DC CLOUT "DC Area Real Estate Buzz"

$6,500 New Tax Credit for existing homeowners

The Feds have added existing homeowners to the new tax credit signed on 11/06/09 by President Obama.  

The specifics for existing homeowners.....

A $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.

Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.

Click here for entire program details..

Don't let this opportunity pass. Contact Al at dcrealtor@live.com and begin your home search today..  Don't delay - the pipeline is now clogged with buyers who were trying to make their purchases before the previous credit expired.  For them this is a reprieve, many would have not been able to close by the deadline...

Homebuyers Tax Credits Comparison Chart

click image for larger view....

soruce nar

provided by Al Matlock  dcrealtor@live.com

Federal Housing Tax Credit explained By Chief Tax Economist of NAHB

HUD: Tax Credit Can Be Used on Closing Costs

FHA-approved lenders received the go-ahead to develop bridge-loan products that enable first-time buyers to use the benefits of the federal tax credit upfront, according to eagerly awaited guidance from the U.S. Department of Housing and Urban Development on so-called home buyer tax credit loans that was released today.

Under the guidance, FHA-approved lenders can develop bridge loans that home buyers can use to help cover their closing costs, buy down their interest rate, or put down more than the minimum 3.5 percent.

The loans can't be used to cover the minimum 3.5 percent, senior HUD officials told reporters on a conference call Friday morning.

Thus, buyers applying for FHA-backed financing with an FHA-approved lender that offers a bridge-loan program can get a bridge loan to bring down the upfront costs of buying a home significantly but would still have to come up with the minimum 3.5 percent downpayment.

There remain many sources of assistance for buyers needing help with the 3.5 percent downpayment, including many state and local government instrumentalities and nonprofit lenders.

In addition, some state housing finance agencies have developed their own tax credit bridge loan programs, so buyers in states whose HFAs offer such programs can monetize the tax credit upfront to cover all or part of their downpayment. These programs are separate from what HUD announced today.

The first-time homebuyer tax credit was enacted last year--and improved upon earlier this year--to help encourage households to enter the housing market while interest rates are low and affordability is high. The credit is worth up to $8,000 and is available to households that haven't owned a home in at least three years. The credit does not have to be repaid, and is fully reimbursable, so households can get their credit returned to them in the form of a payment.

Courtesy of Al Matlock Washington DC Realtor for DCClout.com      al@dcclout.com

Applying the Home Buyer Tax Credit to Your 2009 Return

Applying the Home Buyer Tax Credit to Your 2008 Return       Tax Credit Can Be Used on Closing Costs

credit details

To claim the credit as part of your 2009 return, you will need: The standard Form 1040 and Form 5405 for the home buyer tax credit.

1. First begin Form 1040.
   
   
2. Be sure to take note of your adjusted gross income, which you enter on lines 37 of the form. Form 5405 actually requires you to note your modified adjusted gross income, but that affects few people, so most will just use their adjusted gross income.
   
   
3. When you come to Line 69 you'll be asked to enter your tax credit amount. To do that, you'll need to first complete Form 5405. 
   
   
4. Once you complete Form 5405, enter the amount on Line 69, then complete your return.
   
   
5. Attach Form 5405 to your return.

Collecting Your Refund

Any refund for which you qualify will be sent to you

Courtesy of Al Matlock Washington DC Realtor for DCClout.com      al@dcclout.com

Applying the Home Buyer Tax Credit to Your 2008 Return

 Applying the Home Buyer Tax Credit to Your 2009 Return   Tax Credit Can Be Used on Closing Costs

credit details

To claim the credit on your 2008 taxes, you must file an amendment to your 2008 return. To do this you will need two forms: Form 1040X (PDF 365K ) for filing an amended return; and Form 5405 (PDF 257K) for the home buyer tax credit.

You can visit the IRS site using the links, print out, and fill in the forms manually or type into the forms and save them on your computer. Be aware, though, that the 1040X tax form can only be filed in hard copy, and cannot be submitted electronically.

1. First, fill out Form 5405 using the instructions in Determining the Amount of Your Home Buyer Tax Credit. 
   
   
2. Then fill out Form 1040X.
   
   On the 1040X you'll find a section called "Payments." Look for Line 15, "Credits." On this line you have three columns. On the first you list the credits you took in your original filing (for most people, this will likely be zero); on the second you list any new credits; and on the third you list the "correct" amount (that is, what the new amount should be).
   
