Home Buyer Tax Credit- what's in it for you for Hoboken | Real Estate

Hello Hoboken Blog Readers! This article is from the monthly real estate E-Newsletter that I send to my clients. Read on and learn what's in store for you.

Expanded Tax Credit is Good News for First Time and Repeat Home Buyers Alike!

Home sellers and potential buyers nationwide welcomed the recent news that Congress had decided to extend and greatly expand the Home Buyer's tax credit in an attempt to further stimulate the economy. Not only does the new legislation extend the existing first time buyer's credit until mid-next year, but it also creates a tax credit for qualified repeat buyers. The change in legislation will relieve home buyers scrambling to meet the original deadline and may encourage a wider range of buyers to consider purchasing a residence.

What Has Changed with the New Law?

Deadline: Whereas the original tax credit was set to expire on December 1st, buyers now have additional time to find their dream home! Buyers must have a contract to purchase a residence in place before May 1 2010, and the deal must close before July 1, 2010 in order to take advantage of the tax credits. At this stage, no additional extensions are anticipated.

Sale Price Limit: A ceiling has now been set for the sales price of homes eligible for the tax credit. For purchases made after Nov. 6, the tax credit is only available for any homes costing less than $800,000.

$6,500 Credit for Repeat Buyers: Homeowners considering a new home purchase may now be eligible for their own tax credit. Taxpayers who have lived in the same residence for five consecutive years out of the past eight can now qualify for a tax credit of as much as 10% of the purchase price of a new principal residence (up to a maximum $6,500). The new residence need not be a single-family home, and there is no requirement that the new residence must cost more than the previous residence. Note: the credit for repeat buyers does not apply to homes purchased prior to November 6th of this year.

More Accommodating Income Requirements: The tax credit was designed to phase out based on income levels, meaning the amount of the tax credit decreases as the filer's income approaches the maximum limit. Under the previous format, income restrictions called for the tax credit to begin phasing out for individuals making $75,000 annually, (modified adjusted gross income*), with no credit available to individuals making $95,000 or more. For married couples filing jointly, this "phasing out" range was $150,000 - $170,000 under the previous law. The income limits set within the new law are far more liberal. For single filers, the credits now begin phasing out at $125,000 up to $145,000 of modified adjusted gross income. For married couples filing jointly, the range begins at $225,000 and ends at $245,000.

The existing phase-out ranges of $75,000 to $95,000 or $150,000 to $170,000 for joint filers still apply to purchases on or before Nov. 6, 2009.
(*For most people, modified adjusted gross income will be the same as adjusted gross income.)

Anti-Abuse Measures: The new law contains anti-abuse measures designed to address and prevent fraudulent applications for the home-buyer tax credit. Persons who are under the age of 18 or who are claimed as dependants by other taxpayers will not be qualified for the tax credit program. Taxpayers taking the credit will also have to furnish proof of purchase. After filling out IRS Form 5405 to determine their tax credit amount, buyers must attach a copy of their HUD-1 settlement form (i.e. closing statement) as proof of the completed home purchase.

Additional Limitations on Buyer-Seller Relationship: Under the previous law, buyers were not eligible for the tax credit when purchasing a home from a lineal ancestor or descendent. The new law applying to purchases made after Nov. 6 also prohibits buyers from taking the credit if the home is purchased from a spouse or the spouse's lineal relatives.

What Aspects of the Original Credit Remain?

Up to $8,000 Credit for New Buyers: First-time home buyers remain eligible for a credit of as much as 10% of the purchase price of a new principal residence, up to a maximum $8,000. "First-time" is still defined as buyers who haven't owned a principal residence for a three year period prior to the home purchase (including both partners of a married couple).

Three Year "Principle Residence" Window: Neither the New Home Buyer Credit nor the Repeat Home Buyer Credit needs to be repaid provided that the buyer(s) reside in the home for a period of three years following the purchase. If within 36 months of the date of purchase the property is no longer used as the taxpayer's principal residence, the taxpayer is required to repay the credit. Repayment of the full amount of the credit must be included with the income tax return for the year in which the home ceased to be the taxpayer's principal residence. The full amount of the credit is reflected as additional tax on that year's tax return.

Tax Credit <> Not Deduction: The credits offer a refundable dollar-for-dollar reduction in what the taxpayer owes. For example, a taxpayer who owes $10,000 and qualifies for the full $8,000 tax credit would only owe the IRS $2,000. This offers a greater savings than a tax deduction.

The term "refundable" means that either of the home buyer credits can be claimed even if the taxpayer has little to no federal income tax liability to offset. If the qualifying credit exceeds the taxpayer's liability, the government would refund the excess portion of the tax credit. For example, if you qualify for an $8,000 credit but only owe $5,000 in tax, you could receive a $3,000 check from the Internal Revenue Service.

Tax Return Filing Options: 2009 home buyers may claim the credit on either their 2008 or 2009 returns, while 2010 buyers can claim the credit on either their 2009 or 2010 returns.

Home Buyer Tax Credit - Extended?? Maybe SO!

Good News!

