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gmakerley · Posted: Sun Nov 01, 2009 1:34 pm Post subject: the latest in tax credit news

Here's the latest information on the $8000 tax credit for first time homebuyers.

A new proposal by Senate Democrats would extend the benefit, and some people who already own homes could also claim a benefit, if this proposal becomes law.

Existing homeowners, under this proposal, who buy a new home, would qualify for a $6500 credit if they have lived in their prior residence for five years. The first time homebuyers credit, due to expire on November 30, would also be extended under this proposal, to homebuyers under contract by April 30, 2010, with an additional 60 days allowed to close the deal.

Also, income limitations, currently at $75000 for individuals and $150000 for couples, would be increased to $125000 for individuals and $250000 for couples. Naturally, any bill passed by the Senate would also need to be ratified by the House of Representatives.

This is good news, though incomplete. We wish to see a definitive bill passed extending the first time homebuyers credit; whether or not current homebuyers should obtain such a benefit is, of course, up for debate, and there is a great deal of mixed feelings in that regard.

A reminder: this is a good time, again, to let your congressional delegation know just how important this tax credit is to you and to the rest of the nation. You can find all of your representatives online and email them asking for their support. Congress people love to hear from their constituents, so please take the time to do this today.

savior70 · Posted: Mon Nov 02, 2009 4:10 am Post subject:

Hi,

This is a very good proposal, I must say. If it is indeed passed into a law, it will no doubt benefit hundreds of homeowners who have not been able to take advantage of the existing tax credit. It's also good to hear that besides the first time buyers, the current homeowners will also be subject to a partial tax credit of $6500. The income limitation is also proposed to be increased by almost $50,000 for individuals. It sounds too good.

But I'd be even happier if this proposal is actually passed into law. We are yet to see the final outcome. But given the mounting pressure on the Govt. from all quarters for an extension of the tax credit, one can sense there's a high chance of this proposal being passed into law soon.

gmakerley · Posted: Tue Nov 10, 2009 12:19 pm Post subject:

well, we've had closure. i haven't really read all the commentaries yet, so i can't comment fully as i'd prefer to do. what we have seen is that first time homebuyers have until april of 2010 to make their purchase in order to qualify for the $8000 (maximum) credit.

the big news, i guess, is that non-first time homebuyers now can qualify for up to $6500 in tax credits when they make a purchase. this portion of the new bill had never been addressed in its earlier incarnations.

in any event, i'm gratified for my customers that the credit has been extended, and i am hopeful that this will be a boon to the industry in general as well. more, later.

riseabove · Joined: 09 Nov 2009 Posts: 277 11.01 Dollars($)

So the purpose of this is to attempt to stimulate the real estate market? Encourage people to buy more properties, by offering them a tax break if they do?

gmakerley · Posted: Wed Nov 11, 2009 2:40 pm Post subject:

at least in part, yes. the tax credit first appeared (if memory serves me well) in 2008. it was then for a maximum of $7500 and repayable over a 15-year period. the new incarnation in 2009 required no repayment, nor does the new extension.

gmakerley · Posted: Sat Nov 21, 2009 1:55 pm Post subject:

so now it is official - President Obama signed the legislation on November 6. in order for a first time home buyer to take advantage of the tax credit, a purchase contract must be in place prior to May 1, 2010, and a closing must take place prior to July 1, 2010. If those conditions are met, the tax credit of up to $8000 will be available.

as for expansion: if a current homeowner wishes to purchase a new primary home, that person(s) may be eligible for up to $6500 as a tax credit. Home buyer who have lived in their current home for five of the last eight years will qualify under this new portion of the legislation. the deadlines on time are the same as with first timers.

in either case, the new home being purchased must be a primary residence. vacation homes or investment properties are not allowed.

the legislation, as it pertains to current homeowners, does not require you to sell your existing home to qualify. if you do retain that home, you could convert it to a vacation or investment property. of course, tax breaks that are in place for that property now, as a primary residence, would no longer be available.

here's hoping that this new measure will continue to stimulate the housing sector.

for any buyers who may have more specific questions, it is advisable to discuss this with your tax advisor, or to go directly to the internal revenue service (irs.gov).

eric1 · Posted: Sat Nov 21, 2009 7:49 pm Post subject:

This tax credit is NOT what the economy needs. People are scrambling to buy ANYTHING so they can get the $8k. Getting deeper into debt.

gmakerley · Posted: Thu Dec 10, 2009 10:21 am Post subject:

time for an update: the IRS has just issued it first formal guidelines for those who will be taking advantage of the newly extended first time homebuyer tax credit.

the most important thing to know is that premature filing will be a problem. sometime before year-end, the irs will publish a revised form 5405, along with instructions; and it will take into account the major changes that cropped up in the legislation enacted last month.

among those changes: claims filed by dependents are prohibited; there are additional documentation requirements not previously needed; income limits have been expanded; and there is a cap on the price of a home purchased.

if you use the old form 5405 to file your claim now rather than waiting, you may find that absolutely nothing will be done, as the irs will be looking for the brand-new version.

to recap, the $8000 first-time homebuyer credit has been extended until april 30 of 2010 for signed purchase contracts, and until june 30, 2010, for the subsequent closings of said contracts. also enacted was a new tax credit for repeat buyers (people who've owned a primary residence for at least 5 consecutive years during the previous 8 years). repeat buyers are subject to the same deadlines as noted above.

a qualified repeat buyer will be able to claim a credit of up to $6500. in any event, the maximum credit available will be 10% of the purchase price at maximum.

members of the armed forces, and diplomatic and intelligence personnel serving in foreign countries will have an extra year to qualify for the credits, until april 30, 2011 for contracts and june 30, 2011 for closings.

compliance under these new rules is required for anyone whose purchase date is after november 6, 2009, the date of the enactment of this new bill. no person under the age of 18, or anyone counted as a dependent on another taxpayer's federal tax return is eligible to obtain the tax credit.

income limitations have been expanded for purchasers. they are $125000 "modified adjusted gross income" for single taxpayers and $225000 for taxpayers filing a joint return. singles with incomes up to $145000 may receive a "phased-down" credit, and joint filers with incomes up to $245000 may also received a "phased-down" credit.

the irs has Q and A on its website that will explain much of what is entailed in the legislation. that site is "irs.gov."

prospective homebuyers and their families have many questions about the tax credit and its workings, their eligibility for it, co-signing questions, etc. much of this information is available at the site. and, of course, we who post here on MortgageFit are ready, willing and able to provide as much information as we can.

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the latest in tax credit news