News
Important Information on the Housing Stimulus Bill
July 30, 2008
http://www.federalhousingtaxcredit.com/
Who is Eligible
- • The $7,500 tax credit is available for first-time home buyers only.
- • The law defines a first-time home buyer as a buyer who has not owned a home during the past three years.
- • All U.S. citizens who file taxes are eligible to participate in the program.
Types of Homes that Qualify for the Tax Credit
- • All homes, whether single-family, townhomes or condominiums will qualify.
- • However, there are several conditions:
- o
The home must be used as a principal residence, and- o
The buyer has not owned a home in the prior three years. - • However, there are several conditions:
Income Limits
- • Home buyers who file as single or head-of-household taxpayers can claim the full $7,500 credit if their adjusted gross income (AGI) is less than $75,000.
- • For married couples filing a joint return, the income limit doubles to $150,000.
- • Single or head-of-household taxpayers who earn between $75,000 and $95,000 are eligible to receive a
partial first-time home buyer tax credit.- • Married couples filing jointly who earn between $150,000 and $170,000 are eligible to receive a
partial first-time home buyer tax credit.- • The credit is not available for single taxpayers whose AGI is greater than $95,000 and married couples filing jointly with an AGI that exceeds $170,000.
Effective Dates for the Tax Credit
- • First-time home buyers would receive a $7,500 tax credit for the purchase of any home on or after April 9, 2008 and before July 1, 2009. To qualify, you must actually close on the sale of the home during this period.
Tax Credit is Refundable
- • A refundable credit means that if you pay less than $7,500 in federal income taxes, then the government will write you a check for the difference.
- o
For example, if you owe $5,000 in federal income taxes, you would pay nothing to the IRS and receive a $2,500 payment from the government.- o
If you are due to receive a $1,000 tax refund from the government, your refund would grow to $8,500 ($1,000 plus $7,500 from the home buyer tax credit).
Payback Provisions
- • The tax credit is an interest-free loan that must be repaid over 15 years.
- • The minimum repayment amount must be 15 equal annual installments. For example, if the credit amount is $7,500, then the home buyer must repay a minimum of $500 each year for 15 years.
- • A home buyer must begin repaying the credit two tax years after claiming the credit. For example, if the credit is claimed on the 2008 tax return, repayment of $500 (or less, if the credit amount is less than $7,500) per year begins with the 2010 return.
- • If the home owner sells the home for a profit and there is a remaining credit, then the home owner is required to repay the remaining credit during the tax year of the home sale. The amount of the repayment will depend upon the amount of profit from the home sale:
- o If the profit on the sale is more than the remaining credit, then the home owner must repay the entire remaining credit.
- o If the profit on the sale is less than the remaining credit, then the home owner must repay an amount equal to the profit on the home sale. The remaining credit payback will be forgiven.
Further information regarding the tax credit may be found at www.federalhousingtaxcredit.com or www.irs.gov.
Summary of Housing Stimulus Legislation
- • The housing stimulus bill approved by Congress and signed into law by President Bush is meant to address the housing downturn and to bolster the faltering economy.
- • The key elements of the new law are:
- 1. A temporary first-time home buyer tax credit. The tax credit will stimulate home buying, reduce excess supply in housing markets and shore up home prices.
- 2. FHA modernization and expansion. A revitalized FHA will have greater flexibility to respond to the needs of borrowers, enable more working families to become home owners and play an important role in the mortgage markets. To address the foreclosure crisis, the FHA is given additional authority to insure up to $300 billion of mortgages to refinance loans headed for foreclosure.
- 3. GSE (government-sponsored enterprise) reform. The law reforms the regulation of Fannie Mae and Freddie Mac and permanently increases the conforming loan limit to help buyers in high-cost markets. To reassure financial and global markets, the government will temporarily expand its line of credit to Fannie and Freddie and permit the U.S. Treasury to purchase an equity stake in the companies through the end of 2009.
- 4. Mortgage Revenue Bond Program. The measure gives states the ability to issue an additional $11 billion in mortgage revenue bonds, which will help strapped borrowers seeking to refinance their home loans.
- 5. Low Income Housing Tax Credit. Enhancing this program will expand the supply of much-needed affordable rental housing.
- • The full text of the bill (H.R. 3221) can be viewed at http://thomas.loc.gov/
This information is provided for general awareness only, and is not intended for the purpose of providing legal, accounting, tax advice or consulting of any kind. Please consult with your tax and legal professionals for complete details.
The Latest News From Brady Homes
Oakbrook Park Villas
We just sold another Brady Home............................
Day of the Dozer is this SATURDAY!!
DON'T MISS OUT ON GETTING ADVANCE TICKETS FOR: DAY OF THE DOZER!!
7 DAYS LEFT!!!
DON'T MISS OUT: 7 days left of Brady Homes Summer Extravaganza: