Expanded Tax Break Available for 2009 First-Time Homebuyers
IR-2009-14, Feb. 25, 2009
WASHINGTON - The Internal Revenue Service announced today that taxpayers who qualify for the first-time homebuyer credit and purchase a home this year before Dec. 1 have a special option available for claiming the tax credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year.
Qualifying taxpayers who buy a home this year before Dec. 1 can get up to $8,000, or $4,000 for married filing separately.
"For first-time homebuyers this year, this special feature can put money in their pockets right now rather than waiting another year to claim the tax credit," said IRS Commissioner Doug Shulman. "This important change gives qualifying homebuyers cash they do not have to pay back."
The IRS has posted a revised version of Form 5405, First-Time Homebuyer Credit, on IRS.gov. The revised form incorporates provisions from the American Recovery and Reinvestment Act of 2009. The instructions to the revised Form 5405 provide additional information on who can and cannot claim the credit, income limitations and repayment of the credit.
This year, qualifying taxpayers who buy a home before Dec. 1, 2009, can claim the credit on either their 2008 or 2009 tax returns. They do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date. They can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately.
The amount of the credit begins to phase out for taxpayers whose adjusted gross income is more than $75,000, or $150,000 for joint filers.
For purposes of the credit, you are considered to be a first-time homebuyer if you, and your spouse if you are married, did not own any other main home during the three-year period ending on the date of purchase.
The IRS also alerted taxpayers that the new law does not affect people who purchased a home after April 8, 2008, and on or before Dec. 31, 2008. For these taxpayers who are claiming the credit on their 2008 tax returns, the maximum credit remains 10 percent of the purchase price, up to $7,500, or $3,750 for married individuals filing separately. In addition, the credit for these 2008 purchases must be repaid in 15 equal installments over 15 years, beginning with the 2010 tax year.
Q & A link that I found to be very helpful!
http://www.treas.gov/initiatives/eesa/homeowner-affordability-plan/ConsumerQA.pdf
Article from RISMEDIA, February 18, 2009
Will the Stimulus Benefit Homeowners and Buyers?
RISMEDIA, February 18, 2009-”There are four primary sections of the economic stimulus plan that will benefit home owners and buyers,” said Gibran Nicholas, chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers. According to Nicholas, these include
1. Expansion of Home Improvement Tax Credit.”The tax credit for making energy efficient home improvements is now 30% of the cost of the improvements up to a maximum of $1500,” Nicholas said. “This means that if the improvements cost you $4,500, you would receive a tax refund of $1,500 when you file your tax returns.”
Eligible improvements include energy efficient exterior doors and windows, insulation, heat pumps, furnaces, central air conditioners and water heaters.
“Generally, most modern improvements like windows, furnaces, and air conditioners meet the necessary standards for energy efficiency,” Nicholas said. “If you’ve been holding off on making some of these improvements, now is a great time to get a move on it - especially with all the great deals being offered.”
2. Expansion of First-time Home Buyer Tax Credit.
The tax credit available to first-time home buyers was increased from $7,500 to $8,000 for homes purchased between January 1, 2009, and December 1, 2009. Also, the credit no longer needs to be paid back as long as the buyers live in the home without selling it for at least 3 years.
“The previous version of the credit expired on July 1, 2009, and required home buyers to pay the funds back over a 15 year time frame,” Nicholas said.
The income limitations remain the same ($75,000 for single tax payers claiming the full credit and $150,000 for married tax payers), as do most other qualification requirements. Also, the credit remains refundable. “This means that first-time home buyers who owe less than $8,000 in taxes for the year are still eligible for the full $8,000 credit when they file their tax returns, and the IRS will write them a check for the difference between $8,000 and their actual tax bill,” Nicholas said. “In fact, the credit can be claimed on your 2008 tax returns that you file by April 15 of this year, even if you buy the home in 2009.”
There is one catch, however: if you bought the home in 2008, the credit remains $7,500, and it still needs to be paid back over a 15 year timeframe beginning in 2011 when you file your 2010 returns.
3. Higher Reverse Mortgage Loan Limits.
The loan limits for FHA-insured reverse mortgages have been increased to $625,500 across the entire country-not just the higher cost areas. The previous limit was $417,000 across the country.
“This is especially important because the FHA program is virtually the only game in town as private and jumbo reverse mortgage programs have nearly all evaporated,” Nicholas said.
This coincides with another little-known change in the reverse mortgage
arena: the availability of reverse mortgages on home purchase transactions.
“This is a fantastic opportunity for senior citizens to buy a new home and live mortgage payment-free without having to wait for their old home to sell,” Nicholas said. “Seniors could also use this strategy to buy a new home and turn the old home into a rental or otherwise wait for market conditions to improve before trying to sell the old home.”
4. $729,750 FHA and Conforming Loan Limits Restored in High Cost Areas.
“The $729,750 maximum loan limit had been in force throughout 2008, but was reduced to $625,500 in 2009,” Nicholas said. “The economic stimulus plan restores the $729,750 maximum. This makes higher cost homes more affordable - especially in the coastal housing markets that tend to have higher than average home values.”
For more information, visit http://gibrannicholas.com and www.CMPSInstitute.org or call 888.608.9800.
RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.
Source: http://rismedia.com/2009-02-17/will-the-stimulus-benefit-homeowners-and-buyers/
