TAX CREDIT OVERVIEW

Who Gets What?
First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines?
In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

What are the Income Caps?
The amount of income someone can earn and qualify for the full amount of the credit has been increased.
Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

What is the Maximum Purchase Price?
Qualifying buyers may purchase a property with a maximum sale price of $800,000.

What is a Tax Credit?
A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual’s primary residence.

How Much are First-Time Homebuyers (FTH Eligible to Receive?
An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000.

Who is Eligible laceType w:st="on">fortlaceType> laceName w:st="on">FTHBlaceName> Tax Credit?
Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible.

This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.

As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500.

How Much are Current Home Owners Eligible to Receive?
The tax credit program includes a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Can Homebuyers Claim the Tax Credit in Advance of Purchasing a Property?
No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place.

Can a Taxpayer Claim a Credit if the Property is Purchased from a Seller with Seller Financing and the Seller Retains Title to the Property?
Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the taxpayer may file for the credit. Some examples of this would include a land contract or a contract for deed.

According to the IRS, factors that would demonstrate the ownership of the property would include:
1. Right of possession,
2. Right to obtain legal title upon full payment of the purchase price,
3. Right to construct improvements,
4. Obligation to pay property taxes,
5. Risk of loss,
6. Responsibility to insure the property, and
7. Duty to maintain the property.

Are There Other Restrictions to Taking the FTHB Credit?
Yes. According to the IRS, if any of the following describe a homebuyer’s situation, a credit would not be due:

• They buy the home from a close relative. This includes a spouse, parent, grandparent, child or grandchild. (Please see the question below for details regarding purchases from “step-relatives.”)
• They do not use the home as your principal residence.
• They sell their home before the end of the year.
• They are a nonresident alien.
• They are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)
• Their home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
• They owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2005, through July 1, 2008.

Can Homebuyers Purchase a Home from a Step-Relative and Still be Eligible for the Credit?
Yes. As long as the person they buy the home from is not a direct blood relative, the purchase would be allowed.

If a Parent (Who Will Not Live In The Property) Cosigns for a Mortgage, Will Their Child Still be Eligible for the Credit?

Yes, provided that the child meets the other requirements for the tax credit.                          


As always, this information is provided as a guide.  Please consult your accountant or attorney for financial and legal matters.

  

Proposed changes or new guidelines for FHA announced by Donovan on December 2, 2009 include:

— HUD will increase "up front" cash required on a home purchase, giving the buyer more "skin-in-the-game." FHA said it can tap several options, and analysts say it will mean some increase to the current minimum down payment of 3.5 percent.

— HUD might increase the 1.75 percent up-front premium and/or annual mortgage premiums. It is asking Congress to raise annual premiums since that would raise capital with the lowest borrower impact, Donovan said.

— HUD cut allowable seller concessions to 3 percent from 6 percent in a move to limit incentives to inflate appraised values. The move reduces the money the seller can contribute to a buyer's closing costs, discount points and other concessions without impacting the buyer's mortgage.

— The FHA will raise the minimum credit score for new borrowers. The FHA has yet to determine the minimum "FICO" and may factor in the down payment.

  

FishHawk Ranch home inventory continues to decline.  We started with 157 homes active on the market in January 2009 and now down to 128 as of July 17, 2009.  This is good news for sellers in the real estate market.  As inventory declines, prices will start to hold steady since buyers have less to choose from.

  

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FishHawk Ranch Real estate market report for May 2009

Click Here to View FishHawk Report as PDF

  

Short Sale and Foreclosure Seminar: How to Buy and Sell in this Real Estate Market

Thursday, June 11, 2009  6:30 pm
Doors open at 6:00. Limited Seating.
Palmetto Club at FishHawk Ranch

Craig Beggins, President of Century 21 Beggins Enterprises, speaks frankly about the benefits and/or difficulties of buying a home or selling a home as a short sale.  Buyers learn how to get the best deal and  what to expect during the process and what happens behind the scenes.  Sellers learn how to minimize credit damage by selling as a short sale to avoid foreclosure.

Print this Guest Pass for admission to the FREE seminar.  Seminar Guest Pass

  

Now is the time to buy investment homes, right?  But you don't have the cash to do it...or do you?

If you have an IRA, you may be in luck!  You can Self Direct your IRA investment into a property!  Here some info on how it works...

Investors Turn to Self-Directed IRAs | RISMedia
How to Tap Your Retirement Assets to Achieve Real Estate Dreams | RISMedia
Investors Use Their IRAs to Make Home Loans | RISMedia

  

Realtor.com Property Views Increase

Here is a viewing report from one of our listings.  The increase in activity is showing up on all of the listings.  Looks like the buyers are coming out! Each bar represents the number of views for one week.

  

First Time Home Buyer Credit

The American Recovery and Reinvestment Act of 2009 expands the first-time homebuyer credit to include purchases made before Dec. 1, 2009.

The IRS announced Feb. 25 that for first time home buyers who purchase in 2009, the maximum credit is $8,000 and can be claimed on a buyer's 2008 federal tax return. If the home purchase closes after April 15, a taxpayer can still claim the credit on a 2008 tax return by requesting an extension of time to file or filing an amended return. News release 2009-27 has more details on these options.

For first-time homebuyers who bought in 2008, the maximum credit is $7,500 and must be paid back over a period of 15 years.

  

FishHawk Ranch Market Report March 2009