2009 First-Time Home Buyer Tax Credit Facts

Who is Eligible
• The $8,000 tax credit is available for first-time home buyers only.

• The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase.

• All U.S. citizens who file taxes are eligible to participate in the program.

Payback Provisions

• The tax credit is a true credit. It does not have to be repaid.

• The only repayment requirement is if the home owner sold the home within three years after the purchase.

Income Limits

• Home buyers who file as single or head-of-household taxpayers can claim the full $8,000 credit if their modified adjusted gross income (MAGI) is less than $75,000.

• For married couples filing a joint return, the income limit doubles to $150,000.

• Single or head-of-household taxpayers who earn between $75,000 and $95,000 are eligible to receive a partial first-time home buyer tax credit.

• Married couples who earn between $150,000 and $170,000 are eligible to receive a partial first-time home buyer tax credit.

• The credit is not available for single taxpayers whose MAGI is greater than $95,000 and married couples with a MAGI that exceeds $170,000.

Effective Dates for the Tax Credit

• First-time home buyers would receive an $8,000 tax credit for the purchase of any home on or after January 1, 2009 and before December 1, 2009. To qualify, you must actually close on the sale of the home during this period.

Tax Credit is Refundable

• A refundable credit means that if you pay less than $8,000 in federal income taxes, then the government will write you a check for the difference.

• For example, if you owe $5,000 in federal income taxes, you would pay nothing to the IRS and receive a $3,000 payment from the government.

• If you are due to receive a $1,000 tax refund from the government, your refund would grow to $9,000 ($1,000 plus $8,000 from the home buyer tax credit).

• Buyers can take the tax credit on their 2008 or 2009 income tax return.

Types of Homes that Qualify for the Tax Credit

• All homes, whether single-family, townhomes or condominium apartments will qualify, provided that the home will be used as a principal residence and the buyer has not owned a principal residence in the prior three years. This also includes newly-constructed homes.

For more details on the tax credit, go to www.federalhousingtaxcredit.com

Understanding the Appraisal Issue

In today’s market, there are many obstacles you are faced with when buying and selling a home. One of the major topics of the moment is appraisals. Now what would an appraisal have to do with buying or selling a home?
The appraisal is the keystone for lenders to base their lending limits on, aside from the buyer’s personal financial situation. Every purchase contract is going to have a financing clause that states:

Buyer will apply for new financing at the prevailing interest rate and loan costs based on Buyer’s creditworthiness…the Seller will be entitled to retain the deposits if the transaction does not close by the Closing Date unless (1) the Property appraises below the purchase price and either the parties agree on a new purchase price or Buyer elects not to proceed.

There are four options when this situation occurs.

1) The buyer can bring cash over an above the down payment amount and pay the difference, still being able to attain a mortgage on the appraised value.

2) The seller can reduce the purchase price to the appraisal price.

3) They can do a combination of 1 & 2.

4) Or, elect not to proceed with the purchase and sell of the property.

In this situation, if you are the seller your options are limited to reaching an agreement, not selling, or waiting in hopes of a cash buyer that will pay the difference. The main reason is due in fact to FHA rulings stating that FHA appraisals will remain attached to a property for a 6 month period. This means, depending on your circumstance you must be willing to reduce your sell price to appraisal value.

Buyer’s at times end up reaching a better deal because of this little contingency, but many deals are falling apart because neither party has the means to negotiate up or down. Most FHA buyers are only putting 3.5% down for a reason.

The moral of the story is be careful regardless of which side you are on, because going through negotiations, inspections, and planning how you are going to arrange your living room furniture, only to find out that you are paying well over market price for a home is not a comfortable scenario. Stay away from outrageously priced homes with sellers hesitant to negotiate. The well priced homes are out there they just don’t tend to hang around very long.

Listing Leaders

Coldwell Banker Residential Real Estate’s August Sales and Listings Leaders

Winter Springs, FL, (September 14, 2009) – Anne-Marie Wurzel was named sales leader and Cheryl and Justin Core were named listings leader at Coldwell Banker Residential Real Estate’s Winter Springs office.

According to David W. Robinson, CRS, GRI, Managing Broker of the Coldwell Banker Winter Springs office, “It is a real pleasure to recognize the hard work, dedication and contributions of Anne-Marie, Cheryl and Justin.”

Anne-Marie Wurzel, Cheryl and Justin Core may be reached at the Winter Springs office at 407-696-8000.

