Tag Archives: federal tax credits

Real Estate

Home Buyer Credit Extension Signed by Obama



Congress passed a bill last week extending the deadline to close escrow and qualify for the federal home buyers tax credit.  President Obama signed the bill on July 2, 2010 according to reports.

The bill doesn’t help anyone currently shopping for a home. Buyers must have signed a contract by April 30 to qualify for the tax break. At issue is when the deal must be finalized. Qualified existing homeowners also have until Sept. 30 to close on new homes and receive a tax credit of up to $6,500.

Some details:

  • The bill extends the deadline to close escrow for home buyers who entered into a home purchase contract by the April 30 deadline.  First-time buyers may be eligible to receive up to $8,000 and qualified existing homeowners may receive up to $6,500 if the home buyer closes escrow by Sept. 30.
  • Home buyers entering into sales contracts May 1 or later are not eligible for the federal tax credit, but they may qualify for the California home buyer tax credit.
  • The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) and the NATIONAL ASSOCIATION OF REALTORS® worked closely with members of Congress to extend the deadline.  Estimates from NAR show nearly 180,000 home buyers nationwide would have missed out on the tax credit if the deadline was not extended, including nearly 17,700 home buyers in California.
  • Many of the home buyers who would have missed out on the tax credit are in the midst of purchasing a short sale or foreclosure, which generally take longer to close due to the amount of paperwork involved in the transaction.

Thinking of buying or selling

Call John J. O’Dell
Real Estate Broker
General Contractor
530-263-1091

Real Estate

Nabbing a Bargain-Basement Mortgage Before Rates Rise

The Federal Reserve has been purchasing mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac since early last year.  The purchase program has helped maintain low interest rates for borrowers.  As planned, the Fed this week announced it will stop purchasing these securities at the end of this month.  Many analysts anticipate this will result in a slight rise in rates by year’s end.

Making sense of the story for consumers

  • Interest rates have hovered at or near historic lows for much of the past 18 months, resulting in lower payments for many borrowers.  With the Fed discontinuing its purchase program, some analysts believe a rise in interest rates could range from 0.25 percent to as much as 1 percent by the end of 2010.
  • The federal tax credit for home buyers also is scheduled to end April 30.  The tax credit combined with the expectation interest rates will increase has created a sense of urgency for many home buyers.  In fact, 23 percent of California home buyers purchased a home in 2009 due to the perception that interest rates will rise and they would be priced out of the market, according to C.A.R.’s 2009 Survey of California Home Buyers.
  • Rising interest rates will have an effect on home buyers.  For example, a qualified couple with a combined pretax income of $100,000 per year and debt obligations (excluding mortgage) of $500 who receive a mortgage rate of 5 percent could qualify for a loan of up to $590,000, assuming a 20 percent down payment.  If the interest rate were to rise to 6 percent, as analysts at Barclays Capital predict, the same couple could only qualify for a mortgage of $540,000.

So in short, now is the time to buy real estate while home prices and interest rates are low.

John J. O’Dell
Real Estate Broker

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Real Estate

Now is the Time to Get Your Real Estate Deal, While You Still Can


The combination of affordable home prices, low interest rates, and the federal tax credit for home buyers have created an opportune time for many buyers to purchase a home.  Many real estate analysts also believe that most housing markets have stabilized, but that some markets may decline further.

MAKING SENSE OF THE STORY FOR CONSUMERS

  • Buyers should keep in mind that housing markets are local and can vary greatly from one neighborhood to the next.  Working with a REALTOR® familiar with the area in which the buyer is searching can help the buyer select a house that best suits their needs.
  • California’s housing market has shown signs of stabilization since early last year.  Sales of existing, single-family homes bottomed out in August 2007, and the median home price reached its trough in February 2009.  In January, California’s median home price was 17.2 percent above the low for the current cycle.
  • The federal tax credit for home buyers was extended and expanded late last year.  Qualified first-time buyers may be eligible to receive a tax credit of up to $8,000 on homes purchased before April 30, 2010.  Repeat buyers may be eligible for a tax credit of up to $6,500.  Visit First Time Home Buyers Credit Answers for more information about the federal tax credit for home buyers, including eligibility requirements.
  • The Federal Reserve has helped maintain low interest rates, which, in turn, has assisted home buyers.  However, the agency plans to stop purchasing mortgage-backed securities at the end of this month, which likely will increase rates on 30-year fixed mortgages.  Buyers may be able to lock in a low interest rate by working with their lender.

To read the full story, please click here.

John J. O’Dell
Real Estate Broker
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Because I care
Call 530-263-1091

Local Writers & Contributors, Real Estate

Home Buyers Tax Credits Explained

federal-tax-credits

As you have probably heard, Congress passed a new act that extends emergency unemployment compensation during these difficult economic times. Included in that bill was the extension of the First Time Homebuyer Credit which was scheduled to end December 1st of   2009.  Not only has the credit has been extended but it has also been expanded to include a whole new group of potential homebuyers.

