$8,000 First-time Home Buyer Tax Credit at a Glance
About the First-Time Home Buyer Tax Credit
Showing posts with label NAR. Show all posts
Showing posts with label NAR. Show all posts
Thursday, November 12, 2009
New Tax Credit FAQ!
Thursday, November 5, 2009
New Tax Credit Info!
The Senate voted last night (11/4) to extend and expand the tax credit for homebuyers that was scheduled to expire Nov. 30. The House is expected to schedule a quick vote on the bill as early as today 11/5 as part of a package that also extends unemployment benefits for people out of work more than a year. The White House indicated that the President will sign the legislation.
How the homebuyer tax credit would work:
· Tax credit: Ten percent of the purchase price of a primary residence, up to a maximum of $8,000 for first-time homebuyers and $6,500 for repeat buyers who purchase between December 1, 2009 and May 1, 2010. First-time homebuyers are defined as people who have not owned a home in the previous three years. Repeat buyers must have owned their current home at least five years. The credit cannot be used for houses costing more than $800,000.
· Deadline for qualifying: Purchase agreements must be signed by April 30, 2010, and closings must be final by June 30.
· Military deadline: The deadline is extended by a year for members of the military who have served outside the
· Income limits: Individuals with annual incomes up to $125,000 and joint filers with incomes up to $225,000 qualify for the full credit. Individuals with incomes up to $145,000 and joint filers with incomes up to $245,000 qualify for reduced credits.
· How to apply: Taxpayers can claim the credit on their federal income tax returns. If the credit exceeds their tax bill, the government will issue a payment. Taxpayers who want immediate refunds can amend their tax returns for 2008 to claim the credit.
· New anti-fraud limitations imposed.
· Cost: $10.8 billion.
Source: Bloomberg Press and Associated Press and confirmed information with the content of the Senate bill
Monday, February 9, 2009
Senate Stimulus Bill’s Home Buyer Tax Credit
February 9, 2009, 1:05 pm
FAQ: Senate Stimulus Bill’s Home Buyer Tax Credit
Nick Timiraos reports:
Readers are posing lots of different questions about the proposed $15,000 home buyer tax credit that’s in the Senate version of the economic stimulus bill. It’s important to remember that the proposed credit is far from a done deal. The bill still has a couple of big hurdles, including tomorrow’s scheduled vote in the Senate. (Read the Senate version.)
If it passes, it will have to be reconciled with the House version of the stimulus bill, which modifies an existing $7,500 home buyer credit, repealing a provision that requires buyers to pay it back.
There are some big differences between those two versions. The Senate version is nonrefundable, meaning you can only receive the credit if you owe federal income taxes. The existing credit is refundable, meaning you get a check from the government even if you don’t owe income tax. And the current credit applies to first-time home buyers, defined as anyone who hasn’t bought a house in three years. The Senate version is open to existing homeowners.
Here are some more Frequently Asked Questions. Please note that the answers may change as the Senate bill changes:If I bought a home and used the $7,500 home buyer tax credit, can I retroactively receive $15,000 credit if it becomes law? No.
Are there any income restrictions on the tax credit? The Senate version currently has no income limits. The current $7,500 tax credit phases out on buyers with incomes exceeding $75,000 for individuals and $150,000 for married couples.
When will the new tax credit go into effect? The Senate version would take effect when the bill is signed by the president into law, and it would last for one year.
Can I take the tax credit this year? Yes. The Senate proposal would allow buyers — even those who purchase in 2009 — to claim the credit on their 2008 taxes.
The proposed tax credit is nonrefundable. What does that mean? You can only receive the credit to the extent that you owe federal income taxes. The Senate proposal would give home buyers two years to claim the credit, so buyers could claim a $7,500 credit in 2009 and a $7,500 credit in 2010. A family of four that makes less than $82,000, for example, could have a tax liability of less than $7,500 and they would not receive the full value of the credit.
Are there any repayment requirements on the tax credit? No. The Senate proposal does not require the credit to be paid back. The House proposal eliminates a 15-year repayment provision on the existing $7,500 tax credit.
