Sandrine Deschaux RE/MAX Destiny Cell (857) 204-9872 sandrine@sandrinedeschaux.com |
Market Insights and Insiders News
The financial meltdown of last year has
filtered down to condominium owners. Most
homeowner associations (especially 2-4
unit and those not professionally managed)
will be impacted by new Fannie/Freddie/FHA
guidelines.
In addition the State of Massachusetts
passed legislation requiring an annual
corporate filing starting with 2009 tax filings.
In our recent experience, very few condo
associations meet the new guidelines set
forth by lenders and therefore may not be
marketable to those seeking loans and
mortgages.
As well informed, proactive Realtors, we are
committed to keeping you up to date during
these changing times. We want to provide
you with the information and resources you
need in order to be up to date and ahead of
potential challenges.
We have prepared several outlines and
documents that we would like to make
available to you:
• Setting up condo reserves and an annual
budget for small associations
• MGL Chapter 173 highlights effecting
condominium associations
• Federal Tax Form
• State Tax Form 355S (2008 form as
sample for what will be required for 2009)
• Current Mortgage Guidelines
Please email me if you wish to receive those
documents
filtered down to condominium owners. Most
homeowner associations (especially 2-4
unit and those not professionally managed)
will be impacted by new Fannie/Freddie/FHA
guidelines.
In addition the State of Massachusetts
passed legislation requiring an annual
corporate filing starting with 2009 tax filings.
In our recent experience, very few condo
associations meet the new guidelines set
forth by lenders and therefore may not be
marketable to those seeking loans and
mortgages.
As well informed, proactive Realtors, we are
committed to keeping you up to date during
these changing times. We want to provide
you with the information and resources you
need in order to be up to date and ahead of
potential challenges.
We have prepared several outlines and
documents that we would like to make
available to you:
• Setting up condo reserves and an annual
budget for small associations
• MGL Chapter 173 highlights effecting
condominium associations
• Federal Tax Form
• State Tax Form 355S (2008 form as
sample for what will be required for 2009)
• Current Mortgage Guidelines
Please email me if you wish to receive those
documents
On July 3, 2008, the Massachusetts
Legislature Passed and the Governor
signed into law, Chapter 173 of the Acts and
Resolves of 2008, entitled, "An Act Relative to
Tax Fairness and Business
Competitiveness".
All condominiums, including unincorporated
condominiums and home owners
associations are supposed to file a federal
corporate tax return. However, corporate tax
law principles do not apply to condominiums
under the Federal Tax Code, which
eliminates and/or limits taxes with regard to
income to condominiums, consisting mainly
of interest.
Under the new state law, for tax years
beginning on or after January 1, 2009:
a) All condominiums in Massachusetts,
including unincorporated associations, must
file Corporate Tax Returns;
b) The filing status on the Massachusetts
return for all condominiums must conform to
their filing status for federal tax purposes;
c) All condominiums will now have to file
state tax form 355, a nine page tax form,
rather than what was previously required,
Form 3M, a three page tax form;
d) The new tax rate on "taxable income" for a
condominium has been increased to 9.5%,
previously 5.3%.
e) All condominiums will be subject to the
minimum Massachusetts Corporate Tax of
$456 annually whether a 2 unit association
or 200;
f) The new tax forms must be filed
electronically, when possible.
Legislature Passed and the Governor
signed into law, Chapter 173 of the Acts and
Resolves of 2008, entitled, "An Act Relative to
Tax Fairness and Business
Competitiveness".
All condominiums, including unincorporated
condominiums and home owners
associations are supposed to file a federal
corporate tax return. However, corporate tax
law principles do not apply to condominiums
under the Federal Tax Code, which
eliminates and/or limits taxes with regard to
income to condominiums, consisting mainly
of interest.
Under the new state law, for tax years
beginning on or after January 1, 2009:
a) All condominiums in Massachusetts,
including unincorporated associations, must
file Corporate Tax Returns;
b) The filing status on the Massachusetts
return for all condominiums must conform to
their filing status for federal tax purposes;
c) All condominiums will now have to file
state tax form 355, a nine page tax form,
rather than what was previously required,
Form 3M, a three page tax form;
d) The new tax rate on "taxable income" for a
condominium has been increased to 9.5%,
previously 5.3%.
e) All condominiums will be subject to the
minimum Massachusetts Corporate Tax of
$456 annually whether a 2 unit association
or 200;
f) The new tax forms must be filed
electronically, when possible.
Taxable Income for most condominiums
consists of income earned on the operating
and reserve accounts, but can include other
income such as capital gains and may also
include "net worth."
