Housing Tax Credit extended for Military personnel

Many people are probably not aware that the $8000 tax credit for first-time home buyers and the $6500 tax credit for move-up buyers is extended for active members of the military, foreign services, and the intelligence community for one year. For those that qualify, the deadline for getting a home under contract is April 30, 2011, with the deadline for closing on June 30, 2011.
Click here for details:

http://www.federalhousingtaxcredit.com/service_mem.php

New Tax Credit for First-Time Home Buyers

As part of the American Recovery and Reinvestment Act, Congress is now giving a substantial gift to first-time home buyers! If you purchase a home between now and December 1st, 2009 you will receive a tax credit against your income tax due in the amount of 10% of the purchase price of the home. The maximum credit available is $8,000. The biggest change from the previous $7500 tax credit is that the new credit DOES NOT have to be repaid to Uncle Sam! The income limits are $75,000 adjusted gross income for individuals and $150,000 for those filing jointly. The credit is reduced above these limits until they are eliminated for those filing as an individuals whose adjusted gross income is $95,000 or over and $170,000 for those filing jointly. You also need to keep the home three years or you will be subject to recapture on the tax credit.

One of my clients just bought a home and will have a $8000 reduction of his 2009 income taxes. He may even be due a refund! What a help in buying new carpets, decorating, or paying off Mom and Dad for helping with closing costs or the down payment!! This is a boon to buyers and seller alike and I think it will go a long in helping to reduce housing inventory, and therefore reducing the downward pressure on home prices

Call me if you have any questions about this change in the law. REMEMBER, it is only available until December 1, 2009.

GOOD NEWS FOR FIRST-TIME HOME BUYERS!!

On July 30, 2008, President Bush signed H.R. 3221, the Housing and Economic Recovery Act of 2008, a major housing bill providing a tax credit up to $7500 for first-time home buyers. This is for purchases between April 9, 2008 and July 1, 2009. Note that this is a tax CREDIT, not a deduction. Anyone who has who has not had an ownership interest in a principal residence in the previous three years is eligible, up to certain income limits. Those limits are $75,000 for single tax filers and $150,000 for joint filers. The credit is 10% of the purchase price of the home with a maximum credit of $7500. For example, if you purchased a home for $65,000 your tax credit would be $6500. This amount would apply both to single and married taxpayers. If your income exceeds the limits then your credit would be reduced by a formula set by statute. Call me for details. If income exceeds $95,000 (for singles) or $170,000 (for joint returns) then no credit will be allowed. Also, people who obtain financing through mortgage revenue bond (i.e. through a tax-exempt bond-related program offered by a state housing agency) are not eligible. Here’s the rub… this tax incentive must be paid back over 15 years. I.E. 6.67% of the credit must be paid back each year. For a taxpayer receiving the full $7500 credit the yearly payback amount would be $502.50.

If you receive the full $7500 credit and your tax bill is less than $7500, would receive a refund. For example, if your tax bill was $6000 and you purchased a home for $75,000 or more you would receive a refund of $1500.

The only down side of this legislation is that this credit will not be useable as part of a downpayment, since you cannot claim the credit until you file your 2008 taxes in 2009, and the credit is only available for purchases up to July 1, 2009 (That means title transfers before July 1, 2009. So as a practical matter unless you get a tax refund in time to apply it to a downpayment and close on a purchase before July 1st, you won’t be able to use the credit for a downpayment.)

On balance I think this is a wonderful help to first-time buyers and it should be taken advantage of. Ask your realtor about it!