Beginners Guide to Forex

What is Foreign Exchange?

The Foreign Exchange market, also referred to as the "Forex" or "FX" market, is the largest financial market in the world, with a daily average turnover of approximately US$1.5 trillion. Foreign Exchange is the simultaneous buying of one currency and selling of another. The world's currencies are on a floating exchange rate and are always traded in pairs, for example Euro/Dollar or Dollar/Yen.

Where is the central location of the FX Market?

FX Trading is not centralized on an exchange, as with the stock and futures markets. The FX market is considered an Over the Counter (OTC) or 'Interbank' market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network.

Who are the participants in the FX Market?

The Forex market is called an 'Interbank' market due to the fact that historically it has been dominated by banks, including central banks, commercial banks, and investment banks. However, the percentage of other market participants is rapidly growing, and now includes large multinational corporations, global money managers, registered dealers, international money brokers, futures and options traders, and private speculators.

When is the FX market open for trading?

A true 24-hour market, Forex trading begins each day in Sydney, and moves around the globe as the business day begins in each financial center, first to Tokyo, then London, and New York. Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night.

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Guide to The 2009 New Home buyer Tax Credit

The 2009 Homebuyer Tax Credit is one of the 10 critical provisions of the American Recovery and Reinvestment Act signed into law by President Obama on February 17, 2009. The purpose of the credit is to encourage the sale of new and existing residential real estate by providing a cash incentive for the first- time homebuyer.

The information in this report is based upon careful scrutiny of the bill, which was enacted in February 2009. Purchasers should consult a tax consultant to verify eligibility and all provisions of the 2009 First-Time HomebuyersTax Credit. The government does not participate in pre-authorization practices for 2009 Tax Credit.

The 2009 bill provides an $8,000.00 tax credit to first-time homebuyers for the purchase and title transfer of a principal residence on or after January1, 2009 and before December 1, 2009.

Unlike the 2008 First-Time Homebuyer Tax Credit, the 2009 credit does not require repayment.

Every dollar of the 2009 first homebuyer tax credit reduces income taxes by a dollar. The credit can be claimed on the purchaser’s 2008 or 2009 tax return in order to reduce the purchaser’s income tax liability.

In the 2008 Homebuyer Tax Credit, purchasers who obtained financing by means of mortgage revenue bonds were ineligible for the $7,500 credit. The 2009 tax credit does not disqualify purchasers using this method of financing.

The 2009 First-Time Homebuyers Tax Credit is deemed a “refundable” credit. If the purchaser’s total tax liability is less than the tax credit, the unused amount will be refunded in a check payable directly to the purchaser. Therefore, if the qualified purchaser’s total tax liability is $6,000 and the tax credit is $8,000, the purchase will receive a check for the balance or $2,000.

The 2009 First-Time Home buyers Tax Credit has filing flexibility.

There are basically four flexible ways for qualified homebuyers to capture the tax credit. For qualified primary residences closed after January 1, 2009, and before December 1, 2009, the credit can be claimed on either a 2008 amended return or on the 2009 tax return filed on or before April 15, 2010.

• If the real estate purchase closed after January 1, 2009, and before April 15, 2009, the tax credit can be claimed on the 2008 return.

• The 2008 income tax filing can be extended until October 15, 2009, but the taxpayer must apply for the extension, which is automatically granted once the application is received.

• If the home was purchased after the 2008 tax return was filed, the filed return can be amended by completing and submitting form 1040x.

• The 2009 First-Time Homebuyers Tax Credit can be claimed on the 2009 tax return filed in April 2010.

Under the program, a first-time homebuyer is defined as a purchaser who did not own another primary residence at any time during the three years prior to the date of purchase.

For example, if primary residence was purchased on January 15, 2009, the purchaser may not take the first-time tax credit if the purchaser owned or had an ownership interest in another home at any time since January 15, 2006.

Therefore, if the last time the purchaser owned a home was in 2005, the purchaser is eligible for the 2009 first-homebuyer tax credit even though the home is not actually the first home the purchaser has owned.

The 2009 First-Time Homebuyer Tax Credit can be claimed on the 2008 tax return filed before April 15, 2009, an amended 2008 Tax Return or on the 2009 Tax Return filed ion 2010. The same flexible options exist for purchasers who file jointly.

The following taxpayers are not eligible to take the 2009 First-Time Homebuyer Tax Credit:

• Purchasers whose income exceeds the bill’s stated phase-out range. Joint filers whose Modified Adjusted Gross Income (MAGI) exceeds $170,000.00 or single filing taxpayers whose MAGI exceeds $95,000.00 are ineligible for the tax credit.

• Transactions must be “arms-length” and do not apply to residences acquired from close relatives, spouses, parents, grandparents, children or grandchildren. Only arms-length acquisitions are eligible for the 2009 tax credit.

• The purchaser must be a resident of the U.S.

The following conditions apply to eligible real estate transactions:

• The first-home must remain the primary residence for three years after the closing date.

• The home cannot be sold before the end of three years. If the home is sold prior to the three-year anniversary of the purchase date, the tax credit must be repaid.

• Eligible transactions must transfer title before December 1, 2009.

