First-Time Home Buyer Tax Credit

If you are thinking about buying a house in order to claim the first time home buyer credit, it’s time to act. First-time home buyers can get a credit of up to $8,000, but you must sign a purchase and sale agreement by April 30, and close on or before June 30. If you have not owned a home in the last three years, you are eligible to receive a tax credit of ten percent of the purchase price, up to a maximum of $8,000. Even if you have owned a home before, if you buy a new home having owned and lived in your current home for at least five consecutive years out of the last eight years, you will be eligible for a tax credit of up to $6,500. The credit is claimed by filing an additional IRS form with your federal tax return for the year of purchase. If you bought a new home in 2008 or 2009 and have already filed your return without claiming the credit, you may amend your return for that purpose. Now the catch: there are income limits to the availability of the full credit. For purchases after November 6, 2009, your adjusted gross income cannot exceed $125,000 for singles and $225,000 for marrieds filing jointly. For purchases before November 7, 2009, the limit is $75,000 for singles and $150,000 for marrieds filing jointly. So come on, first time buyers—get out there and help stimulate the real estate market AND get a tax credit at the same time.

New Laws Regarding Smoke Detectors in Massachusetts Residential Properties

Sellers of residential property have long been required to deliver their properties equipped with smoke detectors (and since 2005, carbon monoxide detectors) in compliance with Massachusetts law, to have the property inspected by the local fire department, and to obtain and deliver at closing a certificate evidencing the compliance of the property with those laws. A new law has just gone into effect which modifies the smoke detector requirement.

Effective yesterday, the smoke detectors in any home being sold which is built before 1975 and relies on the old battery operated version must be upgraded to contain photoelectric smoke detectors as well. Photoelectric smoke detectors use light rather than radiation to detect smoke, and are are most effective in detecting smoldering or slow moving fires. Photoelectric smoke detectors must be installed within 20 feet of kitchens or bathrooms containing showers. Areas beyond 20 feet require both photoelectric and ionization smoke detectors, either in the form of a single dual detector or two separate detectors.

If you are selling, or planning to sell, your home, you should be aware of this new requirement and ensure that your smoke detectors are in compliance before scheduling your fire department inspection.

Jumbo Mortgages

If you have been in the market for a jumbo residential mortgage loan (over $417,000, with some exceptions) in the past year, you know how difficult it is to get that type of financing, and the rates have been most unattractive. Good news-- the New York Times is reporting that the stranglehold on jumbo mortgages is loosening up, and those loans are becoming more available at more attractive rates. Read all about it at http://www.nytimes.com/2010/04/04/realestate/04mort.html?emc=tnt&tntemail1=y. The article focuses on the New York tri-state area, but if it's happening there, it's bound to be happening in Massachusetts as well.

Estate Planning: Keep that Paperwork Organized!

The March 24, 2010 New York Times has a great article on the importance of making sure not only that your estate planning documents are in order and up to date, but also that your beneficiary designations, titling of assets and general paperwork are in order so that your heirs can easily manage your estate in the way you intend. It's worth reading this article, so click here: http://www.nytimes.com/2010/03/25/your-money/estate-planning/25ESTATE.html?emc=tnt&tntemail1=y. I do (of course) take exception to the statement that a Will can be easily facilitated by the use of an online do-it-yourself site; there is simply no substitute for the advice of a competent estate planning attorney who will do a comprehensive review of your assets and general needs, since there is far more to the process than just slapping some words down on paper and calling it a Will. The article does, however, give good food for thought. Have you done your estate plan yet? If not, call me and I can help make it happen in an efficient and complete manner.

Estate Planning as a Family Conversation

The March 4, 2010 edition of the New York Times has an interesting article encouraging adult children to help their parents ensure that their estate plans are up to date. Sometimes a loving prompt is needed to put things in order. Read this piece at http://www.nytimes.com/2010/03/04/business/04ESTATE.html?emc=tnt&tntemail1=y.

Privacy, Please

On March 1, 2010, new standards went into effect in Massachusetts for the protection of personal information in both paper and electronic records. Mass. CMR Section 17.00 applies to all persons that own or license personal information about a resident of the Commonwealth.

Every person that owns or licenses personal information about a Massachusetts resident is now required to develop, implement, and maintain a comprehensive WRITTEN information security program and physical safeguards that are appropriate to the individual business and the amount and type of personal data maintained. The regulation applies to those "engaged in commerce", i.e. those who collect and retain personal information in connection with the provision of goods and services or for the purposes of employment. Businesses are required to designate an employee to maintain the security program, to institute policies for safeguarding personal information, and to establish and maintain a secure computer/electronic system to the extent the personal information is stored electronically, including firewall and encryption capabilities. Important to those of us operating largely over the internet is the concept that any personal information transmitted wirelessly must be encrypted to bring about a "transformation of data into a form in which meaning cannot be assigned", meaning that the data must be altered into an unreadable form. Password protection alone is not sufficient and would not satisfy the encryption standard.

The new rule adopts a risk-based approach to information security, directing a business to establish a written security program that takes into account the particular business' size, scope of business, amount of resources, nature and quantity of data collected or stored, and the need for security.

The state Office of Consumer Affairs and Business Regulation developed a compliance checklist to assist small businesses comply with these regulations. These can be found at http://www.mass.gov/Eoca/docs/idtheft/compliance_checklist.pdf.

"Thoughts While Shaving": The Financial Cost of Being a Same-Sex Couple

Regardless of how you feel politicially or morally about the legalization of gay marriage, it is a truth that it is more expensive to be a same-sex couple than a heterosexual couple. Here are just some of the ways that the benefits and costs differ:

1. Social security: certain benefits available to married couples are not available to gay couples. Same-sex couples are not entitled to spousal benefits, survivor benefits or the flat death benefit.

2. Health insurance: Many domestic partners are not eligible to participate in the other’s employer-sponsored health insurance plans. The cost of procuring separate health insurance for each can be substantially higher than if both were on the same plan.

3. Estate taxes: Heterosexual married couples can transfer an unlimited amount of assets to each other during their lives and at death without paying any federal estate or gift taxes. That exemption does not extend to same-sex couples, even if their marriages are recognized in the state where they reside.

4. Retirement accounts: spousal benefits available to married couples with respect to retirement funds are not available to same sex couples.

5. Income taxes: In many cases, two domestic partners filing separate income tax returns will pay, in the aggregate, more in taxes than a married couple with the same financial picture. In addition, accountant's fees will be higher since two returns must be prepared and filed, rather than one.

6. Legal protections: Married and unmarried same-sex couples are encouraged to create legal documents that attempt to replicate the protections and rights that heterosexual married couples automatically receive by law. The cost of preparing estate and other legal documents to replicate the same rights available to married couples may be substantially higher than estate planning costs for heterosexual couples.

Food for thought.