Tax Credit Details

Additional Tax Credit Details from Realtor.org

Frequently Ask Tax Credit Questions

AKHome.info Tax Credit Archives

1)  As long as you stay in your qualified home for 3 years, you don’t have to pay it back the credit back.

2) This is a dollar for dollar tax credit, it is not a deduction.  It will be a reduction in your owed taxes of up to $8,000 for first time home-buyers and up to $6500 for qualified buyers who are repeating the process.  Repeat buyers must have lived in the home at least 5 consecutive years during an eight year period by the closing date of the new home.

3)  The income limit qualification has been expanded to include more buyers.

So hurry if you are planning to take advantage of this home buyer tax credit, you must have a contract in place by April 30, 2010 (with closing to take place by June 30, 2010), so call your real estate agent today!

Tax Credit Details

Additional Tax Credit Details from Realtor.org

Frequently Ask Tax Credit Questions

AKHome.info Tax Credit Archives

But did you know that if you are stepping up and having trouble selling your home, you can still qualify without actually selling the first home.  But. . . you must purchase the second home as your primary residence.   Not too bad.  It is time to move.  . . .  Are you ready?

“There is no requirement that existing homeowners must have sold their home to be eligible for the $6,500 tax credit. However, Weichert encourages existing homeowners who want to benefit from this incentive to move quickly, particularly those who prefer to first sell their current home before purchasing a new one.”  Quoted from : RIS Media – Repeat Buyers Need to Act Fast to Capitalize on Expanded Tax Credit

Tax Credit Details

Additional Tax Credit Details from Realtor.org

Frequently Ask Tax Credit Questions

AKHome.info Tax Credit Archives

1) One of the first thing to do is to locate an agent that you feel comfortable with and that has your best interests in mind. Interview them if you do not know someone personally, even if you are looking to have representation as a buyer.

2) At the same, time find a loan agent. Check with your agent as he or she may have many contacts from mortgage companies and banks. Quite often I find that Mortgage companies may have better programs and lower rates, although not 100% the case.

3) The next thing is to do a budget after getting pre-approved with your loan agent. Many of my buyers says to me, “I am approved for this amount but I don’t want to go that high”. They would like some breathing room.

Below you will find a link for a home affordability calculator for the NAR (National Association of Realtor’s). If you need assistance, have your loan officer, real estate agent, tax advisor sit down and go over your figures with you. Happy House Hunting. Tax Credit deadline to be under contract is April 30, 2010.

Home Affordability Calculator

Top Cities that were least effected by the Recession from Forbes:

“To identify these cities, Forbes magazine ranked the 100 largest Metropolitan Statistical Areas by employment rates, the conventional mortgage home price index, and the average days on the market for properties currently for sale.

The top cities on Forbes list were:”

* Omaha/Council Bluffs, Neb.
* San Antonio, Texas
* Austin-Round Rock, Texas
* Pittsburgh
* Harrisburg/Carlisle, Pa.
* Dallas/Fort Worth
* Rochester, N.Y.
* Houston
* Raleigh/Cary, N.C.
* Baton Rouge, La.”

Quoted from Realtor.org and Forbes, Francesca Levy (11/19/2009)

Heinz Stadium, Pittsburgh, PA

Photo Copyright, 2009 Amy S Myers

Here is what Realtor.org had to say:

“Home sales will increase 15 percent to about 5.7 million units and REALTOR® income will be up 20 percent in 2010, NAR Chief Economist Lawrence Yun told a packed room of REALTORS today in a residential economic update at the 2009 NAR Conference & Expo.

Yun credited the home buyer tax credit with unleashing sales on the lower-end of the housing market this year, bringing up to 400,000 first-time buyers into the market who wouldn’t have bought otherwise. That influx tightened inventories of starter homes, shored up prices, and helped reduce households’ fear over continuing price drops.

This virtuous cycle will continue now that the federal government has extended the credit to mid-2010 and expanded it to make a smaller credit available to repeat buyers and to households with higher incomes. “The key is stabilizing prices and preserving household wealth,” he says.

Yun predicts the supply of homes to stabilize at the historic norm of six to seven months. Homes above $500,000 will remain elevated in the near-term, but that weakness will be offset by a hefty drop in starter-home inventories, which are running at about a five months supply.     . . . ”

Quoted from Realtor.org where you can read more.

