The Federal Tax Credits Blog

Posts Tagged ‘extension’

Question: Housing Bill – New home tax credit: Impact on single salary over $75K?

I’m not sure how this Bill (HR 3221) works – I will be buying a house in the time period defined by this bill – but my salary is about $96K. It mentions “phasing out” over $75K. Will I get the $7,500 tax credit as a first time home buyer? Can anyone explain (simply – the more I look this bill up the more confused I seem to be sadly) what this would mean to someone in my position? Thank you very much.

Answer: This so called Tax Credit, is nothing more than an interest free loan. This credit has what the bill calls a “recapture” period where you have to pay the IRS back over the course of possibly 15 years the full amount of the tax credit. For example, lets say you qualify for the full 7,500 credit. The legislation says, “if a credit under subsection (a) is allowed to a taxpayer, the tax imposed by this chapter shall be increased by 6 2/3 percent of the amount of such credit for each taxable year in the recapture period. This means that 6.66667% of 7500, which is 500, is added to your tax bill for 15 consecutive years. That is a mighty attractive loan offer, but certainly nothing close to a tax savings. The real disadvantage is if you sell the house before the recapture period is over, they now accelerate your repayment and this can cause a larger than expected tax bill at the end of the year. Now to address your specific question: Based on the current legislation (remember this has not gone through conference committee and the President has NOT signed it) it appears that with a annual income of 96,000, you would be eligible for the lesser of 10% of the total home purchase price or around 6,000 dollars (quick math). The amount reduced is based on the ratio of 75,000 bearing to 20,000. I would recommend NOT claiming this Tax Credit or allowing this tax credit to influence you to buy because it does nothing but help the sellers (builders, real estate agents, etc.) If the fed really wants to help out the buyers, they need to fork up the cash and forget the repayment. Republicans don’t like this bill and I don’t like it either.

Gross Dumps Treasuries as Rally Ends

Bill Gross has dumped all Treasuries from the world’s biggest mutual fund and Warren Buffett is shifting to shorter-term debt

First Time Home Buyer Seminar

Question: 1st time home buy tax credit?

Is it true that the $7500 credit given to first time home buyers this year must be repaid @ $500/year for 15 years? If it is not paid, is it true the government can prevent you from selling the home until you pay?

Answer: The first part is true. The $7500 ‘tax credit’ is really just a $7500 interest free loan that must be repaid @ $500 a year over 15 years.

If you claim the credit and have to sell before the 15 years is up then you have to repay the remaining balance from the proceeds of selling the house. If those proceeds do not include enough ‘profit’ to repay the loan, then it is forgiven. But, if you sell the house and there is money going to you, that ‘loan’ has to be repaid.

So, no, the government can’t prevent you from selling the home and there is no lien attached to the home, but if you sell for more than you bought it for, you must repay it.

Because of that, it seems like the smartest thing you could do with that ‘credit’ is send it directly to the mortgage company. It will reduce the amount of interest you pay, shorten the life of the loan, and if you have to sell, the ‘equity’ is built in.

good luck!

Four Housing Issues To Watch in 2011

Perhaps the biggest question facing the housing market in 2011: Is this the year housing actually hits bottom? Here are four issues to keep an eye on.

Tax Credits Push First-Time Homebuyers Into Market

A Gold Buyer’s View of the Lopsided Risk-Reward Ratio

You’d expect gold to rise when there is consumer price inflation. And there is quite a bit of it. But not in the US…nor in most of the developed countries. Maybe some people are buying gold to protect themselves from inflation, but it looks to us as though they are buying it for another reason – because they are fearful that something is going to go wrong.

Michael Ackerman Talks Seattle Real Estate.Homebuyer Tax Credit Extension (Again!)

Senate Approves $4.6B for Black Farmers, Indians

Money Would go to Settle Longstanding Claims Against Government for Discrimination, Lack of Royalties

Tax Credit Extension

Question: First Time Home Buyer Tax Credit or any Credit (question of primary residence)?

I have been reading the IRS website and can not get a clear cut answer of how the IRS defines primary residence. In 2008, I purchased a home for my parents about 500 miles away in another town. My name is on the deed and the mortgage as well. I do not consider this place my primary residence since I have never lived there.

In Oct of 2009, I purchased a home for myself in which I consider as my primary residence. I am looking to file the First Time Home Buyer’s credit and was wondering if I would qualify? I am not sure if the IRS considers a primary residence as just simply owning a home, in the case I do or is it a place where you actually live?

If I do not qualify for the first time home buyer tax credit, I noticed that there was a second home buyer’s tax credit available as well for $6,500. Do I qualify for this? I closed my current property about a week before the extension in November 2009. Thanks!

Answer: If you owned a home in the last 3 years you normally do not qualify for the FTHB credit. There is a newer credit for folks who upgrade their home to a new replacement home. Your circumstances are too involved to get a good answer in this forum. See a local tax pro for solid advice based on your situation. Here is the IRS form:

http://www.irs.gov/pub/irs-pdf/f5405.pdf

Manitoba Telecom Services Inc. Reports Second Quarter 2010 Results

Manitoba Telecom Services Inc. , including its two primary operating units “MTS” and “Allstream”, today reported its financial results for the second quarter ended June 30, 2010.

First Time Home Buyer Tax Credit – 30 year Fixed FHA Financing – RealEstateMarketingThisWeek.com