Christi Bayor, REALTOR
Austin Texas Homes, LLC
512-788-3698
christi@atxhomesforsale.com
Have questions about the new tax credit? This chart should tell you all you need to know. Click to make larger.
Wednesday, November 11, 2009
Homebuyer Tax Credit Changes - Effective December 1st!
Wow!! If you are looking to purchase - now is still the time. Not only is Congress extending the $8,000 first time homebuyer tax credit, but they are issuing a new tax credit for move-up buyers. If you are looking to sell and purchase antoher home - call me and ask about my move-up program. I will discount my commission if you use me to sell your home and purchase your new home.
Christi Bayor, REALTOR
Austin Texas Homes, LLC
512-788-3698
christi@atxhomesforsale.com
Have questions about the new tax credit? This chart should tell you all you need to know. Click to make larger.
Christi Bayor, REALTOR
Austin Texas Homes, LLC
512-788-3698
christi@atxhomesforsale.com
Have questions about the new tax credit? This chart should tell you all you need to know. Click to make larger.
Saturday, September 5, 2009
Tick Tock goes the Clock | Austin Texas Real Estate Agent
Tick Tock Tick Tock.
That's the sound of time ticking closer to when the $8,000 first time homebuyer tax credit comes to an end. That's right - come December 1st - the fun ends. So....if you are thinking about buying in the next year and this is your first home - WHAT ARE YOU WAITING FOR? This is the time. If you wait - guess what? Not only will you lose out on the tax credit money but you may be facing higher interest rates.
To take advantage of the tax credit, contact me:
Christi Baylor, REALTOR
Austin Texas Homes LLC
512-788-3698
christi@atxhomesforsale.com
I'll be happy to help you find that perfect first home!
___________________________________________________________________________
Want to learn more about the tax credit?
Here is some information taken directly from the Federal Housing Tax Credit Website (www.federalhousingtaxcredit.com. To read more on the tax credit click here.
Who is eligible to claim the 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 before December 1, 2009. 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.
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, unmarried joint purchasers may 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. The income limit for single taxpayers is $75,000; the limit is $150,000 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 $75,000 for single taxpayers and $150,000 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 $95,000 (single) or $170,000 (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 July of 2008?
The most significant difference is that this tax credit does not have to be repaid. Because it had to be repaid, the previous "credit" was essentially an interest-free loan. This tax incentive is a true tax credit. However, home buyers must use the residence as a principal residence for at least three years or face recapture of the tax credit amount. Certain exceptions apply.
How do I claim the tax credit? Do I need to complete a form or application?
Participating in the tax credit program is easy. 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 or forms 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.
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. 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 your ancestors (parents, grandparents, etc.), your lineal descendants (children, grandchildren, etc.) or your spouse. Please consult with your tax advisor for more information. Also see IRS Form 5405.
I read that the tax credit is "refundable." What does that mean?
The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.
For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).
Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been "purchased" on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after January 1, 2009 and before December 1, 2009.
In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.
Is a tax credit the same as a tax deduction?
No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS.
A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes. If the taxpayer receives an $8,000 deduction, the taxpayer’s tax liability would be reduced by $1,200 (15 percent of $8,000), or lowered from $8,000 to $6,800.
Is there any way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2009 tax return?
Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the downpayment.
Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.
In addition, rule changes made as part of the economic stimulus legislation allow home buyers to claim the tax credit and participate in a program financed by tax-exempt bonds. As a result, some state housing finance agencies have introduced programs that provide short-term second mortgage loans that may be used to fund a downpayment. Prospective home buyers should check with their state housing finance agency to see if such a program is available in their community. To date, 14 state agencies have announced tax credit assistance programs, and more are expected to follow suit. The National Council of State Housing Agencies (NCSHA) has compiled a list of such programs.
That's the sound of time ticking closer to when the $8,000 first time homebuyer tax credit comes to an end. That's right - come December 1st - the fun ends. So....if you are thinking about buying in the next year and this is your first home - WHAT ARE YOU WAITING FOR? This is the time. If you wait - guess what? Not only will you lose out on the tax credit money but you may be facing higher interest rates.
To take advantage of the tax credit, contact me:
Christi Baylor, REALTOR
Austin Texas Homes LLC
512-788-3698
christi@atxhomesforsale.com
I'll be happy to help you find that perfect first home!
___________________________________________________________________________
Want to learn more about the tax credit?
Here is some information taken directly from the Federal Housing Tax Credit Website (www.federalhousingtaxcredit.com. To read more on the tax credit click here.
Who is eligible to claim the 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 before December 1, 2009. 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.
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, unmarried joint purchasers may 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. The income limit for single taxpayers is $75,000; the limit is $150,000 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 $75,000 for single taxpayers and $150,000 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 $95,000 (single) or $170,000 (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 July of 2008?
