October 2009 Newsletter

Events in October

13th Annual Eli’s Cheesecake Festival 10/3 & 10/4 ♦ To benefit local charities!
10th Annual Chicago River Flatwater Classic 10/4 ♦ The Chicago River’s only canoe and kayak race ♦ www.ChicagoRiver.org
Bucktown 5K Race 10/4, 8:30am ♦ Starting at Marshfield & Wabansia ~ www.Bucktown5K.com
Statesville Haunted Prison 10/2-Halloween ♦ Voted #1 Haunted House in Chicago for the past 8 years ♦ Tickets start at $30; groups of 12+ for $21 ♦ visit www.Statesville.org
Clark/Belmont Music Fest 10/10 Noon-11pm ♦ 3200 N Clark ♦ www.ChicagoEvents.com
Bank of America Chicago Marathon Sunday, 10/11 ♦ Starting and ending at Grant Park on Columbus Drive
Columbus Day Parade Monday, 10/12, 12:30pm ♦ Parade marches along Columbus Drive from Balbo to Monroe
45th Annual Chicago International Film Festival 10/8-10/22 ♦ North America’s oldest competitive film festival with a focus on international work ♦ www.ChicagoFilmFestival.org
Beer Festival 10/14 8pm ♦ Sample more than 40 local and international beers and appetizer pairings at Brasserie Jo @ 59 W Hubbard
Pug Party 10/17 Noon-5pm ♦ Over 400 pugs expected to attend, so arrive early at Zella’s for the celebration @ 1983 N Clybourn
Casting Call for “America’s Got Talent” 10/17 9am ♦ McCormick Place @ 2301 S Lake Shore
Fashion Focus Chicago 2009 10/22-10/25 ♦ The season’s hottest new looks are being spotlighted at various venues throughout the city ♦ www.ChicagoFashionResource.com
Fall Fireworks Cruise Fri & Sat nights, now thru Halloween ♦ www.ShorelineSightseeing.com
13th Annual Halloween Franken Plaza 10/23-10/31 ♦ Every day at Daley Plaza ♦ www.Chicagoween.us
22nd Annual Trick or Treat Trot 10/25 ♦ Come for the 5K Run, 10K Run, 5K Walk and Monster Mash Junior Dash in the lakefront park at Montrose Avenue ♦ www.caprievents.com/trick/
Pumpkin Carving at The Boundary 10/27 ♦ Pumpkin carving goes better with a candy apple buffet and a beer ♦ 1932 W. Division
Chicago Scene Dead Man’s Ball 10/30 9pm ♦ Best costume wins a free trip to Las Vegas at Crobar @ 1543 N Kingsbury


Stay Healthy This Season
Your Common Cold Questions Uncovered

Vitamin C
♦ Vitamin C is water soluble, so the body will get rid of any excess taken in.
♦ How much C can the body absorb and retain? According to studies, 500mg of Vitamin C twice a day is the dose that will keep the average healthy adult well saturated.
♦ There does not appear to be a harmful dosage of Vitamin C; common daily dosages in “immune system boosting” products can suggest using up to 4000mg. However, for daily maintenance, there is no viable reason to be taking more than 1000-1500mg in a day.
♦ Vitamin C certainly improves your system’s immunity, but once you have actually caught a cold, extra Vitamin C does not help.

http://www.nytimes.com/1996/10/07/business/with-winter-whisper-away-question-much-vitamin-c-should-person-take-each-day.html

Echinacea
First and foremost, Echinacea is not a product that should be taken daily. Many people make the mistake of taking an Echinacea supplement as part of their daily supplement routine. The philosophy behind this dosing method is, because Echinacea raises the immune system, using the product daily will help fight against contracting a cold. But this is not really the most effective use of Echinacea. This type of preventative measure is much more successful when using antioxidants like vitamins A, C & E.