 First Time Home Buyers – This credit of 10% of the purchase price of the home or a maximum of $8,000 will remain available on purchases contracted by April 30, 2010 and closed no later than June 30, 2010.  A first time home buyer is defined as someone who has not had ownership in a personal residence during the 3-year period prior to the purchase of the home. 

A new provision has been added to include individuals considered Long-time Residents of the Same Personal Residence.  This provision includes homeowners who have used and owned the same home as principal residence for 5 consecutive years of an 8-year period.  When these individuals purchase a new home after November 6, 2009, they may be eligible for a 10% tax credit not to exceed $6,500.  

The following restrictions apply to both types of credits: 

  • A phase out for individuals with adjusted gross incomes of $125,000 to $145,000 for single filers and $225,000 to $245,000 for married couples filing a joint return.  

·        The purchase price of the home cannot exceed $800,000 or there is no credit of any amount. 

·        The credit is not available for buyers under age 18 or buyers who can be claimed as a dependent of another.  There are also additional restrictions on purchases of homes from family members. 

For extended duty military, Foreign Service workers and intelligence community workers who are serving outside the United States for at least 90 days, the credits have been extended by one year to April 30, 2011. 

To claim either of these credits, the taxpayer must include a copy of the settlement statement when filing their return.  

For tax planning purposes, keep in mind that the price of the home must not exceed $800,000 or the credit is lost completely.  Even a purchase price of $800,500 will eliminate the credit while a purchase price of $799,500 will qualify. 

The phase out amounts have been increased for this new time period which covers purchases between November 7, 2009 and April 30, 2010.  If you fall within the phase out ranges listed above, you can still receive a partial credit.  If your income exceeds those limits, no credit is available. 

No payback is required for credits unless the house ceases to be a personal residence within 36 months.  In other words, if you don’t intend to use the home for at least three years, be prepared to repay the full amount. 

If you have any additional questions regarding additional specifics of the Home Buyer Credits, please do not hesitate to call or email our office.

 Source: Courtsey of  Robertson, Woodford & Summers, LLP
 Abacus7.com

Real Estate

First-Time Buyer Tax Credit Extension Possible

first_time_home_buyer

There are a lot of things driving the real estate market in California. The affordability index has increased to 67%. That is, 67 percent of potential buyers can now afford to buy a home. Prices driven down by short sales and foreclosures, have a dark side, but have created buying opportunities for investors and first time home buyers.

Another incentive for first time home buyers is the $8,000 tax credit. Due to expire on November 30, bills to extend the tax credit are pending in both the U.S. House and the Senate.
Continue reading First-Time Buyer Tax Credit Extension Possible →

Real Estate

Home Buyer Tax Credit Expained

httpv://www.youtube.com/watch?v=qeDp_w3oiqg

Robert Dietz, tax economist, of the National Association of Home Builders gives detailed answers to questions home buyers might have about the Federal tax credit. (The $10,000 California tax credit for home buyers has been used up)
Some of the questions answered are:

• Who’s eligible to claim the credit?
• How does it help you?
• What kind of homes qualify?
• How is the amount of credit determined?
• What is a partial credit?
• When can you claim the refund?
• How is the 2009 credit different from the 2008 tax credit?

Additional information about the tax credit can be found on the Federal Housing Tax Credit website.

Real Estate

Federal Home Buyer Tax Credit Update

tax-credit-update
Lawmakers and businesses are calling for an expansion of the existing tax credit now capped at $8,000 to be raised to $15,000. The existing federal tax credit of $8,000 has been a success in spurring first-time home buyers to get back into the housing market.

A further proposed change would be that the tax credit would be applied to anyone who buys a home.

First-time buyers make up a hefty 40% of home purchases, according to the National Association of Realtors (NAR), which is about 5 percentage points higher than the historical average.

Some economists say a tax benefit is vital to spur home buying and help stabilize prices.

According to USA Today the current proposals are:

“•A Senate bill to expand the tax credit to $15,000 for any home buyer regardless of income was introduced this month by Sen. Johnny Isakson, R-Ga. It is co-sponsored by Senate Banking Committee Chairman Chris Dodd, D-Conn.

“It would go a long way toward inducing trade-up buyers into the market,” says Lawrence Yun, chief economist at the NAR.

•A House bill to keep the $8,000 credit in place until June 2010 and expand it to all home buyers was introduced last month by Rep. Kenny Marchant, R-Texas. It also would provide a $3,000 credit to homeowners who refinance.

•Another bill in the House, introduced by Rep. Eddie Bernice Johnson, D-Texas, would extend the credit to all home buyers through 2010.”

The present tax credit does not apply to singles earning more than $95,000 a year and couples who earn more than $170,000.

Buyers do not have to repay the tax credit if they occupy the home for three years or more.