1st time homebuyers won't have to wait for tax credit

First-time homebuyers who qualify for up to $8,000 in new tax credits don’t have to wait until 2010 to get their money.

The Internal Revenue Service says that buyers can claim the credit when filing their taxes this year, by April 15.

Already filed your taxes? You can still get the credit this year, too, by filing an amended return.

The other option is waiting to claim the credit when filing 2009 tax returns, by April 15, 2010.

The tax credit, which is part of the federal stimulus package, provides up to 10 percent of a home’s purchase price (with a maximum of $8,000). Purchases must be between Jan. 1 and Dec. 1. Buyers who haven’t owned a home in the past three years would qualify, too.

The tax credit is capped at $4,000 for married people filing separately, and the amounts are less for people whose adjusted gross income is over $75,000, or $150,000 for joint filers.

People who already filed federal income tax returns this year can still get the homebuyer tax credit early, if they purchased a home since Jan. 1. They would need to file a 1040X to amend their tax returns, reflecting the new tax credit.

Some people may have bought a home after Jan. 1, but before the new tax credit was adopted last week. If they’ve already filed their taxes, they may have claimed the old credit. They, too, could file an amended 1040X, to get the new credit this year.

An IRS spokesman says it’s best to hold off on filing amended returns until after you receive your expected tax refund.

The IRS has posted a revised version of Form 5405, First-Time Homebuyer Credit, on www.IRS.gov. The instructions to the revised Form 5405 provide additional information on who can (or can’t) claim the credit, income limitations and repayment of the credit.

“For first-time homebuyers this year, this special feature can put money in their pockets right now rather than waiting another year to claim the tax credit,” said IRS Commissioner Doug Shulman in a statement. “This important change gives qualifying homebuyers cash they do not have to pay back.”

First-time homebuyers who purchased between April 8, 2008, and Dec. 31, 2008, would qualify for the previous tax credit of $7,500, which has to be repaid over 15 years.

The new tax credit does not have to be repaid if the recipient stays in the home for 36 months after purchase

 

Economic Stimulus Plan Benefits the Housing and Mortgage Industries

Here’s the Skinny……..

Tax Credit for Homebuyers

First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit.  Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.

The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.  Buyers will have to repay the credit if they sell their homes within three years.

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Additional Housing-Related Provisions

Tax Incentives to Spur Energy Savings and Green Jobs — This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, insulation.  The Incentives also assist with a person favorite of mine wind turbines

Landmark Energy Savings — This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization.  According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing—This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs.  Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.

Expanding Housing Assistance—This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.

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The Economic Stimulus Plan is huge, and impacts a number of industries. I’ve highlighted some of the major provisions that may impact you now and in the future.

As always, if you have any questions or would like to discuss how this may specifically impact you, I’d be happy to sit down with you. Just call or email me to set up an appointment.

Please feel free to share this information.

Best regards,

Brent Diebert

Mortgage Lending Professional