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Archive for Tuesday, March 29, 1994

REAL ESTATE AGENTS LOVE IRS RULING

March 29, 1994

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Local real estate agents say an IRS ruling on mortgage points should be a boon to homebuyers.

"Super." "Great." "Terrific."

Those are a few of the reactions today from local real estate agents about an Internal Revenue Service decision to let homebuyers deduct the "points" paid as part of their home loan -- even if the seller technically paid them.

"I think it's super. It's great," said Bob Stephens, of Stephens Real Estate.

Stephens said the National Realtors Assn. has been lobbying for the change.

"It's great for the consumer, obviously. It's certainly positive for the housing industry, and we're very pleased about it."

Stephens said the majority of home sales would be affected because most home transactions include points, which are fees charged by the mortgage lender.

"It's going to affect almost everyone who buys a house," Stephens said.

"It's terrific," said John McGrew, of McGrew Real Estate.

"It's been a confusion in the past because whether or not they were deductible in the past depended on who paid them, the buyer or the seller," McGrew said. "On the surface it looks very positive. It's nice to know that it was retroactive."

McGrew said he had heard that the tax savings could range on average between $300 and $700.

McGrew said most buyers set up their mortgage where they can deduct the points anyway, but this will clear up what has been a gray area in the tax law.

Pat Flavin, of Calvin Eddy Kappelman Real Estate, said the IRS ruling "can do nothing but to help continued housing activity. It certainly won't hurt it."

Flavin said it was interesting that the IRS ruling came out at the same time that mortgage interest rates have begun to crawl upward.

"I don't see it as an accident," Flavin said.

He said many people were already claiming the points as a deduction on their income taxes, unless the IRS contested that deduction in an audit.

Charlene Garzillo, closing officer at Gill Real Estate, said her office hadn't received any information on the ruling yet.

But she said the change looks like it will help homebuyers.

"It opens up some great things for the buyers and helps them out tremendously," she said.

She said the company's real estate agents will probably contact past customers to let them know they can take advantage of the new rule if they bought homes in 1991, 1992 or 1993.

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