Housing Tax Credit EXTENDED and EXPANDED

It was iffy there for a while, but Congress did renew the Tax Credit for eligible U.S. taxpayers! It now includes a credit up to $6500 for buyers who HAVE owned a home in the past 3 years. See website for details about other qualifying criteria.

http://www.federalhousingtaxcredit.com/

There is also a provision for active military personnel that extends the deadline to purchase until 2011, giving our service members an extra year to take advantage of the credit.

Another benefit is length of occupancy, which is waived for military buyers who have to relocate within the first 3 years because of official business.

All other buyers must agree to occupy the property as a primary residence for the first 3 years, or forfeit the credit.

One concern lawmakers had (and still have!) is fraud. In the beginning, there was no IRS requirement to prove you actually bought a home, other than filling out the proper form. Also, there were numerous mortgage companies, and realtors too, who heavily promoted that you could get the credit before you buy - just by implying on the correct tax form that you intend to buy this year and amending your 2008 tax returns. Not so!

Now the IRS is requesting proof, which is easily handled by sending in a copy of your Settlement Statement (HUD-1) with the proper tax forms when filing for your refund.

The extension and expansion of the Federal Housing Tax Credit will ultimately lead to more buyers looking for homes, which is very welcome in an area that has plenty of inventory!

Start looking NOW

www.mypinellasparadise.com

Boy, is my face red!

CORRECTION: regarding Federal Housing Tax Credit

After further research into this topic, and a discussion with my CPA, it's time to issue a retraction on this topic.

The Federal Housing Tax Credit IS a refund, even if you do not owe income tax. If you file a tax return and can qualify to claim this credit, you will receive this money in the form of a tax refund.

There still seems to be confusion about this incentive for homebuyers and I hope this helps clear up some of the questions.

However, the clock is ticking. To claim the credit, the real estate sale has to close by December 1, 2009. That's less than 60 days, which may not be enough time, depending on your transaction.

For example, I am working with a very well-qualifed buyer right now on a traditional sale, and the lender is telling me they need a minimum 30 days to close. In the mortgage world, we call these customers a "slam-dunk" because the process is normally very streamlined with a buyer of this caliber. Just as a point of reference- in the past, most lenders could close a purchase transaction in about 10 days.

So, if you are a buyer looking at short sales and hoping to close in less than 60 days to get the tax credit, I strongly recommend you switch strategies and start looking at deals that can close in time. Foreclosures take less time to close than short sales, but time is truly of the essence today.

For a list of bank-owned properties in this area, please visit my website and click on the "Foreclosures" page.

www.MyPinellasParadise.com