Echinacea is most effective when you first notice that you have a cold coming on. In this case, your body has already begun to produce additional white blood cells to combat the cold. Taking Echinacea at this time helps to increase the number of white blood cells the body is producing. The resulting effect is that the increased numbers of white blood cells overwhelm the cold, eliminating it from the body.

Using Echinacea means being in tune with your body and how you’re feeling. Most people, who use Echinacea exclusively when they have a cold, still do not use the product properly, not in that they take too much, but that they take too little. Here are some examples of usage so you can start to get the most out of this incredibly effective supplement.

When you first feel a cold come on start by taking two Echinacea supplement pills. Wait a few hours and reassess how you are feeling. Do you feel better or worse than before you took the Echinacea? If you feel better, it’s a good bet that the Echinacea has already been successful defeating the cold. If you feel worse, the cold is stronger than current white blood cell count trying to fight the cold. At this point you should double the amount of Echinacea you take. You took two earlier so now you should take four. Wait a few more hours and reassess how you are feeling. If you are feeling worse than the before you should double the amount of Echinacea you take again. You took four last time so now you should take eight.

And you keep repeating this process until you physically can tell that the cold has started to subside. Think of the cold and your immune response as two bar graphs standing side by side. As the level of the cold increases you need to up your intake of Echinacea to increase the immune response to not just meet the level of the cold but to surpass it.

But winter colds are fighters, which is why you may need to keep doubling your Echinacea intake as to continually surpass the level of the cold in the body. As the level of the cold increases, increasing Echinacea helps raise the immune response to keep the cold at a lower level than the immune response.

Side effects of using Echinacea are few and mild, but some users have reported symptoms like nausea, dizziness and rash. With any supplement you should check with your doctor if you have any preexisting condition or if you have question about whether using Echinacea is right for you.
http://www.chicagoathome.com/detail.aspx?dct=54&id=6404&mid=2509&loc=rss

September 2009 Newsletter

Events in September


1 ~ Tuesdays on the Terrace ~ Museum of Contemporary Art, 220 E. Chicago Ave. ~ A weekly series of free alfresco jazz concerts. A pre-fixe dinner from Puck's Cafe is available for $19.
4–6 ~ 31st Annual Chicago Jazz Festival ~ Grant Park, 300 S. Columbus Drive ~ The city's longest-running lakefront music festival features local, national and international performers on several stages
4– 6 ~ Taste of Polonia ~ Copernicus Center, 5216 W. Lawrence Ave. ~ The 30th annual cultural celebration of Polish traditions includes live entertainment from Poland and the U.S., food, beer, arts and more
5–6 ~ 6th Annual Bash on Wabash ~ South Loop, 1300 S. Wabash
7 ~ Labor Day
11–13 ~ 89th Annual German-American Festival ~ Lincoln Square, 4700 N. Lincoln Ave. ~ Features brats, smoked sausages, potato salad, sauerkraut, German cakes, beer and wine for sale, plus live music, folk dancers and more
12–13 ~ Renegade Craft Fair 2009 ~ Damen Avenue and Division Street, 2000 W. Division St. ~ More than 200 local, national and international artists display handmade wares, including clothing, posters, comics, craft kits, jewelry, and more
12–13 ~ U2 ~ Soldier Field, 1410 S. Museum Campus Drive
12–13 ~ Celtic Fest Chicago ~ Grant Park, 300 S. Columbus Drive ~ The 13th annual salute to Celtic music, dance and traditions features live entertainment, beer, food, arts and crafts vendors and more
12–13 ~ Old Town Crush, Music and Comedy Fest ~ Wells Street between North and Evergreen Avenues ~ Formerly known as the Wine Crush in Old Town, the Wells Street festival expands to two days this year.
19 ~ Guinness Oyster Fest ~ Damen Avenue and Roscoe Street, 2000 W. Roscoe St. ~ An autumn kickoff pairs fresh-shucked oysters and pints of Guinness, in addition to other fare from local restaurants
23–30 ~ UniverSoul Circus ~ Washington Park, 5531 S. King Drive ~ Clowns, aerialists, acrobats, dancers, contortionists, animals and more perform under the big top during a traditional circus with an urban edge
25–26 ~ Oktoberfest ~ Lincoln and Southport Avenues, 3000 N. Lincoln Ave. ~ St. Alphonsus, one of the city's oldest churches, celebrates its German roots with a weekend of bratwurst, beer and live bands
30 ~ 6th Annual Metromix Best Bartender Bash ~ District Bar, 170 W. Ontario St. ~ Watch our Final Four Best Bartenders compete for a shot at the title and sip complimentary samples of each bartender's signature drinks
Saturdays ~ Millennium Park Workouts ~ Millennium Park, 201 E. Randolph St. ~ The popular alfresco series features early morning classes on the Great Lawn in tai chi, yoga, Pilates and aerobic dance/martial arts