Late last week, I heard the news announcing that the Senate reached an agreement for the following items set forth on the home buyer tax credit bill:

To extend the $8000 First Time home Buyer Credit
To offer a tax credit to home buyers that are not first time buyers if they are buying a primary residence

To increase income limits - singles were increased from $75,000 to $125,000. Married couples filing jointly were increased from $150,000 to $250,000
One caveat - Home buyers must have executed contracts in hand by April 30th however you have until June 30th, 2010 to close.

Primary residence limit- Homebuyers who already own a home are only eligible if the home they are leaving has been used as a principal residence for 5 years or more


This is amazing news! Many Hoboken buyers did not qualify under current income limitations and also many home owners who want to sell and buy a home now have an incentive to do so in 2010 to receive the tax credit. While $6,500 is a lot less than the original $15,000 that was first proposed, this is still excellent news for everyone. While it's not set in stone yet, all signs point to a great likelihood that it will be passed soon. Keep in mind, there is always a chance that their will still be some changes to the above.





If only now Congress could pull their heads together to pass a bill making it mandatory that banks negotiate with homeowners that have an ALT A or ARM mortgage to a lower more affordable rate to keep them in their homes, then we could certainly avoid another major bump for home owners.

Gold Coast Real Estate - 200 Condos under $200,000

Homes in the area are becoming more affordable. Just this weekend I was able to find a couple a two bedroom one bath with terrace, in an elevator building that includes one car covered garage parking, all for about $200,000 in a nice neighborhood with convenient transportation to NYC.

It sparked me to compile a list of other affordable homes up to $200,000, and girl did I find a lot! Here is a list of 200 condo's priced under $200,000. They include the Jersey City area, Union City, Weehawken, North Bergen, West New York, and Guttenberg area. All share one great thing in common. They provide convenient transportation options to get to NYC quickly. View the list!!!!!


Don't forget, the $8,000 first time home buyer tax credit ends this year. You need to be in your home by November 30th in order to qualify. Not enouh time? There is a chance that Congress could approve a new bill for 2010 and a different tax credit.

If you need help don't hesitate to leave me a comment. And remember, first step is to arm yourself with a prequalification letter from a reputable lender.

Happy house hunting!

Time is running out on tax credit for 1st time Hoboken Real Estate buyers

According to a report from the Internal Revenue Service more than 1.4 million Americans have cashed in on their $8,000 tax credit and bought their first home. The figure doesn't say of those 1.4 million how many qualified for the full credit, however, this credit has proved to be much more valuable than the original $7,500 tax credit from the previous administration.

The $8,000 1st time home buyer tax credit has become an important tool in stimulating not only real estate sales but many sales transactions that affect many businesses and independent contractors because it is completely refundable allowing many to purchase furnishings for their homes, pay for closing costs, renovate a bathroom say, or apply the credit to pay down debt.

New tools available for buyers such as this new IPhone

APP provided by zillow.com to search for recent price reductions.

In a typical real estate transaction there are about 14 service professionals involved that all benefit from a sale. Not to mention the other service professionals involved from the seller's transaction as well. From a real estate attorney to the appraiser, from a moving company to a lock smith - many benefit.

Real Estate advocates including the National Association of Realtors, are urging Congress to extend the tax credit and make it available to all new home buyers in an effort to keep momentum going. According to CNN money there are 6 proposed bills in front of Congress that if passed would extend the tax credit.

While the tax credit has helped some markets stabilize, some economists predict that if the bill isn't extended it could soften the market when it's over.

On the other hand, if the credit is extended in the new year and becomes available to more Americans, then it's also possible that the real estate market could spike, causing depreciating real estate prices and under market value sales to halt and possibly rise.

On the mortgage side:

While the clock is ticking for first time home buyers looking to take advantage of this year's tax credit, FHA guidelines are becoming stricter making it more difficult for a home buyer to afford a home. New guidelines are set to take place November 1st after being pushed back from it's initial deadline of October 1st, so as not to put a roadblock for those looking to buy a home before time runs out.

In addition, appraisals can be an obstacle as well in closing real estate transactions. Because of current market conditions, some sellers have been forced to sell at prices slightly below market value to cause a sale. As these prices become recorded, appraisers and banks are forced to use the last - most recent sale - to appraise a home. Sellers will need to adjust their prices and buyers will need to be aware of this as well and adjust their offers accordingly.

It's unclear whether or not Congress will pass any of the proposed bills and extend the credit into the new year, and if so, it is also unclear as to what new restrictions will be in place for mortgage lenders. Therefor, it is important that your real estate agent is in tune to not only the real estate market but also has a good relationship with a reputable mortgage broker that is an expert in your area. Ask what guidelines you have to meet before shopping for a home and if these guidelines can affect your home wish list.

If you have a small down payment and are looking to buy a condo for example in the Hoboken real estate market, then time could very well be running out.

If you have 20% - 25% down and excellent credit, then you absolutely should be taking advantage soon. Whether it's for this tax credit or if another one comes on the scene. Sellers should fight over a buyer with excellent credentials if they are aware of the difficulties some buyers face in securing a loan today.

Bottom Line: Decide soon if this is your time to buy a home - then go for it.

1st time buyers - vide0 - what would you do for 8k? Buy Hoboken real estate?

A video of regular people in NYC being questioned "what would you do for $8,000"? Free money? Check it out!

Watch Here On You Tube