TAX CREDITS for HOME BUYERS

2/14/2009 - Revised FHA Loan Limits

CLICK HERE FOR FHA LOAN LIMITS & INFORMATION

2/13/2009- Latest on Home Buyer Tax Credit

CLICK HERE FOR FULL ARTICLE FOR ALL PROPOSED TAX BREAKS

Excerpt relating to HomeTax Credit:
FIRST-TIME HOME BUYER CREDIT First-time home buyers are eligible for a refundable tax credit equal to 10 percent of the purchase price of their home, up to $8,000, if they made the purchase after Jan. 1, 2009, but before Dec. 1, 2009.   Unlike a similar credit that Congress provided last year, you don’t have to pay this one back over 15 years. The new credit, however, does phase out for individuals with incomes over $75,000 or married couples with incomes over $150,000 who file their taxes jointly. Also, you forfeit the credit if you sell the house within three years.

PROPOSED $15,000 TAX CREDIT FOR HOME BUYERS
2/5/2009 >>Senate OKs $15,000 tax break for homebuyers

The Senate voted Wednesday night to give a tax break of up to $15,000 to homebuyers in hopes of revitalizing the housing industry. The tax break was approved without dissent.

Leaders have pledged to have legislation ready for President Obama's signature by the end of next week.

Sen. Johnny Isakson, R-Ga., who advanced the homebuyers tax break, (and who, by the way is a former real estate broker) said it was intended to help revive the housing industry, which has virtually collapsed in the wake of a credit crisis that began last fall.

The proposal would allow a tax credit of 10 percent of the value of new or existing residences, up to a $15,000 limit. Current law provides for a $7,500 tax break but only for first-time homebuyers.

Isakson's office said the proposal would cost the government an estimated $19 billion.

Specifically, this amendment would provide a direct tax credit to any homebuyer who purchases any home. The amount of the tax credit would be $15,000 or 10 percent of the purchase price, whichever is less. Purchases must be made within one year of the legislation's enactment, and the tax credit would not have to be repaid, but the buyer would have to live in the home and own it for at least two years.

The amendment would allow taxpayers to claim the credit on their 2008 income tax return. It also seeks to prevent misuse by only allowing purchases of a principal residence and by recapturing the credit if the home is sold within two years of purchase. The amendment would sunset the current $7,500 housing tax credit on the date of enactment.

Isakson has pushed hard for a non-repayable tax credit for homebuyers because he knows that it will work. In the mid-1970s, America faced a similar housing crisis when a period of easy credit and loose underwriting flooded the market with new construction.  Interest rates rose, the economy slowed and America was left with a three-year supply of vacant homes. Congress responded by passing a $2,000 tax credit for anyone purchasing a new home for their principal residence. Isakson believes the results were clear and swift as home values stabilized, housing inventory dropped and the market recovered.

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$7500 Interest Free Loan for First Time Home Buyers

It’s a great time to be a first time home buyer, as the federal government is offer a $7500 tax credit.  It’s called a tax credit, but it actually works more like an interest free loan if you buy a home between April 8th 2008 and July 1st 2009.

First time home buyers are defined as any home buyer who has not owned a home in the last three years.  There are some income restrictions:  Single tax payers must earn under $75000; Married couples must earn under $150000.  Most first time home buyers would fall into this category.

You can claim the tax credit on your 2009 tax returns, essentially giving you $7500 to use for whatever you want to spend it on.  For example, if your tax liability for the year is $5000, applying the $7500 tax credit would cover your tax bill and provide you with a $2500 refund.  Taxpayers already due a refund would still receive their full refund amount, plus the $7500 tax credit for buying a home.

First time home buyers who claim the tax credit are expected to begin repaying the loan starting in the second tax year after they close on the purchase and continue the payback on their federal taxes for 15 years.   For home buyers who claim the full $7500 credit, the payments would amount to $500 per year.

If the buyer sells their home before the end of the 15 year period, the remaining credit would be due from whatever profit was made on the sale.  In cases where profits from the sale were less than what was owed for the credit repayment, the remainder would be forgiven.

For more information about this program see http://www.federalhousingtaxcredit.com/index.html

Start your search for you first home by using my  ALL THE LISTINGS  on my Home Page and signing up to receive our FREE HOME UPDATES which notify you at scheduled intervals of any homes fitting your criteria that have come on to the market.

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ADDITIONAL PENDING LEGISLATION AFFECTING BUYERS & SELLERS

National Association of REALTORS® update Februry 2009 ***U.S. House passes stimulus package *** The United States House of Representatives passed on a largely partisan vote of 244-188, HR 1, the American Recovery and Reinvestment Act of 2009. The economic stimulus bill, as the legislation is more commonly known, contains a number of key provisions impacting home sellers and buyers:

* Restoration of the 2008 loan limits for FHA, Fannie Mae, and Freddie Mac to 125% of median home price up to a limit of $729,750 (still on the table)

* Elimination of the repayment provision of the $7,500 first-time homebuyer tax credit (has now been proposed to up to $15,000 (10% of the sales price up to $15,000); also proposed that the buyer does not have to be a first time homebuyer)

* Expansion of tax-exempt housing bonds (still on the table)

* Increased funding for the Rural Housing Service Program  (still on the table- should be a no-brainer)

* Additional funding for neighborhood stabilization activities under the Community Development Block Grant Program  (still on the table)

* Incentives to promote weatherization and energy efficiency  (still on the table)

* Retrofitting federally assisted housing for energy efficiency  (still on the table)

* An expansion of the Hope VI low-income housing construction and rehabilitation program  (still on the table)

The House has also addressed a number of housing issues in legislation revamping the Trouble Asset Relief Program. Among the housing provisions of interest in the TARP Reform and Accountability Act of 2009, HR 384, are:

* A mortgage buy-down program to reduce rates below current prevailing market rates  (still on the table-  it will also be interesting to see if the markets can support this)

* Increased foreclosure prevention and mitigation efforts  (still on the table- should be a no brainer)

* Ensuring liquidity in the residential and commercial mortgage markets (still on the table- again, this one should be interesting)

* Streamlining efforts to unclog the credit markets and increase the availability of credit to worthy customers (still on the table- again, this one should be interesting)

What do you think about all this?