The immediate impact of this law could
require every condominium association to
hire a Certified Public Accountant, or other tax
professional, to file the necessary and
appropriate tax returns, beginning with tax
year 2009. It is also important to begin
budgeting to include projected increases in
corporate taxes and tax preparation fees.
Failure to complete the appropriate forms
and make timely tax payments could result in
penalties from the Department of Revenue
as well as prevent/delay future sales and/or
refinancing.
Also, lenders such as Fannie/Freddie/FHA
guidelines are now requiring condo
associations to do the following:
a) Have a minimum of 10% of the condo fee
be applied towards the reserve;
b) Have a minimum 50% owner occupancy
rate;
c) No more than 15% of the total units can be
in arrears on association dues;
If all these requirements are not met, again,
these government backed loans may not be
an eligible option for financing towards a new
purchase and/or refinance.
Inclusions are constantly occurring. Please
feel free to contact me to keep apprised of
future changes.
consists of income earned on the operating
and reserve accounts, but can include other
income such as capital gains and may also
include "net worth."
The immediate impact of this law could
require every condominium association to
hire a Certified Public Accountant, or other tax
professional, to file the necessary and
appropriate tax returns, beginning with tax
year 2009. It is also important to begin
budgeting to include projected increases in
corporate taxes and tax preparation fees.
Failure to complete the appropriate forms
and make timely tax payments could result in
penalties from the Department of Revenue
as well as prevent/delay future sales and/or
refinancing.
Also, lenders such as Fannie/Freddie/FHA
guidelines are now requiring condo
associations to do the following:
a) Have a minimum of 10% of the condo fee
be applied towards the reserve;
b) Have a minimum 50% owner occupancy
rate;
c) No more than 15% of the total units can be
in arrears on association dues;
If all these requirements are not met, again,
these government backed loans may not be
an eligible option for financing towards a new
purchase and/or refinance.
Inclusions are constantly occurring. Please
feel free to contact me to keep apprised of
future changes.
Sandrine Deschaux
RE/MAX Destiny
907 Mass Ave Cambridge MA 02139 I Map Us
office 617 576 3800 fax 617 812 4780
web www.yourguidehome.com
Each office is independently owned and operated.
RE/MAX Destiny
907 Mass Ave Cambridge MA 02139 I Map Us
office 617 576 3800 fax 617 812 4780
web www.yourguidehome.com
Each office is independently owned and operated.
President Obama has
signed legislation to
extend the Homebuyer
Tax Credit. Passage of
the bill was widely
anticipated to further
spur economic
recovery in the
housing sector, as
more buyers are now
eligible for tax breaks
under the new law.
The $8,000 first-time
homebuyer tax credit
was originally set to
expire on November
30.
In addition to offering
the $8,000 first-time
homebuyer tax credit,
the new law also
allows a $6,500 credit
for repeat or move-up
homebuyers who
have lived in their
primary residence for
five years or more.
The tax credits are
available to buyers
who sign purchase
agreements on a new
or existing primary
residence between
December 1, 2009,
and April 30, 2010.
Buyers would have
until June 30 to close
on their new homes.
There is an $800,000
price limit on all
homes eligible for the
credit. The income
limits for all buyers
are now $125,000 per
year for individuals
and $225,000 for
married couples.
Under the old
program, the limits
were $75,000 and
$150,000 respectively.
The first-time
homebuyer credit is
also available to those
who have not owned a
home in the previous
three years. The credit
does not have to be
repaid unless the
home is sold or
ceases to be the
primary residence
within three years.
signed legislation to
extend the Homebuyer
Tax Credit. Passage of
the bill was widely
anticipated to further
spur economic
recovery in the
housing sector, as
more buyers are now
eligible for tax breaks
under the new law.
The $8,000 first-time
homebuyer tax credit
was originally set to
expire on November
30.
In addition to offering
the $8,000 first-time
homebuyer tax credit,
the new law also
allows a $6,500 credit
for repeat or move-up
homebuyers who
have lived in their
primary residence for
five years or more.
The tax credits are
available to buyers
who sign purchase
agreements on a new
or existing primary
residence between
December 1, 2009,
and April 30, 2010.
Buyers would have
until June 30 to close
on their new homes.
There is an $800,000
price limit on all
homes eligible for the
credit. The income
limits for all buyers
are now $125,000 per
year for individuals
and $225,000 for
married couples.
Under the old
program, the limits
were $75,000 and
$150,000 respectively.
The first-time
homebuyer credit is
also available to those
who have not owned a
home in the previous
three years. The credit
does not have to be
repaid unless the
home is sold or
ceases to be the
primary residence
within three years.
| Breaking News! Homebuyer Tax Credit Extended and Expanded! Signed Into Law November 6, 2009. |