AAR Updates

Tax Credits for Education

Considering that education course but concerned with finances right now? Through a variety of tax credits and deductions, there is help to assist you. A tax credit reduces the amount of income tax you may have to pay. A deduction reduces the amount of your income that is subject to tax, thus generally reducing the amount of tax you may have to pay.

Here are a few options to talk to your tax accountant about:

• American Opportunity Credit
• Hope Credit (especially valuable to new agents within the first year)
• Lifetime Learning
• Business Deductions for Work-Related Education. Your work-related education expenses may also qualify you for other tax benefits, such as the tuition and fees deduction and the Hope and lifetime learning credits. If your education is not required by your employer or the law, it can be qualifying work-related education only if it maintains or improves skills needed in your present work. This could include refresher courses, courses on current developments and academic or vocational courses.

Don’t wait! Take that education course you’ve been thinking about.

AAR Volunteers Polish Professional Standards Skills

AAR held its annual Professional Standards Workshop in January. The one-day session is targeted at members of the association’s Professional Standards and Grievance Committees as well as mediators and ombudsmen. The workshop highlighted changes to the Code of Ethics, the benefits of mediation, the ins and outs of procuring cause and much more. To learn more about AAR’s professional standards work, visit http://www.aaronline.com/disputes.

FHA Changes Include Higher Down Payments for Some Buyers

On January 20, 2010, FHA announced four important changes that will help it manage risk and strengthen its capital reserves.

1. The up-front mortgage insurance premium (MIP) will increase to 2.25% (from 1.75%) this spring. FHA has asked Congress for the authority to increase the annual MIP as well. If granted, FHA will shift some of the up-front MIP increase to the annual MIP instead. Because the annual MIP is paid over the loan term rather than at closing, the shift should ease the impact on consumers.

2. Homebuyers with FICO scores below 580 will be required to have a minimum 10% down payment starting in early summer. Borrowers with scores of 580 or above will remain at the 3.5% down payment level.

3. FHA will reduce allowable seller concessions from 6% to 3% in early summer. Per the FHA, “The current level exposes the FHA to excess risk by creating incentives to inflate appraised value.”

4. HUD will enhance monitoring of FHA lenders and increase enforcement. For example, HUD would like to “require all approved mortgagees to assume liability for all of the loans that they originate and underwrite.”

Learn more about the changes FHA is making.

Broker Course Provides Practical Skills for Analyzing Profit

The Certified Real Estate Brokerage Manager (CRB) course, "Analyzing Your Company for Profit," comes to the AAR classroom February 24-25, 2010. The course uses case studies of real estate brokerage companies for practical understanding of the relationship between gross commission income, variable expenses, fixed expenses and profit.

• List the reasons why your company may be struggling to make a profit.
• Identify the reason(s) why your company has too small or no profit.
• List possible solutions for each type of profit-blocking problem.
• Choose the correct line item expense maximum standards for your company in order to make a profit.
• Calculate the financial risk analysis ratios to analyze the financial trends of the company.
• Recite rules of paying compensation to sales associates.
• Forecast income and budget expenses for the next full year to guarantee a profit.
• List components that will add value to your company.

HUD Suspends 90-Day Wait on Foreclosures

On January 15, 2010, HUD announced that it will suspend a 90-day waiting period on property resales because it is putting FHA borrowers at a disadvantage when purchasing foreclosures. Current rules prohibit FHA from insuring a mortgage on a home owned by the seller for less than 90 days. HUD Secretary Shaun Donovan emphasized that the suspension is temporary and has strict guidelines to prevent predatory practices. The new rule takes effect February 1, 2010 and lasts one year. Get details in the HUD announcement.

IRS Form for Homebuyer Tax Credit Available

IRS Form 5405 allows homebuyers to claim the $8,000 first-time homebuyer tax credit. Download a PDF of the form. Want to learn more about the tax credit and who qualifies? Visit the IRS website for more details.

Be the First to Know!

Why wait for a monthly update from Arizona REALTOR® Magazine? If you want to receive more timely updates about important industry news, such as the homebuyer tax credit form or HUD’s expansion of the flipping waiver, become a fan of AAR on Facebook (www.facebook.com/realtorsuccess) or follow us on Twitter (www.twitter.com/aarsuccess). We’ll keep you in the know about the topics shaping your industry!