President Obama is expected to sign the congress-passed bill extending and expanding the Federal Tax Credit for First-time Home Buyers. The tax credit will be extended through April 30, 2010, with a 60-day extension if a binding contract is in place prior to the deadline. First-time home buyers will continue to receive a tax credit of up to $8,000, while existing homeowners who are purchasing a new primary residence will receive a reduced credit of up to $6,500. Existing homeowners will be eligible for the $6,500 if they have lived in their current residences for at least five years. The bill also will increase the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers, to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000.
The changes, among other things, are aimed at encouraging so-called “move-up buyers” to sell their first homes and buy a larger or more expensive place. Under additional provisions in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The bill maintains the provision that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.
federal tax credit first time buyer first time home buyer home house real estate residence tax credit
$10,000 Credit for Purchasing New Construction
Date: Saturday May 2, 2009Posted in: real estate, California, tax credit, new construction
I am working with a first-time buyer family who is considering purchasing new construction as their primary residence. I advised them to look into the $10,000 tax credit offered by the State of California Franchise Tax Board. For all the info and requirements click on this Franchise Tax Board webpage. There is no income limitation on this tax credit.
One of the most important aspects of this credit to keep in mind is that it must be applied for within one week of close of escrow. This credit is limited to the first 10,000 new construction homes sold in California between March 1, 2009 and March 1, 2010. It is given on a first-come first-served basis. As of this morning when I checked the Franchise Tax Board link given above, there were 4,880 applications received by the Board, and it’s only May 2nd. Better hurry if you want to take advantage of this!
1. The $10,000 tax credit is not a loan and if the home remains your primary residence for 2-years, you do not have to pay any portion of the tax credit back.
2. The tax credit is for new homes only.
3. The tax credit is good for 5% of the home’s price or $10,000, whichever is less.
4. Home buyers will receive the tax credit, in equal amounts, over 3-years.
5. Unlike the $8,000 federal tax credit, the California state tax credit is not limited to first-time home buyers.
6. There are no maximum income limitations so any buyer purchasing a previously unoccupied home can qualify for the tax credit.
7. The tax credit only applies if the purchased home is your primary residence.
8. There is no down payment requirement to receive the $10,000 tax credit.
9. The $10,000 state tax credit can be used along with the $8,000 federal tax credit for home buyers. If you’re a first-time home buyer, and you purchase a new home in California that costs more than $200,000, you’ll get $18,000 in tax credits.
10. The tax credit is limited to the first 10,000 new home purchases.
Santa Clara County 1st-Time Real Estate Buyer Program
Date: Sunday March 22, 2009Posted in: real estate, Santa Clara County, affordable housing, buying a home, first time buyer, tax credit
First-time buyers are being wooed from many different directions these days. As I discussed in a previous post, the IRS is offering a first-time buyer tax credit to real estate buyers who meet certain stipulations. In addition to this federal tax credit, Santa Clara County is offering a Mortgage Credit Certificate Program to first-time buyers. And, as I explain in the federal tax credit post, a first-time buyer is defined as real estate buyers who have not owned a principal residence during the past three years.
A few highlights of the Santa Clara County program:
- It is a dollar for dollar tax credit against the borrower’s federal income tax - currently 15% of the interest paid
- The remaining 85% remains as a standard tax deduction
- The home must be purchased in one of the participating cities in the county - all south county cities are participating
- The home purchased must be owner-occupied
- The buyer’s income cannot exceed $97,800 for 1-2 persons and $112,470 for 3 or more persons
- The MCC Program doesn’t allow co-signers
- Maximum purchase price is limited to $570,000 for resale homes and $630,000 for new construction
- There is a possible recapture tax if the property is sold within the next nine years after purchase
- The County maintains a public list of participating brokers and funding lenders
- Applications for MCC are processed on a first come, first serve basis and there is an application fee of $275
For those interested in taking advantage of the MCC Program, you will want to make sure you are working with a paricipating funding lender. For recommendations on lenders, call me at 408-892-9015 or email me at GMerrick(at)InteroRealEstate.com.
Not Owned Your Home for the Past 3 Years? You’re a 1st Time Buyer!
Date: Wednesday March 11, 2009Posted in: real estate, Santa Clara County, Home buying, first time buyer, tax credit
Most likely you’ve heard about the First-Time Buyer Credit offered through the 2009 Economic Stimulus Package passed by Congress. But what you may not realize is that even if you owned a home previously, if you haven’t owned your primary residence within the past three years, you are considered a first-time buyer and may apply for the tax credit of $8000.
This tax credit is for $8000 or 10% of the purchase price, which ever is smaller. In Santa Clara County, chances are that you are not purchasing a residence for less than $80,000 and so will receive the full $8000 credit on your taxes. The home must be purchased between January 1, 2009 and December 1, 2009, so time is of the essence. This credit is unlike the 2008 first-time buyer credit in that it does not have to be repaid to the IRS.
Single taxpayers with modified adjusted gross incomes (MAGI) up to $75,000 will receive the full credit. The credit is reduced proportionally with a MAGI up to $95,000. Any single taxpayer earning over that will not receive the credit. Married couples with MAGI up to $150,000 will receive the full credit. In this case the credit is reduced proportionally with a MAGI up to $170,000. Married couples earning over $170,000 will not receive the tax credit.
For more information, the National Association of Home Builders provides an informative site: http://www.federalhousingtaxcredit.com/2009/glance.php
Please consult your tax advisor for more information regarding the tax implications of buying real estate.
