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| First-time home buyers snapping up tax credit deals |
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| Wednesday, 03 March 2010 | |
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Cliff Buchan News Editor It was a deal too good to pass up for a couple looking to buy their first home. Last year when Nick and Krista Caflisch started planning to buy their first home, they wanted a good buy and a location that would be near their church in Wyoming. Thanks to the help of Bob Fedderly, a real estate associate with Edina Realty in Forest Lake, they found both. With their eligibility to utilize a federal tax credit under The Worker, Homeownership, and Business Assistance Act of 2009, the couple purchased a home in Wyoming. They are like many young, first-time home buyers who have utilized the federal program designed to stimulate home sales during a time when the real estate market has been staggered by declining home values, foreclosures and rising unemployment. After taking advantage of the program last year, the couple has utilized their $8000 tax credit to pump dollars into refurbishing their property, a short-sale acquisition that went through with few hitches. The couple moved in on June 15 and spent the last half of 2009 sprucing up the property, a split-level, three bedroom, two bath single family home with a single car attached garage. They have added new carpet, worked on the walls, floors and ceiling, and applied gallons of paint to give the home a new look. A Real Boon The first-time home buyer’s program in 2009 was so successful that the federal government extended the tax credit through the first four months of 2010. The program will expire on April 30, meaning two months remain for first-time buyers to check out the program. “It did a lot for the real estate industry,” Fedderly said. He sold a half dozen homes in the second half of 2009 where the buyers were eligible for the tax-credit program. “It has been a real nice incentive,” he said. When the Caflischs came to Fedderly last year looking for a real estate professional to help in their search for a home, the tax credit program immediately came into play. They looked at eight to 10 homes in Forest Lake and Wyoming before the property in Wyoming caught their eye. At $94,000, the price was right for the home built in 1986. Based on their combined incomes — Nick works for Hartford Insurance and Krista works for Wells Fargo in Minneapolis — the $8000 tax-credit became reality, too. “It was a short-sale, but we had time,” Fedderly said, adding that in some cases if negotiations on a price with a bank become protracted, a short-sale may not be best. In this case, however, the bank holding the mortgage quickly agreed to sell the home for less than it was owed, paving the way for the couple. “It was very important to us,” Krista said. “We probably would have looked at renting in the area.” “For us, it opened up an opportunity,” Nick added. The couple qualified for a 30-year mortgage at 5.5 percent. Their goal now is to pay down the loan early. Fedderly says the tax-credit program worked its magic in two ways. It assisted a young couple’s desire to buy a home and it kept a home from falling into foreclosure, Fedderly said. “It worked out for everybody,” Fedderly said. “We did well in selling a home.” How it works Under the extension, the tax credit applies to sales occurring on or after Jan. 1, 2009 and on or before April 30, 2010. In cases where a binding contract is signed by April 30, 2010, a home purchase completed by June 30, 2010, will qualify for the credit. For sales occurring after Nov. 6, 2009, the act establishes income limits of $125,000 for single taxpayers and $225,000 for married couples filing joint tax returns. The income limits for sales on or after Jan. 1, 2009 and on or before Nov. 6, 2009 are $75,000 for single taxpayers and $150,000 for married taxpayers filing joint returns. The law defines a first-time home buyer as a buyer who has not owned a principal residence during the three-year period prior to the purchases. For married taxpayers, the law tests the home ownership history of both the home buyer and his or her spouse. The $8000 tax credit is not a flat amount. The amount of the tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8000. Home buyers claim the tax credit on their federal income tax return. Amended tax forms for the previous year may also be submitted to claim the credit. The tax credit may be used on any home that will be used as a principal residence, provided the home is purchased for a price less than or equal to $800,000. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured or mobile homes and houseboats. The program does not allow the purchase of a home from, among other family members, your ancestors (parents, grandparents), your lineal descents (children grandchildren), or your spouse or your spouse’s family. There are many rules and regulations that potential buyer’s should research. Information is available from real estate professionals like Fedderly, and can be found online at: http://www.federalhousingtaxcredit.com. In addition to the first-time home buyers tax credit, Fedderly says existing home owners who are interested in a “move-up” purchase, may also be line for a $6500 tax credit. Purchases with a binding sales contract signed from Nov. 6, 2009 through April 30, 2010 may be eligible. With no decision yet on a second extension of the popular tax credit program, Fedderly said it behooves anyone interested in buying that first home or moving up to a second home to make plans soon. Social Bookmarking ...       |
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