The Real Deal Of Obamas Home Buyer Tax Credit - Short Sale Education
The Obama Administration has passed The Worker
, Homeownership, and Business Assistance Act of 2009 to offer First Time Home Buyers a Tax Credit up to $8000. This tax credit was set to expire in November of this year, but has been extended into 2010. With the high number of foreclosures and property listings requiring a bank approval via a short sale transaction, this tax credit has been a major factor in the increase of buyers in recent months.
This is good news because it means REOs and homes that are selling via a short sale will have an increasing number of buyers looking at these properties and the more of these properties that are sold and off the market the faster the housing market will stabilize. But who knows how long this ride will last. The one take away from this current trend is that Real Estate Agents should be looking and working short sale opportunities NOW, especially because buyers are back in the market. Imagine if an agent closed 1 purchase transaction a month, that would be 12 transactions per year. If they just focused 25% of their time to work short sale transactions, the agent could have an additional 3 transactions, totaling 15 for the year.
So what does this Tax Credit assistance really mean? Well, it certainly has been a reason for the increasing number of buyers the past month, but it also has caused a lot of confusion due to the changes in qualification guidelines from the previous tax credit program. So lets break it down and see what the deal is with this new extended Home Buyer Tax Credit program.
First of all, there are two qualifying home buyers for this tax credit. 1) first time home buyers purchasing as their primary/principal residence and 2) existing homeowners who are looking to move-up/repeat buying a primary/principal residence. Now lets look at the qualification guidelines for each type of home buyer.
1) First Time Home Buyer
Definition:
The definition of a first time home buyer is someone who has not owned a home for the 3 years prior to the home purchase. If married, this test of the definition will apply to both spouses. If one spouse qualifies under this definition and the other does not, the one that does qualify can claim the tax credit.
How Much:
Tax Credit up to $8000
How much tax credit you qualify for depends on your annual income and when you purchased the home.
If the home sale occurred after November 6, 2009, qualifying income limits are $125,000 for single taxpayers and $225,000 for married couples filing joint returns
.
If the home sale occurred on or after Jan 1, 2009, qualifying income limits are $75,000 for single tax payers and $150,000 for married couples filing joint returns.
Qualified Purchase Dates:
Sale must occur on or after Jan 1, 2009 and on or before Apr 30, 2010. IF there is a binding sales contract that is signed on Apr 30th, 2009, the tax credit will still apply if the purchase is completed by Jun 30, 2010.
2) Existing Buyers (Repeat or Move Up Buyers)
Definition:
The definition of an existing buyer is as someone who has both owned and lived in the same residence for a minimum of 5 and a maximum of 8 years prior to buying a new home. This definition is test for married couples in order to define who gets tax credits, if any. The new home being purchase does not have to be more in value to qualify for the tax credit.
How Much:
Tax Credit up to $6500
How much you get is based on ten percent of the home purchase price and maxes out at $6500. Any home purchase $800K and over do not qualify for the tax credit.
Income qualification limits are $125,000 for single taxpayers and $225,000 for married taxpayers filing joint returns.
Qualified Purchase Dates:
Sale must occur on or after Nov 6, 2009 and on or before Apr 30, 2010. IF there is a binding sales contract that is signed on Apr 30th, 2009, the tax credit will still apply if the purchase is completed by Jun 30, 2010.
How the tax credit works
If you owe $8000 in income taxes and you receive $8000 for the First Time Home Buyer Tax Credit, you would owe nothing to the IRS. It is a tax credit NOT a tax deduction.
Full Article Resourse: www.whbsolutions.com/blog/
by: Art Lee
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