Obama Signs Tax Credit Extension & Expansion

President Obama signed H.R. 3548 this morning, enacting into law an extension, and adjustment, of the $8,000 tax credit for first-time buyers. This extension, among other things:

• Adds money for some move-up buyers
• Creates one deadline for signing a contract and a later deadline for closing
• Changes income requirements
• Effective immediately: The maximum home value purchased cannot exceed $800,000. Prior to the law being signed, first-time homebuyers had no limitation on a home’s cost.

The Florida Homebuyer Opportunity Program (FHOP), created by the Florida Legislature earlier this year, still has approximately $28 million that first-time homebuyers can access and use toward their downpayment. And move-up buyers now have the ability to ‘port’ their current property tax savings to a new home.
First-time homebuyers

• The maximum tax credit remains $8,000 ($4,000 for married individuals filing separately
• Anyone who has not owned a home within three years is considered a “first-time buyer.”
• A purchase must be under contract by April 30, 2010
• A purchase under contract by April 30 must close no later than June 30, 2010.
• After Dec. 1, 2009, income limits rise to $125,000 for singles and $225,000 for married couples; up from limits effective through Nov. 30 of $75,000 for singles and $150,000 for married couples.
• The tax credit phases out incrementally at each $20,000 increase in income.
• Purchase price is limited to $800,000 or less
• Contact me if you have questions

Expanded homeowner tax credit

• An existing homeowner who purchases a home may now claim a tax credit of up to $6,500.
• To qualify, that owner must have owned and used the same residence as a principal residence for any consecutive five-year period in the previous eight years.
• This new tax credit is effective immediately
• Eligible homebuyers do not have to wait until Dec. 1 to close in order to qualify
• Personal income limits, maximum home value, and contract/closing deadlines are the same as those for first-time homebuyers
• Long-time Florida homeowners who enjoy discounted property taxes resulting from the state’s Save Our Homes amendment qualify for property tax portability
• Contact me if you have questions

Florida Homebuyer Opportunity Program
Under FHOP, first-time Florida homebuyers can obtain interest-free bridge loans to access their federal tax credit before they complete a home purchase, enabling them to use that money upfront for downpayment and closing costs. Once buyers submit their returns to the IRS and receive their tax credit money, they repay their loans to the state.The Florida Realtors-backed program came out of the 2009 session of the Florida Legislature. However, as part of the 2009-2010 budget year, did not become effective immediately. They tax credit extension will allow many first-time buyers to tap into the approximately $28 million in the program's remaining funds. While funded by the state, the money is distributed through the city and county housing offices that operate the State Housing Initiatives Partnership (SHIP) program. There is no standardized program, and each local agency may operate under different rules for distribution. For more information, buyers should contact their local SHIP office.
Contact me to find a local SHIP office
Additional changes
The tax credit extension includes other new rules, such as:

• The new law also impacts dependent purchases of homes, which weren’t addressed under the old rules.
• The new law requires a buyer to attach documentation about the home purchase to his or her income tax return. An audit found that some buyers are claiming the tax credit when they don’t deserve it, and investigators continue to seek out fraud. To minimize tax abuse going forward, buyers won’t receive the credit without submitting proof to the Internal Revenue Service (IRS).

The homebuyer tax credit is collected as part of the normal income tax process. As a credit, it’s calculated separately from an individual’s income tax, and paid regardless of taxes owed or withheld from income. As always, however, only a tax planner can render specific advice to anyone seeking the credit. For more information on the credit, contact a tax planner or visit the IRS website at: http://www.irs.gov/.
Contact Gabe Fitzhugh with Burbach Realty Services
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most of the information contained in this post came from floridarealtors.org