If I am eligible for the current $7,500 credit, am I also eligible for the $15,000 credit? While the $15,000 credit has fewer restrictions than the existing credit, there is one big difference: because the credit is nonrefundable, if you have a low federal income tax liability, you could end up receiving more money with the current credit than the larger, proposed credit.
Are there any increased down payment requirements on the proposed tax credit? No. A separate measure has been introduced in the House that would expand the tax credit to $15,000 but would require a 5% down payment on mortgages. The Federal Housing Administration currently requires a minimum 3.5% down payment.
Can I use the tax credit to buy a second home? No.
How long do I have to live in my home after I purchase it with the tax credit? The Senate version requires buyers to pay back the credit if they sell the house less than two years after they buy it.
FAQ: Senate Stimulus Bill’s Home Buyer Tax Credit
Nick Timiraos reports:
Readers are posing lots of different questions about the proposed $15,000 home buyer tax credit that’s in the Senate version of the economic stimulus bill. It’s important to remember that the proposed credit is far from a done deal. The bill still has a couple of big hurdles, including tomorrow’s scheduled vote in the Senate. (Read the Senate version.)
If it passes, it will have to be reconciled with the House version of the stimulus bill, which modifies an existing $7,500 home buyer credit, repealing a provision that requires buyers to pay it back.
There are some big differences between those two versions. The Senate version is nonrefundable, meaning you can only receive the credit if you owe federal income taxes. The existing credit is refundable, meaning you get a check from the government even if you don’t owe income tax. And the current credit applies to first-time home buyers, defined as anyone who hasn’t bought a house in three years. The Senate version is open to existing homeowners.
Here are some more Frequently Asked Questions. Please note that the answers may change as the Senate bill changes:If I bought a home and used the $7,500 home buyer tax credit, can I retroactively receive $15,000 credit if it becomes law? No.
Are there any income restrictions on the tax credit? The Senate version currently has no income limits. The current $7,500 tax credit phases out on buyers with incomes exceeding $75,000 for individuals and $150,000 for married couples.
When will the new tax credit go into effect? The Senate version would take effect when the bill is signed by the president into law, and it would last for one year.
Can I take the tax credit this year? Yes. The Senate proposal would allow buyers — even those who purchase in 2009 — to claim the credit on their 2008 taxes.
The proposed tax credit is nonrefundable. What does that mean? You can only receive the credit to the extent that you owe federal income taxes. The Senate proposal would give home buyers two years to claim the credit, so buyers could claim a $7,500 credit in 2009 and a $7,500 credit in 2010. A family of four that makes less than $82,000, for example, could have a tax liability of less than $7,500 and they would not receive the full value of the credit.
Are there any repayment requirements on the tax credit? No. The Senate proposal does not require the credit to be paid back. The House proposal eliminates a 15-year repayment provision on the existing $7,500 tax credit.
If I am eligible for the current $7,500 credit, am I also eligible for the $15,000 credit? While the $15,000 credit has fewer restrictions than the existing credit, there is one big difference: because the credit is nonrefundable, if you have a low federal income tax liability, you could end up receiving more money with the current credit than the larger, proposed credit.
Are there any increased down payment requirements on the proposed tax credit? No. A separate measure has been introduced in the House that would expand the tax credit to $15,000 but would require a 5% down payment on mortgages. The Federal Housing Administration currently requires a minimum 3.5% down payment.
Can I use the tax credit to buy a second home? No.
How long do I have to live in my home after I purchase it with the tax credit? The Senate version requires buyers to pay back the credit if they sell the house less than two years after they buy it.
