Extension and Expansion of the Home Buyer Tax Credit

On Friday, November 6, President Obama signed legislation to extend the $8,000 home buyer tax credit for first-time buyers and add a $6,500 tax credit for repeat buyers who have lived in their home for five of the previous eight years. Income limits are expanded to $125,000 for individuals and $225,000 for joint filers. Households who have binding contracts in place by April 30 will be allowed an additional 60 days to complete their transaction. The legislation places an $800,000 cap on the home sale price.

As always, details are available on my website at
AnyHomes.com.

What is Happening with the First Time Homebuyer’s Credit?

As of November 4, 2009, the Senate and House are working on a compromise measure to extend and expand the $8,000 tax credit for homebuyers.

The homebuyers’ credit — scheduled to expire November 30 — is proposed to be extended to cover homes under contract by April 30 that close by June 30, 2010. Additionally, homebuyers who have lived in their prior residence for at least five years could receive a credit of $6,500.

Income limits for eligibility would be raised, allowing many more people qualify for the program. Under the new legislation, individuals with income up to $125,000 a year and couples earning up to $225,000 would be eligible. The current income limits are $75,000 for individuals and $150,000 for couples. Under both the House and Senate versions, smaller amounts are available to people of slightly higher incomes until the credit phases out.

This is in no way a “done deal,” but at least it looks encouraging. I will update as further details are made available. As always, details of the current plan are available on my website at www.AnyHomes.com.

RECOVERY ACT'S HOMEBUYER TAX CREDIT CAN IMMEDIATELY HELP THOUSANDS OF FIRST-TIME HOMEBUYERS TO BUY A HOME

FHA plan will stimulate new home sales and help stabilize housing market

PRESS RELEASE:

WASHINGTON, Friday, May 29, 2009 - Speaking to the National Association of Home Builders Spring Board of Directors Meeting, U.S. Housing and Urban Development Secretary Shaun Donovan today announced that the Federal Housing Administration (FHA) will allow homebuyers to apply the Obama Administration's new $8,000 first-time homebuyer tax credit toward the purchase costs of a FHA-insured home. Donovan said that today's action will help stabilize the nation's housing market by stimulating home sales across the country.

The American Recovery and Reinvestment Act of 2009 offers homebuyers a tax credit of up to $8,000 for purchasing their first home. Families can only access this credit after filing their tax returns with the IRS. Today's announcement details FHA's rules allowing state Housing Finance Agencies and certain non-profits to "monetize" up to the full amount of the tax credit (depending on the amount of the mortgage) so that borrowers can immediately apply the funds toward their down payments. Home buyers using FHA-approved lenders can apply the tax credit to their down payment in excess of 3.5 percent of appraised value or their closing costs, which can help achieve a lower interest rate. Find out more at HUD's website.

$8,000 Tax Credit for First Time Home Buyers can soon to be use for down payment on FHA loans

PRESS RELEASE:

HUD Secretary Announces Monetization of Tax Credit at NAR Real Estate Summit
WASHINGTON, May 12, 2009

Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, said that theFederal Housing Administration is going to permit its lenders to allow homeowners to use the $8,000 tax credit as a downpayment.

Donovan’s remarks came in an address to several thousand Realtors® gathered this morning at The Real Estate Summit: Advancing the U.S. Economy, a special daylong session at the Realtors Midyear Legislative Meetings and Trade Expo.

Secretary Donovan said that important changes, which the National Association of Realtors® has been calling for, will help consumers purchase a home. “We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a downpayment,” Donovan said. According to Donovan, the FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.

Donovan said the Obama administration plans to further stabilize the housing market. “I do think we have some early signs that the market overall is stabilizing,” said Donovan. “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.”

