Palm Springs Area December Closings

CLOSINGS FOR DECEMBER 2007

PALM SPRINGS/CATHEDRAL CITY

2007 Resales 189 New 21 2006 Resales 207 New 25

DESERT HOT SPRINGS/NO PALM SPRINGS/THOUSAND PALMS

2007 Resales 44 New 16 2006 Resales 75 New 32

RANCHO MIRAGE/PALM DESERT/INDIAN WELLS/LA QUINTA

207 Resales 235 New 52 2006 Resales 292 New 79

INDIO/COACHELLA/EAST TO THE COLORADO RIVER

2007 Resales 95 New 52 2006 Resales 141 New170

Mortgage Rates Fall To Lowest Level in Four Weeks

Primary Mortgage Market Survey showed the 30-year fixed-rate mortgage with an average of 6.07%. The 15-year fixed-rate mortgage averaged 5.68%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.78%. The 1-year Treasury-indexed ARMS averaged 5.74%.

Frank Nothaft, Freddie Mac Vice President and Chief Economist, described this week's events. "The new year has begun with mixed signals on the direction of the economy and mortgage market. On the downside, the Institute for Supply Management's index of manufacturing activity showed significant contraction in this sector, perhaps a harbinger of a more substantial economic slowdown to begin this year. On the upside, the Conference Board reported that consumer confidence rose in December for the first time in five months, with more positive expectations for the next six months. Furthermore, interest rates have moved lower with average 30-year fixed-rate mortgage rates down about a tenth of a percentage point, the lowest in four weeks."

The 30-year loan started at 5.91% and finished at 5.66%. The 15-year loan began at 5.45% and finished at 5.17%. The money market fund began at 3.43% and finished at 3.40%. The $10,000 money market fund started at 3.68% and finished at 3.66%. The one-year CD started at 4.35% and finished at 4.32%.

Tax Law Changes for 2007

Tax Law Changes for 2007 ReturnsIn letter FS-2008-1 on Jan. 2, 2008, the IRS explained a number of changes that affect 2007 tax returns.At the end of December, Congress increased the AMT exemption to $66,250 for a married couple filing jointly and $44,350 for single persons and heads of households. For the approximately 13.5 million taxpayers who file the forms affected by the AMT change, they should delay filing until February 11, 2008. After that date, the IRS computers will be updated and able to process AMT calculations for tax returns.Other changes for 2007 affect the tax extenders such as the educator expense deduction and tuition and fees deduction. These are now in their normal places on the IRS forms.

Previously, the tax extenders were passed so late in the year by Congress that they were not on the regular form.Finally, the IRA contribution limits and many other items are increased. 401(k) elective contributions increase to $15,500. These limits and the additional $5,000 "catch up" amount for persons age 50 to 70½ also apply to 403(b) plans maintained by most nonprofits.

Any gift to charity of cash now requires a written confirmation. This can be a bank record or a written receipt from the charity showing the date and amount of the gift. Receipts are also required for gifts over $250 to charity or for a "quid pro quo" gift. This is a gift over $75 with benefit received from a charity. A typical example of this "benefit received" gift is a donor who pays $100 for a seat at the annual charity gala dinner. The value of the dinner will reduce his or her charitable deduction.Mileage rates were also adjusted in 2007.

The business use rate is 48.5 cents, the medical travel rate is 20 cents per mile and charitable mileage rate 14 cents per mile.Savings with Tax CreditsIn FS-2008-2 the IRS encouraged all taxpayers to take available credits. The credits are particularly valuable, since they reduce taxes dollar-for-dollar.

The earned income tax credit (EITC) is available for working families with incomes under $39,783 or childless workers with incomes under $14,590. Dependent children under age 17 will qualify for a credit of up to $1,000 per child. This is in addition to the $3,400 exemption.If your child is a dependent and under age 13, then you may qualify for the child and dependent care credit. For parents with students in college, there is a Hope credit for the first two years for students enrolled at least half-time. There also is a lifetime learning credit. Education credits are explained in IRS Publication 970.

The Saver's credit is available for single persons with incomes under $26,000 and married couples with incomes under $39,000. By contributing to an IRA before April 15, 2008, the Saver's credit may be claimed.

With the increase in oil prices and energy costs, many home improvements could qualify you for the energy-saving tax credit. Insulation, windows and doors, water heaters, heat pumps and other components may qualify for the $500 credit. In addition, there is a 30% credit for the cost of photovoltaic or solar water-heating units.

eFiling and Free FileDuring the last filing season, over 77 million taxpayers used the eFile system to send in their returns. Many CPA's and other tax professionals are now encouraging their clients to use electronic filing. In addition, taxpayers who complete their returns with software from a commercial provider may also use the eFile system. The eFile returns generally benefit from the error checking in the tax preparation software and are likely to have fewer mistakes.

Approximately 95 million taxpayers will also be eligible for IRS FreeFile. The FreeFile online tax program is a joint venture between the IRS and a number of commercial software tax software providers. Individuals with adjusted gross incomes of $54,000 or less are eligible. The FreeFile program is available on www.irs.gov.Editor's Note: To access any of the extensive information on the IRS site or to use FreeFile, a person should visit www.irs.gov. There have been millions of email messages to individuals claiming to represent the IRS that are fraudulent. The IRS does not use a .com, .org, .tv, .cc or any other address for its official site. The safe and sure way to access the site is to type in www.irs.gov.