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$8,000 First Time Buyer Tax Credit NOW ?? ... here are the GUIDELINES of how my contact GOT IT LAST WEEK ! @@@ UPDATED 5/14/09 ! @@@

By
Real Estate Agent with Bergen County, NJ - RE/MAX Real Estate Limited

@@@ As of today there is still much confusion over this program, so much so that HUD has actually rescinded its statements of the usage as a downpayment advance ! It may be a temporary hold, while they work out the finer points, but unfortunately, as of now it doesnt seem to be available in the way they announced it just 2 days ago. Below is an example of someone who was able to use this option, but again it seems as if it may be on hold - hopefully temporarily ! Please read Jeff Belongers post on the latest conversation with HUD officials on the subject ! " @@@

http://activerain.com/blogsview/1075899/using-first-time-homebuyer-tax-credits-for-the-downpayment-it-s-gone-the-story-of-the-8-000-tax-credit

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Following on from Missy Caulk's post highlighting HUDs announcement that First Time Buyer's can take advantage of the $8,000 tax credit - I wanted to share an experience from one of my contacts WHO ALREADY GOT THIS CREDIT AND USED IT TOWARDS HER DOWNPAYMENT AND CLOSED LAST WEEK !

I know there are some skeptics who questioned whether this advance on the credit would actually make its way to Main Street - well for at least one person I know, it already has !!


Now although this announcement was just made on the 12th by HUD Secretary, Shaun Donovan, this tax advance has actually been in place for many weeks now.

 

Here's an article from May 2nd, and I actually first heard about it in mid April, but wasnt sure how available it was at that time.

http://www.dailyherald.com/story/print/?id=289998

 


However, I just spoke with a contact of mine today, who closed on the purchase of her new home last week, and took advantage of this incentive towards her downpayment !

Here are the things she said you need to know:

This buyer had already filed her taxes earlier in the year - BUT this new loophole allows you to FILE FOR AN AMENDMENT of your 2008 TAXES so you can in fact get the $8,000 Tax Credit for THIS YEAR instead of having to wait until filing for your 2009 taxes.

To do this, here is what I was told you must provide:

  • A copy of your Full Filed 2008 Tax Return
  • The Address of the property you intend to purchase
  • The projected closing date
  • Completed Form 5405, First-Time Homebuyer Credit Form

Once your tax professional has submitted the above information for the credit, it is taking approximately 4 weeks to get the checks to the clients.

THIS FIRST TIME BUYER RECEIVED HER $8,000 CHECK AFTER 4 WEEKS, AND IN TIME FOR HER CLOSING LAST WEEK !!

@@@ PLEASE NOTE : As of 5/14/09 the advance of the $8K is on hold, but you can still amend your 2008 tax return to receive the credit if you have closed already ! @@@

Now, if there is a delay in the closing, it's OK, because as it was relayed to me, you have until November 30th to complete the closing - and use the credit.

BUT !!!!

IF THE PURCHASE DOES NOT GO THROUGH BY NOVEMBER 30TH, AND YOU HAVE RECEIVED THE CHECK ALREADY - OBVIOUSLY YOU HAVE TO RETURN THE CHECK IN ITS ENTIRETY !!!!!

ALSO !!!! ... apparently, these advances are likely to get many RANDOM AUDITS to make sure the advanced checks were issued to First Time Buyers who DID in fact complete their purchase within the guidelines !

And just to confirm, yes this is for the same $8,000 tax credit announced in the stimulus bill from earlier this year - which is a true tax CREDIT and not an interest-free loan !

Again, it is there for those who qualify, and unless they extend the program into next year, it expires later in this year.

Oh and the reason that my contact may have had a jump start on this 'advance' of the tax credit, is that she works for the Department of Finance for a neighboring county, and she got the news as soon as it was in play in our region and filed for it immediately !!!!

... as I understand it,  each state has developed their own guidelines for the use of this credit - SO CHECK WITH YOUR TAX PROFFESSIONAL IN YOUR AREA FOR EXACT CLARIFICATION.

... my contact is one example of how this incentive is a real benefit for first time buyers right now - she got a free $8,000 just because she bought her first house this year !

Now even if this is not available as an ADVANCE at this point, you can still ammend your 08 tax return and get the credit - as I understand right now - unless that ruling changes soon as well...

 

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Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

I think I'm siding with Mr. Burris on this one.  None the less, I'm staying tuned.

 

Hi Sheldon:)

May 14, 2009 03:02 AM
Sheldon Neal
Bergen County, NJ - RE/MAX Real Estate Limited - Maywood, NJ
That British Agent Bergen County NJ

Hi Tom :o) I dont believe that most "Need that money so bad" ... if I was in their position I would want to get that money myself too :o)

... maybe I could do $8,000 of improvements today as opposed to waiting until 2010...

It's still developing thats for sure :o)

Cheers Tom !

Sheldon

May 14, 2009 03:04 AM
Brenda Harmon
Century 21 Beal, Inc College Station, Texas - College Station, TX

Sheldon,

All info I have seen is that you DON'T file till the deal is done.

