First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. The credit starts to phase out for single filers income at $75K and for married $150K. The is a tax credit not a tax deduction.
Tax Credit vs. Tax deduction:
Credit is a dollar for dollar reduction in tax liability as a deduction that only saves you a portion.
Phase out examples:
Example 1: Assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time homebuyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.
Example 2: Assume that an individual homebuyer has a modified adjusted gross income of $88,000. The buyer's income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.
Qualifications:
Must be a 1st time home buyer, not owned property in 3 years
Home must be a primary residence
Non-resisdent alien not eligible
If sell within 3 years the $8K must be repaid
Those that purchased in 2008 will recieve the $7500 tax credit that is an interest free loan that is not repaid until after 2 years. Than re-paid at $500/year over 15 years. If sell before the credit is repaid any captial gains goes towards the credit, if there is no capital gains than the debt is forgiven.
Why are buyers waiting? The opportunity is here.
Interest rates are still at the all time lows.
http://www.freddiemac.com/pmms/pmms30.htm
Interest rates will begin to increase when inflation comes into play.
People hear rates will go lower. It could happen but you will than be fighting with all the other buyers that decide to enter the market: multiple offer situations, pay more because of the competition with a lower rate but you just gave up what you thought would be a savings by waiting.
Home prices are lower than many of us have ever seen giving many the opportunity they thought they would never have. The homes are out there and money is being loaned.
What a great market we are in!
Wednesday: February 25th
6:30pm to 8pm
Location: 4301 Hacienda Drive ste 120: Pleasanton, CA 94588
Learn:
1st Time Home Buyer tax credit
How it might be better to BUY than RENT
Low Down Payment options
Loan programs available
Your credit score and your interest rate
Bank Owned properties and purchasing them
Free Credit Repair kit, Getting Ready to Buy Guide, and Pre-Application Kit will be given.
Schedule a free consultation. After the consultation appointment you will get a $100 off coupon to put towards your closing costs when you close.
Jeri Anderson - Realtor and Kathleen Davis - Mortgage Professional will be teaching the class
SEATING IS LIMITED: RSVP TO 925-474-1129 OR KDAVIS@CCMCLENDING.COM
Tax Credit for Home Buyers:
First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction - a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.
The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.
Increase of the loan limit back to $729,750 through 2009. This means in certain counties you can use FHA with 3.5% down to purchase a home up to $729,750. OR look at Refinancing those ARMs that are getting ready to adjust or just get into an FHA 30 year fixed loan to reduce your rate Most own more than 80% LTV and FHA has the lowest mortgage insurance and the rates are in the mid to upper 5%.
This is a great opportunity. Call and let's talk about your mortgage plan.
No one ever wants to pay more taxes than necessary, but this year it's even more important to save every penny you can. Here are some tips that can help you get a larger refund:
Property Tax Deduction for Non-Itemizers: Before 2008, only people who itemized their deductions could deduct property taxes. For 2008, individuals who do not itemize can deduct up to $1,000 of property tax on a joint return or $500 on a single return.
Driving Deductions: The IRS increased the cents-per-mile deduction for business-related driving expenses from 50.5 cents to 58.5 cents from July 1, 2008 through December 31, 2008. They also increased the rate for deducting medical and moving driving-related expenses from 19 cents to 27 cents for that same time period.
Disaster Losses: Casualty losses (i.e. like those from storm or fire damage) are normally deductible only to the extent they exceed 10% of AGI. For 2008, casualties in federally declared disaster areas can be deducted without having to abide by the 10%-of-AGI rule, which raises the amount that is deductible.
Capital Losses: Review your portfolio and note all your realized losses for 2008. You can write these off against capital gains and you can have a net loss of up to $3,000 deductible against your salary and other ordinary income. What's more, any excess can be used to offset gains or can be deducted in 2009 or later years.
Retirement Plan Contributions: You can make tax-saving contributions to retirement plans for 2008 through April 15, 2009.
Charitable Donations: Not only can you claim deductions for money and items you donate to a charity, you can also claim deductions for expenses you incur on a charity's behalf (i.e. driving costs, printing costs, long distance phone call costs, etc.).
Make sure you take time to go through your records carefully so you receive the biggest refund possible. And if you are looking for a great tax professional to help you, please let me know and I'll be happy to recommend someone.
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"GOOD COMMUNICATION IS AS STIMULATING AS BLACK COFFEE...AND JUST AS HARD TO SLEEP AFTER." Anne Morrow Lindbergh And communication on the new $789 Billion Stimulus Plan has been flying fierce over the past week, resulting in late nights for Congress and probably more than a few cups of coffee. President Obama is certainly hoping the new plan will wake up the struggling economy, and breathe some life back into the housing market as well. The tax credit in the Stimulus Bill has been scaled down to $8,000 from its previous level of $15,000, or 10% of the value of the home for any first time homebuyers who purchase homes from the start of the year until the end of November. It starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000, and buyers will have to repay the credit if they sell their homes within three years. In addition, there's news that the Obama administration is trying to hammer out a new program to subsidize mortgages to fight the credit crisis. The plan would seek to help homeowners before they fall into arrears on their loans, whereas current programs only assist borrowers that are already delinquent. There are no details yet on this plan, but I will be monitoring this news closely in the weeks ahead. There was some unexpected good news last Thursday, as Retail Sales increased in January for the first time in 7 months, as you can see in the chart below. It could take some time for the Stimulus Plan to positively impact the economy, but if it works, the improvement in Retail Sales could continue later in the year.
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Weak economic news normally helps Bonds and home loan rates improve, as money flows out of Stocks and into Bonds...however, not all investors are passing on their gains recently, as so many homeowners and homebuyers are taking advantage of current low interest rates and have flooded many investors to capacity. Call me to determine if the current market presents opportunity for you. As you can see in the chart below, Bonds and home loan rates faced some tough technical resistance last week, which hampered the way to finding improvement. As always, I will be watching closely to see what happens this week. Chart: Fannie Mae 4.5% Mortgage Bond (Friday Feb 13, 2009) |
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