NAR Frequently Asked Questions Homebuyers Tax Credit Changes

I wanted to share this information just in from the National Association of REALTORS® Government Affairs Division. Here are answers to some of the most frequently asked questions on the changes to the Homebuyer Tax Credit

Question: Existing homeowner credit: Must the new house cost more than the old house?

Answer: No. Thus, for example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6500 credit.

Question: 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. If
President Obama has signed the bill by the time I go to settlement, will I qualify for
the new $6500 tax credit?

Answer: Yes. The existing homeowner credit goes into effect for purchases after the date of enactment (when the bill is signed). There is no reference to the date of contract for the new credit. The povision looks solely to the date of purchase, which is generally the date of settlement.

Question: I am a firsttime homebuyer but was not within the prior income limits at the time I
entered into my contract to purchase on October 30, 2009. I will be covered,
however, by the new income limits. If the new rules have been signed into law by the
time I go to settlement, will I be eligible for a credit?

Answer: Yes. The new income limitations go into effect as soon as the President has signed the bill. The income limit and other eligibility rules will look to your status as of the date of purchase,
which is the settlement date. So if the new rules have been signed when you go to settlement,
you should be eligible for the credit (or a portion of the credit if you're within the phaseout
range).

Question: I am an eligible existing homeowner. I have a fair amount of equity in my home. I
have found a home with a nonnegotiable price of $825,000. Will I be able to use any
of the $6500 tax credit?

Answer: No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amount
above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an
absolute ceiling.

Question: I owned my home for 10 years, but sold it two years ago year and have been renting
since. If I purchase a home, will I be eligible for the $6500 tax credit if I meet all the
other eligibility tests?

Answer: Yes. Because you lived in the home for more than 5 consecutive years of the previous 8, you will qualify for the $6500 credit. For example, Say John and his wife bought a home in 2000
and lived there until 2008 when he got a divorce. Whether John has been renting or bought in
the interim, he WOULD INDEED be eligible for the credit because he owned a home and
occupied it as his principal residence for 5 consecutive years out of the last 8 years. The
keyword here is "consecutive." As long as he lived in that house for 5 years straight what he
did since 3 years doesn't impact eligibility.

Question: I am an eligible firsttime homebuyer. I entered into a contract to purchase on
November 1, 2009. Do I have to go to closing before December 1? How does the
extension date affect me?

Answer: You do not have to close before December 1. Once the legislation has been signed, it will be as if the Nov 30 date had never existed. Therefore, so long as the contract settles before April 30 (or July 1, worst case), the purchaser will be eligible for the credit.

Home Selling Tips

We've all watched the HGTV shows, read a magazine article, been given the "secret" to successfully selling a home...but yet some sellers still just do not get it! Putting your best foot forward is crucial to selling a home, especially in a "buyers" market.

We've all heard the age old saying "it's the little things that matter most" or "it's all in the details". When it comes to selling a home, truer words were never spoken. I have been with many a customer touring a home only to be greeted with a foul odor coming from who knows where from who knows what or have endured the frustration of turning on light switches to lights that do not work (simply because the bulb was burned out). Now one might say, hey what's the big deal? Everyone has dirty laundry, don't they? And you've had a light bulb burn out now & then, haven't you? So what's the big deal?

The big deal is that I am selling my house. And every little detail leaves an impression. The foul smell coming from my laundry may simply mean my sons a hockey player but in the mind of a buyer it could leave the impression that I am not a good house keeper and a house that is not well kept can deteriorate faster. Or, the burned out light bulb could say to the buyer that if I can't make sure all the lights are working when I know someone is going to be looking at my house, then what other maintenance or repairs am I neglecting? Neither of these impressions represent the reality of what is going on but they do represent the reality seen by the buyer based on his/her impressions. There is an old marketing saying, "you don't change someones reality you change their impression.

So as you prepare your home for sale and especially right before an Open House or private showing, do make sure to take stock in all the impressions that all the little things are making.

IT APPEARS TO BE WORKING SO LETS NOT STOP!

The $8,000 new home buyer tax credit stimulus seams to be working as evidenced by the three straight months of increases in home sales when compared to the same period last year. As such and with still more home foreclosures to come, it would be wise to extend the program into the new year.

The 10% tax credit (up to a maximum of $8,000) for first time homebuyers will expire on December 1, 2009. To meet that deadline buyers must close on their new home on or before December 1,2009.

This program has had a major impact on housing sales. Without it, who knows where our economy would be. Yes, I know that we still have many problems with the American economy but trust me without this program things would be much worse.

So...again I say it appears to be working so why stop now! If you agree let your Senators & Congressmen know how you feel. Do your part to keep this momentum moving.

Stimulus Tax Credit - Laughing all the way to the bank!

You've probably heard that now is the best time to buy a house, especially for first time home buyers. Why? It's simple - interest rates are at all time lows, real estate inventories are abundant and the US government is offerring up to an $8,000 tax credit.

What is a tax credit?

• Incentive for first time home buyers.
• Applies to home purchases for use as a principle residence of $80,000 and up between now and 12/1/2009 (for homes under $80,000 the credit would be 10% of the purchase price)

Who is eligible?

• 1st time homebuyers (any person who has not owned or purchased a home in the 3 years prior to the day of purchase)

How does it work?

• Every dollar of a tax credit reduces income taxes by $1 In other words the tax is directly applied against the total tax owed.

Is there an income restriction?

• Yes, for those filing form 1040 as single or head of household the income cannot exceed $75,000. Married couples who file jointly may have income of no more than $150,000.

What is a principal residence?

• Generally it is the home wherean individual resides at least 50% of the time.

Are there property location restrictions?

• Yes, the home must be located in the United States.

Do I have to repay the 2009 Tax Credit?

• No. There is no repayment for 2009 tax credits.