The IRS has released their new form for the first time homebuyer’s tax credit.

The most important new line is here:

If you are claiming the credit on your 2009 (or later) tax return, you must attach a copy of the properly executed settlement statement (or similar documentation) used to complete the purchase (see instructions).

It seems the IRS finally wised up that people were fraudulently stating they had already purchased the home when indeed the purchase had not yet been completed.

Link to the document http://www.irs.gov/pub/irs-pdf/f5405.pdf

HIGHLIGHTS ONLY - I don’t want to distribute incorrect information so if you have a viable correction please make it known in the comments.

HR 3458 “The Worker, Home Ownership and Business Assistance Act of 2009″

While it is called an “Extension and Modification of the First-Time Homebuyer’s Tax Credit” it really is an extension and overhaul or re-construction. Modified doesn’t seem to cover it. If you are interested the full text of the Resolution signed into law is found at?this link on Thomas Library of Congress. (This is also based on?S 1678 dated September 16, 2009 and passed unanimously in the Senate.)

All the good stuff related to the Tax Credit seems to be found in Sections 11 and 12. I am not interested in sharing my political opinion in this post (had to clarify?this post) but working with you to develop a fuller and more accurate understanding of this new law. We know the second version of the First Time Homebuyer’s Tax Credit was scheduled to end with homes purchased, and closed on, before December 1, 2009. The key word at that time was “closed”. The newest version has a different twist which we will examine. So, here we go line by line where application matters to our common clients:

Section 11(a)(1)(A) extended to May 1, 2010

Section 11(a)(2)EXCEPTION IN CASE OF BINDING CONTRACT – if the binding contract is entered BEFORE May 1, 2010 then the closing must occur BEFORE July 1, 2010

Section 11(b)(6)EXCEPTION FOR LONG-TIME RESIDENCE OF SAME PRINCIPAL RESIDENCE – if the person buying the primary home lived in their primary residence for “any 5-consecutive-year period during the 8 year period ending on the date of [qualified] purchase” they also qualify for the credit under SEC.11(c)(1)(D)

Section 11(c)(1)(D) sets the maximum credit for long-time residents to $6,500

Section 11(c)(2) sets the maximium individual AGI to $125,000 and the maximum married couple AGI to $225,000

Section 11(d)(3) sets the maximum purchase price [not loan amount] to $800,000

There are other subsections specific to military personnel who are deployed found primarily in Section11(e)(E)

Section 12 is also?pertinent?but contains mostly clerical changes and restates the recipient of the credit must be at least 18 years of age at the time of purchase of the home.

IN SUMMARY

You must close before May 1, 2010 (so no later than April 30 2010), if you are not a “first time home buyer” (defined as someone who has not owned a primary residence during the last 36 months prior to the closing date) you must have lived in your primary residence at least 5 continuous years out of the 8 years preceding the closing date unless you enter into a binding contract before May 1, 2010 then you must close?before?July 1, 2010. Individuals may take advantage of the tax credit if you earn no more than $125,000 per year Adjusted Gross Income and married couples may not earn more than $225,000 AGI. Your sales price may not exceed $800,000 and you must be 18 years of age.

BIG DISCLAIMER: I AM NOT A TAX ATTORNEY OR ACCOUNTANT and everything you just read is my opinion on what the law says. Do not make any decisions based on the content of this blog post. Seriously, do not use this as a substitute for tax advice or legal advice.

Ken Cook – Georgia – FHA, USDA, VA and Conventional Home Loans (678) 439-8683

By NOW! I mean if you have not called a loan officer to get qualified, found a property and made an offer you’re dangerously close to missing the First Time Home Buyer’s Tax Credit. I know what you hear in your mind, “it’s good through the end of November.” You would, of course, be correct in so saying. Your correctness would be equivalent to leaving New York City for a trip to Tokyo to see your best friend’s wedding which happens at 5PM your time and you are getting on a jet at Noon your time the day of the event. In other words it’s “possible” you can make it on time but not very likely with the available equipment.

I know there will be loan officers and others reading this who will say, “shoot man I can close a loan in 8 days”. Well, so can I. But it’s by far the exception and not the rule. If you are a first time home shopper and you are reading this pick up the phone right now and call your local loan officer. If you just have questions feel free to phone me at 678-439-8683 and I can answer some questions for you.