What is an FHA loan?
From GetSmart.com

FHA (Federal Housing Administration) loans were established in 1934 when foreclosures were high and lenders were reluctant to approve mortgages for all but the least risky of borrowers.

Home loans insured by the FHA are once again gaining in popularity as more lenders tighten their borrowing guidelines. FHA loans can be a viable and sometimes less expensive alternative for borrowers making a small down payment.

Here are the basics on government-insured FHA loans:

On the upside. . .
• Low down payment. Most conventional loans require at least 5 percent down, and in a tight mortgage market many lenders prefer to see 10 percent or more. By contrast, FHA loans require a down payment of only 3 percent.
• More lenient approval guidelines. FHA loans follow a different approval model than most conventional loans. You do need decent credit, but it does not have to be perfect or even nearly perfect. Even a bankruptcy or foreclosure may not prevent you from getting an FHA loan. In addition, FHA loans allow for a greater percentage of your gross income to be used for debt (up to 41 percent, compared to 36 percent for conventional loans).
• Just about anyone is eligible. Unlike most other “affordable” loan programs, FHA loans do not carry a maximum allowable income cap. All you need to be eligible is a valid social security number and legal US residency.

On the downside. . .
• Lower loan amounts. Maximum allowable loan amounts vary by state and metropolitan area, but are typically lower than conventional loan limits. You can get the loan limit for your area by visiting the HUD website and entering your state and county.
• Not all lenders are good at FHA loans. If you think an FHA loan might be for you, choose your lender carefully. The guidelines and paperwork are different enough that unless a lender specializes in “government lending” (FHA and VA loans), you could face delays and unwelcome surprises.

Article: Squeeze in Lending Rules Choking Condo Market

More Developers Seeking FHA Approval for Easier Mortgages
By Mary Ellen Podmolik, Chicago Tribune

The glut of unsold condominiums in Chicago has caused developers to offer upgraded appliances, special financing packages and, in one extreme case, $100,000 price reductions.

There's been little condo buildings can do, though, to sidestep dramatically tightening guidelines on mortgages that government-controlled companies will back.

Those restrictions are crimping a local condo market burdened with an oversupply of inventory at the same time consumers are dealing with the Chicago area's 10.7 percent jobless rate.

"It is not killing the market, but it is definitely hurting it," said Michael Golden, co-founder of @Properties, of the stricter requirements.

In March, sales of Chicago condo units listed with Midwest Real Estate Data LLC's multiple listing service were down 41 percent from a year ago. In April, the year-over-year decline was 55 percent, and in May it was 56 percent. Yet according to the Chicago Association of Realtors, condos have experienced less price erosion than single-family homes.

"This is telling us that this is the healthiest segment of our real estate market," said David Hanna, Realtors association president. "Why are we punishing people to be there? This is quashing entry-level buyers, which we need to get the market going."

This year, almost 4,700 new condo and townhouse units are expected to be completed and ready for occupancy, and less than 60 percent of them were under contract in the year's first quarter, according to data from Appraisal Research Counselors.

