| Have you been asked by your clients about the First | | | | credit is $7,800.) and removed the repayment |
| Time Home Buyer Tax Credit? As a mortgage | | | | requirement. It is for homes purchased and closed |
| professional, you can build trust and loyalty with your | | | | from January 1, 2009 to November 30, 2009. For |
| clients if you have a basic understanding of the credit | | | | homes purchased in 2008, the tax credit still must be |
| and how it can impact their decisions when applying | | | | repaid. |
| for a loan. | | | | Does your client need to apply? |
| Use it as a marketing tool to talk with your clients who | | | | There is no pre-purchase authorization, application or |
| are thinking about buying a home (first time home | | | | similar approval process. All eligible purchasers simply |
| buyers ) and will working with you for the loan. Use it | | | | claim the credit on their IRS Form 1040 tax return. The |
| as a reason to call clients you haven't talked with in a | | | | credit will be reflected on a new Form 5405 that will |
| while (shame on you) to give them information. It can | | | | be attached to the 1040. Form 5405 can be found at |
| also be a great way to introduce yourself to real | | | | irs.gov. |
| estate agents who deal with first time home buyers. | | | | Who Qualifies as a First Time Home Buyer? |
| Surprisingly, many first time home buyers have never | | | | A first time home buyer is someone who has not |
| heard of the tax credit, or they misunderstand how it | | | | owned a home any time during the 3 years prior to |
| works. The most common misconception is that it can | | | | the date of purchase. For married joint filers, both must |
| be used toward their downpayment. This is NOT | | | | meet the first time home buyer test to take the credit |
| correct. It is a TAX CREDIT that can be claimed on a | | | | on a joint return. |
| 2008 tax return (filed by April 15, 2009), an amended | | | | The house being purchased must be owner occupied |
| 2008 tax return, or on a 2009 tax return. | | | | and it must be located in the United States. It is very |
| The 2009 Tax Credit | | | | important to note there is a 3 year residency rule, |
| The First Time Home Buyer Tax Credit was originally | | | | which means if the house is sold prior to 3 years of |
| passed by Congress in 2008. It was a $7,500 tax | | | | ownership, the tax credit must be repaid. |
| credit that went into effect on April 8, 2008 and | | | | NAR (National Association of Realtors) has estimated |
| expired on July 1, 2009. The big negative was that it | | | | that hundreds of thousands of new buyers could enter |
| had to be REPAID over a 15 year period, so basically it | | | | the market due to the First Time Home Buyer Tax |
| was a loan - not a credit. | | | | Credit. Just imagine what that would do for your |
| The good news is that in February 2009, Congress | | | | business! For more details and updated specifics, you |
| increased the credit to $8,000 (or up to 10% of the | | | | should always advise your clients to talk with a tax |
| purchase price, so if the purchase price is $78,000, the | | | | expert or CPA. |