TAMPA, Fla. – Jan. 26, 2010 – Federal tax credits for homebuyers have certainly boosted the Tampa Bay area real estate market.The incentives have prompted nervous buyers to get off the fence, and that has helped the area shed thousands of homes from the region’s inventory of unsold properties.But as these buyers prepare to cash in on their purchases by filing their tax returns, many are finding they may not qualify after all or don’t know how to file.“There’s a lot of confusion,” said Greg Armstrong, a Coldwell Banker broker in Pasco County. “It’s so complex that if you’re not living it every day, like a CPA, you’re not in a position to direct someone.”Even if the case seems straightforward, Armstrong encourages clients to seek guidance from an accountant. There have been so many changes to the credit that IRS spokesman Michael Dobzinski had to consult his notes often to answer questions.
Here are some helpful things the IRS wants you to know about the credits.
• The credits are available only to buyers purchasing primary residences. The IRS defines this has the residence where you spend most of your time.
• There are two credits available. One is for first-time buyers, or those who have not owned a home in the past three years. The maximum for this credit is $8,000 and, unlike a previous credit, this one does not have to be paid back. It applies to purchases made this year between Jan. 1 and April 30.
• The government broadened the credit in November to include some buyers who already own houses. Those buyers are eligible for a credit worth up to $6,500 for purchases made between Nov. 7 and April 30. In order to qualify, the buyer must have owned a primary residence for at least five consecutive years out of the past eight years. This credit also does not need to be paid back.
• There are income and price requirements. If the home was purchased after Nov. 6, it can cost no more than $800,000. Also, if purchased after that date, individuals cannot earn more than $125,000 and married couples filing jointly cannot earn more than $225,000.
• You don’t have to wait until 2010 to claim your credit, even if you buy this year. Purchase a home before the April 30 deadline and the credit can be claimed on this year’s taxes.
• If you’re claiming the credit, a paper filing is necessary. Only taxpayers not claiming the credit can file electronically. Dobzinski said buyers can still use electronic forms, but must print them out and mail them in, along with form 5405.
• Unlike last year, buyers claiming the credit must prove they are eligible. This is because some people filed for the credit last year, even though they had not purchased a home. You’ll need to send the HUD settlement statement along with the tax form. If you’re claiming the longtime owner credit, also include proof, such as copies of mortgage interest statements, property tax records or homeowner’s insurance records.
• Keep in mind that the credit is for your primary home. If you decide to rent or sell the home within three years, the credit must be repaid.
• Buyers claiming the credit will have to wait longer than usual to get the credit because of the need to file by paper. Expect to wait four to eight weeks, instead of the typical two weeks when filing electronically.
Copyright © 2010 Tampa Tribune, Fla., Shannon Behnken. Distributed by McClatchy-Tribune Information Services.
WASHINGTON – Oct. 29, 2009 – Senators reached a compromise to extend the $8,000 tax credit for first-time home buyers, a boost the housing industry expects will help it pull out of its two-year-old downturn.
Lawmakers in Washington also added a $6,500 tax credit for other primary-home purchasers and raised the qualifying income limits to $125,000 for single taxpayers and $225,000 for joint taxpayers, housing-industry sources said.
Under the Senate compromise, buyers must have sales agreements in hand by April 30, but they will have until June 30 to go to settlement, the sources said. The measure still faces votes in the full Senate and the House.
The current tax credit did little for the new-home market in September, the Commerce Department reported – news that took many industry analysts by surprise. Sales fell 3.6 percent from August and 7.8 percent from September 2008.
Industry observers had expected a fifth consecutive monthly increase in new-home sales, believing that the tax incentive for qualified first-time buyers – credited with 357,000 sales of previously owned homes so far this year – would do the trick.
Instead, sales of typically more expensive newly built houses slipped.
“The decline in new-home sales seems to us to be more a function of the attractive pricing available on resales in the current environment than a reflection of weakening demand,” said Michael Feder, president of Radar Logic Inc., of New York, which tracks the market.
