If you are a first-time homebuyer, now is a great time to buy a new house. Some of you may have heard about the tax credit for first-time homebuyers established in 2008, under the Housing and Economic Recovery Act. It was worth up to $7,500, and perhaps spurred some real estate activity.
But I’m guessing everybody has heard about the American Recovery and Reinvestment Act (ARRA), more commonly known as the Stimulus Act, of 2009, which expanded the first-time homebuyer credit up to $8,000 for home purchases made in 2009 before Dec. 1. However, the deadline was recently extended, in an effort to continue to spur the market.
Now, according to the IRS website, “taxpayers who have a binding contract to purchase a home before May 1, 2010, are eligible for the credit. Buyers must close on the home before July 1, 2010.” ~ http://www.irs.gov/newsroom/article/0,,id=204671,00.html
This can be a very good deal for first-time homebuyers who purchased a home in 2009, who can actually claim the credit on either their 2008 return or their 2009 tax return, which is due on April 15, 2010. For more information, visit the IRS question and answer section at: http://www.irs.gov/newsroom/article/0,,id=187935,00.html
If you are a first-time homebuyer who is ready to buy a house now, give me a call at 320-894-7528 or e-mail me at noah@farmlandman.com.
Happy Easter!
Saturday, April 3, 2010
Wednesday, March 3, 2010
Farmland Values Continue to Rise
Farmland values continued to rise last year and are once again reaching all time record levels. How long will it last? Nobody has a crystal ball but there are some factors to consider.
The current top capital gains rate of 15% on most assets is the lowest it’s been for years. The Obama administration has talked about raising it to 20%, with another possible 4.5% surtax for the high tax bracket people. Couple this with a state capital gains rate of 8% and you could really see Uncle Sam take a bite out of your money!
The S&P 500 peaked at 1,565 points on October 9, 2007. Then the bear market hit and pulled it down to 676 on March 9, 2009. As of January 2010, the market recovered again to 1,138. A nice bounce back, but how long will it take to get back to even? History shows that it can take up to 5 years to make up for damage caused by downturns in the market. Where will investors park their money?
Farm net income has jumped from $48 billion to an average $64.5 billion in the last decade. While 2010 projects to be slightly below the average, it still projects to be the fifth highest amount of income produced in farming. Livestock economic conditions are expected to improve while crop producers look to stabilize.
Corn yields in Minnesota have nearly doubled since 1980 - from 100 bushels/acre to almost 170 bushels/acre. The ethanol industry has been a big part of this movement, and will look to continue by having 15% ethanol blended into regular gasoline. The country will need to produce more corn on the same (or less) amount of land.
As the value of farmland has increased, rental rates have soared. We have seen anywhere from 10-70% increases in land rental rates from 2004-2009. The law of supply and demand, commodity price and yield, farm size increases, machinery technology, and chemical application are the biggest factors.
There are many other factors that have contributed to farm land increases. For more information, go to my website at www.farmlandman.com, email me at noah@farmlandman.com or call me at 320-894-7528. We are land specialists!
Sincerely,
Noah Hultgren
The Farmland Man
The current top capital gains rate of 15% on most assets is the lowest it’s been for years. The Obama administration has talked about raising it to 20%, with another possible 4.5% surtax for the high tax bracket people. Couple this with a state capital gains rate of 8% and you could really see Uncle Sam take a bite out of your money!
The S&P 500 peaked at 1,565 points on October 9, 2007. Then the bear market hit and pulled it down to 676 on March 9, 2009. As of January 2010, the market recovered again to 1,138. A nice bounce back, but how long will it take to get back to even? History shows that it can take up to 5 years to make up for damage caused by downturns in the market. Where will investors park their money?
Farm net income has jumped from $48 billion to an average $64.5 billion in the last decade. While 2010 projects to be slightly below the average, it still projects to be the fifth highest amount of income produced in farming. Livestock economic conditions are expected to improve while crop producers look to stabilize.
Corn yields in Minnesota have nearly doubled since 1980 - from 100 bushels/acre to almost 170 bushels/acre. The ethanol industry has been a big part of this movement, and will look to continue by having 15% ethanol blended into regular gasoline. The country will need to produce more corn on the same (or less) amount of land.
As the value of farmland has increased, rental rates have soared. We have seen anywhere from 10-70% increases in land rental rates from 2004-2009. The law of supply and demand, commodity price and yield, farm size increases, machinery technology, and chemical application are the biggest factors.
There are many other factors that have contributed to farm land increases. For more information, go to my website at www.farmlandman.com, email me at noah@farmlandman.com or call me at 320-894-7528. We are land specialists!
Sincerely,
Noah Hultgren
The Farmland Man
Saturday, November 21, 2009
Farm Programs
Under the new Farm Bill, producers of USDA program crops such as corn, soybeans, or wheat have the option to enroll in the ACRE program. This is an alternative to the traditional counter-cyclical (CC) program. This program is very important for farmers to decide on as ACRE is irrevocable for the life of the current farm bill, which ends in 2012. There are many factors in producers decision between the two programs. Here are some of the basics of ACRE compared to CC:
With all this being said, the farm economy is still showing strong signs. Commodity prices are still historically high, land values continue to hold, and demand for cash renting has continued to rise. This year probably doesn't show the promise of 2008 farm revenues, but there is a good chance that it could resort back to a year like 2007. Let's keep hoping.
- 80% of the DCP Direct Payment Rate
- 70% of the Market Assistance Loan Rates
- All producers on farm must agree to ACRE (landowners and producers)
- Must meet both "triggers"; State and Farm revenue must be below averages
- State ACRE Guarantee cannot change by more than 10% from the previous year
With all this being said, the farm economy is still showing strong signs. Commodity prices are still historically high, land values continue to hold, and demand for cash renting has continued to rise. This year probably doesn't show the promise of 2008 farm revenues, but there is a good chance that it could resort back to a year like 2007. Let's keep hoping.
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