Last January, the deadline seemed like a million years away.
But now, those first-time homebuyers wanting to take advantage of the Federal Stimulus Package First-Time Buyer Tax Credit have just over three months to close on their new home in order to qualify. See Kathleen Lynn's story in today's Chicago Tribune for more details.
The prize? A straight $8,000 Federal Income Tax Credit, which can either be taken next year, against 2009 income taxes, or this year, by filing an amended federal return for 2008.
And here in Chicago, it has many of our Team's buyers hustling to locate and close on their new home!
At the moment, Dean's Team Chicago has half a dozen buyers scrambling to locate their new home in advance of the November 30, 2009 closing deadline. Backing out time for home inspection, appraisal, and mortgage approval, a contract targeting a timely closing date would have to be accepted no later than October 10th or so, to allow for adequate processing time.
Considering a short sale property, where the seller's lender takes less than is owed for the home?
Allow extra time - often, short sales take over three months for the lending bank to process. Further, banks considering such short sales, and taking a considerable hit on the money they are owed by the seller, feel little compulsion to rush these sales through in advance of the deadline. Therefore, a short sale offer would need to be accepted by the distressed homeseller, for submission to their lender, right about NOW to have a chance to meet or beat the deadline.
Here on the North Side of Chicago were our Team does a major part of our business, the First Time Homebuyer Credit has been only one reason for the robust sales activity throughout 2009. Another reason - first-time buyers have no current home to sell - a big obstacle to home purchase as existing home resales have been bogged down across the Chicago Area for over a year. Today, those without a current home to sell often have a tremendous bidding advantage over those who have a home, but are having trouble selling it now.
Indeed, over 70% of our Team's Buyer Sales so far this year have been to first timers!
Here is a top-line summary of the Federal First-Time Homebuyer Incentive Program -
- Home buyers must not have owned a home as a primary residence within the past three years.
- The sale of the subject home must close no later than November 30, 2009.
- First-Time Buyers qualify for a maximum $8,000 tax credit, or up to 10% of the purchase price, whichever is less.
- The full credit is available to unmarried buyers with adjusted gross incomes of less than $75,000. For married homebuyers, the income ceiling doubles - to $150,000 Adjusted Gross Income.
- The credit need not be repaid, so long as the house is kept for at least three years (partial repayment may be required, in certain circumstances, if the property is sold sooner than three years after purchase).
- There is a State of IL Program to front the buyers their anticipated tax credit in time for closing, similar to a Refund Anticipation Loan for a standard tax return, but fees, and perhaps a higher rate of interest, would apply here.
- Details on how to receive the credit, either with a 2009 Tax Year Filing, or on an Amended Return for Tax Year 2008, can be found at the IRS Website - irs.gov.
- The refund can exceed your total tax liability for the tax year against which you file for the credit. For example, a taxpayer who is required to pay $5,000 in income taxes in Tax Year 2008 or 2009 would now not be liable for the $5,000 due, plus would receive an additional $3,000 tax refund.
Want the Eight Grand, First-Time Homebuyers? Don't delay . . . or, you will miss out!
Please see our post today via BlogChicagoHomes.com.
DEAN & DEAN'S TEAM CHICAGO