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.

Stimulus still a shot in the arm for First timers

Stimulus bill includes boosts for housing. The American Recovery and Reinvestment Act of 2009 (H.R. 1) increases the first-time homebuyer tax credit to $8,000 and eliminates the repayment requirement for buyers who purchase a home between Jan. 1, 2009 and Dec. 1, 2009 (See how the tax credit works). Other housing measures in the bill include:

• FHA, Fannie and Freddie loan limits - Higher 2008 limits will be reinstated for 2009, except in communities where the 2009 limit is already higher. (Link to NAR estimates.)
• Foreclosure mitigation and neighborhood stabilization – Funding will be given to states and municipalities that are recipients of Community Development Block Grant dollars to stabilize neighborhoods and redevelop abandoned and foreclosed homes.

For more information on this and what this means to you and your investments, contact us today at kjpremier@atproperties.com.

Source IAR

Weekly Mortgage Report and Update

Rates for the Week Ending February 13th, 2009*

30 Yr Fixed Conforming: 5.250% APR 5.320%

5 Yr ARM Conforming: 5.000% APR 5.070%

30 Yr Fixed Jumbo: 8.000% APR 8.070%

5 Yr ARM Jumbo: 5.500% APR 5.570%

Prime Rate is at 3.250%

Mortgage News

Government announcements dominated the financial news this week. Updates on two major programs both were favorable for mortgage markets, and mortgage rates fell modestly during the week.

The most highly anticipated news concerned Tuesday’s speech from Treasury Secretary Geithner on the financial institution assistance plan. This “Financial Stability Plan” involves multiple programs to remove bad assets from banks’ books and to support new lending. It also contains funds to help prevent foreclosures. Investors were sorely disappointed by the lack of details about how the plans would work, however, and they responded to the uncertainty by purchasing relatively safer assets. The stock market plunged, while Treasury and mortgage-backed security markets rallied, pushing rates lower. Geithner suggested that more information about a plan to purchase troubled assets and a comprehensive housing program will be released in the next few weeks.

Later in the week, the House and the Senate agreed on a compromise $789 billion fiscal stimulus plan, which is expected to pass within days. The Obama administration estimates that the plan will create 3.5 million jobs. Both the House and the Senate had passed versions which were larger than the final compromise plan, and the reduction in scope helped mortgage markets. A smaller plan means that the government will have to issue less debt. Unfortunately, one of the spending cuts in the final plan was a provision for a $15,000 homebuyer tax credit, which came with an estimated price tag of $35 billion. Instead, the government will modify an existing $7,500 tax credit, applicable to only first time homebuyers. The primary changes to the tax credit is that it will no longer need to be repaidand the credit was raised to $8,000. The estimated cost of this $8,000 tax break is less than $3 billion.

Mortgage This Week

Inflation data will highlight a full Economic Calendar next week. The Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on Friday. CPI looks at the price change for those finished goods which are sold to consumers. The Producer Price Index (PPI) focuses on the increase in prices of “intermediate” goods used by companies to produce finished products and will come out on Thursday. Industrial Production, an important indicator of economic activity, and Housing Starts will be released on Wednesday. In addition, investors will continue to wait for details from the Treasury on the Financial Stability Plan. Mortgage markets will be closed on Monday in observance of Presidents Day.

Mortgage Report Curtesy of Guaranted Rate

Let your home buying process begin….KJ Premier would be more than happy to put you in contact with a mortgage broker that fits your individual needs.  Contact us at kjpremier.com.

Economic Stimulus Package Reportedly Now Has an $8,000 Tax Credit for First-Time Homebuyers

So, it seems as if the homebuyer stimulus package that we’ve been tracking won’t be quite the Christmas in February that we were hoping for, but it’s still going to be great for first time buyers. Read the latest update here:

An $8000 First-Time Homebuyer Tax Credit has found its way into the economic stimulus package that was approved by Senate and House Representatives. Details of the tax credit within the newly agreed stimulus package have slowly been trickling out of Washington, but it appears that the tax credit won’t be quite as good as once hoped. The thought had been that a $15,000 tax credit to home buyers would be put into the stimulus package, but when the House and Senate came back with different numbers, a compromise had to be reached.

The $8,000 tax credit is just one part of the $789 billion stimulus package that should be on President Obama’s desk very soon to sign. It’s most likely going to help home buyers who purchase a house within the next few months, and early reports from the Associated Press do reveal some details, but not everything about what the tax credit will entail. Some of the details are probably still being fine-tuned as well, so there isn’t a 100% flow of information out of Washington just yet.

The details that have been released thus far are that the $8,000 homebuyer tax credit will apply to any first time homebuyers who purchase homes through July 31st. The start date for the tax credit hasn’t been released as of yet, so it could apply to either January 1st of 2009, or be set on the date that President Obama officially signs the stimulus bill. It looks like President Obama wants to have the bill signed by Monday at the latest, so it may have a February 16th start date for the tax credit, but potential homebuyers who are looking in on this may want to not make any decisions based on the date until it is set in stone.

The fact that this tax credit will only apply to first time homebuyers could serve as a stressor to those who were hoping it would apply to everyone buying a house. Additionally, with the tax credit d$8,000 Homebuyer Credit Lands in Economic Stimulus Package, Replaces $15,000 Creditropping from the original proposal of $15,000 down to $8,000 it also means it is a lot less of a “wind-fall” to people looking to buy a new house in this market. Income restrictions for the credit have not yet been released, but it will be interesting to see exactly what the regulations and stipulations of how this is paid back (or if it is) and exactly who qualifies for it.

Source: Washington Announcement

For questions or more information regarding buying in today’s Real Estate market, contact us today at kjpremier@atproperties.com.