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Tammi Copsey REALTOR® Baltimore County Maryland

Home Buyer Tax Credit Extension and Expansion Information

Home buyer tax credit extension and expansion…

It has been made official and expanded! This is great news!

So what does this mean for you, the homebuyer?

  • Deadline for current credit is November 30, 2009.
  • Deadline for new and improved credit is April 30, 2010; as long as the home is under contract by April 30, 2010 the deal must close within 60 days (July 1, 2010).

Eligibility and amount of new credit:

  • $8,000 for first-time homebuyers (those who have not owned a home in the last three years).
  • Up to $6,500 credit for homeowners who have lived in the home they are selling (or have sold) as a principal residence for five consecutive years in the past eight.
  • Buyers with income exceeding $125,000 for single and $225,000 for married couples are not eligible.
  • Homes valued at more than $800,000 are also ineligible.

Below is a chart prepared by the National Association of REALTORS® that details the changes from the expiring credit to the new credit:
NAR HBTC Chart

The following website is a great resource to explain the tax credit and has many answers to FAQ:

http://www.federalhousingtaxcredit.com/home.html

Questions about the $8,000 Tax Credit – a few questions answered from the site:

http://www.federalhousingtaxcredit.com/faq1.php

Who is eligible to claim the $8,000 tax credit?
First-time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and on or before April 30, 2010. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner. A limited exception exists for certain contract for deed purchases and installment sale purchases. See the IRS website for more detail.

However, the law also allows home sales occurring by June 30, 2010 to qualify, provided they are due to a binding sales contract in force on or before April 30, 2010.

Persons who are claimed as dependents by other taxpayers or who are under age 18 are not qualified for the tax credit program.

What is the definition of a first-time home buyer?
The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.

For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, IRS Notice 2009-12 allows unmarried joint purchasers to allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer

How is the amount of the tax credit determined?
The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.

Are there any income limits for claiming the tax credit?
Yes. For sales occuring after November 6, 2009, the income limit for single taxpayers is $125,000; the limit is $225,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $125,000 for single taxpayers and $225,000 for married taxpayers filing a joint return. The phaseout range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $145,000 (single) or $245,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

How is this home buyer tax credit different from the tax credit that Congress enacted in early 2009?
The tax credit’s income limits were increased, the documentation requirements were tightened, and the program's deadlines were extended.

How do I claim the tax credit? Do I need to complete a form or application? Are there documentation requirements?
You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on line 67 of the 1040 income tax form for 2009 returns (line 69 of the 1040 income tax form for 2008 returns). No other applications are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests. Note that you cannot claim the credit on Form 5405 for an intended purchase for some future date; it must be a completed purchase. Home buyers must attach a copy of their HUD-1 settlement form (closing statement) to Form 5405 as proof of the completed home purchase.

Questions about the $6,500 Tax Credit for repeat buyers – a few questions from the site:

http://www.federalhousingtaxcredit.com/faq2.php

Who is eligible to claim the $6,500 tax credit?
Qualified move-up or repeat home buyers purchasing any kind of home are eligible to claim this credit.

What is the definition of a move-up or repeat home buyer?
The law defines a tax credit qualified move-up home buyer (“long-time resident”) as a home owner who has owned and resided in a home for at least five consecutive years of the eight years prior to the purchase date. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. Repeat home buyers do not have to purchase a home that is more expensive than their previous home to qualify for the tax credit.

How is the amount of the tax credit determined?
The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $6,500. Purchases of homes priced above $800,000 are not eligible for the tax credit.

Are there any income limits for claiming the tax credit?
Yes. The income limit for single taxpayers is $125,000; the limit is $225,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) above those limits. The phaseout range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $145,000 (single) or $245,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

What types of homes will qualify for the tax credit?
Any home that will be used as a principal residence will qualify for the credit, provided the home is purchased for a price less than or equal to $800,000. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.

It is important to note that you cannot purchase a home from, among other family members, your ancestors (parents, grandparents, etc.), your lineal descendants (children, grandchildren, etc.) or your spouse or your spouse’s family members. Please consult with your tax advisor for more information. Also see IRS Form 5405.

If you are thinking about buying, it is a really good time to make a move!!

Interest rates are still among the lowest in history! Now is the time to “get off the fence” and get into your new home!

Your cell phone number going public...is this rumor true?

