The Federal Tax Credits Blog

Archive for December, 2009

A bill that extends the $8000 home buyer tax credit into 2010 for people serving in the military, diplomatic positions and intelligence operations may pave the way for the bill’s extension to the general sector. The Home Buyer Tax Credit is seen by many in the White House as an important stimulus to the economy, helping to create and maintain jobs in the coming year.

The Home Buyer Tax Credit was created to encourage first-time home buyers to purchase their first home and is calculated as 10% of the home’s purchase price up to $8000. By taking advantage of this tax credit, new home owners now have a financial advantage that can make home ownership that much easier. It’s like having one’s closing costs and taxes for the year paid for with a bit left over.

According to a study made by the National Association of Realtors®, 350,000 people who bought a home during the time when the Home Buyer Tax Credit was applicable to their purchase would not have taken their first step to home ownership if it weren’t for the Credit. As of mid-October, the window for civilian residents of the U.S. has been effectively closed, as it is nearly impossible to initiate a home purchase and have closing completed in the timeframe of two weeks.

The extension of the Home Buyer Tax Credit to the military and other government employees makes many hope that it will be generally extended into 2010 so that people who were unable to take advantage of it this year will still have an opportunity. While there has been no official word from the White House on whether this is going to be the case, hopes are high that the positive attitude towards it will be enough for it to be signed into law.

Many believe that the tax credit is an important part of combating the recent foreclosures that have turned some areas of the nation into wastelands of empty houses. The more people who invest their money into real estate, the more people there are to take an interest in their neighborhood and create thriving communities.

With government personnel being granted a reprieve that may enable them to buy homes once returned from active duty overseas, the Home Buyer Tax Credit is still alive and well. Hopefully, once the success of its extension for people serving their country is realized, it will make sense for the government to enable its use by non-government citizens into the New Year.

Local existing-home sales jump in November

Spurred by low prices and extension of the federal tax credit, existing-home sales in Las Vegas increased 50.8 percent to 3,952 in November, Las Vegas-based SalesTraq reported Dec. 22.

RE/MAX and the 2009-2010 Homebuyer Tax Credit

There are a lot of great reasons for Canadians to buy right now. Low home prices and interest rates are the most obvious ones, but did you know about the First Time Home Buyers Tax Credit and the increase in the withdrawal ceiling on the RRSP Home Buyers Plan? The 2009 federal budget is making home ownership easier than ever.

Home prices and interest rates are dropping in most Canadian cities, making it a great time to buy from a basic financial standpoint – if you can own instead of rent for a comparable amount of money, why not? Lower home prices mean that you have more options and more buying power.

Interest rates have dropped along with home prices. Interest rates are what really determine what your home payment will be. Right now, you can get an interest rate for below 5%. This can bring your mortgage payment down hundreds of dollars a month.

The 2009 federal budget allows you to make more money tax-free. The tax free amount used to be $9,600; now it’s $10,320. The ceiling on the first two tax brackets has also risen. An income of up to $40,726 is only taxed 15%. The next bracket of 22% income taxation applies to incomes of up to $81,452.

Right now, the government is offering tax credit towards home renovation from $1000-10000, which ends up being around 15% cash back when you tally up your savings. Buy that fixer-upper and put some work into it, knowing that a good chunk will come back to you in tax savings.

The best deals by far come to the first time home buyers. The Canadian government has increased the amount that one can take from their Registered Retirement Savings Plan (RRSP) from $20,000 to $25,000. This is via the RRSP Home Buyers Plan (HBP). The bonus with using your RRSP is that while you have to pay back the money, you have 15 years to do so.

Canadians have a lot of great reasons to buy in the 2009-2010 season. Low rates, low prices and tax breaks are making Canada a great place to invest in real estate. If you’re a first time home buyer, the advantages are increased with the HBP. Prices will eventually start to climb again and those who have bought homes now will benefit from increases to equity as well as any improvements they have made.

HST taps consumers

On Thursday, July 1, the provincial government’s Harmonized Sales Tax (HST) will come into effect amid controversy, opposing viewpoints and predictions on either the fall of the Liberal government or a new era for the economy of BC.

Michael Ignatieff Vancouver Press Conference

As the colder weather starts to kick in, many home owners’ thoughts turn to heating their homes more efficiently and with the end of the year nearing, many home owners are thinking about tax season and ways that they can take advantage of some of the tax credits currently available. Luckily, the current tax credit incentive for biomass stoves will be available until the end of 2010.

