Life has been good the last year or so for first time buyers. With an extra $8000 in their pocket, the prospect of investing hundreds of thousands of dollars in a new home has been a lot better. For those who have waited or weren't ready, what does the future hold? Will the tax credit be extended?
The National Association of Realtors chief economist, Lawrence Yun sure hopes so. He believes an extension of the tax credit is essential to preserving the incentives for financially qualified buyers. Speaking of which, I have noticed that becoming financially qualified is much more difficult than it was a couple of years ago. Banks and other lending institutions are tightening restrictions on mortgage loans to the point that us realtors are pulling our hair out! For those of us who have been in the business more than 15 years, it's simply back to the old days. This is how it used to be. "You mean you actually need to have money for a down payment?!" Uhhh... yea, you do. You also need to prove where that money came from. 100% financing and no documentation loans are all but over. That's what got us into this housing crisis in the first place.
So, back to the real issue... will we see an extension of the tax credit? I don't know, but I sure hope so too. In Omaha, we have seen an impressive surge of first time buyers come into the market. I have even seen a few competing offers on a few listings. I didn't see that happening in a down economy! Those new homeowners are excited about using their tax credit to add on to their home, put in a new kitchen, or invest/save. We have also seen the Omaha metro's inventory go down by 17% in the last year or so, and the entry level market has seen pending sales go up by nearly 50%!!! That's huge people. I'll keep you posted on the tax credit news....
Stay tuned...
Oh By the way... I'm never too busy for any of your referrals!
Showing posts with label stimulus. Show all posts
Showing posts with label stimulus. Show all posts
Monday, October 12, 2009
Monday, February 23, 2009
New Housing Tax Credit Q & A's
It’s time to let everyone know! There is a new Tax Credit for First Time Homebuyers. I’m sure a lot of you have questions about it. Who does it benefit? What does the fine print say? How long will this last? Have no fear… I have the simple answers! Know that this is a phenomenal deal for those who qualify.
Here are some popular Q & A’s:
1)Who is eligible?
A: First time homebuyers are eligible. To qualify, the purchase must be made between January 1, 2009 and before December 1, 2009. In this case, the purchase date means the date of closing.
2)Who is a first time buyer?
A: To qualify, the purchaser must not have owned a principal residence during the 3 year period prior to the purchase. For married persons, the law tests the homeownership history of both people, however unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first time buyer.
3)How is the tax credit amount determined?
A: The amount is equal to 10% of the purchase price, up to a maximum of $8,000.
4)Are there income limits for claiming the tax credit?
A: The credit is reduced for buyers with a modified adjusted gross income of more than $75,000 for single taxpayers and $150,000 for married couples filing a joint return. For those singles making $95,000 and married couples making $170,000, the tax credit is reduced to zero.
5)How does this tax credit differ from the last homebuyer tax credit?
A: The main difference is that this credit does NOT have to be repaid! Remember, the buyer must use the home as their principal residence for at least 3 years or face recapture of the tax credit.
6)How do I claim the tax credit?
A: This is easy! You claim the credit on your federal income tax return. Complete IRS form 5405 to determine your credit amount. Then, claim this amount on line 69 of your 1040 tax form. That is it!
7)Is there any way for a homebuyer to access the tax credit money sooner than waiting for their 2009 tax return?
A: Yes. Prospective homebuyers who qualify are permitted to reduce their income tax withholding. Reducing their withholding (up to the amount of the credit) will enable buyers to accumulate cash by raising his/her take home pay. This extra cash can be used as a down payment if the buyer budgets well. Contact your tax advisor if you are interested in this plan.
Oh By the way... I'm never too busy for any of your referrals!
Here are some popular Q & A’s:
1)Who is eligible?
A: First time homebuyers are eligible. To qualify, the purchase must be made between January 1, 2009 and before December 1, 2009. In this case, the purchase date means the date of closing.
2)Who is a first time buyer?
A: To qualify, the purchaser must not have owned a principal residence during the 3 year period prior to the purchase. For married persons, the law tests the homeownership history of both people, however unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first time buyer.
3)How is the tax credit amount determined?
A: The amount is equal to 10% of the purchase price, up to a maximum of $8,000.
4)Are there income limits for claiming the tax credit?
A: The credit is reduced for buyers with a modified adjusted gross income of more than $75,000 for single taxpayers and $150,000 for married couples filing a joint return. For those singles making $95,000 and married couples making $170,000, the tax credit is reduced to zero.
5)How does this tax credit differ from the last homebuyer tax credit?
A: The main difference is that this credit does NOT have to be repaid! Remember, the buyer must use the home as their principal residence for at least 3 years or face recapture of the tax credit.
6)How do I claim the tax credit?
A: This is easy! You claim the credit on your federal income tax return. Complete IRS form 5405 to determine your credit amount. Then, claim this amount on line 69 of your 1040 tax form. That is it!
7)Is there any way for a homebuyer to access the tax credit money sooner than waiting for their 2009 tax return?
A: Yes. Prospective homebuyers who qualify are permitted to reduce their income tax withholding. Reducing their withholding (up to the amount of the credit) will enable buyers to accumulate cash by raising his/her take home pay. This extra cash can be used as a down payment if the buyer budgets well. Contact your tax advisor if you are interested in this plan.
Oh By the way... I'm never too busy for any of your referrals!
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