Your cell phone number going public...is this rumor true?

Today, I've witnessed the following piece of information posted on numerous websites:

"All cell phone numbers are being released to telemarketing companies and you will start to receive sales calls. YOU WILL BE CHARGED FOR THESE CALLS To prevent this, call the following number from your cell phone: 1-888-382-1222 It is the National DO NOT CALL list. It blocks your number for five (5) years. You must call from the cell phone number you want to have blocked. You cannot call from a different phone number."

If you've been around the internet for any length of time, you've probably heard this story told in many different forms. Well, that's what it is...a story that originated in 2004 and has been passed around every year since.

Here is a screen shot from Snopes.com (the link follows) that dispells this rumor.

Snopes.com

http://www.snopes.com/politics/business/cell411.asp

And here is a screenshot and link to the FCC site with information on this subject:

FCC Cell

http://www.ftc.gov/opa/2007/02/dnccellphones.shtm

Even though both of these sites say it is false, you can still put your cell phone number on the Do Not Call List: https://www.donotcall.gov

Isn't this good to know?

Are you a Veteran or Active Duty Military? Applebee's is saying THANKS!

On Wednesday, November 11, 2009 Applebee's is offering a free meal to Veterans and Active Duty Military with proof of service...
what a wonderful gesture!! 

The menu (six meals to choose from) and details of the promotion can be found on their website:
http://www.applebees.com/vetsDay/default.aspx

Please pass this message along to anyone who has served or is serving their country!

Applebee's locations in Maryland:
http://locator.applebees.com

 

 

I have received no compensation from this blog post and I am not affiliated in any way with Applebee's.

 

It's Time to "Fall Back"!!

It’s Time to “Fall Back”!

Daylight Savings Time ENDS on Sunday, November 1 at 2:00 AM!

Set your clocks back one hour before going to bed on Saturday! An hour gained…to rest, relax, sleep in, play time, work time…however you choose to spend it!

Protect your investment, your home and your family! Change the batteries!

REMINDER: Change the batteries in your smoke detectors and carbon monoxide alarms!

Changing batteries twice a year when you change your clocks ensures that you will be protected should a fire occur and double your chances of surviving a house fire! The most common cause for faulty fire detectors is dead or missing batteries! Once you’ve changed the batteries, you also want to take a moment to clean dust from the device and to push the test button to make sure it is working!

This is especially important this time of year as the weather grows colder and you begin to use fireplaces, wood stoves, pellet stoves, heating systems and whole house humidifiers! If you have not done maintenance on these items in preparation for winter, let the ending of Daylight Savings Time be your reminder to do maintenance on these items.

Enjoy your hour! Happy Fall! Old Man Winter is right around the corner!!

HOW TO IMPRESS POTENTIAL BUYERS (AND THE HOME INSPECTOR)

IMPRESS POTENTIAL BUYERS AND THE HOME INSPECTOR

An ounce of prevention is worth a pound of cure ~ Benjamin Franklin

Today’s buyers have a lot of homes to choose from and they are being very discerning about the home that they ultimately purchase. This comprehensive list will aid you in understanding items that are noticed by buyers when they view your home. It will also help you understand what is checked for in the home inspection process.

Careful examination and repair of the items on this list prior to listing your home with a REALTOR® will aid you in selling quicker, for a higher price and eliminate last minute problems, repairs and expenses. It is recommended that all repairs be done by a licensed/insured home contractor.

EXTERIOR:

Give your home “curb appeal” and clean up the outside of your home (from the curb to the edge of the backyard! A home that is well maintained on the outside is a good invitation for potential buyers to visit the inside of your home! You never get a second chance to make a first impression ~ Will Rogers

