guide to the extended and expanded tax credit
Post on 18-Oct-2014
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DESCRIPTION
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.TRANSCRIPT
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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 WilliamsonMortgage Advisor - Mortgage California
Phone: (650) 520-0915
www. SanMateoMortgageBlog.com
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Questions During the Webinar
• Financing experts are available to answer questions throughout the presentation
• This is an interactive learning environment. You will
Chris Williamson [email protected] Phone: (650) 520-0915
• 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
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Questions During the Webinar
You may type questions in at any time during the presentation –Question box on your screen
Chris Williamson [email protected] Phone: (650) 520-0915
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Guide to the Extended and Expanded Tax Credit
Chris E. Williamson
Mortgage Advisor
Phone: (650) 520-0915
Email: [email protected]
Blog: www.SanMateoMortgageBlog.com
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Purpose & Goals of the Webinar
Purpose
• Help You Learn What the New Credit Means to You as a Home Buyer
Chris Williamson [email protected] Phone: (650) 520-0915
Goals
• Understand How You Can Use the Tax Credit
• Answer Any Questions You Have About the Credit
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Overview
• What is a Tax Credit?
• Biggest Changes for 2010
• Who is Eligible?
Chris Williamson [email protected] Phone: (650) 520-0915
• Who is Eligible?
• How Much Do I Get?
• FAQs
• How to Claim Credit
• Realities of the Market
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What is a Tax Credit?
• Dollar for dollar reduction in the amount of taxes you owe the IRS
Chris Williamson [email protected] Phone: (650) 520-0915
Example
Amount Owed in Annual Taxes $10,000
- Credit -$8,000
Remainder Owed to IRS $2,000
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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
Chris Williamson [email protected] Phone: (650) 520-0915
by the IRS
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Biggest Changes for 2010
• First Time Homebuyer Tax Credit extended to
June 30, 2010
• Income Limits for First Time Home Buyers Raised
Chris Williamson [email protected] Phone: (650) 520-0915
• Income Limits for First Time Home Buyers Raised
• Now Includes Existing Home Owners Who Want to Buy a New Primary Residence
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Who is Eligible?
First Time Home Buyers
• Single tax payers
• Married couples filing jointly or separately
Chris Williamson [email protected] Phone: (650) 520-0915
• Married couples filing jointly or separately
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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
Chris Williamson [email protected] Phone: (650) 520-0915
• Currently own a 2nd home or investment property but haven’t owned a primary residence in 3 years
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Who is Eligible?
Existing Home Owners
• Single tax payers
• Married couples filing jointly or separately• Married couples filing jointly or separately
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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
Chris Williamson [email protected] Phone: (650) 520-0915
period of 5 consecutive years during the last 8 years
• Purchase a new primary residence
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Who Gets What?
First Time Home Buyers
• 10% of the purchase price of the home
• Max available tax credit of $8,000
Chris Williamson [email protected] Phone: (650) 520-0915
• Max available tax credit of $8,000
Existing Home Owners
• Max available tax credit of $6,500
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Married Filing Separately
• First time home buyers
▫ Each party can claim up to $4,000
• Existing home owners
Chris Williamson [email protected] Phone: (650) 520-0915
• Existing home owners
▫ Each party can claim up to $3,200
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Income Limits for Single Filers
• Eligible for Full Credit with up to $125,000 Annual Gross Income
▫ Up from 2009 limit of $75,000
Chris Williamson [email protected] Phone: (650) 520-0915
▫ 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
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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
Chris Williamson [email protected] Phone: (650) 520-0915
▫ 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
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New Deadlines
• New Extension went into effect November 7, 2009
• All contracts must be ratified on or before
April 30, 2010
Chris Williamson [email protected] Phone: (650) 520-0915
April 30, 2010
• All transactions must be closed on or before
June 30, 2010
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Military Extension
• Special extension for extended duty armed forces
▫ Military, Foreign Services, Intelligence
• Out of Country for at least 90 days between Dec. 31,
Chris Williamson [email protected] Phone: (650) 520-0915
• 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
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Maximum Purchase Price
• Old Rules – No limits on purchase price
• New Rules - $800,000 maximum sales price
Chris Williamson [email protected] Phone: (650) 520-0915
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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)
Chris Williamson [email protected] Phone: (650) 520-0915
any time during the first 36 months (3 years)
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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
Chris Williamson [email protected] Phone: (650) 520-0915
claimed the credit and then the purchase did not take place
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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
Chris Williamson [email protected] Phone: (650) 520-0915
the credit….if
• You demonstrate ownership of the property
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Demonstrate Ownership By• Right of possession
• Right to obtain legal title upon full payment of purchase price
Chris Williamson [email protected] Phone: (650) 520-0915
purchase price
• Right to construct improvements
• Obligation to pay property taxes
• Responsibility to insure the property
• Duty to maintain the property
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Purchase from a Step Relative?