"I walk out of my office in Printer's Row and all around me I see condos dead in the water," Hanna said.

As of July 1, Freddie Mac no longer will guarantee mortgages in new condo buildings where less than 70 percent of the units have been sold. Fannie Mae adopted the same threshold March 1. Previously, the requirement was 51 percent.

The changes come on top of a matrix of fees adopted by Fannie and Freddie this spring that increase the cost of a mortgage for condo buyers with various credit scores and also impose fees for buyers who make down payments of less than 25 percent.

Fannie and Freddie's set of requirements "certainly limits the loan options for buyers," said Gail Lissner, a vice president at Appraisal Research Counselors. "It's hard enough in this market to get to 50 percent. To get to 70 percent is very difficult, considering the fallout that's occurring at closing."

As a result, some developers are turning to their own lenders and arranging short-term private financing for buyers. An increasing number, though, are applying to have their developments approved by the Federal Housing Administration.

A building has to be only 51 percent sold in order for buyers to receive FHA-backed mortgages, and the down payment required is 3 1/2 percent.

Because of the lesser underwriting requirements, the FHA's share of mortgages insured for new-home purchases has grown, even before the more stringent Fannie Mae and Freddie Mac rules were adopted. For the five-month period between October and February, FHA's market share of new-home purchases was almost 23 percent.

Condo buildings want in on that action. Since October, 68 Chicago condo buildings have received FHA approval, and an additional 51 buildings have applications pending.

For years, many developers shunned FHA, in part because the approval process was time-consuming and the label didn't carry much cachet. Those concerns have evaporated.

"If I owned a project right now that had a lot of inventory, I would do everything in my power and more to get it made FHA. Developers in trouble need to be more flexible for buyers," said Terrapin Properties' Jake Geleerd, whose own Burnham Pointe condo project was changed into apartments.

A few years ago, Terrie Whittaker, sales and marketing president at New West Realty, never would have considered seeking FHA approval for a project. But late last month, the firm's 1555 Wabash Ave. condo tower received the now-coveted FHA designation.

"Now we care deeply and passionately," Whittaker said. "I care about anything that will help me sell a condo. I still have 47 or 46 percent of the building to sell."

With the approval in its pocket, New West started closing on units last week.

One of the building's future residents is Zaneta Howard, a recent transplant from Philadelphia who has been shopping for a Chicago condo since October. While sales agents in new buildings said "we can make anything work," she often found the final offers weren't as compelling as she'd hoped. Her real estate agent then helped her look for FHA-approved buildings.

"For me it was very exciting, very important," Howard said. "Cash is king. Now I can keep a little more cash in my pocket."

The FHA recently issued new guidelines that it says will help speed how long it takes to get a project approved by the agency. The new rules kick in Oct. 1.

Meanwhile, Fannie and Freddie's more stringent requirements may go under the microscope. Last month, Reps. Barney Frank (D-Mass.) and Anthony Weiner (D-N.Y.) sent a letter to the chief executives of Fannie and Freddie asking them to review the 70 percent threshold.

Article: Chicago Housing Prices Drop Even Faster

Foreclosures Among Several Factors Prompting Sellers To Adjust
By Mary Ellen Podmolik, Chicago Tribune

It's the middle of July, and home sellers are starting to feel the pressure. Elmwood Park resident Dan Gongola is among them.

A month ago, he listed his gutted and rehabbed five-bedroom, four-bath octagonal bungalow for $549,900, almost $25,000 higher than his real estate agent advised. "I said maybe I'd get lucky," he said.

On July 2, with few showings to speak of, he chopped the price far below his agent's original suggestion. The new price tag of $485,000 is a reduction of almost 12 percent from the list price.

