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$8,000 First-Time Home Buyer Tax Credit
The Federal Government wants to give you some tax relief …
$8,000 TAX CREDIT FOR HOME PURCHASES
Under the American Recovery and Reinvestment Act of 2009, qualifying taxpayers who
purchase a home before Dec. 1, 2009 receive up to $8,000, or $4,000 for married individuals filing separately. People can claim the credit either on their 2008 tax returns due April 15, 2009 or on their 2009 tax returns next year.
QUALIFIED HOME BUYERS:
First Time Buyers – people who close on their first principal residence between January 1st and November 30th, 2009; and
People who have not owned a principal residence during the past 3 years and close on their principal residence between January 1st and November 30th, 2009. This includes people who have a “summer home,” but do not own their principal residence.
INCOME QUALITFICATIONS: Your income must be less than $75,000 annually if you’re single ($150,000 annually if you are married and filing jointly).
A pro-rata credit is available if your income is more than $75,000 but less than $95,000, and you are single (more than $150,000 but less than $170,000 if you are married).
CREDIT IS FULLY REFUNDABLE: The credit will be used to reduce your income tax bill, or increase your refund. Since the credit is “fully refundable,” the credit will be paid out to eligible people even if they owe no tax or the credit is more than the tax they owe.
REPAYMENT OF CREDIT: The credit does not have to be paid back unless the home ceases to be the taxpayer's main residence within a three-year period following the purchase.
CLAIMING THE CREDIT: Qualified homebuyers who purchase a home in 2009 can claim the credit on either a 2008 tax return, due April 15, 2009, or a 2009 tax return, due April 15, 2010. The credit may not be claimed before the closing date, but if the closing occurs after April 15, 2009, a taxpayer can still claim it on a 2008 tax return by requesting an extension of time to file or by filing an amended return.
The filing options to consider are:
File an extension. Taxpayers who haven’t yet filed their 2008 returns but are buying a home soon can request a six-month extension to October 15. This step would be faster than waiting until next year to claim it on the 2009 tax return. Even with an extension, taxpayers could still file electronically, receiving their refund in as few as 10 days with direct deposit.
File now, amend later. Taxpayers due a sizable refund for their 2008 tax return but who also are considering buying a house in the next few months can file their return now and claim the credit later. Taxpayers would file their 2008 tax forms as usual, then follow up with an amended return later this year to claim the homebuyer credit.
Amend the 2008 tax return. Taxpayers buying a home in the near future who have already filed their 2008 tax return can consider filing an amended tax return. The amended tax return will allow them to claim the homebuyer credit on the 2008 return without waiting until next year to claim it on the 2009 return.
Claim the credit in 2009 rather than 2008. For some taxpayers, it may make more financial sense to wait and claim the homebuyer credit next year when they file the 2009 tax return rather than claiming it now on the 2008 tax return. This could benefit taxpayers who might qualify for a higher credit on the 2009 tax return. This could include people who have less income in 2009 than 2008 because of factors such as a job loss or drop in investment income
Now You Can Use the $8,000 Tax Credit Toward Closing Costs or Down Payment in NJ & PA!
By: Tim McLaughlin, Weichert Financial
A few weeks back, HUD made good on a promise to provide guidance to lenders regarding how they can enable buyers to use the $8,000 tax credit to effectively buy down their mortgage rate by giving them a larger down payment.
Here’s how the program will work: The option is available on specific loan products. Buyers must provide a down payment of at least 3.5%, which can be a gift from a family member, employer or nonprofit, charitable organization. Lenders may then offer the monetized tax credit to supplement the initial down payment and to pay for closing costs and interest rate buy downs
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As an example, the NJ HMFA is offering a zero interest Second Lien for qualified FTHB who expect to receive a FTHB Tax Credit when they file their 2009 Federal Taxes. Upon receipt of their tax credit, the borrowers are expected to pay off this Second Lien. If the Second Lien is not paid-in-full by 6/30/10, the loan begins accruing interest at the same rate and term as the First Lien. There will be no monthly payments and payment-in-full is due upon sale of property, refinance or pay-off of the 1st lien.
NJ TCLP (Tax Credit Loan Program) provides a loan to pay down payment and/or closing costs to any Agency Home Buyer Program FTHB who meets the requirements of the Home Buyer First Mortgage Program and who is eligible for a tax credit as permitted by the federal law.
The NJ TCLP loan will not exceed $8,000 ($4,000 in the case of married filing separately) and will be secured by a second mortgage. All loans must close by November 30, 2009. The borrower will pledge to apply the refunds received in 2010 from the first-time home buyer tax credit toward the repayment of the TCLP loan.
Again, the NJ TCLP loan requires no monthly payment. The full principal amount together with any accrued interest shall be due and payable upon the sale or refinance of the property or until the applicant ceases to occupy the property as their primary residence, whichever occurs first.
Not many originators that we see are currently offering this Tax Credit Loan Program, but in states where it is available, Weichert Financial is once again out in front, offering this along with a full slate of financing options to get the house of your dreams…we can help! Ask us how!
