TAX CREDIT OVERVIEW Who Gets What? First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000 Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount. Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years. Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount. What are the New Deadlines? In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010. What are the Income Caps? The amount of income someone can earn and qualify for the full amount of the credit has been increased. Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible. What is the Maximum Purchase Price? Qualifying buyers may purchase a property with a maximum sale price of $800,000. A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual's primary residence. How Much are First-Time Homebuyers (FTHB) Eligible to Receive? An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000. Who is Eligible fort FTHB Tax Credit? Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible. This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible. As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500. How Much are Current Home Owners Eligible to Receive? The tax credit program includes a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years. Can Homebuyers Claim the Tax Credit in Advance of Purchasing a Property? No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place. Can a Taxpayer Claim a Credit if the Property is Purchased from a Seller with Seller Financing and the Seller Retains Title to the Property? Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the taxpayer may file for the credit. Some examples of this would include a land contract or a contract for deed. According to the IRS, factors that would demonstrate the ownership of the property would include: 1. Right of possession, Are There Other Restrictions to Taking the FTHB Credit? Yes. According to the IRS, if any of the following describe a homebuyer's situation, a credit would not be due: Can Homebuyers Purchase a Home from a Step-Relative and Still be Eligible for the Credit? Yes. As long as the person they buy the home from is not a direct blood relative, the purchase would be allowed. If a Parent (Who Will Not Live In The Property) Cosigns for a Mortgage, Will Their Child Still be Eligible for the Credit? Yes, provided that the child meets the other requirements for the tax credit. Call me with any questions and have a great weekend!! Carney Williams 610-476-1109 or 610-459-2209 visit us at our websites http://www.findwestchesterhomes.com and http://www,carneywilliamshomes.com
What is a Tax Credit?
2. Right to obtain legal title upon full payment of the purchase price,
3. Right to construct improvements,
4. Obligation to pay property taxes,
5. Risk of loss,
6. Responsibility to insure the property, and
7. Duty to maintain the property.
Corona del Mar Properties - Corona del Mar, CA
Lebanon, TN
I have a few thoughts on this before we all start popping the corks in the champagne bottles.....
Nov 06, 2009 05:36 AM
REMAX Integrity - Kathleen Carney - Chadds Ford, PA
Yes, it great for all of us!! And not just the first time home buyers, is hugh for us agents. ... : )
Nov 06, 2009 05:44 AM
REMAX Integrity - Kathleen Carney - Chadds Ford, PA
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almost 15 years ago
“My new employer is picking up the cost of my relocation” you say? Let’s rethink this statement for a moment. If your new employer is picking up the tab for your relocation, let’s contemplate the lower actual salary level that was likely negotiated compared to the increased salary that could have likely been negotiated in the opposite scenario where a local full service real estate group with a relocation expert is procured on your own to manage the sale of your house, locate temporary housing if necessary, find a capable Realtor to locate your new destination home, and provide you with contacts such as a mortgage company to finance the purchase of your new house, movers and cleaners. After all, regardless of whether a relocation company is involved, a full service selling or buying real estate agent who is experienced in relocation will help organize these aspects of your move.
When faced with career relocation, management of your move can be a daunting task. At some point, your new employer will likely present you with a relocation package of information provided by a relocation service with a list of benefits that goes on and on; from locating a Realtor to sell your current house and locating a Realtor to help find your destination home, and in some cases a guarantee to purchase your current house if it doesn’t sell. The appearance of having a relocation company handle the entire relocation sounds great however it is important to keep in mind that there is still a minimal commitment of time and effort required when moving. There is paperwork to be completed and you are still the ultimate decision maker which will require you to stay involved in the details, and the redundancy of added (duplicate) contacts can be irritating and time consuming. Most importantly, what is not easily determined is the real cost to you of employer sponsored relocation services in comparison to a scenario where a competent full service real estate group is located on your own to manage the process for you.
When an employer picks up the tab to arrange and outsource all of the relocation tasks, the cost to the employer is typically recaptured by spreading the cost over a statistical average anticipated span of employment, and via a sizeable referral fee charged to the buying and or selling real estate agent and other vendors for which the unfortunate impact is the elimination of top Realtors and vendors from the selection of possible agents available. This is because the top Realtors are generally busy enough so incremental business provided through a relationship with a relocation company isn’t always worth the cost. The end result in many cases is that a client is referred to an agent that they might not have chosen to work with on their own, and ultimately, in many cases is not satisfied due to lack of chemistry between the agent and client, or simply dissatisfaction with the Realtors motivations and or knowledge.
“The relocation company plan contains a buyout option and a bridge loan option against the equity of my current home” you say? In most cases, a buyout option will require an appraisal to determine market value and the buyout price will be based on the appraisal unless a minimum purchase price is stipulated. In the case of the latter, any shortfall from the buyout price and the market value will be covered by the relocation company / employer, and again, ultimately you through a lesser salary than what you might have enjoyed had you opted to not utilize the employee sponsored relocation service. If the home ultimately sells for more than the buyout price however, the profits do not go back to the employer or you.
Similarly, a bridge loan will only be provided against equity after outstanding mortgage balances, which will be determined by an appraisal. A Realtor can project what your house will likely sell for by preparing a Competitive Market Analysis, price correctly, market the house, and if done right, sell it in the necessary amount of time, regardless of market conditions. Should you locate your new home prior to the settlement of the home being sold, a bridge loan can be arranged via referral to a reputable mortgage company, and failing that, there is always the sale agreement with a home sale contingency to ensure your prior house is sold before settling on the new home.
In the end, there’s no free lunch. Careful weight of the real costs and benefits to you of an employer sponsored relocation service on the one hand versus the costs (or savings) and benefits of maintaining control of the relocation process via use of a full service real estate group to help manage your relocation will help you make an informed decision.
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