taxmoms asked:

If you act before July 1, 2009 the government will give you a $7500 interest free loan to have you purchase a home.

Tommy

Lee Keadle asked:




Many buyers have been asking about the tax credit for home buyers coming up this tax year. Although this topic has gotten a lot of coverage in the news, people have gotten really confused about what it is. So, I wanted to clarify some of the misconceptions I’ve noticed when talking to home buyers.

The biggest misunderstanding about this tax credit is that every home buyer does not get it. This credit is only for first time home buyers. But, the good news is that the government usually defines people who haven’t owned a home in 3 years as first time buyers. So, you may not technically have to be buying your first home in order to qualify for this incentive.

Another misconception with this tax credit is that buyers think this credit is free money. Now, everyone knows there is no such thing as free money. The rule that “if it sounds too good to be true, it probably is” applies here. It’s important to note that this is actually a loan from the government to help first time buyers pay their taxes (since it’s assumed that this person will have incurred a lot of extra expenses in buying the home this past year). This tax credit is simply an incentive to help more people be able to buy these homes that are sitting on the market.

The way that it works is that this $7500 tax credit is repaid with your taxes every year at $500 a year. So, again, you will be paying this money back, but it will just be over a period of several years (similar to the loan on your home). But, unlike your home loan, this tax credit is an interest free loan. So, you’ll only be paying back that $7500.

When people realize they’re only postponing paying the inevitable tax money, they often ask if it’s really worth doing. After all, why not just pay it and get it over with? The answer depends on whether you need that money now to use for improvements to the house – such as putting carpet down, painting, or getting plumbing or electrical work done. If you’ve bought a house that is going to require some work early on, this tax credit may be worth it.

There have also been a lot of questions about the time frame the buyer purchased in order to qualify. We’ll be filing taxes in 2009 for the tax year of 2008. So, if you bought the home in 2008, you have the option to use this tax credit.

The last point I’ll mention is that this tax credit does not have anything to do with property taxes. Instead, it’s figured in with your income tax – which is confusing. For example, let’s say you file your 2008 returns and have a tax liability of $15,000 that your company withholds in wages. You would use your $7500 tax credit and pay only $7500 in your income tax. Or, if your company withheld $7500, you would use your tax credit of $7500 and would break even. In this last scenario, you would actually pay nothing this year in income taxes.

Be sure to talk to your CPA (or the person who does your tax work) about this tax credit if you think you may be eligible. Although there is a lot of information about this tax credit on the internet, it’s still important to get professional advice about taxes when filing tax returns. And, he or she should be able to answer any questions you have and give you an estimate as to how the credit will affect your income taxes this year.

Claudia

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

Lee Keadle asked:


Many buyers have been asking about the tax credit for home buyers coming up this tax year.  Although this topic has gotten a lot of coverage in the news, people have gotten really confused about what it is.  So, I wanted to clarify some of the misconceptions I’ve noticed when talking to home buyers. 

The biggest misunderstanding about this tax credit is that every home buyer does not get it.  This credit is only for first time home buyers.  But, the good news is that the government usually defines people who haven’t owned a home in 3 years as first time buyers.  So, you may not technically have to be buying your first home in order to qualify for this incentive.

Another misconception with this tax credit is that buyers think this credit is free money.  Now, everyone knows there is no such thing as free money.  The rule that “if it sounds too good to be true, it probably is” applies here.  It’s important to note that this is actually a loan from the government to help first time buyers pay their taxes (since it’s assumed that this person will have incurred a lot of extra expenses in buying the home this past year).  This tax credit is simply an incentive to help more people be able to buy these homes that are sitting on the market.

The way that it works is that this $7500 tax credit is repaid with your taxes every year at $500 a year.  So, again, you will be paying this money back, but it will just be over a period of several years (similar to the loan on your home).  But, unlike your home loan, this tax credit is an interest free loan.  So, you’ll only be paying back that $7500. 

When people realize they’re only postponing paying the inevitable tax money, they often ask if it’s really worth doing.  After all, why not just pay it and get it over with?  The answer depends on whether you need that money now to use for improvements to the house – such as putting carpet down, painting, or getting plumbing or electrical work done.  If you’ve bought a house that is going to require some work early on, this tax credit may be worth it. 

There have also been a lot of questions about the time frame the buyer purchased in order to qualify.  We’ll be filing taxes in 2009 for the tax year of 2008.  So, if you bought the home in 2008, you have the option to use this tax credit. 

The last point I’ll mention is that this tax credit does not have anything to do with property taxes.  Instead, it’s figured in with your income tax – which is confusing.  For example, let’s say you file your 2008 returns and have a tax liability of $15,000 that your company withholds in wages.  You would use your $7500 tax credit and pay only $7500 in your income tax.  Or, if your company withheld $7500, you would use your tax credit of $7500 and would break even.  In this last scenario, you would actually pay nothing this year in income taxes.

Be sure to talk to your CPA (or the person who does your tax work) about this tax credit if you think you may be eligible.  Although there is a lot of information about this tax credit on the internet, it’s still important to get professional advice about taxes when filing tax returns.  And, he or she should be able to answer any questions you have and give you an estimate as to how the credit will affect your income taxes this year.



Jimmy

michaelstromsteen111 asked:


You might be taking a closer look at becoming a first time home buyer after Congress passed the housing bill recently. The bill includes a few incentives that really make now the perfect time to jump into the market and become a first time homeowner. Of course, the depressed real estate market is enough incentive for quite a few people wanting to take advantage of the lower prices of homes; however, the government is now offering a tax">http://first-time-home-buyer-s.com/firsttimehomebuyer/38/tax-credit-for-first-time-home-buyers-2/”>tax credit for first time home buyers that makes it hard to not jump in. The full tax credit of $7,500 is exceptional as it is obtainable to couples who make no more than $150,000 in joint income, which makes a huge number of people able to qualify.