I am not going to chance it.  I am to fat for stripes.

May 14, 2009 03:12 AM
Sheldon Neal
Bergen County, NJ - RE/MAX Real Estate Limited - Maywood, NJ
That British Agent Bergen County NJ

Hi J-Sard !! - I'm staying tuned too :o) ...lol

Hi Brenda !!! Yep that is the info that MOST people have :o) ... I dont blame you for sitting tight for a while, HOWEVER, there are clearly some that have 'other' info that is allowing them to take advantage before some who are still waiting for developments.  The good part is that it seems like there is more attention to this right now, and that we will likely hear more in the very near future !

Hopefully it will become clearer for us all real soon, and our clients can all take advantage of what seems like a valuable option if orchestrated well !!!

 

May 14, 2009 03:44 AM
Sheldon Neal
Bergen County, NJ - RE/MAX Real Estate Limited - Maywood, NJ
That British Agent Bergen County NJ

 ...oh and LOL @Brenda for the 'Stripes' comment !!!!

May 14, 2009 03:45 AM
Gerry Suarez Jr.
New American Funding NMLS 6606 - Orlando, FL
FL Mortgage Guru

Sheldon,

Teresa above said it best and although NAR, HUD and others are talking about changes the IRS hasn't made any. That said I'm confident what this customer did would technically be termed fraud by the IRS and I wouldn't be comfortable recommending anything like that.

The borrowing/leveraging of the tax credit, prior to actually receiving it, is what NAR and HUD are referring to. The mechanisms to do that are varied and most are not in place. Public sector mechanisms are normally mirroring local government down payment assistance programs and thus requiring home buyer education, stricter income limits and much red tape. While we are all anxious to be able to put this tax credit to work pre-purchase or at closing, instead of post closing, I can say here in Florida we do not yet have any viable options.

Since we are getting too close to the line with all this info I will clearly state I'm no attorney or tax professional. My comments come strictly from being a knowledgeable mortgage lender and I suggest any questions as to the legality of these actions be referred directly to professionals who can legally answer them!

Gerry Suarez, Jr.

Your FHA Loan Pro!

May 14, 2009 03:50 AM
Matt Stigliano
Kimberly Howell Properties (210) 646-HOME - San Antonio, TX

Sheldon - Much has been said in the past 24 hours about the First Time Home Buyer Tax Credit.  I'd like to note a few things:

From the IRS website (FAQ):

Q. I am in the process of buying a home. I expect to close the deal before December 1, 2009. Can I claim the first-time homebuyer credit now? That would allow me to use the refund for a down payment.

A. No. You may not claim the credit in anticipation of a purchase that has yet to happen. Until you have finalized the purchase of your home, which for most purchasers occurs at the time of the closing, you do not qualify for the credit.  IRS news release 2009-27, First-Time Homebuyers Have Several Options to Maximize New Tax Credit, contains details for filing options if the home is purchased after April 15, 2009.

From the Virgina Association of Realtors® website (in response to their announcement of the "bridge loan"):

Yesterday VAR released a flyer outlining details of an FHA program that would allow first time homebuyers to "monetize" the $8000 tax credit to be applied towards a downpayment. We have learned that the Office of Management & Budget has asked FHA to (at least) hold off on implementing this program.

Although there is hope that the FHA program could be a potential way to get the money in the hands of first time buyers before they close, at this point in time, it's not happening.  In fact, HUD has removed reference to it on their site.

It is my understanding that some states are attempting pre-closing help, whether it's loans or outright credits, but so far I haven't had time to do research on any other state.

This is a very difficult issue to say the least.  I have been told incorrect information on this more than once by professionals I know.  The most recent statement I spotted was that there was no paperwork involved.  It does require paperwork (one form).  I've heard this "use the credit now" advice several times and after my own research coupled with calls to the IRS, I can say that this is not possible.  The proposed FHA program would have made it possible (in a sense), but as of right now, that's not happening.

May 14, 2009 05:30 AM
Sheldon Neal
Bergen County, NJ - RE/MAX Real Estate Limited - Maywood, NJ
That British Agent Bergen County NJ

Hi Matt !

Yep there is definitely confusion over this as of right now, and the rescinding of HUDs statements definitely delays any further progress even if temporarily.

However, as mentioned I know that some have used the 'use tax credit early' option and it served them well, however, it would seem that individuals should be EXTREMELY cautious at this point as to what they are told by their tax professionals.

Thanks for the update Matt !

Sheldon :o)

May 14, 2009 05:37 AM
Celeste "SALLY" Cheeseman
Liberty Homes - Mililani, HI
(RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE

Goodness....sticky situation huh?  Get a second opinion on the tax pros I would say....even better ....get a second opinion on loan co's too. geez.

May 14, 2009 05:46 AM
Heather Goodwin
Licensed by the Louisiana Real Estate Commission - Shreveport, LA
Results That Move You

Hi Sheldon,

I have read your post and every comment.  It is my understanding, too, that the home purchase must be closed before filing an amended tax return for the $8,000 credit.  That is confirmed by the IRS statement that Matt posted.  The fact that you know of one person who got the credit before closing does not make it legal, and it is irresponsible to make it sound that way.