Tuesday, January 20, 2009
Tax Credit Changes Could Unleash Home Sales
Tax Credit Changes Could Unleash Home Sales
If all home buyers become eligible for a tax credit without a repayment feature, it could result in an additional 555,000 home sales, enough to meaningfully draw down excess housing inventory, the NATIONAL ASSOCIATION OF REALTORS® says. An evaluation of options for a home buyer tax credit by NAR shows wide ranging implications and benefits. A full credit to all buyers means an additional 2.22 million households would meet the income requirements for purchasing a home, but only one in four of those households would actually make a purchase.Under the current $7,500 first-time home buyer tax credit, which must be repaid over 15 years, 264,000 households meet the purchase requirements. Using the same assumptions, with plans to hold their home for a median 10 years, it would mean only 66,000 additional sales.Lawrence Yun, NAR chief economist, said NAR is advocating a tax credit for any home purchase meeting qualifying underwriting standards. “A home buyer incentive is critical to help reduce housing inventory and stabilize home prices,” he said. “The bigger the incentive, the faster housing can help pull the economy out of recession. The cost to the Treasury would be far less than the additional costs of a prolonged recession with insufficient housing stimulus.”Analysis of other options shows that if only first-time buyers are eligible and the repayment feature is dropped, it could mean an additional 202,000 home sales. If extended to all home buyers but the repayment feature is retained, the gain would be 181,000 home sales.NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said a flexible approach to the tax credit would have added benefits. “A home buyer tax credit also should be allowed to be used as a part of downpayment. This would instantly add an equity cushion for homeowners – a vested financial interest provides the foundation for sustainable homeownership, which helps improve economic stability,” he said.NAR estimates only 25 percent of newly eligible households would become homeowners, and does not capture the effect of increased trade-up buying activity. As such, these projections may understate the full impact of a home buyer tax credit.Source: NAR
If all home buyers become eligible for a tax credit without a repayment feature, it could result in an additional 555,000 home sales, enough to meaningfully draw down excess housing inventory, the NATIONAL ASSOCIATION OF REALTORS® says. An evaluation of options for a home buyer tax credit by NAR shows wide ranging implications and benefits. A full credit to all buyers means an additional 2.22 million households would meet the income requirements for purchasing a home, but only one in four of those households would actually make a purchase.Under the current $7,500 first-time home buyer tax credit, which must be repaid over 15 years, 264,000 households meet the purchase requirements. Using the same assumptions, with plans to hold their home for a median 10 years, it would mean only 66,000 additional sales.Lawrence Yun, NAR chief economist, said NAR is advocating a tax credit for any home purchase meeting qualifying underwriting standards. “A home buyer incentive is critical to help reduce housing inventory and stabilize home prices,” he said. “The bigger the incentive, the faster housing can help pull the economy out of recession. The cost to the Treasury would be far less than the additional costs of a prolonged recession with insufficient housing stimulus.”Analysis of other options shows that if only first-time buyers are eligible and the repayment feature is dropped, it could mean an additional 202,000 home sales. If extended to all home buyers but the repayment feature is retained, the gain would be 181,000 home sales.NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said a flexible approach to the tax credit would have added benefits. “A home buyer tax credit also should be allowed to be used as a part of downpayment. This would instantly add an equity cushion for homeowners – a vested financial interest provides the foundation for sustainable homeownership, which helps improve economic stability,” he said.NAR estimates only 25 percent of newly eligible households would become homeowners, and does not capture the effect of increased trade-up buying activity. As such, these projections may understate the full impact of a home buyer tax credit.Source: NAR
Tuesday, December 30, 2008
Weekly Market Activity Report
Weekly Market Activity Report
The recent plunge downward in mortgage rates to a decades-low level is spurring Twin Cities home sales, despite shorter days and holiday interruptions. For the week ending December 20, there were 553 purchase agreements signed (pending sales), which is an increase of 20.0 percent from the same week last year.
Since rates dropped three weeks ago, there have been 368 more pending sales than there were during the same period in 2007, an increase of 27.5 percent. During this period, 57.6 percent of sales have been lender-mediated foreclosures and short sales and 45.8 percent are below $150,000.
Listing supply is relatively flat with last year at this time over the past few weeks, with an increasing share of new listings being lender-mediated. Traditionally, sellers often pull back at this time of year to wait out the holidays, but banks continue to list no matter what time of year it is.
