2009 First Time Home Buyer Tax Credit

As an update to a previous post, details are now in on the First Time Home Buyer Credit in the Economic Stimulus Bill (formally called The American Recovery and Reinvestment Act of 2009).  The bill was signed into law on Tuesday, February 17th.


Here’s an overview of the provisions in the bill that will benefit First Time Home Buyers:


·   The tax credit is for first-time home buyers only.  A First-Time Home Buyer is defined as someone who has not owned or lived in a principle residence within the past three years.   

·   The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.  (ex:  Home purchase price $300,000 x 10%= $30,000   Max Tax Credit = $8,000)

·   The tax credit does not have to be repaid.  (unlike the previous credit enacted in 2008)

·   There is a limited window of opportunity. The credit is available for homes purchased on or after January 1, 2009 and before December 1, 2009.

·   The tax credit is income qualified so is subject to income limitations: single taxpayers will need an adjusted gross income of up to $75,000 for the full credit.  Married couples with incomes up to $150,000 qualify.  Those earning more than these limits may qualify for a reduced credit.

·   The tax credit is “refundable”, meaning even if you have little tax liability and don’t itemize deductions when filing your tax return, a qualified first time home buyer can still take advantage of the credit.

·   You will have to own the home for at least three years to capitalize on the credit.  Should you sell the home before three years, with the exceptions of death or divorce, there is a ‘Recapture’ provision where you would have to return a portion of the credit back to the government.


A note for those first time home buyers who purchased a home prior to Jan 1st, 2009… this bill is not retroactive.  It seems that this bill is to encourage those who have been thinking of purchasing a home to get off the fence to help spur the economy.


However, if you did purchase a home as a first time buyer between April 9, 2008 and December 31, 2008 you may qualify for the $7,500 tax credit and claim this credit on this year’s tax return. 


 A good source for FAQ explanations is http://www.federalhousingtaxcredit.com/2009/faq.php


I encourage you to explore Item 19 especially.  This is an interesting strategy for someone planning to purchase their first home this year and how you can take advantage of this tax credit without having to wait till the 2009 tax returns are filed.


I am an instructor of Washington State Housing Finance Commission sponsored First-Time Home Buyer classes, and will be conducting a class on the evenings of Tuesday, March 10th and Thursday, March 12th.  View a schedule of all the sponsored classes at www.wshfc.org


Complete details of the bill:  http://www.whitehouse.gov/the_press_office/ARRA_public_review/


The White House opened a website to provide some transparency as to where the money is being spent:  http://www.recovery.gov/



Stimulus – Not all Bad

In reading and trying to stay updated on what details that have been made available on the Economic Stimulus package that has apparently been negotiated and agreed, it appears that the proposed $15,000 Home Buyer Tax Credit was a casualty.  Sort of. 

The overall cost of this credit would have been $35 billion. In its place, a more modest proposal was negotiated that will increase the credit to $8,000 and will also eliminate the repayment requirement currently in place.  In its current format, the $7,500 credit is in effect an interest-free loan that must be repaid within 15 years or when the home is sold, whichever comes first.  Though there is a minor possibiilty that things could still change, it appears that now the $8,000 credit will be an actual credit, not a loan like before so you’ll not have to repay the credit.  So, not all bad news.

One article stated that the credit would be 10% of the home purchase price or $8,000, whichever is less, but haven’t seen anything more to validate or dispute this.  ( http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/02/13/BUSH15O70T.DTL )
The Stimulus Home Buyer Credit is income qualified and good for First-Time Home Buyers for houses purchased prior to the end of August 2009. 
A first time home buyer is defined as a person who has not owned or lived in a owned primary residence within the past three years.
The stimulus agreement would also allow taxpayers to deduct the sales tax paid on new car purchases, though not the interest on the new car loan.

President Obama is expected to sign the bill in Denver on Tuesday, February 17th.
 Read the complete stimulus bill here as supplied by consumerism commentary

New Group on Facebook

One of my philosophies is to support local business.  I especially place emphasis on supporting and promoting the businesses of my friends and clients.

An example of the talent is Rob Heim.  Rob and his wife Amy used my services to help them sell their Duvall home and acreage.  They later called on me to help them find their current home in Maple Valley.  Rob and Amy are very active paragliders that fly off Tiger Mountain.

Professionally, Rob is a very gifted Landscaper.  Landscape artist actually.  After his move to Maple Valley, Rob jumped off the ledge.  He left his lead position at the company he where he worked and started his own landscape business.

View Rob’s site online at www.cedarrocklandscapes.com.  He works all around the Eastside and King County.  When you look at his portfolio, and should you get the opportunity to meet Rob & Amy, you will find two talented professionals and a very silly and terrific couple!

I’ve created a group on Facebook called The hello Real Estate Network.  My goal is to encourage discussion and networking among those interested or involved in real estate.  Consumers, real estate agents, as well as vendor and contractors.  It is an open Facebook group so anyone can join.

One of the tasks I am working on is that of compiling a list of contractors and vendors that would not only service my target markets, but would also service the various communities of those in the hello Real Estate Network Group.

First point of emphasis is always … quality first!

Rob’s business is one that I have no concerns in supporting and is an example of the many quality professionals I hope will become part of my Concierge list within the hello Real Estate Group.

You’re invited to share a story of someone that you would like to get noticed

A Real Estate Myth-Understanding

Beyond the usual “how’s the real estate market?”  …I’m being asked more real estate related questions than ever.  Is this a good time to buy?  How do you buy a foreclosure?  Is it hard to get a mortgage?  Are homes selling … How long would it take to sell my home?


There is curiosity, confusion, and myth-information.


Myth-Understanding #1:  It is not a good time to buy real estate.


It’s no doubt that even our Seattle Redmond real estate market remains sluggish.  Many home sellers are frustrated as home prices have fallen and many homes continue to sit waiting for a buyer.  Home foreclosures and short-sales have increased.  And home buyers don’t know whether the timing is right to buy.  Are home values going to continue to go down?  Has the market hit bottom?  Can they even get a loan?


Truth:   Now is a great opportunity!


For a buyer, this is a great opportunity and, yes, there are still many loan products available.  As of today (02/13/09), fixed 30yr interest rates are below 5 ½%.  There are also many First Time Homebuyer products available.  And the Housing Stimulus Bill provides a First-time Home Buyer credit.   These facts, along with lower prices and the  tax advantages,  even if the market hasn’t hit bottom, a buyer could loose money by waiting to purchase.


But the main point in home ownership is not even the economics.  While it is a fact that buying and holding real estate has been a great wealth generator, there is still ‘no place like home.’  Home is where families create memories.  Home is our sanctuary … where we find our calm, our love.


There are many personal rewards outside of economics, and including economics, that prove … homeownership works!