Please consider updating your original post as it seems some AR members who are reading it are NOT reading the ensuing discussion in the comments.  It won't benefit anyone if agents are giving incorrect information to their clients.

May 14, 2009 06:33 AM
Sheldon Neal
Bergen County, NJ - RE/MAX Real Estate Limited - Maywood, NJ
That British Agent Bergen County NJ

Sally - Sticky indeed !!! And such a shame that there is clear miscommunication from the supposed Govt entities who dictate these options !

Hi Heather ! I actually already updated the title, and the opening statement, added more caution to the content,and put a link to Jeff's post so there was no confusion as to how careful we need to be when digesting information we read. Also, There is no fact that states that what the person in my post did was illegal - like many comments here - we dont know the full story, and I dont know if there was something left out in her transalation of her transaction. She also works for a Government Agency !!! So I would also be careful as to make statements her transaction was not legal !! ...we simply dont know at this point :o( The announcement actually came AFTER many of the commenters, which is why I also reblogged Jeff's update earlier.

I'm even more confused myself now than I have been for weeks on this subject !!!

... again, we will hope for a clearer explanation VERY soon !

May 14, 2009 07:29 AM
Dan Magstadt
Paramount Residential Mortgage Group, Inc - Lake City, FL

Interesting info Sheldon...I'm definitely keeping my ears open in regards to all this - This could be huge in today's RE climate!!

May 14, 2009 07:29 AM
Sheldon Neal
Bergen County, NJ - RE/MAX Real Estate Limited - Maywood, NJ
That British Agent Bergen County NJ

AGAIN - PLEASE NOTE THAT IT APPEARS THAT WHAT THE PERSON IN THIS POST WAS ABLE TO DO, MAY INDEED NOT BE AVAILABLE AS OF THIS MOMENT IN TIME

There is much talk today about this being 'in the works' and if so it would be great, but as of now - I suggest we all just sit tight and see what OFFICIAL announcements are made - and how long they STAY announced !

May 14, 2009 08:37 AM
Valerie Osterhoudt
Johnson Real Estate, Inc. - Cromwell, CT
ABR, Cromwell, CT Real Estate ~ 860.883.8889

Sheldon.. My question is how would this work?  Would it be a bridge loan.. and who would be funding this?  Doesn't make sense to me.

valerie osterhoudt

May 14, 2009 11:19 AM
Anthony Stokes-Pereira
Better Homes and Gardens Rand Realty - Nanuet, NY
Realtor

Hi Sheldon;

Great Post with very important information, thank you for sharing.

May 14, 2009 01:54 PM
Gail Robinson
William Raveis Real Estate - Southport, CT
CRS, GRI, e-PRO Fairfield County, CT

Sheldon - So many changes are being made and there is so much confusion.  I'm going to see how this all shakes out next week.  It's so annoying to have officials at HUD and our experts at NAR say one thing and then rescind their comments a few days later.  I'm not sure when information is safe enough to send out to my clients now.  I like to get news to them as soon as I know it, but I don't want to say, "Oh, never mind." a few days later.  This affects our credibility.  Thank you for posting this.

May 14, 2009 02:34 PM
Jay Badru
Keller Williams Realty Cityside - Atlanta Naval Air Station, GA
Certified REO/Short Sale/Foreclosure Specialialist

Sheldon,

 I received the same info from one of our lender on May 13, 2009 by 3pm ET. Next morning the lender send us a note that HUD has rescinded the program with no reason. I was kind of dissaponited. I hope HUD come up with something alternative.

Thanks for sharing

May 15, 2009 03:29 AM
MeLisa Minter, Realtor
Minter Real Estate Services - Taylor Lake Village, TX
Bay Area Houston Real Estate Agent

Surely this issue can't be this confusing.  I hope HUD, FHA, Secretary Geitner and whomever else, gets this worked out.  Like one of the previous post stated, if you want to scare buyers back into their lull, then this is certainly the way to do it.

Buyers are not going to be as anxious to purchase using the $8,000 tax credit if the very people that came up with the idea cannot figure out how and when the tax credit should be used. 

The last thing we need is more confusion with an industry that's already on life support.  I hope that the $8000 tax credit stays in play. I really prefer that the credit be claimed after the home purchase, because if it's claimed before the home purchase and actually received by the "First-time buyer," then who nows what kind of mess we are setting ourselves up for two years from now.

May 15, 2009 04:40 PM
Shane Persinger
Bell Real Estate - Eugene, OR
Realtor/Broker, GRI

would this work for teachers looking to buy a 2nd home?

Jul 08, 2009 08:12 PM
Sheldon Neal
Bergen County, NJ - RE/MAX Real Estate Limited - Maywood, NJ
That British Agent Bergen County NJ

Hi Shane - the rules changed a number of times since this post, so I would check with your accountant as the the current available uses for the $8000 tax credit.

Jul 09, 2009 12:26 AM