   
3. If in your original filing you took no credits, you enter a zero in the first column.
   
   
4. In the second column you enter the amount of your credit, which for many people will be the full $8,000.
   
   
5. And in the third column you list the correct amount, which in most cases simply means restating the $8,000.
   
   
6. Add your housing tax credit amount to any other amendments you're making then total all the amendments up. 
   
   
7. On the back of the form, write an explanation of why you're filing the amendment. Here you should explain in 2-3 sentences why you want to take the credit. You should include the day that you closed on the house and mention that you're electing to amend your 2008 return rather than wait until 2009.
   
   
8. Finally, attach Form 5405 to Form 1040X and file your amended return.

Collecting Your Refund

Any adjustment to your 2008 taxes along with any refund for which you qualify will be sent to you. Since the tax credit is fully refundable even if your tax liability is less than the tax credit amount, you get the full value of the credit. That means the IRS will cut you a check for the balance.

Courtesy of Al Matlock Washington DC Realtor for DCClout.com      al@dcclout.com

The Obama Stimulus Package 2009 First Time Homebuyer Tax Credit - Answers!

Applying the Home Buyer Tax Credit to Your 2008 Return       Applying the Home Buyer Tax Credit to Your 2009 Return

Tax Credit Can Be Used on Closing Costs

Credit Details

The new Credit is an $8,000 REFUNDABLE Tax Credit (or up to 10% of the purchase price).

So if the property is $75,000, the credit is only $7,500. (Assume a property over $80,000 for the rest of the discussion).

Refundable means that if your total tax liability in the given year is less than $8,000, the IRS will send a refund for the balance.

Refundability - Why it's Important

Many taxpayers do not have tax liability that exceeds $8,000.

For example, according to the 2008 IRS Tax Tables:

A single filer would need $46,600 in taxable income to have $8,000 in tax liability.

A couple would need $58,600 in taxable income to have $8,000 in tax liability.

Those with less tax liability will in most cases get a refund meaning they get the full value of the credit.

First-Time Homebuyer Definition

Defined as someone who owned another main home at any time during the three years prior to the date of purchase.

For example, if you bought a home on January 15, 2009, you cannot take the credit for that home if you owned, or had an ownership interest in, another home at any time from January 15, 2006 through January 15, 2009.

So if the last time you owned a home was 2005, you are eligible for the credit even though it is really not your “first” home.

For married joint filers, both must meet the 1sttime homebuyer test to take the credit on a joint return.

Income Limits

This means that for singles making over $75,000 and couples making over $150,000, the credit is proportionately reduced as incomes approach $95,000 and $170,000 respectively.

So if a couple makes $165,000, the excess amount is used to create a fraction 15,000/20,000 (.75) times the credit amount. 75% or $6,000 of the credit would be disallowed.

They would still get a $2,000 credit.

The Home

The home must be located in the United States.

Vacation homes and rental properties are not eligible.

For new construction, the “purchase date” is the date you occupy the home. So the move in date must be before December 1, 2009.

Recapture-3 Year Residency

If the home is sold prior to three years of ownership, the tax credit must be repaid.

This is an improvement from the prior credit. That credit needed to be repaid in total over 15 years or the balance had to be repaid on sale.

Other Provisions

This provision is designed to prevent flipping homes in order to get the credit.

The new credit is available to residents of the District of Columbia

Purchasers who utilize state/local revenue bond financing can now use the credit.

Purchasers who bought before January 1, 2009 are still subject to the terms of the repayable credit.

When Can You Claim the Credit.

It can be claimed on your 2008 Tax Return (to be filed by April 15, 2009), an amended 2008 Tax Return, or your 2009 Tax Return.

 Who cannot take the credit

If any of the following:

Your income exceeds the phase-out range. This means joint filers with Modified Adjusted Gross Income (MAGI) of $170,000 and above and other taxpayers with MAGI of $95,000 and above.

You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.

You stop using your home as your main home.

You sell your home before the end of three years.

You are a nonresident alien.

See IRS Form  5405  'First-Time Homebuyer Credit"

source NAR

Courtesy of Al Matlock Washington DC and Maryland Real Estate