8k tax credit ext

Tax Credit for First-Time and Repeat Homebuyers

The Worker, Homeownership and Business Assistance Act of 2009, signed into law on Nov. 6, 2009, extends the first-time homebuyer tax credit and expands the credit to repeat home buyers and here’s what you need to know.

The new law states that “an eligible taxpayer must purchase, or enter into a binding contract to purchase, a principal residence and close escrow on or before April 30, 2010.” However, the tax credit will qualify if a binding purchase contract is signed by April 30, 2010 and escrow closes by June 30, 2010. For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 tax return. If the home was purchased between January 1, 2009 and November 6, 2009, the income limits are $75,000 for single taxpayers and $150,000 for married couples filing joint tax returns. If the home was purchased between November 7, 2009 and April 30, 2010, the income limits are $125,000 for single taxpayers and $225,000 for married couples filing joint tax returns (an increase of $50,000 for single taxpayers and $75,000 for married couples).

The tax credit for first-time home buyers (the IRS defines a first-time home buyer as someone who has not owned a principal residence the past three years prior to the purchase) is equal to 10 percent of the purchase price (up to a maximum of $8,000 as the tax credit applies only to homes priced at $800,000 or less). The tax credit doesn’t have to be repaid unless the home is sold or no longer used as the buyer’s principle residence within three years after the purchase.

The credit is also valid for current homeowners buying a replacement principal residence. Eligibility to claim the tax credit states that the buyers must have owned and lived in their previous home for five consecutive years out of the previous eight years. The tax credit is equal to 10 percent of the purchase price (up to a maximum of $6,500 and the tax credit applies only to homes priced at $800,000 or less). The credit is available if the home was purchased between November 7, 2009 and April 30, 2010. However, the tax credit will qualify if a binding purchase contract is signed by April 30, 2010 and escrow closes by June 30, 2010. The income limits are $125,000 for single taxpayers and $225,000 for married couples filing joint tax returns. The tax credit doesn’t have to be repaid unless the home is sold or no longer used as the buyer’s principle residence within three years after the purchase.
If you haven’t yet explored how the tax credit and the current rate environment might benefit you or someone you know, let’s arrange a time to discuss your unique situation as well as your short- and long-term goals. Remember, rates are still very good, but they may not be for long.

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Carol Peterson
Home Loan Consultant
100 E Street, #201
Santa Rosa, CA 95404
Cell: (707) 290-5167
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carol@petersonlending.com
www.carolpeterson4loans.com

The government is likely to modify the draft direct tax code to retain tax shelters and principal repayments for home loans to make the new code more attractive for the average Indian, said a Finance Ministry official.

According to the proposed direct taxes code there would be no tax incentives for loan-funded house purchases that are for personal use. The code is expected to become operational from April 2011.

Presently, taxpayers are allowed to deduct interest up to 1.5 lakh every year from their incomes. Besides this, the repayment of principal amount subject to a maximum of Rs. 1 lakh is also exempted under section 80C.

The draft code has proposed to increase the maximum limit under section 80C from 1lakh to 3 lakh, but the list of eligible expenditure/savings does not include principal repayment. The code also restricts interest deductions to houses that have been financed for renting out and where such income is included in the income of the assessee.

At present, if a home buyer in the highest 30% tax slab were to avail the maximum tax exemption available on home loans then government loses over Rs 77,000 in tax.

The proposed discontinuation of the tax benefits has faced widespread criticism. The Finance Minister, Pranab Mukherjee has indicated his willingness to review the debatable issue. He has had talks with senior officials of the apex direct tax body, Central Board of Direct Taxes (CBDT), on the proposed alterations to make them widely accepted.

The UPA-led government has lined up reforms of both direct and indirect tax structures that have a plethora of exemptions. It is considering implementing a comprehensive goods and services tax on the indirect taxes side.

The tax reforms are aimed at increasing compliance and expanding the tax base by discontinuing certain exemptions. The government hopes to redraft the new code quickly in order to present it in the next parliament session.

Tax means a rate or money levied on persons or property for the benefit of the state. Income tax chargeable under the provisions of the Act and fringe benefit tax. PBKS 4U provide tax-planning services that enable you to limit your personal and future tax liabilities. We help you to organize your cumbersome tax affairs, give you reminders of payment deadlines and make sure that all statutory requirements are satisfied. In the personal tax, the income-tax department has done away with the requirement of filing any supporting documents like investment proofs, etc, along with the return of income.

There are three stages in the imposition of personal tax: —

• There is the declaration of liability that is the part of the statute which determines what persons inrespect of what property are liable.
• There is the assessment.
• Method of recovery if the person taxed does not voluntarily pay.

We provide you facility in the tax planning as well as In case you are about to start a new business, inherit property, travel out of the country or retire from your professional career, you will need advice accordingly. We assist you in taking advantage of opportunities and planning your future. Tax planning is cannot be attempted in isolation. But by the PBKS 4U it is not much difficult for you we give you proper tax management because tax planning is not possible without tax management. And we give the best tax planning. In the tax planning requires analysis of the tax implication of any decision involving finance. All tax obligations have to be met. We provide the knowledge of tax laws so that the best alternative or choice may be thought of in order to attract least tax liability. We also give more advices for minimizing the tax liability with the law of taxation. some other advice on minimizing tax liability for all personal taxes given below: —–

• Income tax
• Capital gain tax (CGT)
• Completion and filing of relevant returns
• Advice on what payments are due and when
• Advice on trusts and estates.

For more information please visit. http://www.pbks4u.co.uk

Big news for buyers — the home buyers tax credit has been signed by President Obama!

Under the legislation, homebuyers will qualify for the tax credit until April 30, 2009 (as long as they have entered a binding contract), and have an additional 2 months (until June 30, 2009) to close the transaction. Borrower income limits have also been increased to $125,000 for individuals and $225,000 for couples (up from $75,000 and $150,000 respectively under the current program). The legislation also includes a tax credit not exceeding $6,500 for move up buyers who have owned their current homes for at least 5 years.

D. Stephen Steakley, Jr.
Austin, Texas Home Loan Expert
512-577-8898 ph
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