Alpharetta Cumming Lake Lanier Real Estate Blog

Here are 6 things you should know about the First Time Buyer Tax Credit.

1. Buyers have until July 2009 to make a purchase that qualifies.
The tax credit was passed in July of this year as part of the Housing and Economic Recovery Act (H.R. 3221). It’s worth up to $7,500 and can be taken in a single tax year. Authorization for the credit ends July 1, 2009, so if you buy in the first half of 2009 you will be able to take the credit on your 2009 tax return. Taxpayers can take the credit on their 2008 tax return if they bought their house this year after April 9th.

2. Buyers don't really have to be "first-timers."
The tax credit is actually available to any individual or household that hasn’t owned a home for at least three years.

3. Even if buyers exceed the income limit, they can benefit from the credit.
The actual credit amount is set as a percentage of the home purchase amount. That percentage amount is 10 percent, so you can get 10 percent of the home price credited against your tax liability, up to a maximum $7,500. Sounds like a great deal. But what if you make more money than the income limit of $75,000 for individuals and $150,000 for households? Good news: Individuals whose income exceeds the $75,000 limit but don't make more than $95,000 can still take the credit but on a reduced basis. The same thing applies to households earning up to $170,000. By the way, any house is eligible as long as it’s a primary residence and is in the United States.

4. Think of it as an interest-free loan.
The federal government requires the tax credit to be paid back in small, 6.67-percent increments over 15 years, although repayment will be no more than $500 yearly and payments will not start until 2011. For that reason, some analysts have likened the credit to a 15-year, interest-free loan to help make home buying affordable. The National Association of Realtors is pushing congress to remove the repayment provision, making this tax credit a true tax credit rather than an interest-free loan.

5. You don't have to be authorized before making a home purchase.
There is no pre-purchase authorization, application, or other approval process. Eligible buyers simply have to claim the credit on your IRS Form 1040 tax return and/or any form that the IRS might devise.

6. New-home construction qualifies.
For a home that a buyer constructs, the purchase date is the first date the buyer occupies the home. However, any home that is not a primary residence, such as a vacation home or income property, does not qualify.

Labels: first time home buyer, hr 3221, tax credit, The Housing and Economic Recovery Act of 2008

Yesterday, President Bush signed into law a housing bill passed by Congress aimed at stabilizing the housing market. Opponents to the bill argue that it will reward "irresponsible" lenders and consumers and allow the government too big a role in the housing market. The bill's supporters stress that providing a financial lifeline for the government-sponsored Fannie Mae and Freddie Mac as well as more regulatory oversight would contribute to confidence and stability in housing and financial markets. It will be interesting to see how this bill effects the housing market. Following is a recap of some of the key points in the Housing and Economic Recovery Act of 2008:

— Give the Treasury Department the power to extend Fannie Mae and Freddie Mac an unspecified line of credit and to buy their stock, if necessary, to prop up the mortgage companies. The two companies back or own $5 trillion in U.S. mortgages — nearly half the nation's total.

— Allow qualified homeowners facing foreclosure to apply for lower fixed-rate, 30-year mortgages backed by loan guarantees from the Federal Housing Administration. The original lenders would have to agree to take a loss on their loans.

— Create an independent regulator to oversee Fannie Mae and Freddie Mac. The regulator could establish minimum capital requirements for the two companies and limits on their portfolios. It would also have approval power over the pay packages of Fannie Mae and Freddie Mac executives.

— Provide $3.9 billion in grants to communities with the highest foreclosure rates to buy foreclosed and abandoned properties.

— Give about $15 billion in housing tax breaks, including a credit of up to $7,500 for first-time homebuyers who bought homes between April 9, 2008, and July 1, 2009.

— Put a cap of $625,500 on the loans Fannie Mae and Freddie Mac can buy in certain high-priced areas, and a cap in other areas of up to 15 percent above the median home price.

— Count any federal infusion for the mortgage giants under the debt limit, essentially capping how much the government could spend to stabilize the companies without further approval from Congress. As of Tuesday, the national debt that counts toward the limit stood at about $9.5 trillion, roughly $360 billion below the statutory ceiling.

— It also includes changes that will affect senior citizens through modifications to the standard Federal Housing Administration HECM reverse mortgage product.

Labels: fannie mae, FHA, foreclosures, freddie mac, president bush, The Housing and Economic Recovery Act of 2008

The Housing and Economic Recovery Act of 2008 is a hot topic and is expected to be signed by the President this week. So what will the bill do? Here's a look at some key points to help understand the bill.

— Give the Treasury Department the power to extend Fannie Mae and Freddie Mac an unspecified line of credit and to buy their stock, if necessary, to prop up the mortgage companies. The two companies back or own $5 trillion in U.S. mortgages — nearly half the nation's total.

— Allow qualified homeowners facing foreclosure to apply for lower fixed-rate, 30-year mortgages backed by loan guarantees from the Federal Housing Administration. The original lenders would have to agree to take a loss on their loans.

— Create an independent regulator to oversee Fannie Mae and Freddie Mac. The regulator could establish minimum capital requirements for the two companies and limits on their portfolios. It would also have approval power over the pay packages of Fannie Mae and Freddie Mac executives.

— Provide $3.9 billion in grants to communities with the highest foreclosure rates to buy foreclosed and abandoned properties.

— Give about $15 billion in housing tax breaks, including a credit of up to $7,500 for first-time homebuyers who bought homes between April 9, 2008, and July 1, 2009.

— Put a cap of $625,500 on the loans Fannie Mae and Freddie Mac can buy in certain high-priced areas, and a cap in other areas of up to 15 percent above the median home price.

— Count any federal infusion for the mortgage giants under the debt limit, essentially capping how much the government could spend to stabilize the companies without further approval from Congress. As of Tuesday, the national debt that counts toward the limit stood at about $9.5 trillion, roughly $360 billion below the statutory ceiling.

— It also includes important changes that will dramatically affect senior citizens through modifications to the standard Federal Housing Administration HECM reverse mortgage product.

Labels: fannie mae, foreclosure, Foreclosure Prevention Act of 2008, freddie mac, housing bill, stimulus, The Housing and Economic Recovery Act of 2008