First Time Home Buyer – $8,000 Tax Credit
by Craig Miller on Mar.18, 2009, under All Posts, National
First-time home buyers who purchase a home this year can now take advantage of the stimulus bill’s $8,000 tax credit, the U.S. Department of the Treasury said in a news release on Wednesday.
Unlike the previous $7,500 credit available to this group of buyers, the credit outlined in the American Recovery and Reinvestment Act of 2009 does not have to be paid back — if the home remains the buyer’s “main home” for at least 36 months after the purchase date, according to the Internal Revenue Service’s Web site. First-time buyers, for the purpose of this credit, are those who have not owned a home in three years.
Buyers have to purchase a home before Dec. 1 to be eligible, and the credit can be claimed on a home buyer’s 2008 or 2009 tax return. Tax returns for 2008 are due by April 15, but most taxpayers can get automatic extensions to Oct. 15 without citing a reason. (You must pay any estimated tax liability at the time the extension is filed.) Filing an amended 2008 return after you buy would also be an option for getting the credit sooner.
“For first-time home buyers this year, this special feature can put money in their pockets right now rather than waiting another year to claim the tax credit,” said IRS Commissioner Doug Shulman, in a news release. “This important change gives qualifying home buyers cash they do not have to pay back.”
Buyers can claim 10% of the purchase price, up to $8,000, or $4,000 for married individuals filing separately, according to the IRS’ Web site. The credit starts to phase out for those whose adjusted gross income exceeds $75,000, or $150,000 for joint filers.
The IRS has posted a revised version of the form required to claim the credit, Form 5405, on IRS.gov. Visit IRS.gov’s first-time home buyer page.
“The expansion of the first-time home buyer tax break as part of the president’s recovery agenda gives money to taxpayers when they need it most, while also targeting an important group of buyers,” said Treasury Secretary Tim Geithner. “We view our economic recovery plan, our financial stability plan and now this homeowner affordability plan as three legs of the same stool — an integrated whole that represents our immediate response to the current crisis.
Last year, almost one out of two home buyers bought for the first time, according to the Treasury Department’s news release. The addition of new homeowners helps reduce inventory by filling vacant homes and allowing the sellers of existing homes to move on to another home.
Real-estate industry groups are hopeful that the new credit will have an effect on the housing market. Lawrence Yun, chief economist for the National Association of Realtors, said on Wednesday that the tax credit and other measures to stabilize mortgage rates and housing markets would probably boost home sales by about 900,000 this year. See Economic Report.
The U.S. Department of Housing and Urban Development also announced on Wednesday that it will temporarily increase loan limits for Federal Housing Administration-backed mortgages, also in accordance with provisions in the stimulus. The new FHA limits now go up to $729,750 in high-cost areas. The new limit on FHA’s reverse mortgage product also has been raised to $625,500.
The higher limits are in effect until the end of the year.
New Stimulus Package Signed Into Law
by Craig Miller on Mar.04, 2009, under All Posts, National
By: Weichert, Realtors
For: Weichert WIRE “The newsletter for the Weichert Sales Team”
Dated: February 18, 2009
President Obama signed the American Recovery and Reinvestment Act into law Tuesday afternoon. The $787 billion plan is designed to stimulate consumer spending and create jobs, in order to help families recover and prosper.
Realizing that an economic recovery is contingent upon improvements in the housing market, the package includes provisions that will help attract first-time buyers, reduce inventory, stabilize home values and improve liquidity in the overall mortgage market.
The bill specifically helps real estate in the following ways:
– Increases the first-time homebuyer tax credit to $8,000 and eliminates the repayment requirement.
– Reinstates the 2008 higher loan limits for FHA, Fannie Mae and Freddie Mac.
Both provisions were championed by the National Association of Realtors (NAR), which estimates that the new version of the homebuyer tax credit could stimulate up to 300,000 additional home sales.
