A Complete Guide to the Expanded And Extended Homebuyer Tax Credit - 11/10/09

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On November 6th, 2009 The President signed the last Homebuyer Tax Credit extension we are likely to see.

This presentation is a complete guide to the expanded and extended tax credit.

For more information about this tax credit you can also visit www.CalPETR.com

Published in: Real Estate, Technology, Business
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A Complete Guide to the Expanded And Extended Homebuyer Tax Credit - 11/10/09

  1. 1. A Complete Guide to the Extended and Expanded Homebuyer Tax Credit <ul><li>Thank you for attending </li></ul><ul><li>We will begin in a moment </li></ul><ul><li>Class Scheduled to begin at 6:00pm </li></ul><ul><li>Presented by </li></ul><ul><li>Scott Schang </li></ul><ul><li>Branch Manager </li></ul><ul><li>Broadview Mortgage Corporation </li></ul><ul><li>1-866-667-6724 </li></ul>
  2. 2. Homebuyer Tax Credit Update <ul><li>Topics We Will Cover In This Class </li></ul><ul><li>What’s New with the Extended and Expanded Credit </li></ul><ul><li>What Hasn’t Changed – Qualifying Guidelines </li></ul><ul><li>Expectation management </li></ul><ul><li>Wrap up and Take Aways </li></ul>
  3. 3. Homebuyer Tax Credit Update <ul><li>Answering all your Questions </li></ul><ul><li>You may type questions in at any time during the presentation – Questions Box on your screen </li></ul><ul><li>Home Buying experts are available to answer questions throughout presentation </li></ul><ul><li>This is an interactive learning environment. You will get the most value by having your specific questions answered </li></ul><ul><li>The only dumb question is the one you don’t ask </li></ul><ul><li>Write number down now in case you get disconnected </li></ul><ul><ul><li>1-866-667-6724 </li></ul></ul>
  4. 4. Homebuyer Tax Credit Update <ul><li>Tax Credit Extension </li></ul>
  5. 5. Homebuyer Tax Credit Update <ul><li>Changes apply to qualified buyers that complete the purchase between November 6 th , 2009 and April 30 th , 2010. </li></ul><ul><li>Exception in Case of Binding Contract </li></ul><ul><ul><li>In the case of any taxpayer who enters into a written binding contract before May 1 st , 2010 (in contract by April 30 th ), to close on the purchase of a principal residence July 1 st , 2010 before (close on June 30 th ) will be eligible. </li></ul></ul><ul><li>Special Rules for Members of the Armed Forces </li></ul><ul><ul><li>Individuals that serve on official duty outside U.S. for 90 days during period after 12/21/08, and ending before May 1, 2010 – Extends 1 Year </li></ul></ul><ul><ul><li>In contract May 1, 2011 / Close by June 1, 2011 </li></ul></ul>
  6. 6. Homebuyer Tax Credit Update <ul><li>Income Limitations </li></ul>
  7. 7. Homebuyer Tax Credit Update <ul><li>The Old Income Limitations </li></ul><ul><li>Single filing status - $75,000 – Eligible for full credit </li></ul><ul><ul><li>Phase out begins when MAGI exceeds limit – reduce credit </li></ul></ul><ul><ul><ul><li>Phase out at $95,000 </li></ul></ul></ul><ul><li>Married filing joint - $150,000 – Eligible for full credit </li></ul><ul><ul><li>Phase out begins when MAGI exceeds limit – reduce credit </li></ul></ul><ul><ul><ul><li>Phase out at $195,000 </li></ul></ul></ul><ul><li>Occupying home as Joint Tenants </li></ul><ul><ul><li>If you purchase home under joint tenancy and down payment and ownership are not equal </li></ul></ul><ul><ul><ul><li>Tax credit will be claimed in proportion to ownership in residence </li></ul></ul></ul>
  8. 8. Homebuyer Tax Credit Update <ul><li>The New Income Limitations </li></ul><ul><li>Single filing status - $150,000 </li></ul><ul><ul><li>MAGI – Marginal Adjusted Gross Income – What you pay taxes on </li></ul></ul><ul><ul><li>No mention of a “phase out” as in previous version </li></ul></ul><ul><li>Married filing joint - $225,000 </li></ul><ul><ul><li>MAGI – Marginal Adjusted Gross Income – What you pay taxes on </li></ul></ul><ul><ul><li>No mention of a “phase out” as in previous version </li></ul></ul>
  9. 9. Homebuyer Tax Credit Update <ul><li>Maximum Purchase Price </li></ul>
  10. 10. Homebuyer Tax Credit Update <ul><li>Limitation Based on Purchase Price </li></ul><ul><ul><li>No credit shall be allowed for the purchase of any residence if the purchase price of such residence exceeds $800,000 </li></ul></ul>
  11. 11. Homebuyer Tax Credit Update <ul><li>Previous Home Owner </li></ul>
  12. 12. Homebuyer Tax Credit Update <ul><li>Special Rule for Long-Time Residents of Same Principal Residence </li></ul><ul><li>$6,500 for single and joint tax payers </li></ul><ul><ul><li>$3,250 for married filing separate </li></ul></ul><ul><li>In the case of an individual (and, if married, such individual’s spouse) who has owned and used the same residence as such individual’s principal residence for any 5–consecutive-year period during the 8 year period ending on the date of the purchase of a subsequent principal residence, such individual shall be treated as a first-time homebuyer for purposes of this section with respect to the purchase of such subsequent residence </li></ul>
