First Time Homebuyer Tax Credit Extended Into 2010!
Plus, A New Tax Credit for Certain Existing Home Owners!

It's official. President Obama has signed a bill that extends the tax credit for first-time homebuyers (FTHBs) into the first half of 2010. This program had been scheduled to expire on November 30, 2009.

In addition to extending the tax credit of up to $8,000 through June 30, 2010, the extension measure also opens up opportunities for others who are not buying a home for the first time.

So Who Gets What?
The program that has existed for FTHBs remains intact with the one exception that more people are now eligible based on an increase in the amount of income someone may now earn. Additionally, the program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Deadlines
In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

Higher Income Caps in Effect
The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible.

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

Maximum Purchase Price
Qualifying buyers may purchase a property with a maximum sales price of $800,000.

First-Time Homebuyer Tax Credit - Frequently Asked Questions
Here are answers to some commonly asked questions about the tax credit.

What is a tax credit?
A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual's primary residence.

What is the tax credit for first-time homebuyers (FTHBs)?
An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000.

Who is eligible for the FTHB tax credit?
Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible. This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.

As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500.

How do I claim the credit?
For those taking advantage of the tax credit in 2009, you may choose to either apply for the credit with your 2009 tax return or you may apply for the credit sooner by filing an amended 2008 tax return with Form 5405 (http://www.irs.gov/pub/irs-pdf/f5405.pdf).

Can you claim the tax credit in advance of purchasing a property?
No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place.

Can a taxpayer claim a credit if the property is purchased from a seller with seller financing and the seller retains title to the property?
Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the taxpayer may file for the credit. Examples of this would include a land contract, contract for deed, etc. According to the IRS, factors that would demonstrate the ownership of the property would include: 1. the right of possession, 2. the right to obtain legal title upon full payment of the purchase price, 3. the right to construct improvements, 4. the obligation to pay property taxes, 5. the risk of loss, 6. the responsibility to insure the property and 7. the duty to maintain the property.

Are there other restrictions to taking the credit?
Yes. According to the IRS, if any of the following describe your situation, a credit would not be due.

• You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
• You do not use the home as your principal residence.
• You sell your home before the end of the year.
• You are a nonresident alien.
• You are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)
• Your home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
• You owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2009, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2006, through July 1, 2009.

Can you buy a home from a step-relative and be eligible for the credit?
Yes. Provided the person you are buying a home from is not a direct blood relative, the purchase would be allowed.

Can parent(s) who will not live in the property cosign for a mortgage for their child and the child that is a qualifying FTHB still be eligible for the credit? Yes.

Can a separated spouse who has not owned a home for four years qualify for the FTHB tax credit if the spouse has owned a property anytime in the last three years?
No. However, the spouse may be eligible for the repeat buyer credit. The best path to take in any situation regarding income taxes is to speak with a professional tax preparer or CPA.

If you have any questions that fall outside the situations here, give me a call and if you do not have an accountant to speak with, I can refer you to one.

Aaron Wagner, Strategist, e-Pro, EMS, REALTOR
Equity Real Estate
7090 Union Park Blvd.
Midvale, UT 84047
(888) 95 AARON Office
(801) 735-4656 Mobile
(866) 891-2952 Fax
Aaron@SoldByWagner.com

Property Virgins - Hurry, your first-time stimulus is running out!

Alright virgins, it’s great to wait for the right one your first time, but wait no more. You are running out of time to take advantage of a rare first-time homebuyer opportunity - an $8000 tax credit available only to you virgins. Sadly, non-virgins need not apply.

The $8000 incentive offered by Uncle Sam to encourage Property Virgins to experience their first time ends December 1, 2009. That means if you haven’t already started searching for your first home love, you need to begin the process now and close on your new love before November 30th! The old adage “Time is running out” is in full affect! In today’s climate, it is taking 45 days, on average, to obtain financing and close on your new home.

Factor in the Thanksgiving Holiday and a few days of buffer for unexpected hurdles, and we say plan for 60. Working backwards, that means you would need to write a contract by end of September, early October at the latest, in order to ensure you can close on time to qualify for the tax credit. Today, we are at the beginning of September which means you have the next 30-45 days to begin the process of buying and contracting on your first home. Don’t wait.

The old adage “Time is running out” is in full affect!

THE PERFECT STORM: Low home prices, historically low interest rates, $8k virgin credit Also, please note, that in addition to the $8k credit, home prices and interest rates are at an all time low. This is what we call The Perfect Storm. Those that wait will likely and sadly regret it once the $8k credit is gone and home prices and interest rates rebound. To learn more about The Perfect Storm!

What are you waiting for?

So, what are you waiting for?

Perhaps you have one of the following questions or concerns:

1. “Am I a property Virgin?”

I know this sounds like a rhetorical question in that one usually knows if they are a virgin or not, but with Uncle Sam it is possible to be born again. You are considered a ‘first-timer’ if you have not owned a home within the last 3 years.

2. “I don’t have a down payment”

The good news here is that with an FHA loan, you can obtain a gift from a family member covering the full amount of your down payment. Assuming you qualify for the $8000 tax credit, you can amend your 2008 taxes, collect your refund check in the mail and, if you choose to, pay your family member back. Now that’s cool.

3. “I don’t understand the tax credit”

Read our full blog that explains the tax credit in detail-it’s actually pretty simple. Also, feel free to call our office to learn more. We are happy to explain the program and help you determine if buying now makes sense for you, or not.

4. “I’ve heard that the tax credit incentive will be extended”

As far as we know, this is only a rumor. We are closely plugged into real estate changes and we are not aware of any real legislation working to extend the program. Sure, our Uncle Sam could very well change the terms of the program at any minute, but why take that chance and effectively lose this rare opportunity for free money. Yes, I said free money!

5. “I’ve heard that the tax credit incentive will be increased to $15,000″

Again, as far as we know, this is only a rumor. We are not aware of any real legislation that says this is real. If we hear otherwise, we promise, you will be the

first to know! RE-Post from The Goodlife Team!

So I am back in Utah, and some would say that I am back by negative consequence. But I believe contrary to the fact that i just blew my ACL and am done for the rest of the football season, that everything happens for a reason, and usually for the best if you have the attitude to always move forward and excel in life. I tore my ACL a couple games ago, and need to have surgery and although I will miss the rest of the season, and my team is 1st in the division, and almost a shoe in for playoffs next month and favorite for the CFL grey cup contender, i am still positive and happy. I am grateful that I had the opportunity to play Pro football, be paid well to do so, and meet so many great people, my teammates will be lifelong friends. The experiences and memories are unforgettable. So now I am waiting for surgery and working hard to get my real estate business back on track. I was really firing on all cylinders before my departure for training camp this season, and I am going to get back to form soon and surpass any of my past success in the the industry. I have a business plan that is Fail free.....WORK my Tail Off and believe, I can achieve!!! Fail free! So anyways, just wanted to tell everyone that Aaron is back to business, and excited to sell Real Estate, massive amounts of Real Estate!

Good Luck to Everyone!

Aaron