• For new construction, the purchase date is considered the date the home becomes occupied by the purchaser, which, in some cases may be differ from the date money is exchanged. That date must be prior to 12-01-09.

To qualify as a Principal Residence:

• Generally, the purchaser must spend a minimum of 50% of the time residing at the home.

• The principal residence must either be a condominium, single family detached home, co-operative, townhouse or similar product.

• The residence must be located in the United States.

Additional stipulations of the 2009 First-Time Homebuyer Tax Credit:

• The First-Time Homebuyer Tax Credit is available to residents of the District of Columbia.

• Purchasers who utilize state or local revenue bond financing are eligible for the First-Time Homebuyer Tax Credit.

• If the homebuyer dies within the three-year window, there is no recapture.

• If the property is subject to an involuntary conversion, such as a fire, during the three-year window, no recapture is expected.

• There are provisions and considerations for divorce.

• IRS form 5405 may be used to file for the First-Time Homebuyer Tax Credit.

Clarification of the bill’s income limits and the phase-out stages:

• The 2009 Homebuyers Tax Credit is not available to Single Filers who have Modified Adjusted Gross Income (MAGI) in excess of $95,000.00.

• Single Filers whose MAGI exceeds $75,000.00 enter a “phase out stage.”

• Single Filers whose MAGI is $90,000.00 has an excess of $15,000.00 ($90,000 - $75,000). $15,000/$20,000 (the difference between the Phase Out Start and the Phase out Limit) = 0.75%. 75% of $8,000.00 = $6,000.00. In this instance, the Homebuyer Tax Credit would be equal to $8,000.00 - $6,000.00 or $2,000.00.

• Joint Filers whose MAGI exceeds $170,000 are not eligible for the 2009 First-Time Homebuyer Tax Credit.

* The Joint Filer Phase Out Stage begins with a MAGI of $150,000.00. Use the same process as above to determine the Joint Filer 2009 First-Time Homebuyer Tax Credit.

History of the 2009 First-Time Homebuyer Tax Credit

Congress passed a $7,500.00 first-time Homebuyer Tax Credit in 2008. The program was effective April 8, 2008. The 2008 Homebuyer Tax Credit expired January 1, 2009.

The 2008 Homebuyer Tax Credit required repayment over 15 years. It was a debt, not a benefit. These stipulations do not accompany the 2009 Tax Credit, which provides a substantial benefit and incentive for the first-home buyer.

The new 2009 First-Time Homebuyer Tax Credit was increased to $8,000 or 10% of the Purchase Price, whichever is the lesser amount.

The 2009 Homebuyer Tax Credit is refundable and not a debt. If the qualified purchaser’s tax liability in 2009 is less than $8,000, the government will send a check to the purchaser for the amount of the refund less the tax liability. There is no repayment requirement.

The NAR and the 2009 Homebuyers Tax Credit

The National Association of Realtors (NAR) has more than 1.2 million members and is the country’s largest trade organization. The NAR is involved in all aspects of the residential and commercial real estate industries.

The Association was influential in structuring the 2009 Homebuyers Tax Credit. The NAR’s chief economist, Lawrence Yun, originally advocated that the tax credit should apply to each and every home purchase in 2009, not solely to first-time homebuyers. “A homebuyer incentive is critical to help reduce housing inventory and stabilize home prices. The bigger the incentive, the faster housing can help pull the economy out of the recession. The cost to the Treasury would be far less than the additional costs of a prolonged recession with insufficient housing stimulus.”

The NAR projected that a universal tax credit would have resulted in 555,000 home sales. The NAR projected that if the 2009 Homebuyers Tax Credit were restricted to first-time homebuyers, an additional 202,000 units would be sold.

Many members of the NAR had pushed for the tax credit to be available as a downpayment. The push was based upon the belief that a vested interest in the property adds instant equity and provides the foundation for sustainable homeownership.

Not a downpayment but immediate cash

The 2009 Homebuyers Tax Credit has a provision to help first homebuyers generate immediate cash. Homebuyers who believe they are eligible for all or part of the credit can adjust their income withholding tax from their employer. If the purchaser is self-employed, the buyer can adjust their quarterly estimated tax.

Employees may request a new W-4 and file the form with their employer. The employee’s withholding will be adjusted immediately and the purchaser’s take-home pay would increase accordingly.

NYSAR Reports Tax Credit for Downpayment

At the recent real estate summit entitled Advancing the U.S. Economy at the REALTORS midyear Legislative Meetings & Trade Expo, the U.S. Department of Housing and Urban Development Secretary, Shaun Donovan, reported that under certain circumstances the c(FHA) will permit first-time home buyers to access the tax credit at the closing. These funds can be used as part of the downpayment.

Donovan said; “We all want to enable FHA consumers to access the homebuyer tax credit funds when they close on their home loans so that the cash can be used as a downpayment.” The FHA now offers programs to “monetize” the tax credit through short-term bridge loans.

This exciting development is expected to have immediate repercussions for the slumping residential real estate market.

The 2009 first-time homebuyer tax credit has been instrumental in bringing new homeowners to the closing table. Supply of existing homes far outweighs demand, but with low selling prices, low interest rates and an $8,000 tax credit, it is an excellent time to purchase a first home.

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