RE/MAX Classic Real Estate News

Bringing the Dream of Homeownership Within Reach

As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed new legislation that:

· Extends the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010.

· Expands the credit to grant up to $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.

Who Qualifies for the Extended Credit?

· First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010.

· Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.

To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

If you purchased a home between January 1, 2009 and November 6, 2009, please consult your accountant for applicable 2009 First-Time Home Buyer Tax Credit qualifications.

Which Properties Are Eligible?

The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Is Available?

The maximum allowable credit for first-time home buyers is $8,000.

The maximum allowable credit for current homeowners is $6,500.

How is a Buyer's Credit Amount Determined?

Each home buyer’s tax credit is determined by tow additional factors:

1. The price of the home.

2. The buyer's income.

Price

Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.

Buyer Income

Under the Extended Home Buyer Tax Credit, which is effective on November 7, 2009, single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit.

These income limits have changed from the 2009 First-Time Home Buyer Tax Credit limits. If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see 2009 First-Time Home Buyer Tax Credit.

If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?

Yes, some buyers may still be eligible for the credit.

The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $145,000 for singles and over $245,000 for couples are not eligible for the credit.

Can a Buyer Still Qualify If He/She Closes After April 30, 2010?

Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.

Will the Tax Credit Need to Be Repaid?

No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.

As you know, the AmeriDream program (down-payment assistance) is not an option for buyers right now. The approval of the program is stuck in the mud in Congress and the Senate. You probably are wondering why would we want to initiate another program giving buyers assistance and money to own their own home??? Aren’t we in a big enough mess without enabling new homeowners to own homes without some skin in the game? Well, the truth be told is that over a 3 year study, only 6% of all homebuyers that used the AmeriDream program to purchase a home lost their home to foreclosure. That’s a far cry from the multitudes that over extended themselves on ARM’s, interest only loans and the victims or participants in mortgage fraud. And the AmeriDream program doesn’t cost the taxpayer, you and I anything! Not a pennie!

The truth is homebuyers fuel our economy in many ways. Local property tax dollars, monies spent in stores for improvements, the per student school funding, neighborhood security for filling vacant homes, the list goes on and on for the benefits of restoring this program and utilizing its resources. Please read below for more information on the AmeriDream program and how you can contact your local Senator with just a quick email on your thoughts on the benefits of restoring AmeriDream. This is a cause that is definitely worthwhile.

Lawmakers and businesses are calling for expansion of a tax credit for first-time home buyers that has helped spark home sales in an otherwise dismal real estate market.

With the tax credit scheduled to expire in fall, some business groups say the amount of the credit, now capped at $8,000, should be raised to $15,000 and applied to anyone who buys a home.

First-time buyers make up a hefty 40% of home purchases, according to the National Association of Realtors (NAR), which is about 5 percentage points higher than the historical average.

The credit, introduced in July 2008, was expanded in February as part of the economic stimulus package. The proposals may face headwinds amid growing public criticism of government spending to rescue the economy and the widening budget deficit.

Some economists say a tax benefit is vital to spur home buying and help stabilize prices.

 "I'm fairly confident that (Congress) will extend the tax credit, because it is so important that housing come back," says Bernard Baumohl, an economist at the Economic Outlook Group. "But raising the tax credit will be difficult because it reduces taxes even more."

The White House had no immediate comment Sunday.

Current proposals:

•A Senate bill to expand the tax credit to $15,000 for any home buyer regardless of income was introduced this month by Sen. Johnny Isakson, R-Ga. It is co-sponsored by Senate Banking Committee Chairman Chris Dodd, D-Conn.

"It would go a long way toward inducing trade-up buyers into the market," says Lawrence Yun, chief economist at the NAR.

•A House bill to keep the $8,000 credit in place until June 2010 and expand it to all home buyers was introduced last month by Rep. Kenny Marchant, R-Texas. It also would provide a $3,000 credit to homeowners who refinance.

•Another bill in the House, introduced by Rep. Eddie Bernice Johnson, D-Texas, would extend the credit to all home buyers through 2010.

The Business Roundtable, a consortium of CEOs from large companies, urged Congress this month to expand the tax credit to $15,000 and make all home buyers eligible.

The current tax credit does not apply to singles earning more than $95,000 a year and couples who earn more than $170,000. Some business leaders want the income caps eliminated.

Buyers do not have to repay the tax credit if they occupy the home for three years or more.

$8,000 first time homebuyer federal tax incentive

Don't miss your chance to take advantage of the $8,000 federal tax credit.

The American Recovery and Reinvestment Act of 2009 has made now a great time to buy a home. The new stimulus bill has many advantages for home buyers, including up to an $8,000 federal tax credit for first-time buyers*. The new law defines a first time buyer as anyone who has not owned a home in the last three years.

For people who recently purchased a home or are considering buying in the next few months, there are several different ways that you can get this federal tax credit even if you've already filed your 2008 tax return! Qualifying first-time homebuyers who close on a home between January 1, 2009 and November 30, 2009, could receive up to $8,000, or $4,000 for married individuals filing separately.

Buyers may claim the federal tax credit on their 2008 taxes even if the closing occurs in 2009. A qualified buyer may get the credit for the 2008 tax year by filing an amended 2008 tax return after closing. Qualified buyers may also claim the credit in 2009 rather than in 2008. There are a number of filing options that may be available to you. Visit www.IRS.gov for more tax information on filing options.