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Tax Credit for First Time Home Buyers (Part II)

Posted by Heaton & Gugliotta | on Monday, January 19th, 2009 at 5:08 pm
Category: First Time Home-Buyers.

How do I claim the tax credit for first time home buyers? Do I need to fill out an application? This is a really easy program for first time home buyers. You will claim the tax credit on your federal income tax return. No other applications or forms are required. No pre approval is necessary; however, prospective first time home buyers in Sparks will want to be sure they qualify for the credit under the income limits and first time home buyer tests. Please check with your Sparks tax preparer or lender for further details.

Are there income qualifications?
Yes. This program is designed for first time home buyers whose individual whose Modified Adjusted Gross Income (MAGI) is less than $75,000, or married taxpayers filing joint returns with an Adjusted Gross Income (AGI) of less than $150,000. There may be partial credits available for some first time home buyers whose MAGI exceeds the phaseout limits. You will need to contact a lender, or your tax preparer to determine your qualifying income.

How does this help me buy a home in Sparks?
The minimum down payment required for an FHA loan is 3.5%. On a $200,000
loan, this would only be $7000.00. If you have a 401k, funds may be able to be borrowed from that for your down payment and the tax credit received could repay those funds. There may be other ways available to access this tax credit towards a down payment by reducing income tax withholding. Please check with your tax preparer or lender for further details. We may be able to structure an acceptable offer that would include the seller covering the closing costs on the purchase in Sparks, further reducing the funds needed by the buyer to complete the home purchase.

Since the median home price is 40% lower than the market high, current prices equal to where they would have been anyway without inflated markets, this is a great opportunity to purchase a home for what most people are paying in rent. We have somewhere in the neighborhood of 500 homes in Sparks/Reno under $200,000.

Next blog we will discuss Buying vs. Rent. You won’t believe the numbers.
Can you afford NOT to buy a home? We don’t think so..

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Tax Credit for First Time Home Buyers (Part I)

Posted by Heaton & Gugliotta | on Monday, January 19th, 2009 at 5:00 pm
Category: First Time Home-Buyers.

As a first time home buyer specialist in Sparks, I was very sad to see the most popular down payment assistance program for first time home buyers discontinued at the latter part of 2008. There are still some programs that benefit first time home buyers available in certain areas for the USDA loan program, the Nevada Bond program, or the Nevada Rural Housing program. The good news is that Sparks does qualify, in some locations, for some of these financing programs. The bad news is that these programs are useful in limited areas, or the income limits are fairly restrictive for first time home buyers. In there really seemed to be no broad spectrum financing help left for Sparks first time home buyers in 2009.

As full time real estate agents in the Sparks/Reno area, we see every day the dramatic home price reductions and the great opportunities that are in every neighborhood, affordable for the first time in several years to the first time home buyer. Interest rates are unbelievably low to match the great home prices in Sparks. This is the mother of all buyers markets! But how do Sparks first time home buyers get the down payment that is required? Thanks to Congress, we have one possible solution, the Housing and Economic Recovery Act!

What is this? Very few people we talk to understand how this is such a great benefit to them as a Sparks first time home buyer. We will answer some of the frequently asked questions we get, and hopefully this will encourage more people to investigate and take advantage of this great government program before it ends!

What is the “Housing and Economic Recovery Act”?
This Act authorizes up to a $7500 tax credit for qualified first time home buyers purchasing homes between April 9, 2008, and before July 1, 2009.

What is the definition of a first time home buyer?
A first time home buyer is a buyer who has not owned a principal residence during the three year period prior to purchasing the new home. If you owned a vacation or rental property not used as a principal residence, you still may be eligible for the first time home buyer tax credit.

Is this money free?
No, the money is not free. This is a first time home buyer’s tax credit that is paid back at $500 per year for 15 years at 0% interest, or paid back if the home is sold if there is sufficient capital gain from the sale. The Sparks first time home buyer does not have to begin making repayments on the credit until two years after the credit is claimed. So if you purchase a home on your 2009 tax return, a $500 payment is not due until the 2011 tax return is filed. If there was insufficient profit if the home was sold, then the remaining credit payback would be forgiven.

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