One of the great benefits of owning a home is deducting the mortgage interest you pay each year. But what about rental expenses for investment properties? Painting costs for new renters? In this episode of the podcast, Marc Heller, Partner at Warady & Davis, LLP, discusses real estate tax deductions, how they’re itemized & structured, and how they apply to homeowners.

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Earlier today on Chicago Public Radio’s Eight Forty Eight, David Hanna, President of the Chicago Association of Realtors, explained the dynamics of a recent rebound in sales of single family homes in comparison to condo sales in the Chicago market.

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NEW! In October, FHA loans for condos will have easier guidelines and fewer restrictions for approval.

FHA now allows lenders to determine project eligibility, review project documentation, and certify federal compliance for condo projects.

In accordance with the 2008 Housing and Economic Recovery Act (HERA), FHA is implementing a new approval process for condo projects to insure mortgages on individual units with case numbers assigned as of October 1, 2009.

The lender will be required to retain all legal documents and provide documentation to HUD upon request.

NEW! Right of first refusal is permitted, unless it violates discriminatory conduct under the Fair Housing Act.

Eligibility Requirements
• Projects with 2 or more units carrying hazard, liability and flood insurance
• No more than 25% of units can be used for commercial space
• No more than 10% of units can be owned by more than one investor (applies to developers who rent vacant and unsold units)
• No more than 15% of units can be in arrears (30+ days past due)
• 50% of units must be sold and owner-occupied
• Projects listed as Proposed / Under Construction, Existing Construction or Conversion are eligible

Ineligible Projects
• Condotels
• Timeshares or segmented properties
• Multi-dwelling units
• Commercial properties

About FHA Financing
FHA financing is available for conforming loans (less than $417,000) with down payments as little as 3.5%.

For more specific information, please contact your PERL Mortgage Consultant about these exciting new developments.

For many buyers, condos continue to be a great investment and a sound decision.

Sales Numbers
According to the Multiple Listing Service, 4,217 condos were sold citywide during the third quarter of 2008, down from 6,043 units sold during the same period in 2007. But despite this dip, the average sales price managed to rise more than 8 percent. The average sales price of condos and lofts sold during the third quarter of 2008 rose to $375,699, a 7.8 percent increase from the same period last year.

The rise in the average sales price was due to the dramatic drop in the city’s most affordable units combined with steady sales of million dollar units. Demand for the most expensive units in the area was setady. Sales of units priced at more than $1 million were down by less than 5 percent.

Condo Prices
While housing sales have been in a downturn for the year, local markets are showing stability. According to the Illinois Association of Realtors (IAR), this spring, condos in Cook County sold for 9.6 percent more than they had during the same season in 2007. In fact, condo prices in Chicago were up 5.1 percent in the second quarter. So while there may be an excess of condos for sale, they are the rare part of the market showing positive growth.

First-Time Buyers
Because mortgage guidelines have tightened, the number of first-time buyers has drastically decreased. This has the greatest impact on lower priced inventory. However, the federal housing stimulus package may bring back this market by giving these buyers a $7500 tax credit. Essentially, the credit is an interest-free loan and could give buyers the much-needed boost to make home ownership a reality.

Think Locally
National numbers have reflected a general downturn in recent months, but it’s important to evaluate local markets on a neighborhood level. Talk to your Realtor about areas on the rise, and consult with your loan advisor to discuss new loan products and lending guidelines. Even though our economy is in a period of recovery, remember that many Chicago area condos are affordable, available, and a solid financial investment.