Somethings in Real Estate can wait but getting a move on with the HOMEBUYERS TAX CREDIT cannot wait. So, this is a timely message for all of you home buyers that have been doing my favorite exercise. . . Procrastination. I have addressed this before but thought since time is running out for this great savings, I should bring it to the forefront again. As I always do I am going to answer some ACTUAL real life questions that people have brought to my attention and have consulted other legal resources for my answers. (Federaltaxpayerscredit.com)
Q. What if you have already owned a home or you are married and your spouse has already owned a home, can you qualify?
A. This is a big misconception that people have when you talk about the First time homebuyer credit because YOU CAN qualify even if you have already owned a home per the “Economic Recovery act” definition is as follows:
“The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.”
For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter.
Q. What if you already have a partnership in a vacation home can you still qualify?
A. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer. This is a big question I have gotten from many people and the answer was quite surprising to me as well. What a great surprise!!!!
Q. How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008?
A. The most significant difference is that this tax credit does not have to be repaid. Because it had to be repaid, the previous “credit” was essentially an interest-free loan. This tax incentive is a true tax credit. However, home buyers must use the residence as a principal residence for at least three years or face recapture of the tax credit amount. Certain exceptions apply.
Q. How about short sales at this stage of the game? Should I buy a short sale or a foreclosure?
A. Now that could be a whole other article. Let me preface this by saying. . . “don’t shoot the messenger!” All short sales are not inherently bad, but I would at this point ask your Realtor if it is possible to close in time. It may be a risky venture for a home buyer and they should know the time frame going in. Most foreclosures are not complicated and can close in a timely fashion so they should be just fine. Again seek the consult of your trusted Realtor and lender, and they can help you with this on a case by case basis.
A big thing to remember that makes this so wonderful is that this is NOT a deduction, it is a CREDIT meaning that you actually get the check up to $8,000 if you qualify. You may use the money as you see fit. You may want to pay yourself back for the down payment or closing cost or you may purchase a home that needs a little face lift. You DO NOT have to justify your expenses it is your money to spend. Another huge bonus is that in addition to this money you also will be able to take a tax deduction for interest payments.
So now that you know and you have just enough information to get excited, give us a call and we will send you a Reference guide to the “Economic Recovery Act of 2009” You can also call your lender and he will help walk you through this process but you only have until November 30 to close so. . . on your marks – get set – GOOOOOO.