Do You Qualify for the $8000 Tax Credit?

$8000-Tax- Credit-Extension

You are considered to be a First Time Homebuyer if you have not owned a home in the last three years. If you owned a home before, sold it, and rented for three years and a day, you qualify for the First Time Home Buyer Tax Incentive.

The Existing Deadline is Extended as of November 5, 2009

• To continue to spur the housing market, the bill extends an $8,000 tax credit for first time home buyers until May 1, 2010.
• You can go under contract on April 30, 2010 and close later and still get the benefit of this $8000-Tax Credit Extension
• This applies to homes up to $800,000 in price
•  The bill also creates a new credit of up to $6,500 for existing homeowners who buy a new residence if they have lived in their current one for at least five of the last eight years.
• This is a credit that you receive when you do your taxes. It is not up-front money used for down payment.
•  The measure also raises the income limits for those claiming the credit to $125,000 a year for individuals and $225,000 for couples, up from $75,000 and $150,000. After that, the break begins phasing out.

• Please allow me to coach you before you begin the task of finding your dream home. 
• Any good realtor who is busy will need a pre-qualification letter before you go house-hunting. I provide that.
• I have been helping customers for 15 years and know all the potential pitfalls and now, I would like to help you

Please see attached link to read all  of the details of the homebuyer extension             

First Time Homebuyers credit extension.pdf

For starters, if you are a first time homebuyer you should download the "Special Information Booklet". SpecialInformationBooklet.pdf

• This booklet will help educate every first time homebuyer as to what to expect.
• Also see my video series "First Time Home Buyers" and "Mortgage Process". The First Time Home Buyer series will talk about things you need to be doing well in advance of your purchase such as building credit or getting your ducks in a row. The Mortgage Process series talks about events that take place once your loan is in process.

 (We do not need to pull credit at this point in the process. Simply enetr 111-11-1111 for your social security #)

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 For you readers: Here is the time line for the build up to the decision to extending the credit: 

Options for Extending Tax Credit are Now on the Table       Oct 29, 2009

Calculate Your Tax credit for your 2009 Tax Returns  Feb 2009 

    There is still a huge supply of homes at available at discounted prices. Lending institutions still need to get thousands of foreclosures off of their books.

    The process of getting pre-qualified, searching for a home, going under contract and closing will take approximately one to two months. If your intent is to purchase a short sale or a foreclosure, due to bank delays, the process may even take longer so let's get started today!  

The $8,000 Tax Credit Money is not available as down payment money . It is a Rebate from the IRS when you do your taxes the following year.

See Below

FHA Updates Rules on 2009 Tax Credit and FHA Loan Down Payments

The FHA issued a new policy on May 11, 2009 regarding the 2009 First Time Homebuyer's Tax Credit and down payments on FHA loans. For a time after the intitial press release from the Department of Housing and Urban Development, it appeared that home buyers interested in FHA mortgages could get a short-term "bridge loan" to let them take advantage of their 2009 First Time Homebuyer's Tax Credit. This would let FHA borrowers use the loan as a down payment on their homes. But since the initial May announcement, the rules have been revised again and much confusion was the result.

In short; the 2009 First Time Homebuyer's Tax Credit, known to some as the Obama Tax Credit or the Obama First Time Homebuyer's Tax Credit, lets those buying their first primary residence to get a tax break up to $8000. The tax break can only be claimed for purchases made in the 2009 tax year and is paid after the home buyer has filed an income tax return for 2009.

The first round of new FHA rules appeared to let banks offer bridge loans to borrowers so they could use their IRS money as a down payment on an FHA home loan. But further investigation into the rules uncovers a law forbidding banks from offering down payment assistance; these bridge loans could be interpreted as down payment assistance even though the loan is simply to cover the amount of an income tax refund the home buyer would get anyway.

Additional guidance was issued by the FHA at the end of May. The revised rules state FHA home loan applicants can still apply for these bridge loans, but the loans cannot be used to meet the FHA's minimum 3.5% down payment. The money can be used for other expenses or be paid on top of the required down payment; and putting an additional $8000 down on your FHA mortgage beyond the required 3.5% is a good thing. Imagine the reduced interest payments and the money saved over the lifetime of the loan. FHA loan applicants are also allowed to use the bridge loans to pay for closing costs, up front interest payments or other expenses related to closing the deal on an FHA home loan.

For FHA lenders and borrowers alike, May was a very confusing month, but the FHA seems to have sorted out the mess. The rules are clear now--bridge loans are permitted, but the FHA's required down payment must still come from the borrower's own funds. According to the Department of Housing and Urban Development's official site, FHA guidelines are designed to allow people interested in an FHA mortgage to cut their up front costs while requiring the borrower to have a personal investment in the property bought with an FHA home loan.

"In addition to the borrower's own cash investment," a press release at HUD.gov states, "FHA allows parents, employers and other governmental entities to contribute towards the downpayment. Today's action permits the first-time home buyer's anticipated tax credit under the Recovery Act to be applied toward the family's home purchase right away."

This version: Introduced in House. This is the original text of the bill as it was written by its sponsor and submitted to the House for consideration. This is the latest version of the bill.

HR 2801 IH

 As of Right Now, You Need to Purchase Your Home Prior to Dec 1, 2009 to Qualify for the $8000 First Time Homebuyer Tax Credit

Feb. 25, 2009

WASHINGTON — The Internal Revenue Service announced today that taxpayers who qualify for the first-time homebuyer credit and purchase a home this year before Dec. 1 have a special option available for claiming the tax credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year.

Qualifying taxpayers who buy a home this year before Dec. 1 can get up to $8,000, or $4,000 for married filing separately.

“For first-time homebuyers this year, this special feature can put money in their pockets right now rather than waiting another year to claim the tax credit," said IRS Commissioner Doug Shulman. “This important change gives qualifying homebuyers cash they do not have to pay back.”

The IRS has posted a revised version of Form 5405, First-Time Homebuyer Credit, on IRS.gov. The revised form incorporates provisions from the American Recovery and Reinvestment Act of 2009. The instructions to the revised Form 5405 provide additional information on who can and cannot claim the credit, income limitations and repayment of the credit.

This year, qualifying taxpayers who buy a home before Dec. 1, 2009, can claim the credit on either their 2008 or 2009 tax returns. They do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date. They can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately.

The amount of the tax credit begins to phase out for taxpayers whose adjusted gross income is more than $75,000, or $150,000 for joint filers.

For purposes of the credit, you are considered to be a first-time homebuyer if you, and your spouse if you are married, did not own any other main home during the three-year period ending on the date of purchase.

The IRS also alerted taxpayers that the new law does not affect people who purchased a home after April 8, 2008, and on or before Dec. 31, 2008. For these taxpayers who are claiming the credit on their 2008 tax returns, the maximum credit remains 10 percent of the purchase price, up to $7,500, or $3,750 for married individuals filing separately. In addition, the credit for these 2008 purchases must be repaid in 15 equal installments over 15 years, beginning with the 2010 tax year.

The other great incentives in today's market are the historically low rates and that the real estate market has already beeen discounted 40% in some areas.