The most significant difference is that this tax credit does not have to be repaid. Because it had to be repaid, the previous "credit" was essentially an interest-free loan. This tax incentive is a true tax credit. However, home buyers must use the residence as a principal residence for at least three years or face recapture of the tax credit amount. Certain exceptions apply.
How do I claim the tax credit? Do I need to complete a form or application?
Participating in the tax credit program is easy. 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 or forms 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.
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. 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 your ancestors (parents, grandparents, etc.), your lineal descendants (children, grandchildren, etc.) or your spouse. Please consult with your tax advisor for more information. Also see IRS Form 5405.
I read that the tax credit is "refundable." What does that mean?
The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.
For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).
Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been "purchased" on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after January 1, 2009 and before December 1, 2009.
In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.
Is a tax credit the same as a tax deduction?
No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS.
A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes. If the taxpayer receives an $8,000 deduction, the taxpayer’s tax liability would be reduced by $1,200 (15 percent of $8,000), or lowered from $8,000 to $6,800.
Is there any way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2009 tax return?
Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the downpayment.
Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.
In addition, rule changes made as part of the economic stimulus legislation allow home buyers to claim the tax credit and participate in a program financed by tax-exempt bonds. As a result, some state housing finance agencies have introduced programs that provide short-term second mortgage loans that may be used to fund a downpayment. Prospective home buyers should check with their state housing finance agency to see if such a program is available in their community. To date, 14 state agencies have announced tax credit assistance programs, and more are expected to follow suit. The National Council of State Housing Agencies (NCSHA) has compiled a list of such programs.
Thursday, September 3, 2009
Welcome to my new blog! | Austin Texas Real Estate Agent
Hi Everyone!
Welcome to "The Roof Over Your Head" my new blog about owning a home. The purpose of the blog is to inform you about the many facets of home ownership - from purchasing & selling to keeping up property values, buying/selling trends, mortgage and loan information and even a little local (Austin Texas) buzz. I want you, my readers, to use this blog as a source of information to the buying/selling real estate process. Bookmark it. Come back to it. Comment on my posts. Ask questions. That's what it's here for. You will find that I'm not the *best* writer in town - but I hope that will improve with time. I find myself funny, in fact, I'm one of those that laughs at my own jokes. Terrible, I know. But I will try to throw a little humor in there as well, as to not sound too dry.
Allow myself to introduce......myself. My name is Christi Baylor - I am a Real Estate Agent with Austin Texas Homes, LLC in the fabulous city of Austin Texas. I am a wife, mother to a beautiful little girl and 2 rowdy terriers, a fitness instructor and a real estate agent. I have been practicing real estate for 2 years - but have been involved in it far longer than that. My husband has held a career in Real Estate for several years, and because of that, I realized that it's my passion as well. We moved to Austin from Houston about 4 years ago and have loved every minute of it. We appreciate the outdoors, the culture, the lifestyle of Austin. While it still is a city, it's not too large and despite what others say, the traffic doesn't hold a candle to Houston traffic.
So, in a very tiny nutshell, this is who I am and what my blog strives to be. I hope you find it informative. I hope you feel inclined to pass it on. I hope you feel inclined to contact me should you have any real estate needs. Stay tuned for more posts. (I'll even throw in a little promotion here and there.)
Questions? Comments? Thoughts for future posts?
Welcome to "The Roof Over Your Head" my new blog about owning a home. The purpose of the blog is to inform you about the many facets of home ownership - from purchasing & selling to keeping up property values, buying/selling trends, mortgage and loan information and even a little local (Austin Texas) buzz. I want you, my readers, to use this blog as a source of information to the buying/selling real estate process. Bookmark it. Come back to it. Comment on my posts. Ask questions. That's what it's here for. You will find that I'm not the *best* writer in town - but I hope that will improve with time. I find myself funny, in fact, I'm one of those that laughs at my own jokes. Terrible, I know. But I will try to throw a little humor in there as well, as to not sound too dry.
Allow myself to introduce......myself. My name is Christi Baylor - I am a Real Estate Agent with Austin Texas Homes, LLC in the fabulous city of Austin Texas. I am a wife, mother to a beautiful little girl and 2 rowdy terriers, a fitness instructor and a real estate agent. I have been practicing real estate for 2 years - but have been involved in it far longer than that. My husband has held a career in Real Estate for several years, and because of that, I realized that it's my passion as well. We moved to Austin from Houston about 4 years ago and have loved every minute of it. We appreciate the outdoors, the culture, the lifestyle of Austin. While it still is a city, it's not too large and despite what others say, the traffic doesn't hold a candle to Houston traffic.
So, in a very tiny nutshell, this is who I am and what my blog strives to be. I hope you find it informative. I hope you feel inclined to pass it on. I hope you feel inclined to contact me should you have any real estate needs. Stay tuned for more posts. (I'll even throw in a little promotion here and there.)
Questions? Comments? Thoughts for future posts?
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