November 6, 2009 President Obama signed The Worker, Homeownership, and Business Assistance Act into law. This legislation extends the first-time home buyer credit of up to $8,000 to contracts signed by April 30, 2010 and purchases completed by June 30, 2010. In addition, this legislation expands the credit to include move-up/repeat buyers with a credit up to $6,500. * Talk to your tax professional for more details.

Credit Highlights:

• A first-time buyer is any buyer who has not owned a principal residence during the three-year period prior to purchase.
• A move-up buyer is any buyer who has owned and resided in a home for at least 5 consecutive years of the 8 years prior to purchase.
• Move-up buyers do not have to purchase a home that is more expensive than their previous home and are not required to sell there previous home. The purchased home does have to become the principal residence, however.
• The tax credit is equal to 10% of the purchase price up to $8,000 for first-time buyers, up to $6,500 for move-up buyers.
• The income limit is $125,000 for single taxpayers and $225,000 for married couples filing jointly.
• This is a credit, not a deduction, meaning this is a dollar for dollar reduction in what the taxpayer owes. For example, if you owe $2,000 in taxes and you have an $8,000 homebuyer credit, you will get a check from the IRS for $6,000.
• Buyers using FHA insured mortgages can use their anticipated credit immediately to help with down payment and/or closing costs, rather than waiting to file their 2009 or 2010 tax return.

To take advantage of this credit call me direct at 858-869-9035 or email me at dan@thisdancan.com

Will the tax credit be extended???

As I’ve mentioned in previous posts, the first time homebuyer tax credit of up to $8,000 is set to expire for loans closing after 11/30/09. I have been a huge proponent of extending this credit to keep the housing market recovery effort rolling into 2010. And I’ve been waiting anxiously to see if Congress will do the right thing and pass such legislation. However, in the past few days I’ve been a bit doubtful due to the widespread media coverage regarding the outlandish fraud that has been discovered surrounding the current tax credit. I was shocked to learn that the IRS was not requiring claimants to include a copy of their final HUD-1 settlement statement which would prove that they actually purchased a house. It’s like sending in for a rebate without your receipt! No wonder fraud abounds!  In the new bill a requiremet that the buyer be at least 18 years old and a copy of the HUD 1 Settlement  Statement will be required.

It looks like Congress is in fact leaning towards extending this credit through June of 2010 (all contracts must be signed by April 30,2010 to be eligible). Not only would the $8000 first time buyer credit be extended but also, up to a $6500 credit for move-up buyers who already own a home and have lived there for the last 5 years is being proposed. This time around, buyers would have to attach a copy of their settlement statement when filing the claim with their tax returns. Also, the new home’s price would be capped at $800,000 to be eligible for the credit.

The previous income limits were $75,000 for individuals and $150,000 for married couples filing jointly. The new proposal would increase those limits to $125,000 and $225,000 respectively.

The proposed extension is scheduled to be voted on by the Senate next week as part of a bill to also extend unemployment . If it passes it will move on to the Assembly. If the bill becomes law, we will have a fantastic opportunity to help more renters become home owners. However it remains to be seen whether the lack of entry-level home inventory in California will increase providing a more fair playing ground for those same buyers.

~Cari