Kathy Querin, PMAR Chief Executive Officer: Portland, Ore. — If you’re thinking about purchasing your first home, have good credit, and can afford a mortgage payment, but have been sitting on the fence, wondering when to make your move, there are 8,000 reasons that may push you right off to the other side of that fence.
First time homebuyers who purchase a home between January 1, 2009 and December 1, 2009, are eligible for an $8,000 tax credit. This is a new and improved tax credit from the one that was in place last year. The improved features include:
• Increased Funds The credit is $500 more than the previous tax credit. • A Gift, Not a Loan Unlike the previous tax credit, this does NOT have to be paid back. It’s important to note, however, that as the credit is aimed at long-term homeowners, if you sell the house within three years, the credit will be recouped on the sale. • Possible Downpayment Assistance
The Federal Housing Administration recently announced they will permit their lenders to allow homebuyers to use the $8,000 tax credit as a downpayment. Now, instead of having to wait until taxes are filed to receive the funds, homeowners receiving financing through an FHA-approved lender, state or local housing agency, or an FHA-approved nonprofit organization could receive the money immediately at closing through a “bridge loan.” At the moment, lenders are waiting for guidance from the FHA before implementing this new concept—stay tuned for details!
The tax credit is refundable—that is, if your 2009 tax liability is less than the $8,000, you’ll receive the remaining funds as a refund from the IRS.
If you haven’t owned your residence in the past three years, you are actually defined as a “first time” homebuyer and may make use of this credit.
There is an income restriction of no more than $75,000 for single buyers and $150,000 for married couples. Once a buyer crosses those income thresholds, the tax credit available decreases until the final income threshold (more than $95,000 for single buyers and $170,000 for married couples) is reached.
To take advantage of the tax credit, buyers must close on the property by December 1, 2009. Buyers claim the credit using IRS form 5405 on their 2009 taxes. Talk to your accountant for more details.
Don’t delay—talk to your Realtor® today if you are interesting in purchasing your first home. Industry experts are predicting a last minute rush of activity in the market as people try to take advantage of the tax credit before the December 1st deadline, which could result in a slower closing process as the date draws near. For more details, and the latest updates on the possible downpayment assistance, visit http://tinyurl.com/REinsider.
# # # PMAR, the voice of real estate in the Portland metropolitan area, is Oregon’s largest local Realtor® association. Representing more than 6,800 professionals involved in all aspects of the real estate industry, PMAR is committed to protecting and promoting homeownership, establishing and maintaining high professional standards of practice and creating unity in the profession. Questions about homeownership? Visit www.HOWNW.com, a one-stop information resource on buying a home.