We are in for another year of offering first time homebuyers the $8,000 tax payer special credit.  This year the government has improved the offering to current homeowners and increased the income limits.  A current homeowner can receive a tax rebate check from the government for buying a new principal residence.  This should help loan originators stimulate their local economy with giving existing homeowners as well as first time homebuyers an huge incentive to purchase a home.

House prices are affordable, interest rates are low, and house values have seemed to have bottomed out and started to rebound.  Most homeowners move every three to five years.  The housing market has been in a slump with only REO properties on the market since the later part of 2006.  We are going on four years that homeowners have waited to sell their homes and move.  With the massive amounts of loan modifications being done, homeowners are not as up-side down as they have been over the past few years.

Loan originators must not delay in marketing this untapped market.  Homeowners will need to have a written binding contract by April 30, 2010, and close the sale by July 1, 2010.  The homeowner will need to comply with the documentation required to meet the IRS requirements. 

The new rules are as follows:

                First time homebuyers up to $8,000

                Current homeowners who purchase a new owner occupied property up to $6,500

                                Must live at least 5 years of the last 8 years in their current home.

                                They must have lived in the same principal residence for any 5-consecutive year period during the 8-year period that ended on the date the replacement home is purchased.

Credit can be taken on their 2009 or 2010 taxes         

Purchase price limited to $800,000

                Income limits

                                Individual – Modified adjusted gross income up to $125,000, then phases out up to $145,000

                                Joint filers – Modified adjusted gross income up to $225,000, then phases out up to $245,000

No repayment required   

The new law gives the IRS broader authority to deny first-time homebuyer credit claims, without having to first audit a taxpayer’s return. Known as math error authority, this authority applies, retroactively, to credits claimed on original and amended 2008 returns, as well as to claims yet to be filed.

Members of the military and certain other federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit.

The credit is claimed using Form 5405, which the tax payer files with their original or amended tax return.

This entry was posted on Thursday, December 31st, 2009 at 9:07 pm and is filed under ANNOUNCEMENTS. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.