First Time Home Buyer Tax Credit Extended!

First Time Homebuyer Tax Credit Extended Into 2010! Plus…A New Tax Credit for Certain Existing Home Owners! It’s official. President Obama has signed a bill that extends the tax credit for first-time homebuyers (FTHBs) into the first half of 2010. This program had been scheduled to expire on November 30, 2009. In addition to extending the tax credit of up to $8,000 through June 30, 2010, the extension measure also opens up opportunities for others who are not buying a home for the first time. So Who Gets What? The program that has existed for FTHBs remains intact with the one exception that more people are now eligible based on an increase in the amount of income someone may now earn. Additionally, the 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. 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. Higher Income Caps in Effect 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. Maximum Purchase Price Qualifying buyers may purchase a property with a maximum sales price of $800,000. First-Time Homebuyer Tax Credit – Frequently Asked Questions Here are answers to some commonly asked questions about the tax credit. 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. What is the tax credit for first-time homebuyers (FTHBs)? 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 for the FTHB 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 do I claim the credit? For those taking advantage of the tax credit in 2009, you may choose to either apply for the credit with your 2009 tax return or you may apply for the credit sooner by filing an amended 2008 tax return with Form 5405 (http://www.irs.gov/pub/irs-pdf/f5405.pdf). Can you 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. Examples of this would include a land contract, contract for deed, etc. According to the IRS, factors that would demonstrate the ownership of the property would include: 1. the right of possession, 2. the right to obtain legal title upon full payment of the purchase price, 3. the right to construct improvements, 4. the obligation to pay property taxes, 5. the risk of loss, 6. the responsibility to insure the property and 7. the duty to maintain the property. Are there other restrictions to taking the credit? Yes. According to the IRS, if any of the following describe your situation, a credit would not be due. You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild. You do not use the home as your principal residence. You sell your home before the end of the year. You are a nonresident alien. You 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.) Your home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.) You 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, 2009, 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, 2006, through July 1, 2009. Can you buy a home from a step-relative and be eligible for the credit? Yes. Provided the person you are buying a home from is not a direct blood relative, the purchase would be allowed. Can parent(s) who will not live in the property cosign for a mortgage for their child and the child that is a qualifying FTHB still be eligible for the credit? Yes. Can a separated spouse who has not owned a home for four years qualify for the FTHB tax credit if the spouse has owned a property anytime in the last three years? No. However, the spouse may be eligible for the repeat buyer credit. The best path to take in any situation regarding income taxes is to speak with a professional tax preparer or CPA. So, get on out there today and start shopping.  There is some great inventory, and many great deals waiting to be purchased. Contact us today to discuss this awesome opportunity further.  kjpremier@atproperties.com

$8000 Tax Credit May Now Be Used for Down Payment!

Previously, first time buyers would not be receiving their $8000 credit until filing their tax returns, until now.   The Federal Housing Administration just announced that they would allow lenders to use the first time buyer credit as a portion or all of a buyers down payment at the closing table.

Shaun Donovan, secretary of the U.S. Dept. of Housing and Urban Development addressed a group of Realtors at the NAR mid year meeting and had some other positive things to speak about.  “Since January we’ve seen both home sales moving up and down around a relatively stable number and we are seeing the first signs that the rapid decline in home prices is starting to abate.”  He also commented that the overall market was beginning to stabilize.

This is great news, both as a first time homebuyer, and as a seller looking to sell and move up.  The first time market will continue to purchase, thus allowing the buy up seller to spend in a higher price point.  To read the full story, click here.

To find out if you qualify for the first time buyer tax credit, or to help with pricing your home for a quick sell, contact us today at kjpremier@atproperties.com.

Fall Fun!

Today is Labor Day which officially marks the end of Summer.  For some people this means back to school, and the end of short weeks, and family vacations.  For others, its the beginning of a whole new fun season to enjoy around Chicago land.  Farmers Markets are still in full swing for another 2 months or so, so be sure to check them out, in the city and the suburbs. Fall produce is hearty and brings another fun dimension to your grilling and cooking.  Acorn and Butternut Squash, Apples, Pears, Mushrooms, and Pumpkins, are a few favorites my family enjoys.

Apple and pumpkin picking can be a great way to enjoy a weekend with friends and family, not to mention bringing home some tasty souvenirs.  There are many places around Chicago land that make a day trip to one of these fun country getaways worth the gas.  For a great resource on picking around Chicago land, click here!

And how can we forget Football season?  With the college season underway this weekend, and the Bears beginning their action next Sunday in Indy, there are so many local and state teams to grab the kids and catch a little football action!

Of course, as we begin the home stretch towards the holidays, we mustn’t forget the last flurry of real estate activity.    For the 3rd straight week, interest rates have dropped.  Sales prices are slowly rising, and areas that have been hard hit by plumeting prices are starting to rebound.

With all this positive news and fun to be had, get out there and enjoy the last bit of summer, and welcome Fall with excitement!  To find out about how to take advantage of the real estate market before you settle in for the winter, or if your just want some more fun fall ideas, contact us at kjpremier@atproperties.com.