The recent plunge downward in mortgage rates to a decades-low level is spurring Twin Cities home sales, despite shorter days and holiday interruptions. For the week ending December 20, there were 553 purchase agreements signed (pending sales), which is an increase of 20.0 percent from the same week last year.
Since rates dropped three weeks ago, there have been 368 more pending sales than there were during the same period in 2007, an increase of 27.5 percent. During this period, 57.6 percent of sales have been lender-mediated foreclosures and short sales and 45.8 percent are below $150,000.
Listing supply is relatively flat with last year at this time over the past few weeks, with an increasing share of new listings being lender-mediated. Traditionally, sellers often pull back at this time of year to wait out the holidays, but banks continue to list no matter what time of year it is.
Wednesday, December 10, 2008
'Extreme Makeover' Winners Face Foreclosure
'Extreme Makeover' Winners Face Foreclosure
One of the most-watched winners on ABC-TV’s "Extreme Makeover: Home Edition" is about to undergo foreclosure.The Nov. 6, 2004, show, which set an "Extreme Makeover" ratings record, featured Judy and Larry Vardon, who are both deaf. The show remodeled their home to accommodate their blind, autistic son Vance, now 16 years old.
The Vardons currently face a monthly house payment of $2,300 and a mortgage rate that has topped 11 percent."Everyone thought the house was paid for," says Gerald Naftaly, the mayor of Oak Park, Mich., where the family lives. "But that wasn't the case. They still had their mortgage. They are just another number with the mortgage company."Vardon, 50, works at Chrysler's Sterling Heights stamping plant. The couple is working with Lighthouse of Oakland County, a nonprofit group that aids families in crisis, to help them negotiate a lower mortgage rate.Source: The Associated Press (12/08/08)
One of the most-watched winners on ABC-TV’s "Extreme Makeover: Home Edition" is about to undergo foreclosure.The Nov. 6, 2004, show, which set an "Extreme Makeover" ratings record, featured Judy and Larry Vardon, who are both deaf. The show remodeled their home to accommodate their blind, autistic son Vance, now 16 years old.
The Vardons currently face a monthly house payment of $2,300 and a mortgage rate that has topped 11 percent."Everyone thought the house was paid for," says Gerald Naftaly, the mayor of Oak Park, Mich., where the family lives. "But that wasn't the case. They still had their mortgage. They are just another number with the mortgage company."Vardon, 50, works at Chrysler's Sterling Heights stamping plant. The couple is working with Lighthouse of Oakland County, a nonprofit group that aids families in crisis, to help them negotiate a lower mortgage rate.Source: The Associated Press (12/08/08)
Monday, December 1, 2008
Treasury Announce Plan to Jumpstart Lending
Daily Real Estate News November 26, 2008
Share Fed, Treasury Announce Plan to Jumpstart Lending
The Federal Reserve and Treasury Department on Tuesday unveiled hundreds of billions more in money they are pumping into the struggling U.S. economy, trying to jumpstart lending by the nation's banks for mortgages and consumer debt.
Together, the programs from the Federal Reserve and the New York Fed aim to dump $800 billion in additional funds into the struggling U.S. economy, more than Congress approved in October for a bailout of the nation's banks and Wall Street firms.
The NATIONAL ASSOCIATION OF REALTORS® said the actions will free up money on main street and lower long-term interest rates, which in turn will boost home sales.
"This is great news for home buyers and sellers and we applaud the Fed for taking this historic step,” said NAR President Charles McMillan. “Housing recovery is the key to economic recovery in this country and it always has been.” (Read the full NAR statement.)
Under the plan, the Federal Reserve announced it will purchase up to $500 billion in mortgage-backed securities that have been backed by Fannie Mae, Freddie Mac, and closely held Ginnie Mae, the three government-sponsored mortgage finance firms set up to promote homeownership. It will also buy another $100 billion in direct debt issued by those firms.
"This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally," said the statement from the Fed.
