I am sorry, But you do not Qualify for the 1st Time Homebuyer Credit

I am sorry, But you do not Qualify for the 1st Time Home-buyer Credit, by a Realtor in Hudson Florida

How devastating would that be if, because you and your agent were not fully versed in the complexities of this Program.  You found the home of your dreams, you laid out all the costs to get it through the inspection period, and you think it is clear sailing to closing.  Well if there is anything a Realtor has learned it is that there is no such thing as Smooth Sailing To Closing.  Until you close, you have NOT closed, and anything can go wrong.

For instance:

• when you last bought a house, you had bad credit so the home was purchased, 2 years ago in your spouses name, and now you think you can buy the new house, in your name only and get the $8000 tax credit.  I am so sorry, but you can not.  First of all, the tax credit is a credit of up to the 10% of the homes purchase price.  If you buy a $50,000 home, you would only be eligible for $5,000 (10%).  However when qualifying you for the credit the IRS will exclude you because your spouse did own a home in the previous 3 years.  They check everyone out regardless of whether or not they are a party to the contract.

• the next dis-qualifier would be Income.  If you earn an adjusted gross income up to $75,000 (or $150,000 if filing jointly) you qualify.  If you earn more than that you are not eligible.  There is no graduated tiers of payout.  You are eligible for all (depending on the value of the home purchased) or nothing

• Now the general public may not have much experience with Short Sales, but us professionals certainly do.  If you were counting on that $8,000 credit, which you qualify for, in full, but do it on a short sale, you risk not closing by the programs deadline of Dec. 1, 2009.  Banks have become a bigger hurdle to getting to closing, than ever before in my career, which is only since 2000, but still.  It is not uncommon for a closing to take 3 months. So if you go into contract in September the deal could easily drag into December, making you no longer eligible for the Credit.  And I can find no rational reason why the Banks are taking so long.  They are losing more money than they are saving by being understaffed, or poorly staffed.

• Next one would be buying the wrong type of property.  The eligible properties include Single Family Residences, Townhomes, & Condo’s.  Do you see anything missing?  Thats right Mobile homes and Modular homes.

• Did you also know that this is an actual tax credit.  If you are eligible, for conversations sake, the entire $8,000, if you owed $10,000 in taxes you would only pay $2,000.  If you owe $8,000 in taxes, itis a wash.  If you owe less than $8000 you will receive a check for the balance..  If you are owed money on your Return, they are added together and returned to you.  Now you also need to evaluate your Financial situation, because the Credit can be applied retroactively on your 2008 return by amending it, or you can apply it to your 2009 Taxes next year.  At this point you need to consult your Accountant/Financial Planner.

• The last wrinkle you need to be fully aware of, is you are REQUIRED to live in this home for the next 3 yearsor you need to repay the credit, in full.  At this point in time, while their starting to be some optimism creeping up, I see nothing that says your house will appreciate by $8,000.  I know we just came out of a market where you were up $8000 while you drove home from the closing.   Those days however are long gone

All that being said, I hope you now feel better educated about the First Home-buyer’s Tax Credit.  That you have a better footing on what is involved, because the value of current housing is very attractive.  Especially in Florida.  Now I can not say we have bottomed or we will soon, but nobody can pick a bottom.  A 1000 people will try and a year or two from now, we will notice somebody happened to have a lucky guess.    If you are considering moving up, downsizing, or are an actual First time home-buyer, it really si a great time to buy.  Just make sure you are represented by trusted property trained Professionals.

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