first time home buyer – owner loan

December 29, 2010

2008 Housing Stimulus Legislation – First Time Home Buyer Tax Credit

Filed under: Real Estate — Tags: , , , , , , , , , , , , , , — admin @ 8:14 am
Karen List asked:




Who is Eligible

*The $7,500 tax credit is available for first-time home buyers only.
*The law defines a first-time home buyer as a buyer who has not owned a home during the past three years.
*All U.S. citizens who file taxes are eligible to participate in the program.

Who is not Eligible

*First Time Buyers using a state or local housing agency tax-exempt bond mortgage to finance the property.
*Non-resident aliens

Types of Homes that Qualify for the Tax Credit

*All homes, whether single-family, townhomes or condominiums will qualify.
* However, there are several conditions: (a) The home must be used as a principal residence, and
(b) The buyer has not owned a home in the prior three years.
*The Tax Credit includes newly-constructed homes.

Income Limits

*Home buyers who file as single or head-of-household taxpayers can claim the full $7,500 credit if their adjusted gross income (AGI) is less than $75,000.
*For married couples filing a joint return, the income limit doubles to $150,000.
*Single or head-of-household taxpayers who earn between $75,000 and $95,000 are eligible to receive a partial first-time home buyer tax credit.
*Married couples filing jointly who earn between $150,000 and $170,000 are eligible to receive a partial first-time home buyer tax credit.
*The credit is not available for single taxpayers whose AGI is greater than $95,000 and married couples filing jointly with an AGI that exceeds $170,000.

Effective Dates for the Tax Credit

First-time home buyers would receive a $7,500 tax credit for the purchase of any home on or after April 9, 2008 and before July 1, 2009. To qualify, you must actually close on the sale of the home during this period.

Tax Credit is Refundable

*A refundable credit means that if you pay less than $7,500 in federal income taxes, then the government will write you a check for the difference. (a) For example, if you owe $5,000 in federal income taxes, you would pay nothing to the IRS and receive a $2,500 payment from the government. (b) If you are due to receive a $1,000 tax refund from the government, your refund would grow to $8,500 ($1,000 plus $7,500 from the home buyer tax credit).
*If you purchased the home in 2008, the tax credit is taken on your 2008 tax return.
*If you buy in 2009, you have the option of taking the credit on your 2008 or 2009 tax returns.

Payback Provisions

*The tax credit is an interest-free loan that must be repaid over 15 years.
*The minimum repayment amount must be 15 equal annual installments. For example, if the credit amount is $7,500, then the home buyer must repay a minimum of $500 each year for 15 years.

ALSO: On July 30, 2008, President Bush signed into law a new housing reform bill designed to help stimulate the recovery of the housing industry.NOW is the time to take advantage of existing home buying assistance programs before they expire later this year.

Two important changes are:

1. All government-sponsored zero down payment assistance programs are eliminated as of October 1, 2008.To be eligible for these programs, all home loans would need to be approved by September 30, 2008.
2. The minimum down payment for Federal Housing Administration (FHA) loans, the largest purchaser of mortgages in the United States, would increase from 3 percent to 3.5 percent after October 1, 2008.

Veronica

June 9, 2010

The First Time Home Buyer Tax Credit – How it Works

Filed under: Real Estate — Tags: , , , , , , , , , , , , , , — admin @ 4:21 pm
Nick Piscitelli asked:




Well, the market is all abuzz over the Housing and Economic Recovery Act of 2008′s new $7,500 Federal Tax Credit for First Time Home Buyers. And well it should be! Right now, buyers should be out there buying! Rates are low, there is an excessive amount of inventory to choose from, and with this new tax credit it is clear that the time to act is NOW! But everyone seems to have a different idea about what this credit is all about. I’ve written this article to highlight this new tax credit and shed some light on exactly what the benefits are to the First Time Home Buyer who takes advantage of this credit. Below are the most common questions I am asked regarding the new credit, along with an easy to understand answer.

Who is eligible for this credit?

The $7,500 credit is available to first time home buyers only (a first time home buyer is defined as a buyer who has not owned a home during the past three years.) If you are a U.S. citizen, file taxes, and fit the definition of the first time home buyer, you are eligible to participate!

Are there any income limitations?

Yes. For a single individual (or head-of-household) the modified adjusted gross income (MAGI) must be less than $75,000. For a married couples filing a joint income tax return, the income limit is $150,000.

Single or head-of-household taxpayers making between $75,000 and $95,000 are eligible for a partial first-time home buyer tax credit. Married couples making between $150,000 and $170,000 are eligible for a partial first time home buyer tax credit.

What if I pay less than $7,500 in income taxes? Do I lose some of my credit?

No! The tax credit is refundable, meaning that if you pay less than $7,500 in taxes, the government will write you a check for the difference! As an example, if you owed $6,000 in federal income taxes, you would pay NOTHING and receive a check for $1,500 from the government. Another great example would be if you are due to receive a refund of $2,000 from the government. That refund would grow to $9,500 (the $2,000 original refund amount PLUS the $7,500 tax credit!)

What are the effective dates?

You must purchase a home after April 9, 2008 and before July 1, 2009. The home buyer must actually make settlement on the home during this time period.

What types of homes qualify for the tax credit?

Single family homes, townhomes, and condominiums all qualify, assuming that the home will be used as the primary residence and the buyer hasn’t owned a home in the prior three years.

Do I have to pay back this credit?

Yes, the credit is basically an interest free loan which will be repaid over 15 years. If you receive the whole $7,500 credit, you will pay it back at $500 per year for 15 years. A nice feature, though, is that the buyer doesn’t start repaying the credit until two years after the year in which they claimed the credit.