Photo Copyright 2007, Amy S Myers

The key to having funds be used for a down payment was finding someone who would fund this amount because it would really have to be a loan.  Well, I actually saw this happen.   I recently had a closing in October, where the buyer for my sold listing actually did use the tax credit for the down payment.   The transaction contained seller’s assist  (where the seller pays part of the closing fees) and the balance due after that was around $4k.  PHFA (Pennsylvania Housing Financing Agency) backed the balance due amount.  The buyer’s have 12 months to pay the approximately $4K amount back as an interest free loan.  The funds to pay back would come after filing their taxes in the spring.   What we were told at the closing is, if they chose not to pay it off it would become a loan and would be a lien against the property.

What I did find out at the closing was the PHFA had run out of funds at the point of this closing so we were not likely to see funding again in the near future from PHFA.  It was a great deal for the buyer because with the seller assist, VA backed funding, and the tax credit funds for the down payment, the cash due at closing from the buyer was “Zero dollars”.   This is extremely rare but apparently it does happen.  The interesting thing was the buyer even had a credit due them at closing but due to the loan rules the buyer was not able to get any money in their pocket after the transaction so it had to go onto the principle of their loan.

Photo Copyright 2007, Amy S Myers

“Obama Signs Extended Tax Credit into Law”-  Expected to contribute approximately $22 billion to the economy, Congress overwhelmingly passed a bipartisan measure this week extending the $8,000 home buyer tax credit to April 30, 2010″. . . . .

More people are now eligible to take advantage of the law, which includes a $6,500 tax credit for buyers who are current home owners and have lived in their home for five of the past eight years.” 

“Which Properties Are Eligible?   – The 2009 First-Time Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Will the Credit Be?   – The maximum allowable credit for home buyers is $8,000. Each home buyer’s tax credit is determined by two factors:

1) The price of the home—the credit is equal to 10% of the purchase price of the home, up to $8,000.

2) The buyer’s income—single buyers with incomes up to $75,000 and married couples with incomes up to $150,000—may receive the maximum tax credit.”  - Quoted from Realtor.org

Additional details on the tax credit

Here is a helpful chart on the new home buyer tax credit changes.  You will be able to compare the first home buyer tax credit plan that expires November 30, 2009 and the new plan that starts December 1, 2009.  Chart supplied by the NAR (National Association of Realtors)

Additional info from CNN.com

“The bill also made more homeowners eligible to claim the credit on their taxes. First-time buyers — those who have not owned a home in the past three years — still qualify for an $8,000 rebate. But now people who want to trade up can also qualify. Those who have owned and occupied a residence for at least five years out of the past eight can claim a $6,500 tax credit if they close on a purchase by the end of June.

“The new version of the tax credit has the potential to stimulate the housing market even more than the old version due to the fact that more people will qualify under the new rules,” said Gibran Nicholas, chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers.   “

“Senate Banking Committee Chairman Chris Dodd (D-Conn.) says Senate Democrats have agreed to extend the first-time home buyer tax credit. The latest version extends the program to home sales signed — not closed — by April 30. Purchasers would have another 60 days to close the sale. The credit will also be expanded to include so-called step-up buyers who have lived in their current home for at least five years.

“The credit would be cut nearly 10 percent to a $7,290 cap. Income eligibility for first-time home buyers would stay the same, but it would rise for step-up buyers to $125,000 for individuals and $250,000 for couples.”

Source: Bloomberg News, Dawn Kopecki and Ryan Donmoyer (10/27/2009)and Realtor.org

Photo Copyright 2007-2009, Amy S. Myers

1)  The tax credit could apply to “step up buyers”, buyers who will be upgrading to a new home.

2)  The “step up buyers” will have had to be in the home they are leaving for at least 7 years

3)  Step up buyers” may have to be in their next home for at least three years.

4)  The tax credit new deadline may extended to sometime in the spring of 2010.

5)  If an executed contract is secured before the deadline, an extension for the credit could be possible for up to 60 days to complete closing.

Here is some additional information from the Associated Press and Realtor.org

“It seems likely that the U.S. Senate will approve a deal to extend the First-Time Homebuyer Tax Credit, but the devil is in the details.

Florida Democrat Sen. Bill Nelson told reporters traveling to Florida with President Obama on Monday that he thought that the extension would be approved, but both senators and representatives are among those who think that there should be some fiscal offset for the cost of the extension.  . . . .

The proposal in the Senate that appears to have the most likelihood of passage would extend the $8,000 credit through March 31, then its value would drop by $2,000 for each of the subsequent three quarters of 2010. This plan was offered by Senate Majority Leader Harry Reid of Nevada and Senate Finance Committee Chairman Max Baucus, a Montana Democrat.”

photo copyright 2007-2009, Amy S Myers