Athens, GA First-Time Home Buyer Tax Credit: A Wealth of Information is Available

By Danielle Hale, Research Economist

This commentary was prompted by a recent conversation I had with a Realtor® who was lamenting the fact that a first-time buyer who had a co-signer did not qualify for the first-time home buyer tax credit. “That’s not true!” I said and pointed her to an IRS website that stated otherwise. Since this is not the first time I have heard incorrect information on the tax credit from a Realtor®, the news media, or other person or entity that should be in the know, I thought it would be a good time to remind everyone of the basics and show you where to go when you have questions.

The Basics

First-time home buyers who purchase a home to be used as a primary residence before December 1, 2009 are eligible for a tax credit equal to 10 percent of the value of their home purchase up to $8,000. To qualify as a “first-time home buyer” the purchaser and his/her spouse (if applicable) may not have owned a residence during the three years prior to the purchase. The credit is subject to income limits. Single buyers with incomes up to $75,000 and married couples with incomes up to $150,000 may receive the maximum tax credit. The credit decreases for single buyers who earn between $75,000 and $95,000 and for married buyers filing jointly who earn between $150,000 and $170,000. Home buyers earning more than the maximum qualifying income—over $95,000 for singles and over $170,000 for couples are not eligible for the credit. Unlike the credit for homes purchased in 2008, the tax credit for purchases in 2009 does not need to be repaid unless it ceases to be the primary residence of the tax credit recipient within three years after the purchase. In that case, the credit recipient will owe the full amount of the credit at that time the income tax return for the year the home ceased to be your principal residence is due. (i.e. You sell your home on January 1, 2010 or December 31, 2010; the full amount of the credit is due when your tax return is due on April 15, 2011.)

Limited, But Still Powerful

As of now, the credit is still limited to $8,000, available only to first-time buyers, and can be used on purchases that close before December 1, 2009. Still, we expect the tax credit in its current form to impact the market by bringing in a substantial number of home buyers. Check out this analysis done by Research after the credit passed in February to get the full picture. Currently, the National Association of REALTORS® is advocating for changes that would extend the time period for eligible purchases or expand the credit to all buyers. For more information on the legislative picture, visit the National Association of REALTORS®’s government affairs website.

Available at Closing!

While the tax credit itself cannot be claimed until a tax return is filed after a home has been purchased, the FHA recently announced changes to rules that enable FHA lenders to monetize the credit so that a buyer can use it for certain purposes at closing. In order to take advantage of this program, a buyer still must meet FHA’s 3.5 percent minimum down payment requirement. Before FHA’s announcement, certain states had instituted their own monetization programs that enable the monetized credit to be applied to the 3.5 percent minimum down payment. For more information on state level programs, check out this site.

Resources Available from the National Association of REALTORS®

The National Association of REALTORS® has a wealth of information to help everyone make sense of the tax credit. Visit our home buyers and sellers resource page on the tax credit here.

If you’re looking for resources to help you get the message out to potential first-time buyers, be sure to check out the Right Tools Right Now page where you’ll find a special section full of free tools on the tax credit and information about working with first-time buyers.

Resources Available from the IRS and FHA

Of course sometimes it’s nice to go straight to the source. The IRS has some helpful web pages on the tax credit, too. Check out the overview page.

Also be sure to visit the “Scenarios” section of the question and answer page for guidance on issues such as splitting a credit between non-married persons, having cosigners, how to handle the credit for married couples. For further clarification, consult with a tax attorney.

The tax credit is a great opportunity for first-time buyers, but it is only available for a limited time. Be sure you are up to speed on the tax credit provisions that are currently in the law so you can help buyers take advantage of this opportunity.

If you are a buyer in our market, these are probably the best buying conditions in 30 years! If you would like to search the Athens MLS with MapTracks please take a look at listings in our “Classic City” today! On this web MLS search solution you can search every listing on the Georgia MLS for the Greater Athens area or in your Georgia town!

Copyright National Association of REALTORS®, Reprinted with permission. Photos courtesy of Athens Convention and Visitor's Bureau

Possible Expansion of First Time Home Buyer Tax Credit

Posted on June 22, 2009 by hankbailey

At my link to the NewsVine I just posted a seed to a link from U.S. News and World Report entitled, Will the $8,000 First-Time Home Buyer Tax Credit Expand to $15,000?. Johnny Isakson is at it again. Last February when the stimulus bill got stalled in Congress, Isakson took the opportunity to get his idea for a $15,000 break for every new home buyer passed through the Senate. The House wouldn’t have it and the resulting $8,000 credit that did get passed was to many first time home buyers that I have spoken with, not enough motivation to take the plunge into home ownership. So now that you thought you knew what was going on, the rules may be changing, again.