About Coldwell Banker Residential Real Estate

Coldwell Banker Residential Real Estate (FloridaMoves.com), is the leading real estate brokerage company in Florida, serving the communities of Central Florida, Palm Beach, Southeast Florida, Southwest Florida and Tampa Bay. Coldwell Banker Residential Real Estate is part of NRT LLC, the nation’s largest residential real estate brokerage company. NRT, a subsidiary of Realogy Corporation, operates Realogy’s company-owned real estate brokerage offices.
For more information, visit our Web site, www.FloridaMoves.com/WinterSprings

and www.FloridaMovesNews.com

Any house. Any time. Anywhere.

First-time buyers race to qualify for $8K federal tax credit

LOS ANGELES – Sept 10, 2009 – First-time homebuyers have just 12 weeks to find and close on a home to qualify for the $8,000 federal tax credit by Nov. 30 – before the Dec. 1, 2009, deadline.

Those just beginning the process will have to beat the average time it takes to buy a home, a challenge that real estate professionals can help buyers meet even though it’s taking longer today to close most transactions today, according to Realtor.com officials.

On average, first-time buyers search 12 weeks to find a home, while closing can take up to 60 days, depending on individual circumstances and local regulations.

Additionally, the tax credit has proved to be extremely popular this year: studies show that taking advantage of the first-time homebuyer’s federal tax credit and relevant state incentives is the most important reason motivating 10.8 percent of buyers today. In fact, approximately 1.14 million buyers have already filed for the credit. Many more are expected to file for the credit when income taxes are due April 2010.

Historically high affordability is a major factor driving first-time homebuyers today, a growing group that accounted for one third of all purchases in July 2009, according to a survey by the National Association of Realtors®.

NAR’s affordability index in July 2009 was 36.0 percentage points higher than July 2008. Under these conditions, the typical median-income family can allocate 15.8 percent of their gross income to mortgage payments, well below the traditional allowance of 25 percent. Interest rates, which play a major factor in affordability, remain low, and averaged 5.22 percent in July for a 30-year fixed rate loan.

Realtor.com President Errol Samuelson said, “The national median home today costs approximately $174,100. By moving quickly to find and close on a home by Nov. 30, first-time buyers qualifying for the $8,000 tax credit can actually purchase this same home for only $166,100, an almost 4.5 percent discount off of the price of a typical new home. Because affordability this year is at its highest level in 28 years, and the market offers an incredible selection of homes within reach of most first-time buyers, we expect their numbers to grow as they pursue this once-in-a-generation opportunity to become homeowners.”

He added that by combining the effective use of technology for information-gathering with expert advice from local Realtors, today’s first-time home buyers can beat the clock and use the $8,000 federal tax credit, along with any available state-level credits, to purchase a home before the Dec. 1 deadline.

“By moving quickly, being prepared to make decisions in the face of increased competition, and using the expertise of a real estate professional, first-time homebuyers can still close on time and qualify for the $8,000 federal tax credit,” Samuelson said.

Housing Market Indicators

FAR - News and Events: "Housing Market Indicators:

Florida existing home sales:
(month-to-previous-year comparison)
33%

Florida existing condo sales:
(month-to-previous-year comparison)
48%

Florida existing home median price:$147,000

Florida existing condo median price:$108,300

Florida consumer confidence: 67

National existing home sales:
(month-to-previous-month comparison; all housing types)
7.2%

National existing home median price
$178,400

National (Freddie Mac) mortgage rate
(all housing types)5.2%"

New Condominium Regulations by FHA

In the most recent FHA guidelines and regulations that are set to be implemented October 1st, 2009 is the following:

FHA Concentration
a. Projects consisting of three or less units will have no more than one unit encumbered with FHA insurance.
b. Projects consisting of four or more units will have no more than 30 percent of the total units encumbered with FHA insurance.

What this states is that FHA will not back more than 30% of any given building. This applies to all condominium projects of 4 or more units. The condominium market is still in shambles and this is going to further reduce the accessability to financing.

At this point in time there are very few condos that are financable by FHA. In downtown Orlando there are only 2 highrise condos that are FHA approved. If you were considering investing or purchasing condos in the near future it appears there will be a rough road ahead for the foreseeable future. There could be many unintended consquences to this enactment like higher vacancies, more investor owned units, decreasing value, and higher HOA fees. Although on the other hand can you blame FHA for not wanting to fund the instability of this market at this time?

This article breaks down the situation of the condo market and it's volatilty expanding on some of the points above.


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