“Big deal,” said Joel L. Naroff, of Naroff Economic Advisors, of Holland, Bucks County. “Since hitting rock bottom in March, demand is up 20 percent.”
For Naroff, the robust rise in existing-home purchases – 9.2 percent year over year in September – indicated that the housing market was not faltering.
“Maybe the issue is supply, which fell to its lowest level in 27 years,” he said. “Builders, at least those left standing, have been making sure they don’t have any houses sitting around, and they have been very successful in controlling inventories.”
IHS Global Insight Inc. economist Patrick Newport echoed that, noting new-home inventories “sank for the 29th straight month to their lowest level since November 1982.”
Naroff maintained housing had recovered enough to stand without the tax credit. But Newport said he believed that if the credit were not extended and expanded, housing demand would take a hit, and home sales would drop.
Until the Senate compromise today, the extension of the credit seemed mired in what National Association of Home Builders vice president Jerry Howard called “a game of partisan chicken.”
Howard’s take on the lower September numbers: It was too late to sign a contract on a house that would be completed by the current Nov. 30 deadline, and many buyers were concerned the credit would not be extended.
The credit has helped, acknowledged Marshal Granor, a principal in Granor Price Homes, of Horsham. But he added, “I’d love for it to go away, for a month.”
“People who believe there is no rush aren’t buying, they are waiting for more bargains from more squeezed sellers,” Granor said.
Still, said Feder of Radar Logic, lower home prices have carried “buyers further into the autumn than we would expect, based on historic patterns.”
Declining inventory means builders will have to ramp up production, Newport said.
As the Senate worked on the compromise, third-quarter data were released showing that the burden of foreclosure filings in the post-bubble market continued to shift from the subprime-ridden “sand” states (California, Nevada, Florida and Arizona) to areas with rising levels of unemployment and adjusting rates on the “exotic” mortgages prevalent in high-cost metropolitan markets.
Yet Las Vegas remained the toxic-loan capital, according to the third-quarter survey by RealtyTrac Inc., of Irvine, Calif. – its rate of foreclosure filings was seven times higher than the national average.
Copyright © 2009 The Philadelphia Inquirer, Alan J. Heavens. Distributed by McClatchy-Tribune Information Services.
But one firm now says it has figured out a way to turn the post-closing tax credit into a pre-closing down payment — a move that should raise at least some eyebrows among anyone concerned about a growing number of homeowners that are finding themselves over-leveraged into a mortgage. An Alpharetta, Ga.-based firm, Metro Buyers Group, LLC, said Friday it will begin purchasing the tax credit from borrowers prior to closing, giving a check for the full $8,000 to any borrower that qualifies; the firm says the program is designed to help many would-be borrowers that wouldn’t otherwise have the money needed to make a down payment on a new mortgage.
via Firm Touts ‘Cash for Tax Credits’ Program : HousingWire || financial news for the mortgage market.
The above, is in the works here in Florida, while not available at the current time, it hopefully is just a matter of time. This measure will assist more buyers to look at the foreclosures that are in need of work, or that have been stripped down by previous owners.
As soon as we start moving the foreclosures, we will begin to see a real improvement in the market. Unfortunately as long as the gov’t continues to bail out the banks, the banks will continue to drag their feet.
I do believe the gov’t bailout has helped some of the banks, I do not believe it has done what was promised or expected. The bank is still keeping much of the spread as profits, and will continue to do so for the duration of the loan, unless it is sold off, and if that occurs, then the bank receives the cash up front…. So how bad off are the banks… yes there are losses, but there are still profits as well.
I know its late, but at least to me the above made sense. If you would like a more in depth discussion, ask a question, or better yet, give me a call.
This report provided by Brady Pevehouse, an agent specializing in Avalon Park Real Estate and homes for sale and Avalon Park Foreclosures.
Photo by: Generosa Cawley
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321-501-9389
e-mail: generosa@goperrone.com
Website: www.GenerosaDreamHomes.com
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