December 27th, 2010 5:35 PM

                         Market Update

 Nothing new to report here; inflation is up, the economy and jobs are down.

This is causing bonds, which are hyper sensitive to both inflation and the economy, to move in a sideways pattern. The two blue lines of support and resistance are putting the squeeze on bonds in a technical way. Rest assured there will be some news that comes out to send the bond shooting either up through this resistance or down through support.

The 30 yr fixed interest rate was 6.625% at yesterday's bond level.

Stay Tuned,
Todd Dawkins

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       The New Housing Bill - HR3221

I want to discuss one portion of the new housing bill today. That is the first time home buyer tax credit of $7,500 that the house just passed to help stimulate the housing market. This is a big perk for first time home buyers.

A first time home buyer is defined as anyone who has not owned a home for the past three years.

The time period to take advantage of this tax credit ends June 30th, 2009 but it is retro-active to April 9th, 2008. If you know a first time home buyer who purchased their home after April 9th they can take advantage of this tax credit.

The income limitations for a married couple are up to $150,000 for the full $7,500 tax credit and fazes out at $170,000. For single tax filers full tax credit up to $75,000 fazing out at $90,000 income.

Now before you get to excited this is essentially an interest free loan. The loan is to be paid back over a 15 year period at $500 a year.

If the home owner where to die the loan is forgiven. If the house is sold at any time before the 15th year and the appreciation is not enough to pay the outstanding balance on the loan  (tax credit) then the difference is forgiven. If the house is turned into a rental property then the balance would become payable on the next tax return.

This is a tax credit which is cash back to the new home owner not just a deferment of taxes owed. For all of you financial advisors, wouldn't it be nice to have that money put to work compounding for fifteen years? As usual please consult with a CPA to confirm how this will affect you taxes.

To Your Financial Health,
Todd Dawkins

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                                 Funny Bone

 

Our election process this year:

 

Electile Dysfunction : The inability to become aroused over any of the choices for President put forth by either party in the 2008 election year. Amen and Amen!

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