  1. Trim trees, bushes and vegetation back from foundation, roof, siding, chimneys, air conditioning and heat pump units.
  2. Check condition of landscape components (retaining walls, landscape timbers, etc).
  3. Remove mulch or grading near siding and foundation vents.
  4. Check condition of wood in direct contact with soil, including fences and gates.
  5. Remove any fire wood, rotting wood or debris that is near your home.
  6. Check that landscape lighting/irrigation systems work.
  7. Check that ponds, fountains, and waterfalls, and related utilities, work properly.
  8. Check for loose/missing/rusted guardrails and handrails at stairways, decks, balconies and porches.
  9. Check that any exterior outlets are weatherproofed and not in permanent use for any landscape lighting.
  10. Check for loose wiring (electric, cable, phone) and poor wire terminations.
  11. Check for holes and damage to siding, doors, windows, and trim.
  12. Clean all debris off roof and clean out dirty gutters and basement entrances.
  13. Caulk around doors, windows, siding, porches and any other place there is cracking or settlement or a hole around an entrance pipe or vent. Do a neat job; poor workmanship will cause concern from buyers.
  14. Sand and paint areas of wood that are chipping or blistering.
  15. Point up failing mortar joints in bricks or chimney.
  16. Check your grading, downspouts and water splash pans for proper water run off from house. Keeping the water away from your home will avoid foundation moisture problems.
  17. Repair cracks in sidewalks and seal driveways.
  18. Check on your roof for flashing and gaskets deterioration around vent pipes, chimney and make sure a chimney cap is in place.
  19. Check for loose/damaged/lifted shingles.
  20. Check attic ventilation and condition of vent screens.
  21. Check all entrances for safety problems.
  22. Check that doorbells work.
  23. Replace missing siding, attic vents or other missing items.
  24. Check for trip hazards in walkways, driveways, and stairways (deterioration, vegetation, etc.).

INTERIOR

  1. Replace all burned out light bulbs.
  2. Remove all paints, gas, solvents, etc. from crawl space, basement and attic.
  3. Make all areas accessible for inspection including attic, basement, crawl space, heat and air conditioning units, garage foundation walls where possible and under steps. This is the perfect time to dispose, donate or have a yard sale of those unwanted/unused items in storage areas.
  4. Clean out your wood stove or fireplace and have that chimney or flue cleaned by a chimney sweep professional.
  5. Clean, vacuum dirt, dust, etc. from furnace, water heater, appliances and other units.
  6. Check condition of towel holders and bathroom tissue holders.
  7. Check condition of bathtubs, showers, and shower doors, and replace old shower curtains.
  8. Check for loose kitchen and bathroom countertops.
  9. Check for damage to walls and ceilings that need to be patched and painted.
  10. Check for moisture stains on ceilings and walls; around doors and windows; near sinks, toilets, bathtubs, and showers and near the dishwasher.
  11. Check for loose, broken or missing baseboards and door and window moldings.
  12. Check for cracked tiles or deteriorated grouting in kitchen and bathrooms.
  13. In the kitchen, clean ovens, dishwashers, refrigerators and other appliances that will be left for the new buyer. Get appliances serviced and keep the paperwork to show the new buyers.
  14. Check that kitchen appliances work.
  15. Check that filters are in place and clean (range hood, heating/cooling, bathroom fans, etc.)
  16. Check/clean/replace the filter on your heating/cooling system (should be done monthly).
  17. Check/clean/replace the filter on your whole house humidifier.
  18. Check for soot, cobwebs, and wildlife in the fireplace and lower areas of the chimney.
  19. The Chimney Safety Institute of America (CSIA) recommends that the fireplace and chimney undergo a Level II inspection any time real estate ownership is transferred, and I recommend having that done prior to the Buyer's inspection.
  20. Check that the fireplace damper opens/closes easily.

PLUMBING SYSTEM (Including kitchens/baths/laundry areas):

  1. Check that stoppers work in bathtubs and sinks.
  2. Check for clogged drains.
  3. Check that faucets don't drip or leak around the base.
  4. Check stop action on faucet handles.
  5. Check condition of caulk or grout in bathtubs, showers, shower enclosures, sinks (including kitchen).
  6. Check insulation on water pipes in foundation crawl space and attic.
  7. Check for safe and easy access to water shutoff valves (water heater, sinks, toilets, etc.).
  8. In bathrooms, replace old and discolored caulking around tub, shower and sink areas. Do a professional job.
  9. Check the bath vents and fans for proper working condition and ventilation.
  10. Tighten the toilet to the floor and check for leaks and cracks in toilet and tank areas. Repair or replace tank filling and flushing systems if needed.
  11. Check for leaks in plumbing, under your sinks and all visible connections.
  12. Make sure the drains are running smoothly and the fixtures are not leaking.
  13. Make sure all drains have stoppers.
  14. Check your sump pump for proper operation and make sure the well is clean and the cover is installed. Eliminate any odors.

