$8000 tax credit

Getting Your Home Buyer Rebate Check in 2010

Let me first disclose that I am not a tax professional and this should not be considered tax advice.

Glad that’s over!

When a home buyer client of mine e-mailed me recently with confusion about how to claim the home buyer credit in 2010 from the IRS, I knew that he probably wasn’t the only one out there. He was really bummed out to read an old memo from the IRS on the first page on Google that gave the impression he would have to wait until he filed his 2010 taxes to get his rebate check… but know, recent home buyers, that just isn’t the only option. The new memo was released in January.

The home buyer tax credit was intended to be an economic stimulus… not a delayed stimulus plan.

You have two options to claim the tax credit for home buyers:

• File an Amended 2009 Form 1040x along with IRS Form 5405 and proper documentation including a copy of your HUD-1 Settlement Statement.
• Or you can wait until you file your 2010 taxes next year.

Like I discussed in a post in January, I felt that the home buyer tax credit or rebate program was going to be another super motivator for home buyers who were on the fence. As a Northern Virginia real estate agent, I did see it push some sales forward by a month or two, as those long-time owners living in Vienna VA put their homes on the market ahead of their projected time frame to capture the excitement.

Basically, first timers could get 10% of the sales price or up to $8,000 maximum. And current owners had the option to buy a home to qualify for the long term home buyer tax credit, up to $6,500.

But now that the deadline of April 30, 2010 has passed, there are plenty of people wondering how do I get that money to fix up the kitchen or replace the carpets? Maybe to amended your 2009 using Form 1040x to claim your first time home buyer tax credit is the route for you… consult a tax professional for advice if you have questions.

By the way, how long is it taking people to get those checks?

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$8000 tax credit

The real estate market catches a hint of Spring 2010

We had a bright and sunny weekend here in Northern Virginia, and a surge of home buyers were out looking at the homes for sale that had popped up late Thursday afternoon and Friday morning. A little marketing tip is to put a home into the MLS database Thursday to feed all the IDX sites out there that send e-mails to registered home buyers.  Our MLS, actually the Metropolitan Regional Information System (MRIS), is the #1 source and they pump out the data you see on Trulia, Zillow, Frankly MLS, Roost, Redfin or Sawbuck. They have their own “ad-free” site for you called Homesdatabase.com which is excellent.

So I showed some townhomes in Fairfax around $350,000 and the newest listing was swamped with buyer agents and their eager clients. At one house there was a guy with an Alexander Ovechkin jersey who looked like he would fight us for it!

I tried to show a home in Vienna priced at $599,900 in my neighborhood but the agent, who I know well, told me she had two offers on Friday. One offer was so good that it was accepted by the home sellers… before the scheduled open house!

Vienna, VA Home Buyers can’t wait for the Sunday Open House

I also showed a home in Vienna around the corner priced at $699,900 and again I knew that agent well. She was holding an “open house” and there were three families there at the same instant, all looking quietly and wondering if they would be in a bidding war over this classic 1970′s colonial? It seemed like it was the house du jour…

Residential real estate is the ground floor barometer for the economy and, mark my words, the economists will be talking about this in five weeks. Again, I am seeing a frantic home buyer surge as they are trying to find a home, and get a contract accepted to get the $6,500 or $8,000 home buyer credit before the deadline… and lock in a low mortgage interest rate (currently below 5%).

Real estate in Vienna, VA is fueled by the location to employment centers like Tysons Corner or Reston  (some people like the W&OD Bike Trail) and Fairfax is fueled by price where many homes have dipped significantly but have great locations or neighborhoods.

This is the time, home buyers of Northern Virginia, to have a buyer agent or ABR working for you!

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$8000 tax credit

Real Estate’s New Strategic Focus | April 30, 2010

Revised to include new 5405 instructions

The world of residential real estate in the U.S. is facing an expiration date of historic proportions in 2010 that buyers and sellers need to pay attention to for a variety of reasons. April 30, 2010 is the last day that buyers and sellers can “enter into a binding contract” for a real estate transaction to qualify for the two, limited time, federal tax credits for buyers of residential real estate.

Having a strategic real estate plan in early 2010 is essential for both sellers and buyers of primary residences especially before the ship has sailed… and it will. Hey, I’m just a real estate agent so ask your tax adviser what’s best for your tax situation.

Attention home Sellers, it ain’t just for first-time home Buyers this time!

Way back in November ’09 when first-time buyers were in a frenzy to close on a home before November 30th, Congress passed The Worker, Homeownership, and Business Assistance Act of 2009 to extend the first-time home buyer tax credit and add a new tax credit for “long-time resident” homeowners. So now the move-up home seller group or downsizing home seller needs a clear strategy for getting a contract on their existing home and then a contract on their new home. These tax credits are for principal or primary home purchases and not intended for investors or people buying second homes.