Here are some pointers to speed the process and hopefully close before the end of November:

• Get prequalified right now, today. Not in a minute RIGHT NOW.
• Once you are prequalified ask your loan officer for a list of “findings” this will likely include:
  • Last two years of tax returns all pages all schedules
  • Last two months of bank statements on all accounts all pages (ALL pages)
  • One month’s worth of pays stubs (if you get paid weekly that’s FOUR)
  • Name of your landlord and their contact information for rent verification
  • Explanation of any credit checks that have been done on you in the last 90 days
  • A clear (CLEAR) copy of your driver’s license (photo ID) and Social Security Card
  • If your down payment is a gift a GIFT LETTER and supporting documentation (the giver’s paper trail from their bank to you)
  • Name and contact information for your preferred home owner’s insurance agent
• Be prepared to get more stuff and don’t argue with the loan officer or processor – JUST GET IT

If your home purchase closes on or after December 1st, as it stands today and there is no reason to believe it is going to change, you will NOT be eligible for the tax credit. Trust me, there will be hundreds, if not thousands, of people nationwide who think they are going to qualify for the tax credit who do not get it because they started too late. Today is getting just about too late.

So what are you going to do right now? Right CALL A PROFESSIONAL, EXPERIENCED LOAN OFFICER!

Probably so, the House of Representatives voted on the 8th to give service members who served a minimum of 90 days overseas an extension on their ability to claim the $8000 federal tax credit for first time home buyers. TBWS reported the extension of 6 months based on Housing Wire reports while US News reported a 12 month extension.

Here’s the official story from Congressman Mark Schauer:

WASHINGTON, Oct 8 - Today, Congressman Mark Schauer voted to pass two key measures for our American veterans. The Service Members Home Ownership Tax Act (H.R. 3590), which passed with bipartisan support today, will extend the deadline for taking advantage of the first-time homebuyer tax credit under the American Recovery and Reinvestment Act for qualified service members by one year. Today’s House passage of an amendment to the Veterans Health Care Budget Reform and Transparency Act (H.R. 1016) will help advance the legislation towards a Presidential signature. The bill authorizes Congress to approve investments in Department of Veterans Affairs (VA) medical care one year in advance to provide more predictable health care funding for veterans.

If you have questions or comments about the First Time Home Buyer’s Tax Credit, FHA, VA or any other real estate finance questions I will be happy to answer. Telephone me at 678-439-8683

Like it or not it’s coming to an end. There has been much lively debate about whether it should have existed to begin with, whether it should be increased and whether it should be extended. All of those aspects are all over the Internet. This is to remind you there is very little time left – today there are only 52 days left to CLOSE. Say what they may at some broker/lender houses it is taking an average of 35 days to close from the date the fully executed contract is received.

If you have not yet identified a home and made an offer you are going to be very hard pressed to get closed in time to take advantage of the Federal First Time Home Buyer’s Tax Credit. If you have questions don’t wait any longer – pick up the phone and call me at 678-439-8683 or complete the form below now. Not tomorrow, not after you get back from your break … now!

If you have been renting, especially an apartment, you likely are short a key element to home ownership: window treatments. When I was growing up we just said, “curtains”. Of course that included drapes, shears, rods, tie backs … the list.

The Complete Photo Guide to Window Treatments: DIY Draperies, Curtains, Valances, Swags, and Shades

I know how people can dream about windows – believe me. We have over 60 of them and my wife planned what would cover them for a year while we were building our home.

Here is a checkpoint for you if you are a first time home buyer. If you go to WalMart and buy shears, drapes and rods you will spend a minimum of $50 per window. Count the window openings in your home and multiply by $50 to get a very inexpensive base for the cost of dressing the windows in your new home. If you think you can make your own and save money – good luck!

The First Time Home Buyer’s Tax Credit ends with homes which close on November 30, 2009. Since you are a first time buyer let me give you the hint that maybe you should go into the business of making window dressings and selling to WalMart!

I am available to answer any First Time Home Buyer questions at any time at 678-946-0100

UPDATED UPDATED UPDATED Thursday 5/14/2009 – the entire letter has been rescinded. After thousands of blog posts by excited and misinformed real estate agents HUD has reversed any information which would have been valid as of yesterday (Wednesday 6/13/2009).

Wednesday 5/13/2009

The First Time Home Buyer’s Tax Credit can NOT be used (directly) as a down payment. The Tax Credit itself is being used as neither the down payment nor down payment assistance rather is being used to secure a loan which is either secured by a second lien on the property or a bridge type loan only from HUD approved organizations or lenders.

Georgia has passed a 3 year tax credit of up to $1800 for all tax payers who purchase a home between June 1, 2009 and December 1, 2009 (final day to close is November 30, 2009).

