Tax credit system defrauded
According to a report by the Treasury Department Inspector General for Tax Administration and internal Revenue Service, massive discrepancies have been identified. Although the homebuyer tax credit helped to stimulate the real estate sector, the system is apparently insanely simple to defraud. Millions were improperly paid out to people who applied early, and millions of checks were cut to prisoners, while in some cases, multiple taxpayers claimed the credit ont he same home.
Here are just some of the other issues found in the report:
- 2,555 taxpayers were given $17.6 million for homes purchased before the dates legally allowed.
- For one address, 67 taxpayers claimed the credit on the same home.
- 241 prisoners claimed the credit while serving life sentences, none of which were filing joint tax returns.
- Over 10,000 people were granted the tax credit on homes used by other taxpayers to claim the same credit.
- 34 IRS employees who already owned homes filed for and were given the homebuyer tax credit (plus the 53 already under investigation from an internal audit in 2009).
- Over $9.1 million was paid to 1,295 prisoners who were incarcerated when they said they purchased their homes. While some instances this is still possible, the audit reveals that in most cases it is illegitimate.
The IRS responds:
“In swiftly making the First Time Homebuyer Credit immediately available to more than 2.6 million homebuyers, a very small number of payments were made to prisoners incorrectly, which the IRS is now taking all steps to recapture and to prevent going forward,” the IRS said. “The IRS will follow up on every instance of an improper prisoner payment and take swift and appropriate enforcement actions.” It has also promised to go after and recoup any other losses from fraudulent claims on the effective, if easy-to-game, program.
IRS spokesman Anthony Burke claims that the agency had “successfully blocked or denied nearly 400,000 questionable homebuyer claims and opened more than 150 criminal investigations. These aggressive efforts have saved taxpayers more than $1 billion.”
Assistant Treasury Secretary Michael Mundaca said that the homebuyer tax credit led to $2.5 million worth of new home purchased to be completed and points to the credit as a stabilization factor for the housing market.
“These fraudulent claims, which are being pursued to the fullest extent of the law, represent less than half a percent of the credits paid out under this program,” Burke said, in an e-mail to CNNMoney.com. “As with all new and expanded programs, we are constantly working to improve implementation, and the IRS has already begun to take additional steps to prevent fraud in this program.”
How is any of this even possible? We know managing a process of this size is collosal, but is our government keeping records via stone tablet and chisel? The media has swarmed around the fact that prisoners were given checks fraudulently, but it seems that they took advantage of a dramatically flawed system, and the finger pointing should go directly toward the source. What do YOU think?
CC Licensed image courtesy of assbach via Flickr.com.
Austin tops the list of best places to buy a home
When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?
Looking at the bigger picture
(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).
That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).
They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.
“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”
Average age of houses on the rise, so is it now better or worse to buy new?
With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.
The average home age is higher than ever
(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.
With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.
Prices of new homes on the rise
Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.
Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?
The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.
Why Realtors are vulnerable to these rapid changes
(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.
Note: We’ll let you decide which company plays which role in the image above.
So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.
1. Zillow poaches top talent, Move/NAR sues
It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.
Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.
2. Two major media brands emerge
Opinion Editorials1 week ago
The actual reasons people choose to work at startups
Business News2 weeks ago
2020 Black Friday shopping may break the mold
Business Entrepreneur1 week ago
Small businesses must go digital to survive (and thrive)
Business Finance6 days ago
Small business owners furious over more PPP fraud this week
Opinion Editorials2 weeks ago
Work from home – are we over it?
Business News1 week ago
RIP office culture: How work from home is destroying the economy
Tech News2 weeks ago
Incoming! Amazon drones will be dropping off packages soon (we hope)
Business News6 days ago
Hobby Lobby increases minimum wage, but how much is just to save face?