Real estate agents have been advising sellers for months that they were going to have to let go of a good chunk, if not all, of the appreciation their homes enjoyed during the past five years. Now it appears that a confluence of factors -- fluctuating mortgage rates, sales comparisons that include bargain-price bank foreclosures, lingering job insecurity, a real estate market headed into its August lull and a first-time buyer's tax credit that expires Dec. 1 -- are giving their argument more credence. And sellers like Gongola are taking their advice.

As of Thursday, 31 percent of Chicago-area homes listed for sale had at least one price cut, compared with 29 percent of listings in June and 26 percent of listings in April, according to Trulia Inc., a San Francisco-based provider of real estate data. Nationally, 24 percent of homes on the market have had at least one price cut.

Drill deeper into the data, though, and that 31 percent local average is healthy compared with what's going on in some neighborhoods. In the East Loop near Millennium Park, prices have been cut at least once on 43 percent of the listings, with an average reduction of 6.6 percent. In the sections of Lincoln Park and Logan Square that make up the 60614 ZIP code, 35 percent of the listings have price cuts, with an average reduction of 8.2 percent. In Elmwood Park, sellers have slashed, by an average of 9.6 percent, prices on 40 percent of the listings.

"Sellers say, 'I'm not going to give it way,' " said Randy McGhee, an agent at Koenig & Strey GMAC Real Estate. "If you want to sell, you will be giving it up for what you paid for it or less in the last four years. If you want to sell it and you're thinking of a reduction, don't wait until September. Do it now."

In some areas of Chicago, the issue is condos that were bought by investors who are trying to shed them at a loss. They are advertised as short sales, a private transaction in which an owner, with lender approval, sells the property for less than the amount owed on the mortgage.

"My last three buyers and a current one only want to see foreclosures and short sales because they believe that's where the deals are," said Kimberly Oehmke, an agent with @Properties.

"It's hurting the person who has a great property and isn't in the short sale-foreclosure predicament," she said. "Anybody that is not a short sale, we just beg our clients to rent it out, just hold on until next year."

Foreclosures, meanwhile, continue to roil the market, being scooped up more quickly and cheaply than traditional listings.

In the past 90 days, 43 percent of home sales in Cook County have been bank-owned foreclosures, according to data from Clear Capital, a Truckee, Calif.-based provider of real estate valuation data to investors. Nationally, 35 percent of sales were foreclosures.

They've sold faster, too, with an average local marketing time of 53 days for a foreclosure compared with 73 days for a traditional sale.

The impact of foreclosures is partly to blame for local home values sinking in April to the same level they were at in mid-2002, according to the S&P/Case-Shiller Home Price index released late last month.

In Elmwood Park, Gongola's real estate agent, Sally Haynes of ERA Realife Realty, blames much of his troubles on foreclosures and the too-high original home price; in a better market the home might sell for slightly over $500,000. She was surprised, pleasantly, when he opted to make the dramatic cut."

I know it's worth more than that, but with the market the way it is right now, I have to go with what's comparable in the neighborhood," Gongola said. "That's why I did the big reduction," he said. "Let's not play games here. I wasn't going to lower it $10,000, and then in another month another $10,000. People will [now] say, 'Hey, this guy dropped $70K, we should go look at this.' "

Haynes has had the same difficult conversation with sellers in other neighborhoods who are eager to grab hold of any market uptick."

I'm seeing the same thing in Des Plaines and Portage Park," Haynes said, noting that her pool of buyers has increased significantly in the past three months. "They are looking for a deal."

Article: Improvement Coming to Buyer Tax Credit?

Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, said that the Federal Housing Administration is working on a plan that will permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment.

Previously, most buyers wouldn't receive the funds until after they filed their tax return, and that deterred some people from using the credit. The NATIONAL ASSOCIATION OF REALTORS® has been calling for the change.

“We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment,” Donovan says. His remarks came in an address to several thousand REALTORS® gathered May 12 at the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo in Washington, D.C..

He says FHA’s approved lenders would be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table. The plan isn't final; more details are expected in coming weeks.