This tax credit may be used in addition to the Federal First Time Home Buyer’s Tax Credit if the buyer is a first time home buyer.

The credit is available only to taxpayers who purchase a single family home during the covered calendar period. The amount of the tax credit is 1.2% of the purchase price of the home or $1800 whichever is less.

Letter from Governor Purdue

Full Text of the Bill as Passed

IRS Form 5405 for First Time Home Buyer’s Tax Credit (Federal)

Polls and surveys can be very skewed or deceiving – especially when conducted online without filters. In other words 1 in 5 people who fill out an online survey who say they intend to buy a new home within the next 6 to 12 months does not science make. A recent survey conducted by Move.com did, according to reports, yield just such results. While we find this bit of news exciting we’re not getting too carried away with the validity thereof.

However, having typed that entire paragraph, let me add that this may just very well be the best time in recent history to buy a new home. There are more homes on the market which creates more suppy than demand. You only needed to go to the first day of high school economics to learn that makes prices lower. Interest rates are at an all time low and dancing in and out of the upper fours for fixed thirty loans. Additionally the first time home buyer’s tax credit has been extended to cover homes purchased through the end of November 2009. It was also raised to $8000 from the former $7500.

Sources: Huliq

Information on the previous First Time Homebuyer’s Tax Credit from the IRS.

This information is contained in the text of the second half of HR1-2009-111th Congress

The tax credit, in the form of a 15 year, interest free loan, has been raised from $7,500 to $8,000. The required recapture period has been changed from a prorated period of the life of the loan to a period ending 3 years following the date of purchase for homes purchased in 2009 only [this needs clarification - it appears if the home is sold during the first 36 months there is a full recapture but after 3 full years there is no recapture. I question this interpretation because it makes no sense]. The time period is extended to cover home purchases made prior to December 1, 2009 (formerly ended July 1, 2009).

SEC. 1006. EXTENSION OF AND INCREASE IN FffiST?TIME HOMEBUYER CREDIT; WAIVER OF REQUIREMENT TO REPAY.
(a) EXTENSION.-
(1) IN GENERAL.-Section 36(h) is amended by striking”July 1, 2009″ and inserting “December 1, 22 2009″.
(2) CONFORMING AMENDMENT.-Section 36(g)
is amended by striking “July 1, 2009″ and inserting “December 1, 2009″.
(b) INCREASE.-
(1) IN GENERAL.-Section 36(b) is amended by striking “$7,500″ each place it appears and inserting “$8,000″.
(2) CONFORMING A1VIENDMENT.-Section 36(b) (1) (B) is amended by striking “$3,750″ and inserting “$4,000″.
WAIVER OF RECAPTURE.-
(1) IN GENERAL.-Paragraph (4) of section 36(f) is amended by adding at the end the following new subparagraph:
“(D) WAIVER OF RECAPTURE FOR PURCHASES IN 2009.-In the case of any credit allowed with respect to the purchase of a principal residence after December 31, 2008, and before December 1, 2009-
“(i) paragraph (1) shall not apply, and
“(ii) paragraph (2) shall apply only if the disposition or cessation described in paragraph (2) with respect to such residence occurs during the 36-month period beginning on the date of the purchase of such residence by the taxpayer.”.
(2) CONFORMING AIVIENDMENT.-Subsection (g) of section 36 is amended by striking “subsection (c)” and inserting “subsections (c) and (f) (4)(D)”.
(d) COORDINATION WITH FIRST-TIME HOMEBUYER CREDIT FOR DISTRICT OF COLUMBIA.-
(1) IN GENERAL.-Subsection (e) of section 1400C is amended by adding at the end the following new paragraph:
“(4) COORDINATION WITH NATIONAL FIRST TIME HOMEBUYERS CREDIT.-No credit shall be allowed under this section to any taxpayer with respect to the purchase of a residence after December 31, 2008, and before December 1, 2009, if a credit under section 36 is allowable to such taxpayer (or the taxpayer’s spouse) with respect to such purchase.”.
(2) CONFORMING AlVIENDMENT.-Section 36(d) is amended by striking paragraph (1).
(e) REMOVAL OF PROHIBITION ON FINANCING BY MORTGAGE REVENUE BONDS.-Section 36(d), as amended by subsection (c)(2), is amended by striking paragraph (2) and by redesignating paragraphs (3) and (4) as paragraphs (1) and (2), respectively.
(f) EFFEC’l'IVE DATE.-The amendments made by this section shall apply to residences purchased after December 31, 2008.