Quite a few people are feeling that the time is right for them to get active in the housing market, buy their first home and utilize the incentives including the tax credit. The people with the most to offer the market are the first time homebuyer who does not bring additional housing into the market; all they bring is their ability to buy.

The tax credit is appealing to many because it is not something in which you have to apply; it is something you claim when you do your taxes. However, the tax credit does not come without certain requirements and regulations.

The tax credit is based on 10 percent of the sale price of the house with a roof of $7,500. This means that a house that sells for $75,000 or more will qualify for the full $7,500 credit. A house that sells for $65,000 will only qualify for $6,500 credit.

It is also important to note that the tax credit is really more of an interest free loan that has to be paid back over a 15 year period. When you claim the tax credit you will receive the total amount on your taxes and will then have to pay it back over the next 15 years with the total remaining balance due if you sell your home before the loan is paid off. Since there is no interest on the credit it will cost you $502.50 a year if paying back the full $7,500 credit.

There are other incentives available through state programs and private programs such as a lower interest rate for public servants such as teachers, military, police and firefighters. These incentives are available for all, not just first time homebuyers.

Down payment assistance is also available from many lenders; however, the requirements and restrictions are a bit stricter now than they have been in the past. The credit score is very important when applying for a 0% down payment program.

A realtor can and often will point you to more incentive programs than even the ones discussed above. The housing market is defiantly a buyer’s market and for anyone who is considering entering the market now is the best time. To take advantage of the tax credit you will want to close on your new home before July 1, 2009 so you might want to start getting ready now before you lose out or the market changes.



Keith

Karrie Rose asked:


The other day I was listening to a local agent complaining about how quiet the office was – nobody was coming in. “It’s to be expected”, he said, “Everyone is going through the same thing;.”

It frustrates me that people are content to sit and wait for business to come to them. This complacent attitude only translates into missed opportunities.

One of the prime opportunities in our current market is the first time home buyer. This is a cross-section of the real estate market that is ripe for the picking. While seasoned buyers were cashing in during the boom, first timers could barely make the down payment. Now with low interest rates, cheap house prices, plenty of inventory, and government incentives, first time investors are back in the game again.

The trouble is, they’ve been scared off into sitting on the sidelines by the barrage of economic horror stories in the media. The smart realtor will take this opportunity to educate the public. You’ve got time on your hand, use it to your advantage. Spread the word and hold free lectures about buying a home. Outline the steps involved in a home purchase and explain the legal terminology.

Do some number crunching that demonstrates to renters how much house they could get for the same payment. Post current mortgage rates by all major banks. Open their eyes to the different ways they could subsidize their mortgage by renting out rooms in their own home.

Outline the process for obtaining financing and what new buyers can do to maximize their success with lending institutions. Describe how they can obtain credit checks and what information they should have before applying for a mortgage, so they go in confident and prepared.

Explain the different FHA and government-sponsored programs that are available for first time homebuyers. A prime example is the $7,500 interest free loan they can receive from the federal government.

Eligibility requirements include:

- Home must be the first for both spouses (rental properties and vacation homes don’t count).

- The home purchase must be between April 9, 2008 and July 1, 2009.

- Income should not be greater than $75,000 (single) or $150,000 (married)

Once they qualify, the new buyers get a refundable tax credit that basically wipes out $7,500 of the taxes they pay for that year. The catch is that the money has to be paid back at a rate of $500 per year at tax time – with no interest.

Up until now, you’ve been dealing with a cross-section of the market that has heard nothing but negative information about the housing market; it’s your job to turn that around. You may be pleasantly surprised with the results.



Juan

Jerry Clifford asked:


Imagine getting a loan that is 100% interest free for your first home. The federal government has done some revamping of the First Time Home Buyer tax credit, which is exciting news for first-time home buyers. With it, you could save up to $7,500 on your first home purchase. This is an interest free loan that you have 15 years to repay. Add to that falling home prices and you have the chance to buy a home that will repay you with thousands in equity when the market turns around.

If you have owned a home in the past, don’t despair! You may still qualify if that home ownership is 3 or more years behind you. However, if you’re married, you may want to ensure that your spouse also has not owned a home for 3 years prior to your home purchase, as having a spouse who is or has been a homeowner in the last 3 years disqualifies you from the credit. If you’re planning on, say, buying a home with a parent or child, there is still some luck in store: as long as you’re unmarried, the credit can be applied to the party who is a first-time home buyer.

You have to be intending to live in the house you buy to qualify for this credit and have to buy said residence between January 1, 2009 and December 1, 2009. However, if you’ve jumped the gun a little and bought between April 9, 2008 and January 1, 2009, you can still qualify for a tax credit up to 7,500.

There are income limits to this tax credit. If you earn more than 75,000 a year for singles or 150,000 a year for couples, you cannot qualify for the full credit. There is some leeway of 20,000 for people who earn a bit more than the above amounts and you may qualify for a partial credit if this is your case.

This credit is open to a wide variety of real estate. In addition to single family homes, it covers condos, townhomes, mobile homes, houseboats and new construction. If you’re choosing a home that is to be constructed, whether you qualify for the credit will be determined by the settlement date.

The credit must be paid back, but you have 15 years to do so. In the meantime, it will not be accruing any interest charges or late fees.

The First Time Home Buyer Credit is a great way to alleviate some of the expenses involved with buying a home. Using it wisely will mean that you may be able to buy a house sooner than you expected and deal with house purchase costs. It’s only here for a short time, so if you’re looking to buy a home, perhaps now is the best time ever!



Jamie