Homebuilder Confidence Jumps
In a strong sign that the housing market may be picking up, builder confidence in April made its most dramatic increase in nearly seven years, according to an industry report.
Obama Launches Mortgage Rescue Plan
The Treasury Department announced last week the first six participants to sign up for President Obama’s loan modification program. They include three of the nation’s largest banks: JPMorgan Chase, Wells Fargo and Citigroup. The others are GMAC Mortgage, Saxon Mortgage Services and Select Portfolio Servicing.
it seems like all of us are turning over every stone looking for the magic answer to the mystery behind the tax credits. Does the customer pay it back? Is it taxable? How do they get it? When do they get it? The list goes on.
After consulting one of my customers and a trusted CPA, we went over both the 2008 and 2009 tax credits. I have to qualify this as he was very clear that no one should give specific tax answers to an individual’s scenario unless you know all of the particulars and everything about their finances and deductions.
With that said, he gave me specific answers to general questions so here I go:
1) The difference between 2008 and 2009 tax credit:
There is a difference in the 2 at present not only in amounts but repayment.
2009 purchases do carry the $8000 credit which doesn’t have to be repaid if one lives in the house for at least 3 years.
If they move prior to the 3 years then it is supposed to be repaid and I believe that is handled at closing.
If the house was bought in 2008, the tax credit is $7500 and is to be paid back over 15 years, $500 one year at a time. It is basically an interest free loan for 15 years. If bought in 2009, the credit only has to be repaid if the house is sold within 3 years.
2) Who is eligible?
Yes it is for first time homebuyers and the definition of that is anyone who has not owned a house in the last 3 years.
3) Is it taxable?
The tax credit is not taxable but keep in mind that this doesn’t ensure a taxpayer gets 8k back. if a homebuyer owes $ for that year it will be essentially netted from the tax credit amount.
4) When does it get processed?
The tax credit will be issued only with a filed tax return and process along with any applicable refund. One loophole is that you can claim the 8k credit instead of the $7500 on the 2008 return even if you didn’t close until 2009 as long as your 2008 returns were not already filed. If you e-file your return and direct deposit, one will usually get the refund in less than 2 weeks.
Randy Pace or Matt Franklin are highly recommended CPAS who only take new clients on a referral basis and if you know someone who could use their assistance I am glad to refer you to either one. Please let me know if you’d like their contact information. I hope you find this useful and if I can be of further assistance please let me know.
Rob Sadoff, Executive Vice President
Omni Mortgage Corporation