Other Solutions for Today's Market

During his address, Donovan went on to say that the Obama administration plans to further stabilize the housing market. “I do think we have some early signs that the market overall is stabilizing,” Donovan says. “Since January we’ve seen both home sales moving up and down around a relatively stable number and we are seeing the first signs that the rapid decline in home prices is starting to abate.”

He and other speakers examined cutting-edge solutions necessary to promote and preserve homeownership and real estate development, stimulate the economy, and protect the nation’s taxpayers. They also shared their ideas on what the role and responsibility of the federal government is in the revitalization effort.

“Right now the Federal Reserve is the market,” said panelist Jay Brinkman, chief economist for the Mortgage Bankers Association. “What will be the effect when the Fed stops buying?” Brinkman explained that an exit strategy must be planned for the long-term; the federal government cannot continue to support the mortgage markets indefinitely.
“We are thrilled that so many high-caliber individuals were able to join us today at this important meeting to promote stability in the housing market and the U.S. economy,” said NAR President Charles McMillan. “We look forward to an ongoing dialogue and action toward this goal, during our midyear meetings this week and beyond.” [Click here to view article]

Article: 2009 Federal First-Time Homebuyers Tax Credit

Q: What is the amount of the new tax credit?
A: $8,000

Q: Who is eligible for the $8,000 tax credit?
A: First-time homebuyers who closed (or will close) on homes between January 1, 2009 and November 30, 2009.

Q: What are the details of the new tax credit?
A: The new tax credit is an $8,000 refundable tax credit (or up to 10% of the purchase price). This means that if your total tax liability in the given year is less than $8,000, the IRS will send a refund for the balance.

Q: What if I purchased a home between April 8, 2008 and January 1, 2009?
A: Purchasers who bought between 4/8/08 and 1/1/09 are subject to the terms of the $7,500 repayable credit.

Q: Do I have to pay back the credit?
A: If you occupy your home for three years, you will not have to pay back the credit.

Q: Who qualifies for the credit?
A: 1) First-time homebuyers (taxpayers who owned a main home at any time during the three years prior to the date of purchase are not eligible). 2) Purchasers of a “main home,” i.e. principal residence. The home must be a home located in the United States and is generally considered to be the home where you spend 50% or more of your time. It can be a condo, single family detached, co-op, townhouse or something similar. Vacation homes and rental properties are not eligible. For new construction, the “purchase date” is the date you occupy the home.

Q: Who do I contact if I have more questions about this credit?
A: Contact your REALTOR® or your tax preparer, or call the IRS toll-free at (800) 829-1040 for more information on the tax credit. This information is accurate based on the information available as of February 19, 2009. As with any tax law change, check with a tax advisor if there are any questions regarding using this provision.

Q: Who cannot take the credit?
A: Purchasers with any of the below circumstances cannot take the credit:
-Your income exceeds the phase-out range. This means joint filers with Modified Adjusted Gross Income (MAGI) of $170,000 and above and other taxpayers with MAGI of $95,000 and above.
-You buy your house from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
-You stop using your home as your main home.
-You sell your home before the end of three years.
-You are a nonresident alien.

Q: What are the income limits?
A: The credit is reduced or eliminated for higher-income taxpayers. Joint filers with a MAGI of $170,000 and above and single filers with a MAGI of $95,000 and above are ineligible for the credit. Singles making between $75,000 and $95,000 and joint filers with a MAGI of between $150,000 and $170,000 are in the “phase-out” range, meaning you will only receive a fraction for the $8,000 tax credit.

Q: When/How can I claim the credit?
A: It can be claimed on your 2008 tax return (to be filed by April 15, 2009), an amended 2008 Tax Return, or your 2009 Tax Return.

Article: A Home-Buyer Tax Credit Worthy of the Name

By Kenneth Harney, Washington Post


Should you give the $7,500 home-buyer tax credit a second look? Now that Congress may be on the verge of transforming it into a true tax credit -- one that never has to be paid back -- you just might want to do so.

