Guide to the Extended and Expanded Tax Credit

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Chris Williamson, Mortgage Advisor at Mortgage California explains the new home buyer tax credit including income restrictions, how to apply, who qualifies, biggest changes for 2010, deadlines you must meet to qualify, how to claim the credit and realities of the San Mateo real estate market.

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Guide to the Extended and Expanded Tax Credit

  1. 1. Tax Credit Guide Thanks for joining tonight’s webinar. We will begin shortly. To download the slides, please visit http://budurl.com/WebinarSlides Tonight’s Speaker Chris Williamson Mortgage Advisor - Mortgage California Phone: (650) 520-0915 www. SanMateoMortgageBlog.com
  2. 2. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Questions During the Webinar • Financing experts are available to answer questions throughout the presentation • This is an interactive learning environment. You will get the most value from this program by having your specific questions answered. • We welcome all of your questions
  3. 3. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Questions During the Webinar You may type questions in at any time during the presentation – Question box on your screen
  4. 4. Guide to the Extended and Expanded Tax Credit Chris E. Williamson Mortgage Advisor Phone: (650) 520-0915 Email: Chris@ChrisEWilliamson.com Blog: www.SanMateoMortgageBlog.com
  5. 5. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Purpose & Goals of the Webinar Purpose • Help You Learn What the New Credit Means to You as a Home Buyer Goals • Understand How You Can Use the Tax Credit • Answer Any Questions You Have About the Credit
  6. 6. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Overview • What is a Tax Credit? • Biggest Changes for 2010 • Who is Eligible? • How Much Do I Get? • FAQs • How to Claim Credit • Realities of the Market
  7. 7. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 What is a Tax Credit? • Dollar for dollar reduction in the amount of taxes you owe the IRS Example Amount Owed in Annual Taxes $10,000 - Credit -$8,000 Remainder Owed to IRS $2,000
  8. 8. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 What Happens if I Owe No Taxes? • IRS will issue you a check for amount of credit • You will also receive any other rebate owed to you by the IRS
  9. 9. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Biggest Changes for 2010 • First Time Homebuyer Tax Credit extended to June 30, 2010 • Income Limits for First Time Home Buyers Raised • Now Includes Existing Home Owners Who Want to Buy a New Primary Residence
  10. 10. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Who is Eligible? First Time Home Buyers • Single tax payers • Married couples filing jointly or separately
  11. 11. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Who is Considered a First Time Buyer? • Have never owned a home • Have not owned a primary residence in past 3 years • Currently own a 2nd home or investment property but haven’t owned a primary residence in 3 years
  12. 12. Who is Eligible? Existing Home Owners • Single tax payers • Married couples filing jointly or separately
  13. 13. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Who is a Qualified Purchaser? Existing home owners are eligible for a credit if… • Owned & occupied the same primary residence for a period of 5 consecutive years during the last 8 years • Purchase a new primary residence
  14. 14. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Who Gets What? First Time Home Buyers • 10% of the purchase price of the home • Max available tax credit of $8,000 Existing Home Owners • Max available tax credit of $6,500
  15. 15. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Married Filing Separately • First time home buyers ▫ Each party can claim up to $4,000 • Existing home owners ▫ Each party can claim up to $3,200
  16. 16. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Income Limits for Single Filers • Eligible for Full Credit with up to $125,000 Annual Gross Income ▫ Up from 2009 limit of $75,000 • Phases Out if you Make More than $125,000 • Not Eligible if you Make $145,000 or More
  17. 17. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Income Limits for Married & Joint • Eligible for Full Credit with up to $225,000 Combined Annual Gross Income ▫ Up from 2009 limit of $150,000 • Phase Out with more than $225,000 of Combined Annual Gross Income • Not Eligible if you Make $245,000 or More
  18. 18. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 New Deadlines • New Extension went into effect November 7, 2009 • All contracts must be ratified on or before April 30, 2010 • All transactions must be closed on or before June 30, 2010
  19. 19. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Military Extension • Special extension for extended duty armed forces ▫ Military, Foreign Services, Intelligence • Out of Country for at least 90 days between Dec. 31, 2008 and May 1, 2010 • Eligible for a 1 year extension for the tax credit ▫ In contract on or before May 1, 2011 ▫ Close on or before June 30, 2011
