I wanted to follow up on my previous post dated 10/30/09 regarding the potential extension of the home buyer credit. Below you will find information on the bill which extended the first-time home buyer credit.

Yesterday President Obama signed a $24 billion economic stimulus which included an extension of the first-time homebuyer credit which will extend the credit through April 30, 2010.  The bill extends the $8,000 tax credit for home buyers who are buying their first home. The bill also offers a $6,500 tax credit to homeowners who have lived in the current residence for at least five years and are seeking to purchase a new residence.

The eligibility requirements for the $8,000 tax credit were left unchanged with the signing of the bill, and still require first-time home buyers to have not owned a principal residence in the prior three years.

Eligibility for the $6,500 tax credit requires the taxpayer have lived in their principal residence for five consecutive years out of the last eight and are purchasing a home to be their “new” principal residence.

Income limits were increased under the extension. Homebuyers who file single or head-of-household now can claim the full credit if their modified adjusted gross income is less than $125,000, an increase from $75,000 from the original tax credit.

Those filing married saw income limits increase to $225,000, an increase from $150,000 based on the original tax credit.

A partial credit is given in the event a single/HOH taxpayer income exceeds $125,000 and is phased-out when income reaches $145,000. Respectively those filing married with incomes between $225,000 and $245,000 will be given a partial credit.

The effective date of the tax credit extension begins for home purchased after November 6^th and before May 1 2010. But, homes subject to a binding sales contract by April 30^th, 2010, will qualify for the tax credit provided closing occurs by July 2010. All homes under a price of $800,000 qualify provided they are used as a principal residence.

If you have any questions regarding the first-time home buyer credit or your tax situation please contact our office.

Tags: Home Buyer Tax Credit, Real Estate, Taxes

With 1.4 million taxpayer claims and a cost of $10 billion dollars through August 2009, the First time home buyer tax credit will likely be extended through the middle of next year 2010.  Stakeholders from both the National Association of Realtors and the Mortgage Brokers Association have urged congress to extend the tax credit through 2010.

On October 20^th, NAR’s Vice President, Ron Phipps addressed the Senate Banking, Housing and Urban Affairs Committee. Phipps commented that the home buyer tax credit has had an impact with increasing sales in recent months and projects 5.1 million home sales for the year, nationally. He noted, “But it is a fragile recovery, and now is the time to build on home sales momentum by extending the tax credit throughout 2010 and expanding it to all home buyers,”

Although congress is leaning to extend the credit, the Obama administration is concerned about the cost of extending the credit.

Another concern of the administration has been the scrutiny the program has received for fraudulent claims. The IRS has opened 107,000 exams of questionable claims, and have identified 167 criminal schemes involving the tax credit since enacted in February 2009.

Several versions of credit extension remain in debate. House Majority Leader Steny Hoyer-D-MD, favors extending the credit through the end of the year. A bipartisan effort proposal would extend the credit an additional six months, extend the credit to all homebuyers, and raise the income limitation caps to $150,000 for individuals and $300,000 for those filing jointly. This version has been stalled due to congressional politics as the republicans have tried to attach the extension amendment to the recent unemployment bill, which the democrats do not favor.

With the current credit expected to expire on November 30^th, 2009 it is likely the administration and congress will pass an extender bill which will most likely extend the credit through May 2009, although I believe the final version will not include the amendment to extend the credit to all homebuyers.

Call me for more information about First Time Home Buyers Tax Credit, or if you have questions regarding your tax situation or real estate concerns, please contact our office.

Tags: Housing, Real Estate, Taxes

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Tags: Housing, Housing and Economic and Recovery Act of 2008, Real Estate, REIT, Taxes

These days stock investments have been slow performers in our current declining economy. Putting a few thousand dollars each year in an IRA-which is invested in mututal funds, stocks or bonds will not get you far these days. Estimating an annual contribution of 3,000 and a 8% percent return, it would take 30 years to accumulate $350,000. Continue Reading »

Tags: Real Estate, retirement, Taxes