The biomass stove tax credit will cover 30% of the cost of a biomass stove and installation costs up to $1500 for qualifying stoves installed in a primary residence by December 31, 2010. To claim your tax credit you must ensure that your choice of stove qualifies for the program; get a manufacturer’s certification statement from the manufacturer’s website to ensure that the stove qualifies.

Biomass stoves are more efficient than regular wood stoves because due to their design they can produce more heat from less fuel, they create less ash waste, and need far less ventilation to run properly. They come in a variety of types: some just for one type of fuel and some for a variety of fuels. Check out what type of fuel is most readily available in your area before choosing one for your home.

Biomass fuel is basically renewable, plant-based fuel that is sustainable. Wood pellets are a common fuel: made from compressed sawdust, bark, or wood shavings and usually collected from industries that use wood in their products. Wood burns more cleanly than other biomass fuels and produce more heat. Due to these properties, quality wood pellets create a very small amount of ash residue.

Corn is another common fuel for biomass stoves. The dried corn that is used in a heating stove is basically the same type that is used to feed livestock and is cleaned to remove debris that would clog your fuel intake system.

Some less common types of fuel include pits, nuts, and nutshells. These types of fuel will be more or less common depending on your area and the agriculture found there.

Because of the nature of biomass stoves and their ability to use a smaller amount of fuel for warming a home, they are a good investment for most any home. There is no time like the present, apparently, for taking advantage of federal tax credit dollars as well as making your home more efficient to heat.

BRIEFLY: July 22

See what’s happening in and around Marion.

Blaze King Wood Stoves Get Federal Tax Credit!

Question: Have you amended your taxes for the first-time home buyer’s tax credit?

I am about to buy my first home and plan on using the tax credit to do renovations. I am wondering how long it took to get your amended tax return?
This is what I found from the IRS website:

The American Recovery and Reinvestment Act of 2009 expanded the first-time homebuyer credit by increasing the credit amount to $8,000 for purchases made in 2009 before Dec. 1.

For home purchased in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer’s main residence within a three-year period following the purchase.
…
so the July 1st purchase is incorrect

thanks everyone!

Answer: It would take about 4 to 6 weeks

A retrospective: Journey through the news of 2009

The last year of the “aughts” or “double-zeros” – whatever the years from 2000 to 2009 will be remembered as – certainly wasn’t lacking in news.

Home Renovation Tax Credit Benefits

Home buyers who are building their new homes and hope to qualify for the $8K tax credit should know that they have to be moved into their home by December 1st in order to qualify. A sales contract won’t do it! The credit is good until November 30, 2009, which gives home buyers whose residences are under construction only a few more months to qualify.

For already-built homes, qualifying for the tax credit is relatively easy. You buy a home, you move in. For those who are having their homes constructed, there are a lot more steps to go through before one can carry the first couch through the door.

It takes time to choose a buyer, to decide on a location and floor plan and any options that the builder offers. This can make buying new construction more time consuming than a pre-built home. Builders are open to working with buyers, but they are limited in how much they can accomplish in a short period of time. Building a home from the foundation up can take up to half a year, depending on outside factors like materials, worker availability and the kind of work to be done on the home.

There are also issues with contracts, home inspections and certificates. Most of the time, these are easily obtained and passed. However, if there is a problem, it could mean a delay of days or weeks while things get straightened out. You shouldn’t hurry through a new construction purchase just to get the tax credit. A home that is improperly built can cost you a lot more than $8K. The key is to plan very carefully and use builders with a solid reputation. Don’t skimp on inspections and certifications either; you will regret it if something turns out to be wrong with your home and your warranty has expired.

New construction buyers may still be in luck; apparently the effect on new construction by the tax credit has been small thus far. This could mean that builders are less busy with new construction and can still have time to build your home and move in before the first day of December. Ask the builders you interview how much of a workload they have and ask if they can give you some kind of guarantee that the home will be completed by the time you specify.

Builders want your patronage and are willing to work with you, but it’s getting to the point where they can’t build you the house of your dreams in the time allotted. If you have your heart set on a new construction, it’s time to start the home buying process, so you don’t get caught on December 1st with a half-finished home and no Tax Credit Eligibility.

NC economic recovery money creates jobs, helps environment

RALEIGH — The N.C. Department of Environment and Natural Resources received more than $157 million as part of the American Recovery and Reinvestment Act. The department is using the money to stimulate the economy, create jobs and help cities, towns and counties with a host of environmental improvements.

Peter Newman, Scott Borden, Michael Lee: Economics 2009