By putting money in the hands of holders of consumer and mortgage loan securities, the government hopes more money will flow to consumers than has occurred so far in previous bailout plans.
The moves came as the Commerce Department announced that gross domestic product, the broad measure of the nation's economy, fell at an annual rate of 0.5% in the third quarter, the biggest drop in economic activity in seven years. Economists believe that the economy is likely to continue to contract in the current quarter and into early next year.
Source: Chris Isidore, CNNMoney.com (11/25/08), NAR
Share Fed, Treasury Announce Plan to Jumpstart Lending
The Federal Reserve and Treasury Department on Tuesday unveiled hundreds of billions more in money they are pumping into the struggling U.S. economy, trying to jumpstart lending by the nation's banks for mortgages and consumer debt.
Together, the programs from the Federal Reserve and the New York Fed aim to dump $800 billion in additional funds into the struggling U.S. economy, more than Congress approved in October for a bailout of the nation's banks and Wall Street firms.
The NATIONAL ASSOCIATION OF REALTORS® said the actions will free up money on main street and lower long-term interest rates, which in turn will boost home sales.
"This is great news for home buyers and sellers and we applaud the Fed for taking this historic step,” said NAR President Charles McMillan. “Housing recovery is the key to economic recovery in this country and it always has been.” (Read the full NAR statement.)
Under the plan, the Federal Reserve announced it will purchase up to $500 billion in mortgage-backed securities that have been backed by Fannie Mae, Freddie Mac, and closely held Ginnie Mae, the three government-sponsored mortgage finance firms set up to promote homeownership. It will also buy another $100 billion in direct debt issued by those firms.
"This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally," said the statement from the Fed.
By putting money in the hands of holders of consumer and mortgage loan securities, the government hopes more money will flow to consumers than has occurred so far in previous bailout plans.
The moves came as the Commerce Department announced that gross domestic product, the broad measure of the nation's economy, fell at an annual rate of 0.5% in the third quarter, the biggest drop in economic activity in seven years. Economists believe that the economy is likely to continue to contract in the current quarter and into early next year.
Source: Chris Isidore, CNNMoney.com (11/25/08), NAR
Tuesday, November 11, 2008
Weekly Market Activity Report
Weekly Market Activity Report
There is further evidence that home sellers (both traditional and lender-mediated) in the Twin Cities housing market are becoming more successful in attracting buyer interest by pricing their properties attractively from the get-go. This is having the bonus effect of limiting further extension of market time and reducing the number of price concessions. For instance, the Average Days on Market Until Sale in October was 141, down from last year by 0.8 percent. This is the first year-over-year decline in market time since we began tracking the figures in 2006.
Similarly, the Percent of Original List Price Received at Sale in October sat at 91.3 percent. While still down from last year, it is only down 1.9 percent, compared to the more robust drops of 4 percent or higher seen during most of 2008. In other words, the market is still tilted in the buyer's favor, but sellers and banks are responding with more realistic prices at the time of first listing.
For the week ending November 1, there were 21 percent fewer new listings than there were at this time last year, and 1.4 percent fewer pending sales. This is the first downward year-over-year movement in pending sales since June.
The Housing Affordability Index has increased slightly in November to 161, while November's Months Supply of Inventory shows a drop to 9 months.
Click her for Market Report Details - PDF
There is further evidence that home sellers (both traditional and lender-mediated) in the Twin Cities housing market are becoming more successful in attracting buyer interest by pricing their properties attractively from the get-go. This is having the bonus effect of limiting further extension of market time and reducing the number of price concessions. For instance, the Average Days on Market Until Sale in October was 141, down from last year by 0.8 percent. This is the first year-over-year decline in market time since we began tracking the figures in 2006.
Similarly, the Percent of Original List Price Received at Sale in October sat at 91.3 percent. While still down from last year, it is only down 1.9 percent, compared to the more robust drops of 4 percent or higher seen during most of 2008. In other words, the market is still tilted in the buyer's favor, but sellers and banks are responding with more realistic prices at the time of first listing.