• Purchasing from “step relatives” does not make you ineligible for the credit
• Cannot purchase from a direct blood relative
Chris Williamson [email protected] Phone: (650) 520-0915
• Cannot purchase from a direct blood relative
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Non-Occupant Co-Borrowers
Home Buyer is Still Eligible if…
• Co-borrower is a parent
• Parent must not live in the home
Chris Williamson [email protected] Phone: (650) 520-0915
• Parent must not live in the home
• Home buyer meets other requirements of credit
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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
Chris Williamson [email protected] Phone: (650) 520-0915
� 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
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Other Restrictions▫ You are, or were, eligible to the claim the District of Columbia first time home buyer credit for any taxable year
Chris Williamson [email protected] Phone: (650) 520-0915
� Doesn’t apply for home purchased in 2009
▫ Financing comes from tax-exempt mortgage revenue bonds� Doesn’t apply for home purchased in 2009
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Claiming the Credit
• Homes Purchased in 2009
▫ Claim on 2009 return (Form 1040) or amended 2008 return with form 5405
Chris Williamson [email protected] Phone: (650) 520-0915
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
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Claiming the Credit
• 2010 Home Purchases
▫ Claim on 2010 return or amended 2009 return
• Copy of HUD-1
Chris Williamson [email protected] Phone: (650) 520-0915
• Copy of HUD-1
• Possible to adjust W-4 withholdings in anticipation of 2010’s credit
• Speak to a Tax Advisor before doing this!
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Realities of the Market
• Heading into one of the best times to buy
▫ November, December, January
▫ Less competition in all price levels
Chris Williamson [email protected] Phone: (650) 520-0915
▫ 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
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Realities of the Market
• Current inventory of homes below $800,000 in short supply
• Pace of sale of most affordable homes expected to
Chris Williamson [email protected] Phone: (650) 520-0915
• 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
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Financing Questions?http://sanmateomortgageblog.com/mortgage-financing-question/
Chris Williamson [email protected] Phone: (650) 520-0915
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Class Schedulehttp://sanmateomortgageblog.com/class-schedule/
Chris Williamson [email protected] Phone: (650) 520-0915
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• Multi-Platform Lender specializing in home buyers
▫ Offer benefits of a Mortgage Banker, Direct Lender and Mortgage Broker
Who We Are
Chris Williamson [email protected] Phone: (650) 520-0915
Mortgage Broker
▫ Can offer access to many more loan programs than a traditional lender
▫ Ability to close in less than 30 days
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Who We Are
• Welcome the opportunity to be your lender
• Already chosen a lender? We’ll be happy to be your second option
Chris Williamson [email protected] Phone: (650) 520-0915
second option
• Can also recommend Realtors in your area that share our passion for education and expertise
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Enjoy this Webinar?
Please help us spread the word by telling your
friends and family.
Classes Tab
Chris Williamson [email protected] Phone: (650) 520-0915
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Free Consultation
Chris Williamson
Chris Williamson [email protected] Phone: (650) 520-0915
Chris Williamson
Phone: (650) 520-0915
Email: [email protected]
www.SanMateoMortgageBlog.com