The First Time Homebuyer Extension has been signed into law!

The First Time Homebuyer Extension has been signed into law!Great News for Virgins who held out for their first timeIf you haven’t owned a home in the last 3 years, you are still eligible for the $8,000 tax credit. Just approved by the President, the Credit will extend through April 30^th to contract on a home. You will have through June 30^th to close on it.The new tax credit is no-longer Virgin exclusive. The credit has been expanded to non-first time homebuyers as well, giving some move-up buyers $6500 of more purchasing power. The caveat is that you must have owned your current home as your primary residence 5 out of the past 8 years.Other details

• The income limits were raised from $75,000/$150,000 (single/married) to $125,000/$225,000.
• Where there was no maximum home price in the first bill, the maximum purchase price is now $800,000
• For purchases made in 2010, you would be able to claim the credit on your 2009 income tax return
• You must remain in this home as a primary residence for 3 years after you purchase it
• An Anti-fraud rule has now been attached – you must attach documentation of purchase to the tax return
• The tax credit limits for single filers are: $4,000 for the First-Timer and $3,250 for the Move-Upper

Creative Ways to Use the Credit:There are many creative ways of structuring your home purchase transaction in ways that maximize the benefits of the credit. Here are a few examples:

• The credit applies to 1-4 unit homes as long as you live in one of the units as your primary residence – you could live in one unit and rent out the others.
• If two unmarried individuals buy a home, and only one of the individuals qualifies for the credit based on their income or past home ownership status, the individual who qualifies for the credit can claim the full credit (Note: in the case of married couples, both spouses must qualify for the credit).
• The credit applies even if you have co-signers on your mortgage loan

Will YOU take advantage of this new legislation?We would love to know what you think. Please share your thoughts.Do you think this is a good move by our government?Do you think extending the credit during the slowest buying months of the year will have the intended impact?Do you plan to take advantage of this incentive? If no, why not?More details from our preferred lenderCheck out the following two pdf’s from our preferred lender, Kristin Carroll, for answers to frequently asked questions:First Time Home Buyer 2009-2010 Tax Credit FAQRepeat Buyer 2009-2010 Tax Credit FAQWait, there’s more…Other ways to reduce your 2009 tax debtIn addition to the $8,000 tax break for first-time home buyers and the newly expanded tax credit that includes move-up buyers, new tax-relief bills passed in 2008 provide for a number of other tax breaks that may lower your 2009 tax debt. Plan now and review these breaks with your accountant to see if they could help reduce your tax liability in 2009 and beyond:Payroll Tax Credit. For 2009 and 2010, Congress gave workers a 6.2% credit on earned income, applied as lower income tax withholding (there are caps based on income). Recipients of Social Security, Railroad Retirement benefits or Supplemental Security Income, some federal workers, and veterans with disability pensions will get a one-time $250 check. Self-employed workers may be able to reduce quarterly estimated payments to get advance benefits. Larger Personal Exemptions. For 2009, each personal exemption you can claim is worth $3,650-up by $150 over 2008. Higher Standard Deductions. The standard deduction for married couples filing jointly rises to $11,400 up by $500 from 2008. For singles, the amount increases to $5,700-up by $250 over last year, and heads of households can claim $8,350, a jump of $350. Tax Credit for College Tuition. For 2009 and 2010, the Hope credit is replaced by a new credit of up to $2,500 per student a year for four years of college, not just the first two years. It now also covers the cost of books, but begins to phase out based on higher incomes. Child Tax Credit. If the credit exceeds the filer’s tax liability, all or part of the credit will be refunded if the filer earns more than $3,000 – down from $12,550 in 2008. (Also, for families with three or more children, the maximum earned income tax credit for 2009 and 2010 rises by $628.50)Other changes that could affect you include higher income limits for deductible IRAs and Roth IRAs, higher estate tax and gift tax exemptions, credit for energy-saving home improvements, and partial exclusion of unemployment benefits.To understand how the new tax breaks could save you money, consult with your financial advisor or post your questions on this blog.

Tagged as: Property Virgins, Tax Benefits