PorchLightScott asked:

This is an exciting first time home buyer benefit being offered by the California Association of Realtors through the Housing Affordability Fund. The Mortgage Protection Program offers insurance payments in the event that a new homebuyer become involuntarily unemployed or accidentally disabled. For more valuable homebuyer education classes be sure to sign up at www.REblueBird.org to receive notifications of upcoming classes.

Allan

Don’t you get it?? asked:


Can you apply for the first time home buyer tax credit before you buy a home and use it as your down payment as long as you close before 7/1/009?
At the bottom of this website you’ll see what I’m talking about..

http://www.federalhousingtaxcredit.com/faq.php#3

If you go the website you will see that the 7500 can be given in this year or the next, and it’s income base so if you are going to get paid more this year 09 then you can claim it on your 08 return.

This is what it says…

If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?
Yes. The law allows taxpayers to choose (“elect”) to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.

Eileen

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

Jeff Ragan asked:


You hear that being a first time home buyer is a good idea. But you’re wondering how can that be? Here you are deciding to go deep in debt!!! Isn’t this going against everything you’ve learned? Once you see the many first time home buyer benefits, then you’ll understand why everyone is telling you this is a good idea.

Consider some of these benefits:

Building Equity Pride of Ownership Deductions





Building Equity



One of the first time home buyer benefits is that you are building equity is something rather than just giving your money away. When you are renting, you aren’t building anything, you’re just paying rent. But when you’re buying a home, you’re beginning to build equity. The down payment is the beginning of that equity. As you pay for your home over the next 15 to 30 years, you will be adding equity with each payment. Plus your home will appreciate in value and that adds equity too.

Let’s say down the road there is an event in your life where you need money now. That equity gives you borrowing power. You can borrow a portion of that equity for that emergency. That equity built in your home makes it possible to take care of that emergency right now. Of course, we should guard our equity, but when there is an emergency, you have options when you build equity. Renting doesn’t give you this option.

Pride of Ownership

Another first time home buyer benefits is pride of ownership. This is a key benefit. When you rent you are limited as to what you can do with your home. But when you own you can decorate any way you want! You can enjoy your music at the volume that is good for you.

Plus you don’t have to hear the fights that go on with your neighbors. Of course, that doesn’t mean when you buy a home that neighbors don’t fight, but when you’re renting you hear everything. Consider too, when you rent, your neighbors may enjoy things you don’t like, for example smoking. When they smoke, that smoke comes into your apartment. Not so when you’re buying.

Pride of ownership gives you a sense a security. You don’t have to worry about the rent going up. You now have something that is yours. Not to mention the extra space you have compared to a rental place.

Tax Deductions

There are first time home buyer benefits that are tax deductions. For example you can deduct the interest you paid for your mortgage on your income tax. Now you’re lowering how much you pay in income taxes. Another deduction is your property tax. You can also deduct that on your income tax. You can see now why some people consider their home a tax shelter. They can use it to lower their income tax.

An additional plus is when you make home improvements. Save those receipts because many of those improvements can also be deducted on your income taxes. Having a record of these improvements can be added to the value of your home. Guess what, those improvements have added equity to your home. I remember adding a humidifier to the furnace of my rental home when I was renting. Unfortunately, when I moved the humidifier had to stay, so that purchase only benefited me while I stayed in the town home I was renting. I couldn’t take it with me.

These are just a few of the first time home buyer benefits. As you search further you may find tax credits available to you. So buying that first home really is a good idea.

Jeffrey Ragan has several years of experience helping people reach their goals and wants to help you learn more about the home buying process and other helpful information on their website, First-Time-Home-Buyer- Solutions.com.



Margaret

The Realtor asked:


You’ve decided to purchase a home and take advantage of the 2009 First-Time Home Buyer Tax Credit. Here’s what you have to do to get your benefit:

Close on your home purchase by November 6, 2009. (If you closed on your home on or after November 7, 2009, please see: How to Get the Extended Home Buyer Tax Creditfor more information.) Ensure that you are a qualified first-time buyer under IRS guidelines, Decide which year to file under, 2008 or 2009, File an amended 2008 return or choose to apply the credit to your 2009 tax return.

Deciding When to Apply the Credit

If you want the benefits of your credit as soon as possible: 

You might choose to file under your 2008 tax year. Since April 15 has already passed, you would have to file an amendment to your return. However, if you’ve already filed for an extension of your 2008 return, then you can simply claim the credit when you submit your return. 

If you anticipate a drop in income next year: 

You can wait to claim the credit as part of your 2009 filing. In some cases the value of the credit might be higher, particularly if in 2008 you qualify for only a partial credit because your income is over $75,000 (single) or $150,000 (joint). 

Your Next Steps

Once you have determined which year to apply the tax credit, you will need to do two things to claim the credit:

Fill out Form 5405 to determine the amount of your available credit, and File an amended return for your 2008 taxes, or wait and apply to credit when you file your 2009 tax return.

Regina