On Jan. 15, the House Democratic leadership outlined its $825 billion economic stimulus package, loaded with $275 billion in tax cuts and $550 billion in new spending on health care, education, alternative energy and infrastructure improvements.

Tucked away in the tax section was a significant improvement to last July's congressional effort to stimulate home sales. That program offered a credit of up to $7,500 to purchasers who had never bought a house or hadn't owned one during the previous three years. To qualify, taxpayers would need to close on a house between April 8, 2008, and this coming July 1.

But relatively few consumers were attracted to the plan because, unlike virtually all other federal tax credits, this one had to be repaid in full to the IRS over a 15-year period. In effect, the $7,500 was more like an interest-free installment loan from the government than a straightforward dollar-for-dollar reduction on buyers' tax bills.

Though final details on a revised credit are still subject to negotiations between the House and Senate, and to passage of the economic stimulus package itself, there's a good chance that buyers who sought the credit in 2008, and new purchasers in 2009, will be relieved of the repayment requirement.

According to industry estimates, removing the repayment rule could lead to an additional 202,000 purchases this year. The National Association of Realtors is pushing for the July 1 deadline to be extended to Dec. 31, opening the door to even greater numbers of sales.

Meanwhile, the IRS has come out with two recent advisories on the credit, plus a new Form 5405 for taxpayers interested in claiming the $7,500 benefit, either for 2008 or 2009. You can download a copy of the form at www.irs.gov in the publications and forms section.

Based on the latest IRS guidance, here's what you need to know if you're thinking about buying a house this year -- taking advantage not only of low prices and record low mortgage rates, but also a temporary tax credit that may well turn out to be a grant.

* The $7,500 is available to singles, married couples filing jointly and unmarried co-purchasers, provided they meet the non-ownership test for the previous three years. Married couples filing singly can claim up to $3,750 each. Unmarried individuals can allocate the credit on their filings according to their respective ownership shares or capital investments in the house.

* Only principal residences, or in the IRS' words, "the one you live in most of the time," are eligible. No second homes, investment properties or houses located outside the United States pass the test. However, the definition of "home" extends far beyond conventional houses sited on lots. It "can be a ... houseboat, house trailer, cooperative apartment, condominium or other type of residence," according to Form 5405.

For example, if you buy a sailboat or powerboat with full living facilities, tie it up at a marina, and make it your "main home," you should be eligible to claim the credit, though you may want to run all the specifics of your situation by your accountant or tax adviser.

* Even if it's your first home purchase, you are not eligible if your adjusted gross income is above $95,000 (single filer) or $170,000 (married joint filers). Married couples with incomes between $150,000 and $170,000 are eligible for reduced credits, based on a phase-out schedule. Single filers with incomes between $75,000 and $95,000 also are subject to reduced credit limits. District of Columbia residents who are eligible for the city's first-time home-buyer credit are barred from use of the federal tax credit. Taxpayers who use tax-exempt mortgage bonds issued by state or local governments to finance home purchases also are ineligible.

* You can't claim the $7,500 credit if you buy your house from a "related person," meaning a spouse, parent, grandparent or child or from a corporation or partnership where you own more than 50 percent of the stock or capital interests.

If you pass all these tests, and get the purchase done by whatever deadline Congress decides on as part of the final stimulus package, you should be able to take $7,500 off your federal tax bottom line, and not worry about ever paying it back.


To read this article online, go to: http://www.washingtonpost.com/wp-dyn/content/article/2009/01/23/AR2009012301874.html

Distributed by the Washington Post Writers Group. Kenneth Harney is a nationally syndicated real estate columnist. He can be reached at the Washington Post Writers Group, 1150 15th St. NW., Washington, DC 20071-9200 or by e-mail at kenharney@earthlink.net.