ELECTRICAL SYSTEM

  1. Check for safe and easy access to electric panels and main circuit breaker.
  2. Check that ceiling fans work on all speeds.
  3. Check for burned out lights, including ceiling fans.
  4. Check for damaged or loose outlets and light switches, including covers for outlets and switches.
  5. Check for loose wiring (electric, cable, phone) and poor wire terminations.
  6. Check that appliances are plugged in and operating.
  7. Unplug anything that is unnecessary to facilitate outlet testing by the Buyer's property inspector.
  8. Remove extension cords and outlet multipliers.
  9. Check that outlets work.
  10. Install GFCI receptacles near all appropriate areas, kitchens and bathrooms. Check existing GFCI receptacles for proper operation.
  11. Check for outdated two-prong outlets and upgrade them to three-prong outlets.
  12. Check that exhaust fans work in kitchen, bathrooms, and laundry area.
  13. Check that any electrical junction boxes have covers.
  14. Have your furnace, air conditioner and heat pumps serviced or placed on a service contract. This is a great selling point and peace of mind for you and your buyer.
  15. Replace the filter in the furnace and any other air cleaning units.
  16. Replace all burned out light bulbs.
  17. Test all smoke detectors and install CO detectors if needed. (Check code in your area).

DOORS AND WINDOWS

  1. Check ease of operation for doors (including closet doors and cabinet doors), drawers, and windows, including windows/doors nailed or painted shut.
  2. Check for missing, loose, or damaged hardware on doors (including closet doors and cabinet doors), drawers (stops and guides), and windows.
  3. Check for loose glass panes in windows and doors, as well as glass with holes or cracks in them.
  4. Check for condensation in the windows (foggy or containing moisture).
  5. Check that latches/locks work on doors (including closet doors and cabinet doors), drawers, and windows.
  6. Check for damage to screen windows.
  7. Make sure all the doors, windows and sliding entrances are in good working condition. Clean the tracks and thresholds.
  8. Repair or replace any missing or torn screens or broken windows.

MOISTURE ISSUES:

  1. Moisture in the home is a primary reason for buyers not to purchase your home.
  2. Moisture causes wood rot leading to structural damage.
  3. Moisture in foundation causes foundations to fail and severe structural damage.
  4. Moisture at the bottom of door jams, window sills, garage doors, entrances and exit areas should be corrected.
  5. Moisture from cracks in foundation should be corrected by finding the source and fixing the problem. Patch up all cracks in the foundation walls and floor. Water proofing companies can inject sealants in many cracks eliminating water intrusion.
  6. Moisture causes mold and mildew which cause allergies and asthma problems for many. Black mold can cause serious illness. Eliminate all signs of mold and mildew by eliminating the moisture source and installing proper ventilation.

MISCELLANEOUS:

  1. Pets (dogs, cats, birds, reptiles, etc) should be caged or removed from the home (family, neighbor, friend, pet spa) during showings and the home inspection. Many people have allergies or phobias of pets.
  2. Neutralize pet odors and air out the home prior to listing it for sale. These odors can trigger allergy and asthma attacks. FACT: pet odors are a major cause for a buyer to not consider the purchase of your home.
  3. Be aware of product failures that may be present in your home such as aluminum wiring, polybutylene pipes, EIFS (synthetic Stucco), etc. If these items are present, you should consider consulting a licensed contractor for a price quote and repair of these items prior to listing or selling your home.
  4. Certain items should be inspected annually due to their inherently dangerous nature. These include gas-using appliances, pool/spa equipment, roof, and the fireplace and chimney. If they have not been inspected within the last 12 months, having it done now can make escrow go more smoothly.
  5. Check for manufacturer installation guides, operating instructions, or user guides that you can provide to the buyer, especially for kitchen appliances; heating and cooling system; water heater; security, irrigation, fire suppression, central cleaning, and water modification systems; water well; and septic system.
  6. Many property inspectors exclude inspection and testing of some specialized systems, such as security and irrigation systems. Once you get the Buyer's inspection report, note what the Inspector did and did not do or could and could not do. Offer to meet with the Buyer to demonstrate how those systems are operated and maintained, and provide the contact information for any companies that regularly service the systems.
  7. Check for receipts and warranty papers for any work done on the property, particularly for inspections and work done to prepare the property for sale.
  8. VACANT HOMES: be sure all utilities are turned on: water, electric, water heater, furnace, air conditioning, breakers in main panel.