Housing Assistance Tax Act Information…
by Craig Miller on Feb.26, 2009, under All Posts, Knowledge, National
From: Perry Gambrell
Published on: February 26, 2009
The single largest provision in the $15.1 billion package of housing tax incentives in the recently enacted Housing Assistance Tax Act of 2008 (the “Housing Act”) is a measure allowing individuals buying their first home to take a tax credit of up to $7,500 of the purchase price. Qualified homebuyers can subtract the credit amount from their federal income tax when they buy a home and even get a refund if the credit exceeds the tax. However, they are then required to pay the credit back over 15 years. The result is that the credit resembles an interest-free loan that must be repaid to the government. Here are the details of the new credit:
• The home must be located in the U.S. and must be the taxpayer’s principal residence (main home). The taxpayer (and the taxpayer’s spouse if married) must not have owned another principal residence in the U.S. in the three-year period before purchasing the new home. Thus, the home doesn’t literally have to be the taxpayer’s first home.
• The home must have been purchased from April 9, 2008 through June 30, 2009, inclusive. Purchases from certain related persons and acquisitions by gift or inheritance don’t qualify. A home constructed by the taxpayer does qualify if the taxpayer moves in from April 9, 2008 through June 30, 2009.
• A special rule allows taxpayers who purchase a principal residence in the first six months of 2009 to treat the purchase as if made on Dec. 31, 2008. This allows the taxpayer to claim the credit for 2008 rather than 2009.
• The credit is equal to 10% of the price paid for the home, up to a maximum of $7,500. The $7,500 maximum credit applies both to individuals and married couples filing a joint return. A married individual filing separately can claim a maximum credit of $3,750.
• The credit is phased out for individual taxpayers with modified adjusted gross income (AGI) between $75,000 and $95,000 ($150,000 and $170,000 for joint filers) for the year of purchase. Taxpayers with modified AGI over $95,000 ($170,000 for joint filers) can’t claim the credit.
• The credit is refundable, meaning that households with incomes too low to owe income tax can benefit from it.
• In the second year after purchase, taxpayers who took the credit must start paying back the credit in equal installments over 15 years, with no interest charge. This works as follows. Suppose a first-time homebuyer purchases a home for $100,000 this coming December and claims the maximum credit of $7,500 on his 2008 tax return. He would then be required to pay back $500 (one-fifteenth of the credit) on his tax return for 2010 and for each of the following 14 years, through 2024.
• If the taxpayer sells the home (or the home ceases to be the principal residence of the taxpayer or the taxpayer’s spouse) before complete repayment of the credit, any remaining credit is due on the tax return for the year in which the home is sold (or ceases to be the principal residence). If the home was sold at a loss to an unrelated person, repayment of the remaining credit is forgiven to the extent of the loss.
• No credit is allowed if: the taxpayer was ever entitled to a D.C. homebuyer credit; the home purchase was financed through tax-exempt mortgage revenue bonds; the taxpayer is a nonresident alien; or the taxpayer disposes of the residence (or it ceases to be a principal residence) in the year of purchase.
Stimulus Checks, Bailouts and Market Stabilization, oh my!
by Craig Miller on Feb.12, 2009, under All Posts
The government is throwing money out left and right. The money they are giving is supposed to be stabilizing the economy. Well, maybe it is helping, but what else could the money be used for that might stabilize the economy even more? Yeah, I am asking you. Any ideas, please comment on this post.
I’m saying, this is BIG money the government is dealing with here! All the bailouts combined will potentially cost $7.5 trillion ($7,500,000,000,000 – written out). To put that astronomical amount of money into perspective… Lets say you make $10 per minute, and you saved every dollar until you had saved $7.5 trillion. It would take you almost 1.5 million years to save that amount!
In addition to the $800 billion pledged to make credit more available, there is an additional $306 billion to bailout Citigroup. October 2008, congress allocated $700 billion to bailout some of Wall Street’s firms by buying up their troubled assets. $29 billion to JPMorgan, $122.8 billion to AIG and the list keeps going. The federal government has planned to buy up to $2.4 trillion in short-term notes. The FDIC feels $1.4 trillion would help guarantee bank-to-bank loans.
Leave a comment on what you think the government should be doing, where they should be giving money, and about this whole financial issue in general…
-
Meta
