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Thursday, November 12, 2009

Here is some good information on the new home buyer tax credit.

Here is some good information on the new home buyer tax credit.

 

First Time Home Buyer Tax Credit

·         A First Time Home Buyer is defined as someone who has not owned a Primary Residence in the past 3 years

·         Once you marry a homeowner you automatically become a homeowner regardless of who is on the title and the loan (IRS rules, not my rules)

·         The buyer must have an accepted purchase contract by April 30, 2010 and fund/record by June 30, 2010 to qualify.

·         In Arizona, there is no way to use this money upfront for down payment or closing costs unfortunately

·         The Tax Credit is the lesser of 10% of the purchase price or $8000

·         The Tax Credit is “real money” that you get as part of your tax refund

·         This credit does not need to be repaid if you live in the home for 3 years

·         The credit begins to “phase out” for Singles with income above $125k/year and Married above $250k/year

·         The max purchase price of the home is $800k.

·         If Mom and Dad (that own a home) Co-Sign for their child to help him qualify, the child can still take the Tax Credit.  Perfect for an FHA loan!

·         This Tax Credit is a Tax Related issue and therefore you should consult a tax professional for advice.  Two good websites for info are www.federalhousingtaxcredit.com and http://www.irs.gov/newsroom/article/0,,id=206294,00.html  (IRS site still needs to be updated for the move-up buyer tax credit).

·         To claim the credit the buyer must include IRS tax form 5405 along with a Final Stamped HUD-1 Settlement Statement issued by the title company after a successful close.

 

”Move-Up Buyer” Tax Credit

·         A “Move-up Buyer” is defined as a home owner who has owned and resided in the same home for at least five consecutive years of the eight years prior to the purchase date.

·         The buyer must have an accepted purchase contract by April 30, 2010 and fund/record by June 30, 2010 to qualify.

·         In Arizona, there is no way to use this money upfront for down payment or closing costs unfortunately

·         The Tax Credit is the lesser of 10% of the purchase price or $6500

·         The Tax Credit is “real money” that you get as part of your tax refund

·         This credit does not need to be repaid if you live in the home for 3 years

·         The credit begins to “phase out” for Singles with income above $125k/year and Married above $250k/year

·         The max purchase price of the home is $800k.

·         This Tax Credit is a Tax Related issue and therefore you should consult a tax professional for advice.  Two good websites for info are www.federalhousingtaxcredit.com and http://www.irs.gov/newsroom/article/0,,id=206294,00.html  (IRS site still needs to be updated for the move-up buyer tax credit).

·         To claim the credit the buyer must include IRS tax form 5405 along with a Final Stamped HUD-1 Settlement Statement issued by the title company after a successful close.

·         Loan underwriting guidelines still state that a move-up buyer needs to qualify with both mortgage payments unless the primary residence that the borrower is vacating has 25%/30% (FHA/Conventional) equity along with a rental contract and proof of security deposit. 

 

 

Take Care,

 

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