It’s an unprecedented Buyer’s
market right now.
Interest rates are at an historic all
time low. Why are you still on the fence? If you are: (1)
a first time home buyer (defined as someone who has not owned a principal
residence
for the
last
3 years), (2) single person with adjusted gross income of $75,000 or
less (or a married couple with adjusted gross income up to $150,000),
and (3) plan to
purchase a home.
You may be making a huge mistake if you do not immediately get
off the fence and start searching for a home.
The essential VITAL fact is that the "First Time Home
Buyer Tax Credit" was included in the $787 Billion Dollar
Stimulus bill that was signed into law in February of 2009 will expire
on December 1, 2009, Expiration is right around the corner!
If you do not find a home and close on it before December
1st of this year, you will be walking away from a check in
the amount of eight thousand dollars ($8,000.00). Can you afford to turn your
back and walk away from a gift of $8000,00? If not,
then time is running out for you!
To avoid losing out, here’s what you need to do:
First, you should check your credit. If you have
any issues, hopefully, you can give them a quick fix. Otherwise,
in view of the December 1st deadline, you should immediately apply for a mortgage pre-approval with
your current scores. You also
need to line up
your lender, your real estate agent, and a property inspector.
If you move quickly, you should be in good shape. Remember, it could
easily take 30 days or more to
obtain a mortgage commitment, and if the property that you want to
purchase is a “short sale” property, it commonly takes
60 days or more to find out if the Seller’s lender will
permit the sale to go through at the contract price.
Things to Know about the 2009 First Time Home Buyer’s Tax Credit:
1. First
Time Home Buyers Only A first time home buyer is any person who
has not owned a principle residence
within the three year period
prior to purchase.
If you are married, neither you nor your spouse may own
a principle
residence. You will not be disqualified from the credit if
you own other real estate
that is not a principle residence – for example,
a rental property.
2. Time Limit to Purchase You must purchase between January 1, 2009
and December 1, 2009. To qualify for the credit, you must close on your
home and file the deed to your property by December 1, 2009.
3. Amount of Credit 10% of the cost of your new home, up to a maximum
of $8,000. Accordingly, if you purchase for $70,000 and qualify for the
credit, you will receive a tax refund in the amount of $7,000. If you
purchase a home for $125,000, your refund will be capped at the $8,000
maximum.
4. Deduction
vs. Credit/Refund A deduction merely reduces the amount of income
that is subject to
tax. A tax credit is significantly more
valuable to you. It is a dollar for dollar refund of tax. Because
the credit is “refundable”, qualified buyers will receive
a direct cash benefit even if they have very little tax liability.
For example,
if your 2009 income tax liability is $500, you will receive a
refund in the amount of $7,500.
5. Income Limits
To qualify, a single purchaser’s Adjusted Gross
Income cannot be greater than $75,000. The income limit for
a couple is twice that amount, or $150,000. So, if alone, you exceed
the $75,000
income limit, but together with your fiancée have
Adjusted Gross Income in the amount of $150,000 or less,
jointly, you do qualify for
the credit and if you both marry and purchase a home for
more than $80,000 by December 1, 2009, your Uncle Sam will
give you an $8,000 wedding present.
Note: If you exceed
the applicable income limits, you may still qualify for a credit,
but at a dramatically reduced amount.
6. What Homes Qualify? All single family homes qualify. This
includes condominiums, modular homes, multi-family homes (provided
that you occupy
one unit), and new construction, provided that you occupy the
home by December 1, 2009.
7.
Recapture: If you take the credit, you must occupy the home
for at least 3 years to retain the
tax benefits. If you sell within 3 years,
you have to give back the credit to the government.
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