For the week ending November 1, there were 21 percent fewer new listings than there were at this time last year, and 1.4 percent fewer pending sales. This is the first downward year-over-year movement in pending sales since June.
The Housing Affordability Index has increased slightly in November to 161, while November's Months Supply of Inventory shows a drop to 9 months.
Click her for Market Report Details - PDF
NAR Recommends New Housing Stimulus Legislation
The National Association of REALTORS® will offer a four-point legislative plan to reinvigorate the housing market, calling on Congress to act during a lame-duck session. NAR believes the plan will give a boost to the economy and help to calm jittery potential homebuyers.
The plan features such consumer-driven provisions as eliminating the repayment of the first-time homebuyer tax credit and expanding it to all homebuyers, making higher mortgage loan limits permanent, pushing banks to extend credit to Main Street, and prohibiting banks from entering into real estate.
"Housing has always lifted the economy out of downturns, and it is imperative to get the housing market moving forward as quickly as possible," said NAR President Richard F. Gaylord. "It is vital to the economy that Congress take specific actions to boost the confidence of potential homebuyers in the housing market and make it easier for qualified buyers to get safe and affordable mortgage loans. We are asking Congress to act right away."
The four-point plan includes the following provisions:
Remove the requirement in the current law that first-time homebuyers repay the $7,500 tax credit, and expand the tax credit to apply not only to first-time buyers but also to all buyers of a primary residence.
Revise the FHA, Fannie Mae and Freddie Mac 2008 stimulus loan limit increases to make them permanent. The Economic Stabilization Act, enacted in February, made loan limit increases temporary, and subsequent legislation reduced the loan limits and made them permanent. This has broad implication for homebuyers in high cost areas.
Urge the government to use a portion of the allotted $700 billion that was provided to purchase mortgage-backed securities from banks to provide price stabilization for housing. The Treasury Department should be required to use the newly enacted Troubled Assets Relief Program to push banks to:
1. Extend credit down to Main Street, making credit more available to consumers and small businesses;
2. Expedite the process for short sales;
3. Expedite the resolution of banks' real estate owned (REOs) properties.
4. Make permanent the prohibition against banks entering real estate brokerage and management, further protecting consumers and the economy.
The National Association of REALTORS® will offer a four-point legislative plan to reinvigorate the housing market, calling on Congress to act during a lame-duck session. NAR believes the plan will give a boost to the economy and help to calm jittery potential homebuyers.
The plan features such consumer-driven provisions as eliminating the repayment of the first-time homebuyer tax credit and expanding it to all homebuyers, making higher mortgage loan limits permanent, pushing banks to extend credit to Main Street, and prohibiting banks from entering into real estate.
"Housing has always lifted the economy out of downturns, and it is imperative to get the housing market moving forward as quickly as possible," said NAR President Richard F. Gaylord. "It is vital to the economy that Congress take specific actions to boost the confidence of potential homebuyers in the housing market and make it easier for qualified buyers to get safe and affordable mortgage loans. We are asking Congress to act right away."
The four-point plan includes the following provisions:
Remove the requirement in the current law that first-time homebuyers repay the $7,500 tax credit, and expand the tax credit to apply not only to first-time buyers but also to all buyers of a primary residence.
Revise the FHA, Fannie Mae and Freddie Mac 2008 stimulus loan limit increases to make them permanent. The Economic Stabilization Act, enacted in February, made loan limit increases temporary, and subsequent legislation reduced the loan limits and made them permanent. This has broad implication for homebuyers in high cost areas.
Urge the government to use a portion of the allotted $700 billion that was provided to purchase mortgage-backed securities from banks to provide price stabilization for housing. The Treasury Department should be required to use the newly enacted Troubled Assets Relief Program to push banks to:
1. Extend credit down to Main Street, making credit more available to consumers and small businesses;
2. Expedite the process for short sales;
3. Expedite the resolution of banks' real estate owned (REOs) properties.
4. Make permanent the prohibition against banks entering real estate brokerage and management, further protecting consumers and the economy.
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