  13. 13. Homebuyer Tax Credit Update <ul><li>Special Rule for Long-Time Residents of Same Principal Residence </li></ul><ul><li>Plain English Explanation – sort of…. </li></ul><ul><li>You must have lived in your home for at least the 5 consecutive years </li></ul><ul><li>The 5 years will start counting 8 years back from the date of the close of escrow on your new home </li></ul><ul><li>NOTE: The challenge here is the 5 consecutive years. If you have not owned a “main home” in the past 3 years – you qualify as a First Time Buyer </li></ul>
  14. 14. Homebuyer Tax Credit Update <ul><li>Fraud Prevention </li></ul>
  15. 15. Homebuyer Tax Credit Update <ul><li>Age Limits – No credit shall be allowed for taxpayer under 18 years old </li></ul><ul><ul><li>Exception If taxpayer is married and spouse is at least 18 </li></ul></ul><ul><li>Documentation Requirements – Copy of the HUD-1 Settlement Statement must be attached </li></ul>
  16. 16. Homebuyer Tax Credit Update <ul><li>What Hasn’t Changed </li></ul>
  17. 17. Homebuyer Tax Credit Update <ul><li>Qualifying Guidelines </li></ul><ul><li>10% of the Purchase Price up to $8,000 for single and joint taxpayers </li></ul><ul><li>Married filing separate may claim $4,000 </li></ul><ul><li>Not paid back – No recapture if home is lived in as main home for at least 3 years </li></ul><ul><li>Purchase loans using Mortgage Revenue Bonds are eligible for Homebuyer Credit - CalHFA </li></ul>
  18. 18. Homebuyer Tax Credit Update <ul><li>Occupancy and Property Type </li></ul><ul><li>Must purchase a “main home” – Primary residence </li></ul><ul><ul><li>Main home - Your main home is the one you live in most of the time. It can be a house, houseboat, housetrailer, cooperative apartment, condominium, or other type of residence </li></ul></ul><ul><ul><li>New construction – Purchase date treated as first date you occupy home </li></ul></ul><ul><li>Must be a First Time Homebuyer - $8,000 </li></ul><ul><ul><li>Can not have owned another primary home within 3 years of the closing date of new home </li></ul></ul><ul><ul><li>May own other homes or properties as long as you have never lived in it as your main home </li></ul></ul>
  19. 19. Homebuyer Tax Credit Update <ul><li>Tax Credit Restrictions – Do Not Qualify if… </li></ul><ul><li>You acquired your home through gift or inheritance </li></ul><ul><li>You acquired your home from a related person: </li></ul><ul><ul><li>Spouse, ancestors (parents, grandparents,etc.) </li></ul></ul><ul><ul><li>Lineal descendants (children, grandchildren, etc.) </li></ul></ul><ul><ul><li>A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock of the corporation. </li></ul></ul><ul><ul><li>A partnership in which you directly or indirectly own more than 50% of the capital interest or profits interest </li></ul></ul><ul><ul><li>NEW: Spouses parents or siblings </li></ul></ul>
  20. 20. Homebuyer Tax Credit Update <ul><li>Claiming the First Time Homebuyer Credit </li></ul><ul><li>IRS Form 5405 – Attached to 1040 </li></ul><ul><li>A main home purchased in 2009 and is eligible for tax credit may be claimed on 2008 (or amended 2008) or 2009 tax return </li></ul><ul><li>A home purchased in 2010 may be claimed on 2010 or amended 2009 tax return </li></ul><ul><li>You may adjust your W4 withholdings in anticipation of claiming credit on 2010 tax return </li></ul>
  21. 21. Homebuyer Tax Credit Update <ul><li>Expectation Management & Speculation </li></ul><ul><li>Housing inventory remains low – No signs of “flood” of foreclosures onto market </li></ul><ul><li>Expect this level of competition and steady to rising home prices at least while credit is available </li></ul><ul><li>Home prices inflated due to demand from tax credit </li></ul><ul><li>Important timelines if you plan to purchase for 2009 tax year </li></ul><ul><ul><li>Should be in escrow before Monday, November 23 rd , 2009 </li></ul></ul><ul><ul><li>Title companies, lenders closed 26 th & 27 th of Nov. </li></ul></ul><ul><ul><li>Title companies, lenders closed 24 th & 25 th of Dec. </li></ul></ul><ul><ul><li>Many appraisers, inspectors, professionals wind down during holiday season prolonging turn times for services </li></ul></ul><ul><li>Last shot at tax credit – No more extensions! </li></ul>
  22. 22. Homebuyer Tax Credit Update <ul><li>Wrap Up and Take Aways </li></ul><ul><li>We are a direct Lender that specializes in CalSTRS, CalPERS, CalHFA, FHA, VA, USDA and Community based down payment assistance programs </li></ul><ul><li>Our “turn times” are under 30 days to close </li></ul><ul><li>We would love the opportunity to be your lender if you have not already chosen one </li></ul><ul><li>We are more than happy to be your “second opinion” if you are already working with someone </li></ul><ul><li>We can recommend a qualified Real Estate Agent in your area that shares our values and expertise </li></ul><ul><li>We are committed to educating and empowering homeowners - Please join us for other classes </li></ul>
  23. 23. Thank You for Attending If you enjoyed this class – Tell a friend  <ul><li>Please tell us how we’re doing </li></ul><ul><li>Thank You email includes a link to “Praise” page </li></ul><ul><li>Your feedback is greatly appreciated </li></ul><ul><li>For more information </li></ul><ul><li>1-866-667-6724 </li></ul><ul><li>Homeownership Educator </li></ul><ul><li>Scott Schang </li></ul><ul><li>Branch Manager </li></ul><ul><li>Broadview Mortgage Corporation </li></ul>

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