  20. 20. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Maximum Purchase Price • Old Rules – No limits on purchase price • New Rules - $800,000 maximum sales price
  21. 21. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Credit Have to Be Repaid? • Credit Does Not have to be Repaid Unless: ▫ Home is no longer your primary residence at any time during the first 36 months (3 years)
  22. 22. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Claim Credit in Advance? • Not possible to claim tax credit in advance • IRS has recently begun prosecuting people who have claimed the credit and then the purchase did not take place
  23. 23. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 What About Seller Financing? If purchasing a property with seller financing where the seller retains title to the property you can still claim the credit….if • You demonstrate ownership of the property
  24. 24. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Demonstrate Ownership By • Right of possession • Right to obtain legal title upon full payment of purchase price • Right to construct improvements • Obligation to pay property taxes • Responsibility to insure the property • Duty to maintain the property
  25. 25. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Purchase from a Step Relative? • Purchasing from “step relatives” does not make you ineligible for the credit • Cannot purchase from a direct blood relative
  26. 26. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Non-Occupant Co-Borrowers Home Buyer is Still Eligible if… • Co-borrower is a parent • Parent must not live in the home • Home buyer meets other requirements of credit
  27. 27. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Other Restrictions • According to the IRS, a credit will not be due if: ▫ Buy a home from a close relative Spouse, parent, grandparent, child or grandchild ▫ Home is not your primary residence ▫ Sell your home within 1 year of purchase ▫ You are a nonresident alien ▫ Owned primary residence at any time during the 3 years prior to the date of new purchase
  28. 28. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Other Restrictions ▫ You are, or were, eligible to the claim the District of Columbia first time home buyer credit for any taxable year Doesn’t apply for home purchased in 2009 ▫ Financing comes from tax-exempt mortgage revenue bonds Doesn’t apply for home purchased in 2009
  29. 29. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Claiming the Credit • Homes Purchased in 2009 ▫ Claim on 2009 return (Form 1040) or amended 2008 return with form 5405 (http://www.irs.gov/pub/irs-pdf/f5405.pdf) • 2010 Home Purchases ▫ Claim on 2010 return or amended 2009 return • Possible to adjust W-4 witholdings in anticipation of 2010’s credit • Copy of HUD-1
  30. 30. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Claiming the Credit • 2010 Home Purchases ▫ Claim on 2010 return or amended 2009 return • Copy of HUD-1 • Possible to adjust W-4 withholdings in anticipation of 2010’s credit • Speak to a Tax Advisor before doing this!
  31. 31. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Realities of the Market • Heading into one of the best times to buy ▫ November, December, January ▫ Less competition in all price levels • Interest Rates are at their Lowest Levels in Years • Short sales can take months to complete ▫ Plan to be in contract as soon as possible ▫ If you don’t close in time (June 30th, 2009) – no credit
  32. 32. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Realities of the Market • Current inventory of homes below $800,000 in short supply • Pace of sale of most affordable homes expected to increase • Extended, increased loan limits of $729,750 ▫ Money is available • Spring buying season expected to start earlier than normal
  33. 33. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Resources You Can Use at Home
  34. 34. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 SanMateoMortgageBlog.com
  35. 35. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Financing Questions? http://sanmateomortgageblog.com/mortgage-financing-question/
  36. 36. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Upcoming Classes and Webinars
  37. 37. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Class Schedule http://sanmateomortgageblog.com/class-schedule/
  38. 38. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Who We Are • Multi-Platform Lender specializing in home buyers ▫ Offer benefits of a Mortgage Banker, Direct Lender and Mortgage Broker ▫ Can offer access to many more loan programs than a traditional lender ▫ Ability to close in less than 30 days
  39. 39. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Who We Are • Welcome the opportunity to be your lender • Already chosen a lender? We’ll be happy to be your second option • Can also recommend Realtors in your area that share our passion for education and expertise
  40. 40. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Enjoy this Webinar? Please help us spread the word by telling your friends and family. Classes Tab
  41. 41. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Free Consultation Chris Williamson Phone: (650) 520-0915 Email: Chris@ChrisEWilliamson.com www.SanMateoMortgageBlog.com

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