Keith & Jason Renno

The First-Time Homebuyer Tax Credit
________________________________________
Do you or anyone you know qualify for the first-time homebuyer tax credit? If so, here's how to take advantage of this lucrative incentive.

Qualifying first-time homebuyers can claim 10% of the purchase price up to $8,000, or $4,000 for married individuals filing separately. The credit is available for purchases completed on or after January 1, 2009, and before December 1, 2009. The credit is refundable, meaning recipients receive a check for any claim amount beyond what's owed in taxes.

Eligibility for the first-time homebuyer credit is determined by the date of the completed purchase, not the date of occupancy. One exception is if the home is being constructed, then the date of occupancy is considered the date of purchase. The home must be used as a primary residence (generally defined as where an individual spends more than 50% of their time). To be eligible, the buyer, or either spouse, cannot have owned and used a home as a primary residence within the last three years. A taxpayer who owned a rental property but not a primary residence within the past three years is eligible for the credit.
The credit does not have to be repaid unless the home is sold or ceases to be the primary residence within three years. There are some exceptions: homes sold as part of a divorce settlement, homes destroyed in a natural disaster, homes subject to condemnation, etc.

To be eligible for the credit, the home cannot be inherited, received as a gift, or purchased from a spouse or related person. The credit applies to any type of new or existing dwelling. Even some houseboats and manufactured homes used as primary residences are eligible. The $8,000 tax credit phases out for individuals with modified annual gross income (MAGI) of $75,000 to $95,000 and married couples with MAGI of $150,000 to $170,000.

With interest rates hovering at historic lows and housing affordability at its best level in more than a decade, this is a timely tax incentive. To claim the credit, fill out the IRS Form 5405 and claim this amount on line 67 of the 1040 income tax form for 2009. For more information, visit the IRS Newsroom.

The above content is for informational purposes only and should not be used as a substitute for consultation with a tax advisor.

Please click on the link below for today's Mortgage Update brought to you by The Renno Lending Team with Prospect Mortgage, LLC. Prospect Mortgage, LLC is the largest privately held direct lender in the U.S.

Last Week in the News

The Commerce Department reported new home sales jumped 9.6% in July to a seasonally adjusted annual rate of 433,000 from an upwardly revised rate of 395,000 in June. July's sales pace was the highest since September 2008. Economists had expected a sales pace of 390,000 units..... more information go to www.scvmortgageblog.com.

On Tuesday, August 11, the Labor Department said that productivity jumped at an annual rate of 6.4% in the second quarter of 2009. The increase was the biggest quarterly gain in nearly six years and follows a 0.3% increase in the first quarter.

The Commerce Department said wholesalers reduced their inventories by 1.7% in June, following a revised 1.2% drop in May. It was the 10th straight monthly decline. Sales at the wholesale level rose 0.4% in June and 0.2% in May. It was the first back-to-back increase in a year.

The trade deficit rose 4% to $27 billion in June, from $26 billion in May. Exports rose 2% to $125.8 billion, indicating that demand for American-made goods is picking up.

Retail sales unexpectedly fell 0.1% in July following an upwardly revised 0.8% increase in June. Economists had expected retail sales to rise 0.7% in July.

Initial claims for unemployment benefits rose by 4,000 to 558,000 in the week ending August 8. The figure was higher than the 545,000 that economists had forecast. The number of people continuing to claim jobless benefits in the week ending August 1 fell by 141,000 to 6.2 million.

The Federal Reserve reported that industrial production at the nation's factories, mines and utilities rose for the first time in nine months. The 0.5% increase in July followed a 0.4% decrease in June. The overall factory-operating rate rose to 68.5% of capacity in July, up from a record low of 68.1% in June.

The Reuters/University of Michigan consumer sentiment index for August fell to 63.2 from 66 in July. Economists had forecast a reading of 69.

Consumer prices were unchanged in July, and for the year are down 2.1%, the biggest decline since 1950.

Upcoming on the economic calendar are reports on the housing market index on August 17, housing starts on August 18 and existing home sales on August 21.

For More information visit www.scvmortgageblog.com.