-discretionary index, which includes Macy's Inc. and Kohl's Corp.


The underperformance was “very severe” amid persistent negative news about housing, said Michael A. Gayed, chief investment strategist at Pension Partners LLC. Now, “even a small amount of positive news is a big surprise” to investors, which is why these retailers may lead the consumer sector, said Gayed, whose New York firm oversees $140 million in assets.


‘Bouncing Along'


While the industry has been “bouncing along a bottom” this year, there are “solid signs of stabilization” in home prices and the number of mortgages entering delinquency, said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit.


The combined rate of mortgages 30 and 60 days past-due dropped to 4.5 percent in the quarter ended Sept. 30 after peaking at a seven-year high of 5.6 percent in 2009, data from the Mortgage Bankers Association in Washington show. Loans in delinquency eventually determine the number of foreclosures, so this suggests a moderating foreclosure rate, which has averaged 4.5 percent since the recession ended in 2009, Price said. From 2005 through 2007, when the recession began, the foreclosure rate averaged 1.2 percent, according to the bankers association.

Meanwhile, sentiment about home prices is moderating, said David A. Schick, a retail analyst for Stifel Nicolaus & Co. in Baltimore, who recommends buying Home Depot and Lowe's. This is “potentially a good sign” because people are more likely to spend if they think their asset is appreciating, he said.


Home Price Sentiment


The number of consumers who said home prices are “going up” dropped 2 percent from a year ago to 15 percent in late November, according to a survey conducted twice a month by Stifel Nicolaus. While the difference between this and the 30 percent who reported “falling” prices remained at minus 15 percent -- the same as earlier in the month -- it was an improvement from late September's minus 21 percent reading, the most negative since April 2009, Schick said.


Residential real-estate prices still are struggling, as the S&P/Case-Shiller index of property values in 20 cities fell 3.6 percent in September from the same month a year ago, the group said yesterday. While this was the smallest decrease since February, it was more than the estimated 3 percent decline in a Bloomberg News survey.


Lowe's introduced an advertising campaign in mid-September -- “Never Stop Improving” -- to “inspire” customers “to innovate and improve their homes,” Chairman and Chief Executive Officer Robert Niblock said on a Nov. 14 conference call.


‘Above Average' Sales


The company experienced “above average” sales in building materials, tools and hardware during its fiscal third quarter, Chief Financial Officer Robert Hull said the same day.


Similarly, Home Depot's electrical and plumbing sales outpaced comparable-store results

MARKET TRENDS: Home Store Sales Up; Housing Tax Credit for Vets; and More Read more: http://www.houselogic.com/blog/why-home-ownership-matters/friday-five-home-store-sales-housing-tax-credit-vets-and-more/#ixzz1fOY4ZnxG

In this week’s top housing news: a rebound in sales at home improvement stores may bode well for the housing market; home owners get a second chance to refinance with HARP 2.0; and a federal official pushes a new tax credit for veterans.




After a week of football, scrambling for deals at the mall, and finishing up Thanksgiving leftovers, you might have missed the stories impacting home owners. Strong numbers from Black Friday — especially an increase in sales at home improvement stores — might be an early indicator of a housing market return. Check out this story and more in HouseLogic’s Friday Five.


Bloomberg Businessweek: Stable Housing Seen as Home Depot-Lowe’s Lead Market: Retail
Shares of Home Depot Inc. and Lowe’s Cos. — the two largest U.S. home improvement retailers — are outperforming other consumer discretionary stocks as the worst of the declines in the housing market may be over.


New York Times: A New Shot at Mortgage Relief
Like millions of other home owners, William D. Compton would like to refinance his mortgage so that he pays less each month for his three-bedroom house. Although he would appear to be a good candidate, Compton has been turned down twice for a federal refinancing program aimed at home owners like him. Still, he has renewed hope. That’s because the government is expanding the Home Affordable Refinance Program, which was meant to help home owners whose mortgages are backed by the government and whose home values have declined sharply — even below what they owe.


Newsday: Should Vets Get a Credit to Buy Foreclosures?


Veterans from Afghanistan and Iraq could in a way serve the country once again — this time stateside for the economy. An official with Federal Reserve Bank of New York thinks there should be incentives for the veterans to buy government-held foreclosures.


HouseLogic: Will Housing Market Benefit from Good News Out of Black Friday Chaos?
While shoppers were trampling each other to get the season’s hottest stuff, a glimmer of hope emerged for the economy. Does this mean a Christmas miracle for the housing market? 



Huffington Post: Renting out Government-Owned Homes is Right Move — But Probably Wouldn’t Make Any Difference to You
The Federal Housing Finance Agency (FHFA) is considering proposals for selling government-owned homes to investors, who would then sell or rent them. It’s hoped this move would help government agencies earn some revenue, boost neighborhood home values by getting buyers or renters into vacant homes, and ease tight rental markets by expanding the supply of rental housing.Will it?




Read more: http://www.houselogic.com/blog/why-home-ownership-matters/friday-five-home-store-sales-housing-tax-credit-vets-and-more/#ixzz1fOXUqEek