What if I sell the home in less than 15 years, before the credit is paid off?

The remaining balance would be due from the profit of the sale of the home. If you don’t earn enough profit on the sale, the balance of the credit payback would be forgiven.

So what are you waiting for? Even when the market is down, home prices will still appreciate more than the stock market! It’s time to get out there and buy the home of your dreams!! Contact your favorite local Realtor and get out there now!

Jean

May 5, 2010

$7,500 Credit For First-Time Home Buyers Due to Housing Recovery Act of 2008

Filed under: Real Estate — Tags: , , , , , , , , , , , , , , — admin @ 2:06 pm
Steve DePalma asked:




The Housing and Economic Recovery Act of 2008 offers some amazing benefits to first-time home buyers. This also applies to some one who has not owned a home in the past three years. This credit is almost too good to be true, so please pass this information on to anyone who is a first time buyer or who is buying for the first time in three years.

The time frame for the purchase to qualify for this credit is from April 10th, 2008 to June 30th, 2009.

The government allows you to take a credit or $7,500 off their tax bill to the IRS, although it must repaid at a later time. In essence, what you are getting is an interest free loan. But note, this is not a current deduction. Instead it is a credit. A credit differs from a deduction. A credit gets taken off the bottom line of taxes owed. A deduction decreases the amount of taxable income. A credit is a much more powerful benefit.

Another benefit of this credit is the timing of when it is being offered. There is a glut of inventory and home prices have dropped significantly. Therefore, it is a buyers market and a great time to buy, especially in light of this new credit being offered to first time home buyers.

The credit can be taken against either your 2008 0r 2009 taxes. The credit is $7500 for a married couple. If you file your tax return as single, then your credit would be $3,750. The credit is 10% of the purchase price of your home, up to a maximum as listed above. The credit begins phase out at $150,000 if married and $75,000 adjusted gross income if single.

This credit must be repaid over an extended period. The taxpayer must pay back the credit over a 15 year period. The taxpayer will pay back the credit pro-rata over that period. On average, the payback would amount to $500 per year for years 2 through 16 following the purchase. An example would be a married couple taxes the tax credit of $7,500 this year. For the next 15 years they would pay back the credit on their tax returns in an amount of $500 per year. So in essence, the credit is the governments way of lending you $7,500 interest free for the next 15 years. You pay back 6.67% of the loan each year subsequent to the purchase.

In addition, the federal government is taking the risk that your home will go up in value. If you sell your home before the end of the 15 year repayment period, and you do not make a profit, you will not be required to payback the remainder of the credit.

In summary, this credit is an interest free loan. It should inspire buyers to stimulate the housing market out of the current stagnation that it is currently in. That was the purpose of this credit. To give buyers an opportunity to purchase a home easier and in the process move the housing market in the right direction. In addition, this should slow down the amounts of foreclosures. This is a great opportunity for both first-time home buyers as well as those who want to “move-up” to something beyond their first home (as long as they have not owned in the past three years.)

Steve DePalma, CPA is a Certified Public Accountant in Breckenridge, Colorado with more than 25 years of experience in Accounting, Real Estate and Investing. To read more articles that I have written on real estate and investing, visit our website at http://www.summitmountainhome.com. Let us help you find your Summit Mountain Home.

Billy

April 25, 2009

Qualify for the First-Time Home Buyer Stimulus

Filed under: Real Estate — Tags: , , , , , , , , , , , , , , — admin @ 1:44 am
Roby Pagong asked:


First time home buyers can now enjoy tax credit. The government is currently offering this. The home buyer can enjoy as much as $8,000 tax credit. However, not everyone is qualified. If you have purchased a property this year, verify if you qualify for the said program. If you want to find out if you qualify, keep on reading.

The initial thing you have to keep in mind about this stimulus is that it is established for the first time home buyers. This is for those who have purchased their principal residence from January 1, 2009 up to December 1, 2009.

As stated earlier, this are for the first time home buyers who have purchased a principal residence during the period indicated. This means that home purchases made in 2008 is not covered by the program. The date of the purchase is the date of the date of the closing, which is the actual transfer of the property ownership. If you acquired the property in a different manner, consult a financial adviser to verify on how you can benefit from this arrangement.

You also have to be a first time home buyer in order to qualify. However, who is the first time home buyer? You are considered as one if you have not purchased a principal property in the last three years. You cannot be qualified as one if you have just purchased a principal property a year or two ago. You can still qualify though if the purchase you made concerns a vacation home or an investment property.

You should also take note of the income limit. The program has set limits as to who can qualify for the said program. For singles, the adjusted gross income should not be more than $75,000. Couples on the other hand, who are joint filers, should not exceed $150,000 on their adjusted gross income.

The tax credit is usually 10% of the value of the purchased property or the $8,000, whichever value is lower. Bear in mind that the tax credit is refundable. This means that you can claim it even if your tax liability is not that much. You should also remember that the said credit can be collected by the government back. This happens if you lose ownership of the property before reaching the third year mark. This means that you should have ownership of the property for at least three years. There are exempted cases though, such as health concerns and divorce.

Do not worry if you have filed your tax return early this year because you can amend it by filling up the 1040x form. It is best to talk to a tax adviser to ensure that all necessary steps are taken to amend your tax return.

As an added bonus, the HUD has authorized buyers with a mortgage insured by the FHA to avail of a short term loan amounting to as much as $8,000. This way, they can make use of the tax credit even if they have not filed their tax return yet.

Now is the best time to purchase a home. The price of the properties and the interest rates are low. Additionally, there are programs like the tax credit offered by the government.



Robin

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