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Connecticut Real Estate Market Snapshot Gives you the Real-Time Information You Need - for Buyers and Sellers

Other services may provide a generalized, estimated market evaluation of an average home that has the same basic characteristics as your home. However, such an estimate is only one of many pieces of information you’ll need to make the most informed decisions you can when selling your home. Real-Time Market Snapshots also include graphical analysis of important market trends that will place your home evaluation into perspective. These Snapshots give you:

• Real-time data on homes similar to yours in your area that have recently sold or are currently for sale.
• How long specific homes were on the market before they sold, as well as time-on-the-market averages for your area.
• Comparisons of recent sales, new listings and total listings.
• Percentages comparison of asking price to selling price for recent sales.
• Average, median and high/low prices for homes that have recently sold or are currently for sale.

This additional information is crucial in helping to price, position and market your home so that you get top dollar when you sell. Sign-up for Market Snapshot now! It’s FREE and only takes a few minutes! If you’d like more detailed market information and my analysis of it, please contact me.

$8,000 Tax Credit for First Time Homebuyers and Those Who Have not Owned for Three Years Preceeding Purchase

Most importantly, the IRS defines a First Time Homebuyer as “Taxpayers who have not owned another home at any time during the three years prior to the date of purchase.” Below is a summary of the credit as revised to 2009. All of this information was gleaned from IRS First-Time Homebuyer Credit Form 5405.

Who Can Claim the Credit?

In general, you can claim the credit if you are a first-time homebuyer. You are considered a first-time homebuyer if:

• You purchased your main home located in the United States after December 31, 2008, and before December 1, 2009.


• You (and your spouse if married) did not own any other main home during the 3-year period ending on the date of purchase.


• If you constructed your main home, you are treated as having purchased it on the date you first occupied it.


• Your main home is the one you live in most of the time. It can be a house, houseboat, house trailer, cooperative apartment, condominium, or other type of residence.

Who Cannot Claim the Credit?

You cannot claim the credit if any of the following apply.

• Your modified adjusted gross income is $95,000 or more ($170,000 or more if married filing jointly).


• You are a nonresident alien.


• Your home is located outside the United States.


• You acquired your home by gift or inheritance.


• You acquired your home from a related person.

A related person includes:

• Your spouse, ancestors (parents, grandparents, etc.), or lineal descendants (children, grandchildren, etc.).


• A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock of the corporation.


• A partnership in which you directly or indirectly own more than 50% of the capital interest or profits interest.

Amount of the Credit

Generally, the credit is the smaller of: $8,000 if you purchased your home in 2009, but only half of that amount if married filing separately, or 10% of the purchase price of the home. You are allowed the full amount of the credit if your modified adjusted gross income is $75,000 or less ($150,000 or less if married filing jointly). The phase-out of the credit begins when your MAGI exceeds $75,000 ($150,000 if married filing jointly). The credit is eliminated completely when your MAGI reaches $95,000 ($170,000 if married filing jointly).

Repayment of Credit For Homes Purchased in 2009

You must repay the credit only if the home ceases to be your main home within the 36-month period beginning on the purchase date. This includes situations where you sell the home, you convert it to business or rental property, or the home is destroyed, condemned, or disposed of under threat of condemnation. You repay the credit by including it as additional tax on the return for the year the home ceases to be your main home. If the home continues to be your main home for at least 36 months beginning on the purchase date, you do not have to repay any of the credit.

If you and your spouse claim the credit on a joint return, each spouse is treated as having been allowed half of the credit for purposes of repaying the credit.

Exceptions. The following are exceptions to the repayment rule.

• If you sell the home to someone who is not related to you, the repayment in the year of sale is limited to the amount of gain on the sale. (See Who Cannot Claim the Credit for the definition of a related person.) When figuring the gain, reduce the adjusted basis of the home by the amount of the credit.


• If the home is destroyed, condemned, or disposed of under threat of condemnation, and you acquire a new main home within 2 years of the event, you do not have to repay the credit.


• If, as part of a divorce settlement, the home is transferred to a spouse or former spouse, the spouse who receives the home is responsible for repaying the credit. If you die, repayment of the credit is not required.


• If you filed a joint return and then you die, your surviving spouse would be required to repay his or her half of the credit.

All of this information along with links to additional information is available on my website at AnyHomes.com.

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