Members of the U.S. military, Foreign Service and intelligence communities have another year to purchase a home and claim the home buyer tax credit.
Any service member who is or has been on extended duty for 90 days or more between Jan. 1, 2009 to April 30, 2010, has until April 30, 2011, to sign a sales contract and until June 30, 2011, to close on the property. Both the $8,000 first-time and the $6,500 repeat home buyer tax credits are included in the extension.
The rule that requires buyers to repay the credit if they move out of their home within three years has also been waived for qualified service members if they receive government orders to move.
Special thanks to Kevin Kenagy for providing this information.
Kevin Kenagy, Senior Loan Officer
Hyperiod Capital Group Retail
4640 SW Macadam Ave. Ste. 260
Portland, OR 97239-4232
NMLS ID: 211691
The April 30th deadline is just around the corner!
In order to claim the tax credit, Home buyers must sign a purchase agreement between November 30, 2009 and April 30, 2010, and close by July 1, 2010.
As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress passed legislation that grants a tax credit of up to $8,000 to first-time home buyers and $6,500 for existing homeowners who have lived in their home consecutively for 5 of the previous 8 years. (More Details Here)
To claim the credit as part of your 2009 return, you will need: The standard Form 1040 and Form 5405 for the home buyer tax credit.
1. First begin Form 1040.
2. Be sure to take note of your adjusted gross income, which you enter on lines 37 of the form. Form 5405 actually requires you to note your modified adjusted gross income, but that affects few people, so most will just use their adjusted gross income.
3. When you come to Line 69 you’ll be asked to enter your tax credit amount. To do that, you’ll need to first complete Form 5405.
4. Once you complete Form 5405, enter the amount on Line 69, then complete your return.
5. Attach Form 5405 to your return.
When to Apply the Credit
- Buyers purchasing homes on or before December 31, 2009 may claim the credit on their 2009 tax returns.
- Buyers purchasing in 2010 will have the option to:
* Claim the credit on their 2009 return, even if the purchase is completed after December 31, 2009;
* File an amended return for 2009 if their purchase is completed after April 15, 2010; or,
* Claim the credit on their 2010 tax returns.
Yesterday morning mortgage broker Venessa Ward of Pacific Residential Mortgage spoke to the Bella Casa Real Estate brokerage. She covered a lot of valuable information and I wanted to share some of the key points we learned from Venessa.
Venessa provided this FHA loan scenario to illustrate how waiting to purchase will hit your pocketbook in just a short 6 weeks from now. You will notice three upcoming changes that will affect your out-of-pocket expenses:
- The UFMI rate is increasing from 1.75% to 2.25% (Up Front Mortgage Insurance is an insurance premium collected by FHA at the time the loan is initially made. It is in contrast to private mortgage insurance (PMI), which is collected by the lender each month when a buyer’s down payment is less than 20% of the purchase price.)
- The allowable Seller Contribution will decrease from 6% to 3%. For example, a seller can only contribute up to 3% toward the buyer’s settlement charges (formerly called “closing costs”).
- The Homebuyer Tax Credit expires on April 30. Buyers must be under contract, having a signed purchase agreement in hand by April 30th, but you have until June 30th to close the financing. If a first-time homebuyer misses this April 30th deadline then you will miss out on $8,000.
Now take a look at this chart. In the case of $193,000 loan, there is a potential difference of $14,965 by purchasing after April 2010.
The lending industry has undergone big changes this past year, resulting in different paperwork, requirements to qualify for loans, and more complexity. Bella Casa firmly and absolutely encourages all buyers to ONLY seek financing from LOCAL mortgage lenders. You need to be able to sit face-to-face with your lender so they can educate you about the process and your loan, and also so that you can hold your lender accountable.
We realize that these figures can be confusing, so we highly recommend that you call a local lender to discuss your specific situation.
Special thanks to Venessa Ward from Pacific Residential Mortgage!
Pacific Residential Mortgage has offices in McMinnville and Lake Oswego.
Venessa Ward, Sr. Mortgage Banker
“Making it happen in 2010”
Pacific Residential Mortgage, LLC
117 NE Fifth Street, STE D
McMinnville, OR 97128
(503) 437-9200 Office
(971) 241-2001 Cell
(503) 670-0674 Fax
(800) 758-0030 Toll Free
These questions will help you decide whether you’re ready for a home that’s larger or in a more desirable location. If you answer yes to most of the questions, it’s a sign that you may be ready to move. Somewhere like Berlin might whet your appetite. If so, check out JLL Residential Development Germany.
1. Have you built substantial equity in your current home? Look at your annual mortgage statement or call your lender to find out. Usually, you don’t build up much equity in the first few years of your mortgage, as monthly payments are mostly interest, but if you’ve owned your home for five or more years, you may have significant, unrealized gains.
2. Has your income or financial situation improved? If you’re making more money, you may be able to afford higher mortgage payments and cover the costs of moving.
3. Have you outgrown your neighborhood? The neighborhood you pick for your first home might not be the same neighborhood you want to settle down in for good. For example, you may have realized that you’d like to be closer to your job or live in a better school district. What if it’s not just your neighbourhood that your have outgrown? What if it’s because you actually want to move country and live in a completely new place. Why not have a new adventure and move all the way across the world to Australia. If this idea excites you then you should take a look at these real estate agents Australia, just to give you an idea of what you are missing out on. Continue reading “Does Moving Up Make Sense?”
This IRS video explains how to claim the Homebuyer Tax Credit on your 2009 or 2010 taxes, and the official paperwork you must submit.
Learn more about the Homebuyer Tax Credit, see FAQ’s and Sample Scenarios
Download IRS Form 5405.
The Federal Housing Administration announced several changes to FHA insured loans this week.
1) The upfront mortgage insurance premium will increase from 1.75% to 2.25%.
For example: On a a $200,000 mortgage, a 1.75% mortgage insurance premium added $3,500 to the FHA loan, bringing the total loan amount to $203,500 that a borrower was required to qualify for. With the increased premium at 2.25%, the premium would increase to $4,500 and the borrow would need to qualify for a $204,500 loan. This amounts to an approximate difference of $5.37 per month at an interest rate of 5.00%.
Continue reading “Changes to FHA Loans Impact Buyers”
Watch this IRS video tip on taking advantage of the Homebuyer Tax Credit. Also, check out BellaCasaNewsAlert.com for a comprehensive explanation of the Homebuyer Tax Credit. Or click here, here, and here to see our previous blog posts about the tax credit.
Did you know that for qualifying purchases in 2010, you will have the option of claiming the credit on either your 2009 or 2010 return?
These sample scenarios further explore the ins and outs of this valuable federal tax credit.
I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a new home. I have lived in my current home for more than 5 consecutive years and am within the new income limits. I will go to settlement on November 20. Since the new law has gone into effect, will I qualify for the new $6,500 tax credit?
Answer: Yes. The existing homeowner credit goes into effect for purchases after the date of enactment (Friday, November 06, 2009 – when the bill was signed). There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement. Continue reading “Sample Scenarios – regarding the extended Homebuyer Tax Credit”
You’ve heard about the expanded federal tax credit for first-time and repeat homebuyers, and now you have specific questions. Right? Here are several frequently asked questions related to the Homebuyer Tax Credit. Let us know if you have further questions and we’ll be glad to help you.
Q. For existing homeowners, must the new house cost more than the old house?
A. No. For example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6,500 credit. Continue reading “Frequently Asked Questions – regarding the extended Homebuyer Tax Credit”