There has been a lot of debate of the First Time Home Buyer Tax credit in the last several months, intensifying as the original November 30 deadline approached. Today, President Barack Obama signed into law bill H. R. 3548, granting an extension of the credit until April 30, 2010. The measure passed with an unprecedented show of bi-partisanship with a vote of 403-12 in the house and the Senate approving it unanimously.

First Time Home Buyer Tax Credit Changes

The bill made some changes to the original tax credit, aside from extending the deadline to April 30, 2010 to claim it. However, you have until June 30, 2010 to close on a property and still be able to claim the credit. So, say you put in an offer on a home towards the end of April next year. The offer is accepted and you open escrow on the 28th. As long as you close escrow before June 30, you can still claim the credit (of course, you have to meet the other requirements as well).

Credit Extended to Current Home Owners

Another significant change to the original credit is the addition of a smaller credit of $6,500 for current home owners if they purchase a new primary residence. There are of course, some requirements. In order to qualify for the credit, existing home owners must have lived in their primary residence for the last consecutive five years of out eight. The new home purchased can't exceed more than $800,000. You must also meet the new income requirements (see below) and just like first time home buyers, you must live in the new home for at least three years. Otherwise, you will be forced to repay the credit.

Income Limits

The other major change to the tax credit is the raising of the income limits. Under the original tax credit, a single person could earn no more than $75,000 a year and married couples $150,000. Now the income eligibility limits for both groups of home buyers have been raised to $125,000 a year for singles and $225,000 for married couples.

Military Personnel

Members of the Armed Forces and certain federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and still qualify for the credit. An eligible taxpayer must buy or enter into a binding contract to buy a home by April 30, 2011, and settle on the purchase by June 30, 2011.

The bill H. R. 3548 also extended unemployment benefits for another 14 weeks for those out of work people who have exhausted their benefits. It also provides additional tax relief for small businesses.

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Source: Associated Press

Attention to all of you sitting on the fence. Time is running out for the First Time Home Buyer Tax Credit. Rumors have been flying around Washington for the last several months about a possible extension of the credit, but do you really want to gamble on the Federal government? After all, congress could simply reinstate the 2008 tax credit of $7,500  again that has to be paid back!

The 2009 credit officially ends on November 30th of 2009. In order to claim it, you have to meet certain qualifications which have been posted on this site. The major hurdle facing any buyer that wishes to claim the credit is closing in time. Right now, unless you are paying cash, homes are taking anywhere from 35 to 45 days or more to close escrow from the time the offer has been accepted.

What does that mean for you? Simply put, if you are looking to buy a property this month, in order for you to close in time to claim the credit, the property needs to be in escrow as soon as possible. Preferably, by the end of next week at the very, very latest.

This only applies to bank owned homes. If you are buying a new Las Vegas home or condo directly from the builder or an actual regular listing being sold by the owner, then you have up until the end of the month to get your offer accepted and escrow started. Many new home builders are stating that they will guarantee close of escrow before November 30th on any of their homes.

The Las Vegas real estate market is still a buyer's market (as are most of the major real estate markets in US) and you have to allow additional time to close escrow on a property. If you are currently thinking about buying a property and claiming the tax credit, you might want to consider a new home. New home builders are offering some fantastic deals right now and you'll avoid a lot of headaches as far as closing on the property.

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There has been a lot of talk (and confusion) about the economic stimulus bill and what it means to home buyers. Who qualifies? What year can I claim the credit? How much of a refund would I get back? What are the criteria to receive the credit? So I'm going to attempt to answer the most common questions about the bill. Keep in mind, I am NOT a tax professional or accountant and always recommend when it comes to your taxes to seek the advice of an accredited tax professional.

That being said, the bill states that first time home buyers can claim a tax credit worth $8,000 OR 10% of the home's value, whichever amount is less. So, if you bought a condominium for $65,000, your tax credit under the bill would be $6,500, not $8,000.

Qualifying

In order to qualify for the credit, the home purchase must be made between January 1st and November 30th of 2009 (so if you buy a home on December 1, 2009 you are not eligible). In addition, there are income restrictions as well. To qualify, a single person must make less than $75,000 a year. Married couples must make under $150,000 a year. However, higher income buyers may receive a partial credit. You must also live in the house purchased for at least three years or you will be required to pay back the credit. The property being purchased can not be owned by a close relative like a parent, grandparent or one of your children. The definition in bill for a first time home buyer is anyone that has not owned a home in the last three years.

Tax Filing

The credit can be claimed on your 2008 or 2009 income taxes. Now as I said you can claim the credit on your 2008 tax filing. If you have already filed them, you can file an amended return to claim the credit if you wish to do so. Based on the feeback we've been getting, the process takes about 12 weeks. Another great thing about the credit it that it is fully refundable, so even if your total tax bill (refund) is less than $8,000 (and you qualify for that amount of a credit), you would still receive the full $8,000 back plus the amount you had overpaid.

For example, John's taxes showed that he had paid $5,000 in taxes over the year. He filed his return and he actually only owed $3,000 in taxes. Normally he would have received a refund of $2,000. But under this bill, he would receive the full $10,000 instead! To claim the credit on your taxes is just a matter of filling out the form, without any additional paperwork involved.

This is a simplified breakdown of the economic stimulus bill. I highly recommend consulting a professional tax service regarding your taxes. You can download the tax form here: http://www.irs.gov/pub/irs-pdf/f5405.pdf

Thank you for reading our real estate blog and feel free to contact us for all of your Las Vegas NV real estate needs.  

source: CNNMoney.com