Cristina McBreairty

If you are a First-Time Home Buyer and purchase a home before December 1, 2009 you can take advantage of the 2009 First-Time Home Buyer Tax Credit.

Here's what you have to do to get your benefit:

• Close on your home purchase by November 30, 2009,
• Ensure that you are a qualified first-time buyer under IRS guidelines,
• Decide which year to file under, 2008 or 2009,
• File an amended 2008 return or choose to apply the credit to your 2009 tax return.

Deciding When to Apply the Credit:

If you want the benefits of your credit as soon as possible:
You might choose to file under your 2008 tax year. Since April 15 has already passed, you would have to file an amendment to your return. However, if you've already filed for an extension of your 2008 return, then you can simply claim the credit when you submit your return.

If you anticipate a drop in income next year:
You can wait to claim the credit as part of your 2009 filing. In some cases the value of the credit might be higher, particularly if in 2008 you qualify for only a partial credit because your income is over $75,000 (single) or $150,000 (joint).

Your Next Steps...

Once you have determined which year to apply the tax credit, you will need to do two things to claim the credit:

1. Fill out Form 5405 to determine the amount of your available credit, and
2. File an amended return for your 2008 taxes, or wait and apply to credit when you file your 2009 tax return.

If you haven't owned your own home in the past 3 years, you may qualify for MaineHousing's Gift of Green. For a limited time, MaineHousing is offering eligible borrowers who use a MaineHousing mortgage:

• Up to $5,000 (not to exceed 4% of the mortgage amount) to help with the cash needed for closing, such as any required down payment, closing costs, and prepaids.


• A coupon worth up to $500 for a 2-part home energy audit.

The Gift of Green is a gift, which will not be added to the loan amount, and it never has to be paid back.

Because the Gift of Green promotion is part of MaineHousing's mortgage program, you also may be able to use the Purchase Plus Improvement Option to fund home energy improvements as part of your mortgage. MaineHousing mortgages even come with payment protection for unemployment.

Total Financial Incentives of Up To $15,000!

Add the Gift of Green grant of up to $5,500 to the federal First-Time Homebuyer Tax Credit worth up to $8,000. This, in turn, lets you invest in home energy-efficiency improvements that may qualify for additional federal tax credits worth up to $1,500.

The combination of financial incentives through the Gift of Green and federal tax credits could add up to $15,000 -- a once in a lifetime opportunity!

Before a home owner curses the troubled housing market, he or she should take solace in the U.S. tax code, which makes buying a home a good deal for almost everyone.

Here's why:

Mortgage interest deductions, including in some cases mortgage insurance premiums, reduce home owners' tax liability by reducing income. The deduction includes interest paid on both a first and a second home.

Interest on home equity loans is also deductible - whether the borrower uses the money to remodel the kitchen or to take a vacation to Disney World.

Profits from selling a house are potentially a huge windfall. When a home owner sells a primary residence, any profit on the sale of the property is tax free up to $250,000 for single home owners and $500,000 for married home owners filing. Any profit above that is nearly always a long-term capitTax Bal gain taxed at 15 percent - less if the seller's tax rate is less than 20 percent.

Home owners can itemize. That opens up opportunities to deduct a host of other items that wouldn't be deductible if the taxpayer took the standard deduction.

If you follow my blog, you are well aware of the fact that the first-time home buyer tax credit of up to $8,000 has helped to move housing inventory during an otherwise sluggish real estate cycle.

Now, both legislators and the business community are hoping to build on the incentive's success by expanding it! A number of bills have been introduced in the House and the Senate that lobby for an expansion of the measure. Among the proposed changes are:

• Setting a new cap of $15,000
• Extending the tax break into mid-2010
• Making the benefit available to all home buyers, not just first-timers
• Offering a separate tax credit to $3,000 for borrowers who refinance

Let's keep our fingers crossed! These proposed changes will benefit many home buyers and really stimulate the real estate market!

On May 14, 2009, the Obama Administration announced its Foreclosure Alternatives Program (FAP) providing incentives and uniform procedures for short sales and deeds-in-lieu of foreclosure under the Making Home Affordable Program.

The Making Home Affordable Program is designed to help homeowners obtain modifications to their loan so they can afford to stay in their home. Where a modification is not possible, new incentives encourage a quick private sale or voluntary transfer of property, which will save homeowners money and protect their financial future. A uniform process for handling short sales and financial incentives should help facilitate this process.

Click here to view a summary of the incentives and process.