What a year!!!  I have never experienced so many tax and regulation changes since my first tax season in 1971 (yes, I am that old).  The interesting thing for 2010 is that most people are past being frozen and panicked and are ready to deal with the changes they are being forced to make.  A lot of them are OK with simplifying their lives and selling assets at much lower prices to pay down debt.  A lot of us will be working into our 70's to build up that retirement again. And people are finally realizing they need to take responsibility for knowing their own financial position and tracking it.  That is good news for people like me who really would like to help clients through these difficult times, but need them to be ready for change.

So, we are two weeks into 2010 and the final 2009 reports are coming in for my business clients.  First of all, a lot of them are in already which is unusual.  That tells me they are much on top of their financial picture and really trying to understand their current financial position.  Also, clients are becoming aware that the IRS and States are really coming down on any one that isn't staying current with their tax filings and payments.

The great surprise is that there are actually a few businesses that really had great years in 2009.  The common threads are interesting:

1. They all really track the source of the customers/clients and market to those groups.

2. They all keep their financial records up to date on a daily basis and know immediately what their cash, income, expense and debt positions are.

3. They have agressive and targeted marketing programs - this takes a lot of effort.  You cannot just throw all the balls in the air and hope they stick.

4. Some of them know how to determine their market group, others pay consultants to help them determine this.  Both of those methods work.

5. They all stay extremely current with the payment of all taxes and other expenses.

On the other hand, I don't have any clients not re-evaluating their asset and debt mix and considering all options.  Do we sell the home in a down market and downsize??  It's all relative the low selling price leads to a low buying price.  I think all this downsizing will create a whole other type of increase in the upper end housing listings.

Life is interesting -

I am a Northwest Multiple Listing Service groupie.  I watch the changes daily.  I have really been shocked at the prices a lot of Sellers are listed at.  I have always been surprised that Agents take listings at prices that are clearly too high, but I am more surprised than ever in the current market.  The Agents are not producing near (if any) the income they have produced in the past, but they (and their Brokers in some cases) have to foot the bill for these unrealistic prices.  Can anyone explain to me why the Agents continually take these listings?  Are they not able to show their Sellers where the market really is and ask the Sellers point blank if they really are serious about selling? 

 The final Stimulus package ended up with an $8000 refundable tax credit for First Time Home Buyers (those who have not owned a home within the past 3 years) which is a lot more sensible than the original proposal.  The problem is still that it will be 2010 before anyone sees the money - would be nice if it could be used toward the down payment.  I think part of the Housing portion of the new bill should have the government guarantee 10% of all primary residence loans under the median price range and require only 10% down for low and middle income primary residence purchasers.  What do you think?

Businesses and Individuals seem to really be on top of putting their 2008 tax information together earlier than usual this year.  People are anxious to know where they stand financially and what they need to looking at for options.  The major questions center around the viability of holding real estate investments and small businesses.  I have been quite impressed about the attitudes of my clients.  Most of them are stressed, naturally, but they are not sitting around whining.  They realize they need to adjust to major changes and simply want some input about their options.

This weeks Blog centers around the logic of Congress pushing for a $15,000 tax credit for Buyers of primary residences.  In some versions, it refers to first time Homebuyers (i.e. haven't owned a primary residence in that past two years - not exactly "first time") and others simply any purchase of a primary residence.  This would be a "free and clear" tax credit.  Last year the $7500.00 credit would have to be paid back over 15 years. There willl limits on the price of the home purchase - I believe they are looking at the $150,000 and below for the full credit.  The problem I have with this is that people who buy in that price ranges don't have $15,000 in taxes.  Is it going to be a refundable credit?  That seems like a huge tax bill for the rest of us that cannot participate in that program??  Also, it will not help them get financing.   It is not availalble for a down payment or to pay down current debt so people can qualify for a loan to start with.  I feel that is where the emphasis should be.  These type of funds should go first to those who owe more than their home is worth so they can restructure their loan under current interest rates and at a lower amount of principle owed. Then they should assist with down payments for those qualifiied for affordable housing.

 What do you think?