Time is running out for $8,000 Exemption!

Time is running out!

Pocketwatch for blog

The US government has an $8,000 tax credit for you if you have not owned a home in the last three years. It is called a First-Time Homebuyer Credit, but it is for anyone who is buying a primary residence that has not owned a home since 2006. This means that you can deduct $8,000 from your 2009 taxes and may end up with $$ in your pocket in 2010. Please see your CPA or Tax adviser for guidance.

The single most important rule in this stimulus program is that your escrow must close by November 30th, 2009. This gives you less than 120 days from the publication of this blog to close. Since many affordable homes are in the distressed market, foreclosures and short sales, time is literally running out for buyers. These properties tend to have longer escrow periods and must be approved by various entities. A short sale can take as long as 5 months to clear escrow.

Now is the time to contact Hilo Brokers, LTD to see what bargains are available in this market. There are plenty to be had all over East Hawaii in all classifications.  Whether you are looking for a Farm property, waterfront home or a cottage, there are fantastic deals available in today’s market place. At Hilo Brokers, LTD, we can offer you turn key assistance in making your purchase and you can rest assured that we will find the best home for your real estate dollars and if it is your first home in 3 years, you can take advantage of this Government incentive for home buyers. You must act quickly if you want to be assured of qualifying and receiving your $8,000 credit.

House made of money

For more details on the tax credit and what it can mean to you, check our past post about this incredible program: $8,000 Tax Credit Used for Closing Costs & More

ContactHilo Brokers, LTD today and get the ball rolling!

$8,000 Tax Credit Used for Closing Costs & More

Following up on my previous post

On May 29th, NAR announced FHA-approved lenders received the go-ahead to develop bridge-loan products that enable first-time buyers to use the benefits of the federal tax credit upfront, according to eagerly awaited guidance from the U.S. Department of Housing and Urban Development on so-called home buyer tax credit loans.

Under the guidance, FHA-approved lenders can develop bridge loans that home buyers can use to help cover their closing costs, buy down their interest rate, or put down more than the minimum 3.5 percent.

According to senior HUD officials, the loans can’t be used to cover the minimum 3.5 percent.

Thus, buyers applying for FHA-backed financing with an FHA-approved lender that offers a bridge-loan program can get a bridge loan to bring down the upfront costs of buying a home significantly but would still have to come up with the minimum 3.5 percent downpayment.

There remain many sources of assistance for buyers needing help with the 3.5 percent downpayment, including many state and local government instrumentalities and nonprofit lenders.

In addition, some state housing finance agencies have developed their own tax credit bridge loan programs, so buyers in states whose HFAs offer such programs can monetize the tax credit upfront to cover all or part of their downpayment. These programs are separate from what HUD announced today.

The first-time homebuyer tax credit was enacted last year – and improved upon earlier this year – to help encourage households to enter the housing market while interest rates are low and affordability is high. The credit is worth up to $8,000 and is available to households that haven’t owned a home in at least three years. The credit does not have to be repaid, and is fully reimbursable, so households can get their credit returned to them in the form of a payment.

Learn more about the credit, including how to apply for it this year even if you’ve already filed your taxes, at www.REALTOR.org.

As always, we’re available to answer your questions, or assist you in finding your perfect Big Island “first home” … just contact us.

$8000 1st Time Homebuyer’s Tax Credit – Easy Overview

We’ve had lots of questions regarding the new $8000 first time homebuyer’s tax credit, so I wanted to provide the basic overview:

If you know anyone who qualifies as a first time home buyer, they may be eligible for a large tax credit in 2009.  The new stimulus bill, the American Recovery and Reinvestment Act, signed by President Barack Obama on February 17, 2009, updates the previous First Time Home Buyer Credit of 2008.

Some important changes include:

  • No repayment for the 2009 credit if you do not sell before 3 years
  • Maximum credit increase from $7,500 to 8,000 or 10% of the purchase price of the home (whichever is smaller)
  • Qualifying dates include homes bought between January 1, 2009 and before December 1, 2009
  • First time home buyer is defined as someone who has not owned a principal residence in 3 years
  • Income limits apply, but those earning more than the limits may qualify for a reduced credit

The income restrictions are based on the Adjusted Gross Income (AGI) on your tax return.

Income restrictions include:

  • Individuals/Single Head of Household – income no more than $75,000
  • Married couples filing Joint return – income no more than $150,000

The 2009 First-Time Homebuyer Tax Credit is claimed on IRS Form 5405 and filed with your 2009 federal tax return. Tax forms can be found at www.irs.gov.

**UPDATE** As of May 29th, first time home buyers can use the credit toward closing costs and more. Read all about it here.