NEW Tax Credit Rules - $8000 for Qualified "First-Time" Home Buyers

Not only has the Tax Credit been extended for first-time home buyers... it has also been expanded to benefit current homeowners looking to buy again! Here are some things you need to know for First Time Home Buyers...

FIRST-TIME HOME BUYERS
-----------------------------------

1. Who's considered a first-time home buyer? "The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase" (Legal description provided by NAHB). So, YES... if you've owned a home, you may still qualify for the credit... as long as you haven't owned a home in the past 36 months!

2. What if I'm a first time home buyer, but my spouse has owned a home within the past 36 months? According to the new rules, neither person would benefit from the $8,000 First Time Home buyer tax credit. (However, you may qualify for the $6500 Tax Credit... See the Tax Credit Rules for Current Homeowners.)

3. I'm a single first-time home buyer, but my co-signer (ie: relative, friend) IS a homeowner... can I claim the tax credit? YES! "IRS Notice 2009-12 allows unmarried joint purchasers to allocate the credit amount to any buyer who qualifies as a first-time buyer." (NAHB)

4. Do I have to buy a New or Pre-Owned home to qualify? Either one! A qualified first time home buyer may either build a home or purchase a pre-owned home, as long as it's $800,000 or less. The home may be a single-family detached home, a townhome, a condominium, a manufactured home (also known as a mobile home) or a houseboat... as long as it is used as the Primary Place of Residence (NOT an investment/vacation home).

5. By when do I have to buy my house to qualify? The purchase (your closing date) must fall between January 1, 2009 and (on or before) April 30, 2010. "However, the law also allows home sales occurring by June 30, 2010 to qualify, provided they are due to a binding sales contract in force on or before April 30, 2010." (NAHB)

6. How is the Tax Credit calculated? The Tax Credit is 10% of the purchase price (up to $8,000). For example... purchase a home for $60,000 and receive $6,000. In order to qualify for the full $8,000 you'll need to purchase a home for at least $80,000.

7. How is the Tax Credit paid or applied? If you file (or have filed) your taxes and do not owe the IRS, you may receive the Tax Credit in the form of a refund... a NICE check in your pocket! If you owe the IRS money, your credit will be applied to your unpaid balance first, then you will receive the difference (if applicable) in the form of a refund.

8. Is there an Income Limit in order to qualify for the Tax Credit? Yes... for purchases after November 6, 2009, the income limit (for a single taxpayer) is $125,000. The income limit for married taxpayers filing jointly is $225,000.

9. What do I need to do to claim the Tax Credit... is there a form I need to fill out? In order to claim the Tax Credit, a qualified first-time home buyer (after closing on the home) must fill out IRS Form 5405. No other applications are required and no pre-approval is necessary! Also... the new rule states that you MUST submit a copy of your HUD-1 Closing Settlement Statement along with the IRS Form 5405 as proof of the completed purchase.

If you have other general questions about the Tax Credit, Mortgage Qualifying or Home Finding, feel free to call my cell... 210.378.5987. If you have technical Tax/Tax Credit inquiries, contact your tax adviser. You may also visit the National Association of Home Builders (NAHB) web site for more FAQ's and answers.

http://www.federalhousingtaxcredit.com/faq1.php


This note provided by:

Val J Aranda, CHMS
"Your Certified Home Marketing Specialist"

Own a Piece of Texas: Real Estate Services & Consulting
P.O. Box 760121
San Antonio, TX 78245

Direct: 210.378.5987
E-Mail: Val@ownapieceoftexas.com
Online: www.OwnAPieceOfTexas.com