In addition to increasing the credit from $8,000 to $15,000, additional details are as follows;

• Extending the tax credit deadline into the middle of 2010.

• Making the benefit available to all home buyers

• A tax credit to $3,000 for borrowers who refinance.

If you are a buyer in our market, these are probably the best buying conditions in 30 years! If you would like to search the Athens MLS with MapTracks please take a look at listings in our “Classic City” today! On this web MLS search solution you can search every listing on the Georgia MLS for the Greater Athens area or in your Georgia town!

First Time Buyers in Athens, GA; Can Tax Credit Be Used for Down Payment?

According to Realtor.org last Friday, “FHA-approved lenders received the go-ahead to develop bridge-loan products that enable first-time buyers to use the benefits of the federal tax credit upfront, according to eagerly awaited guidance from the U.S. Department of Housing and Urban Development on so-called home buyer tax credit loans that was released today.

Under the guidance, FHA-approved lenders can develop bridge loans that home buyers can use to help cover their closing costs, buy down their interest rate, or put down more than the minimum 3.5 percent.”

The loans can’t be used however toward the down payment of the minimum 3.5 percent according to HUD officials.

If you are a buyer in our market, these are probably the best buying conditions in 30 years! If you would like to search the Athens MLS with MapTracks please take a look at listings in our “Classic City” today! On this web MLS search solution you can search every listing on the Georgia MLS for the Greater Athens area or in your Georgia town!

Tax Credit Can now be Used for Down Payment says FHA

Posted on May 12, 2009 by hankbailey

In a statement made today, HUD noted that the Federal Housing Administration (FHA) is going to allow first time home buyers to use the $8,000 tax credit as a down payment. Up until now first time home buyers wouldn’t receive the funds until after they filed their tax return.

“We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment,” Donovan says. He went on to say that FHA lenders will be permitted to “monetize” the tax credit through “short-term bridge loans.” This will allow home buyers to access the funds at closing.

Donovan also noted, “I do think we have some early signs that the market overall is stabilizing. Since January we’ve seen both home sales moving up and down around a relatively stable number and we are seeing the first signs that the rapid decline in home prices is starting to abate.”

If you are a buyer in our market, these are probably the best buying conditions in 30 years! If you would like to search the Athens MLS please take a look at listings in our “Classic City” today! On this web MLS search solution you can search every listing on the Georgia MLS for the Greater Athens area or in your Georgia town!

Earning First Time Tax Credit with a Co-Borrower who isn’t one!

Posted on May 19, 2009 by hankbailey | Edit

written by Tom Harper and Turner Williams

Mortgage Consultant and Managing Partner

Southern Lending Consultants, LLC

In an effort to stabilize the ailing housing market, the Federal Government is offering a tax credit of $8,000 to people purchasing a primary residence, who have not owned a primary residence in the last three years. Unlike past versions, the latest plan is not a loan and does not have to be paid back. You simply must live in the home for three years to keep the $8,000. Though details have yet to be released, HUD/FHA has announced that the tax credit will be available for use as a down payment and for costs incurred upon closing on a residential property.

We have received many questions about earning the credit when a co-borrower is also on the loan with a first-time home buyer. If the home is purchased as the primary residence of the first time home buyer, the tax credit will be given in full to the first time home buyer. The co-borrower, who has had or does have ownership interest in a primary residence in the past three years, cannot claim any of the tax credit. This provision allows parents, extended family or even friends to help someone qualify for a loan and still make the $8,000 credit available. A helpful FAQ from the IRS can be found at http://www.irs.gov/newsroom/article/0,,id=206294,00.html.

With home values depressed and mortgage rates at historically low levels, the federal tax incentive can make owning a home much cheaper than renting. With FHA loans requiring only 3.5% down payments, the $8,000 tax credit may cover the entire down payment and all of the costs to close on a home. In some cases, borrowers have cash left over for other household expenses. Now is the time to buy! For helpful calculators to evaluate renting versus owning or to determine how much you can borrow, visit our website at www.southernlendingconsultants.com.

If you are a buyer in our market, these are probably the best buying conditions in 30 years! If you would like to search the Athens MLS please take a look at listings in our “Classic City” today! On this web MLS search solution you can search every listing on the Georgia MLS for the Greater Athens area or in your Georgia town!