Home Sellers, if you had planned on moving-up or down this year, then you should realize that buyers this winter have a deadline or extra motivation to snatch-up your home. This is important especially since home inventories are low in many areas (supply vs. demand). And then, once you have that contract in hand,  you can put in a contract on your new home before the April 30th deadline for the “long-term resident” credit if you qualify.

If you are thinking of just waiting until the Traditional Spring Market in 2010, then you really need to think again. Waiting until May to put your home on the market is a strategic error. The motivation of the tax credit can act a little like rocket fuel to qualified buyers to enter into contracts by the April 30 deadline, and I witnessed that phenomenon in the Northern Virginia real estate market last fall as the original deadline approached. This credit is essentially up to $8,000 cash to the first-time home buyer… and that will buy a lot of home furnishings!

I forecast 45% of 2010′s real estate sales are “in escrow” during this period

Here are the important dates as posted on IRS.gov:

• Binding Contract by April 30, 2010
• Must Settle on the Purchase by June 30, 2010

First-Time Homebuyer Credit details:

• Buyer who have not owned a primary residence during the three years up to date of purchase
• No one under 18 years old
• Modified Adjusted Gross Incomes up to $125,000 for single filers (reduced credit $125,000-$145,000)
• MAGI up to $225,000 for joint filers (reduced credit $225,000 – $245,000)
• No credit on homes with a purchase price over $800,000
• Maximum Credit of $8,000 or 10% of Purchase price (smaller of the two)
• Need to file IRS Form 5405
• New instructions as of January 15th, 2010: Revised 1/10 5405 Instructions

Long-time Resident Credit details:

• Must have used the same home as a principal or primary residence for at least five consecutive years of the eight-year period on the date of purchase of a new home as a primary residence.
• Credit up to $6,500
• Modified Adjusted Gross Incomes up to $125,000 for single filers (reduced credit $125,000-$145,000)
• MAGI up to $225,000 for joint filers (reduced credit $225,000 – $245,000)
• Need to file IRS Form 5405
• New instructions as of January 15th, 2010: Revised 1/10 5405 Instructions

Members of the Armed Forces and certain Federal Employees serving outside the U.S.:

• You will have an extra year to qualify for the credit

This information is intended as strategic advice to help give readers an overview of the upcoming 2010 real estate market, and you should always consult a professional tax adviser to discuss your tax situation and if you qualify for this tax credit, and how much you are entitled to receive at your price-point.

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$8000 tax credit

It’s a race to finish the Home Buyer Tax Credit for 2010?

REVISED for the extension (see new post below)

If you are or have a friend who is thinking about buying a home and taking advantage of the $8,000 first-time home buyer tax credit, then there are some facts you need to know, and we need to talk today. Especially since everyone and their little brother/sister knows about the current affordability index… more on that below. And this isn’t just information for my real estate clients in Northern Virginia, but for any home buyer out there across the USA!

Home Buyer Tax Credit info you should know:

• There is a deadline: Have a contract by May 1, 2010 and settle before July 1, 2010
• The income caps for the full $8,000:

Individual Filers with a modified AGI of $125,000
Joint Filers with a modified AGI up to $225,000

• First-timers are defined as someone who has not owned a home in the last 3 years
• Primary residence only (main home)
• A fast transaction from contract to closing is 30 days
• Most lenders suggest giving FHA loans a 45 day window
• The Fairfax County Courthouse is closed for Memorial Day.
• If rates change, your lender may have to give you a new estimate with a new review period.

So your strategy needs to start right now because I am seeing multiple offers on many places as buyers are rushing to beat the Home Buyer Tax Credit deadline. Work the time frame backwards for a minute because the big “crush” on mortgage companies will probably come at the end of June (code for delays). I am going to feel a bit uncomfortable if settlement is after the 19th and will advise you of the risk. With many loans today being of the FHA variety, lets move back another 45 days meaning you need a ratified contract by early April!

So what is this affordability index?

Prices are down about 15% since last year, and 30-year fixed rates that were at 6.5% last year are now lower than you may think. For example Curt Gilbert at Bank of America sent me a rate sheet on 10/30/2009 showing an FHA rate at 5.00% with 0.50 points. Conventional financing to $729,000 has rates close to 5.00% too.

For IRS details, (I will update this)

Time is passing quickly and we should be discussing a game plan right now or you may just miss the Home Buyer Tax Credit for 2010. My contact information is on the Contact Me page.

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