8k it is not much.

Come on are you sure Phoenix is giving 15k grants for property. I didn't read it any where up till now.

Hi Jay, added some information about the Phoenix $15k grant to buy foreclosure properties on my site. Is there any way I can write a guest article on your site? Or, do you want to place a friendly link to my site? Many thanks!

Phoenix $15000 Grant

**Steve Trang´s last blog post..$15000 Phoenix Grant Update</abbr></abbr>

Mike - the $15K never made it into the bill that was signed into law. There was an existing $7,500 tax "credit " (that was actually an interest free loan paid back over 15 years). That $7500 is now in effect from April 9, 2008 - Dec 31, 2008.

The new $8,000 true tax credit is in effect (for 1st time home buyers) from Jan 1, 2009 - Nov 30, 2009.

Hello,

I thought that they were offering $8K in tax credits and 15K in interest free loan for 15 yrs to new home buyers. That's what I heard in the news. Could someone please confirm that for me or shed some light on the subject...

For those following - i'll post this here:

http://appropriations.house.gov/pdf/Recovery_Bill...

See page 24 - it looks like the final measure has $8,000 for first time homebuyers who purchase between January 1, 2009 and December 1, 2009, and no need to repay it as long as you live in your home for three years.

Don - you'll need to consult a CPA or attorney once the bill is finalized to figure out how it impacts you directly...

Mary and Hagfish had me laughing so hard I had to comment; you guys-points well made on both sides, but I do think Hagfish is crossing the line into fraud with your idea. But hey, maybe the IRS won't catch you; it seems most of the people in charge don't know how to pay their own taxes, let alone figure out if others have done it correctly...lol

My fiance and I are purchasing a home and closing April 15th. I make more than 75k but together we make less than 150k. We are getting married in October. Filing taxes in 2009 will we be eligible for this since we will file jointly, or do we need to be married before purchasing the home to be eligible? I just want to make sure my income doesn't cost us the credit.

It is amazing the transformation this bill is taking in such a short time; still no clear answers for anyone though. Let's hope they decide something soon, though it may end up being better for the economy overall if there isn't any more stimulis out there to artificially support it at a level higher than it should be-eventually the cards will still fall where they should be, no matter how much money we pump into it.

**MaryAnn Knell-Peoria Real Estate´s last blog post..10 Steps to Achieving the American Dream of Home Ownership!</abbr></abbr>

Here's something i found:

http://c-span.com/pdf/taxprovisions.pdf

looks like $8,000 - need to purchase a home in 2009 (January 1 - December 31st) need to be a new home owner...

I think this finalized bill only pertains to first-time homebuyers - not homebuyers in general. It amends the statute to forgive repayment from Jan1 - Aug 09 and increases the credit to $8,000. Income limitations, etc remain the same. I really don't think this pertains to any homebuyer. Sorry.

Jay - it looks like the final bill will have an $8,000 tax credit (up from $7,500) and NOT need to be repaid...and will be effective for homes purchased on or after January 1st, 2009 and before August 1, 2009. According to the LA Times:

http://www.phoenixrealestateguy.com/15000-home-bu...

GRANTED - the paper could have it wrong - but they have been the most specific of any other article I have seen.

On top of this, it STILL hasn't been voted on by the house or senate, so there's no telling if more changes could come if they can't get it together.

My guess though, is that given the political climate, I can understand why they went the way they did. In the senate, the Democrats went with the republicans on the $15,000 non-refundable credit, in hopes of making the bill more bi-partisan. When they realized it wasn't going to help, and it wasn't going to get them any more votes, they went back to the original plan. They included the 3 republican senators in the compromise, and increased it to $8,000 - but it didn't make sense any more to keep the full $15,000 in. ESPECIALLY because Democrats tend to want to give refundable tax credits, where republicans tend to prefer non-refundable ones. This is all purely speculation - but it is not surprising.

IF this is true - this is wonderful news for us - looks like we are closing on Friday - the loan is supposed to get funded today, and then we'll get our keys tomorrow.

USATOday also had an article supporting the $8,000 compromise

http://www.usatoday.com/news/washington/2009-02-1...

They could be reporting it wrong - but these two articles are the only ones who mention the specifics of the homebuyers credit in their articles on the compromise bill. Until the full text is release (which should happen sometime today) we can only rely on the reporters here...and hope they are accurate

@Raj - to be perfectly honest, I'm not sure if anything makes sense. Personally, if I had a home in escrow right now that was scheduled to close, I'd probably try to delay it until this thing becomes law and decisions can be made. But every situation is different.

@Amanda - the $15K credit appears to be gone. It's been reduced to $7.5K, $8K or "effectively eliminated" depending on which news source you want to believe. The only certainty right now for you is that the stimulus bill should be signed into law well before your March 15 scheduled close (most sources are saying possibly by Friday). One recent report I saw said the revised bill goes back to first time buyers only. IF that is true, then clearly your current home purchase would not qualify. Also, I would check with a tax professional quickly because there are existing terms in the $7500 law that require repayment of the "credit" IN FULL on your next tax return (such as selling the home and/or no longer using the home as your primary residence). Depending on what you are doing with the home you're claiming the $7500 "credit (which is actually a zero interest loan), you may fall under those repayment criteria (see the IRS FAQ for more)

I have a question for you....

We bought our fisrt home in may 2008, and e filed our taxes and claimed the 7500 tax credit. We are in the process of buying a new home, and it is expected to close march 15th. If the new law passes with the 15000 tax credit, can we also claim the new tax credit?

What about homeowners who currently do not qualify for the $7,500 tax credit? If this law gets passed anytime after excrow is closed Wouldnt it make sense if for them to wait?

http://latimesblogs.latimes.com/laland/2009/02/ho...

Looks like the $7500 will be the amount that they go with, if the bill is passed in the coming days, for home owners that purchased after January 1, 2009.

Michael - no one knows yet - no one has seen the finalized version...

Robert - only the Senate had the $15,000 tax credit in it - the house version did not - the house ONLY waived the current need to repay the $7,500. The senate added the $15,000 which looks like it is getting "trimmed" "scaled back" or however you want to look at it. Right now everything is only SPECULATION until we see the finalized version, it gets passed by the house and senate, AND the president signs it into law. Until that time - we don't know for sure

Eliminating the $15,000 tax credit is bullshit. Both the house and senate versions had that in it.

Did they agree to waive the payback fee of the $7500 tax "credit" (it was a no interest loan) for first time home buyers?

If this doesn't spark home sales, will the government sweeten the deal, like they did with the existing $7,500 credit? And if it does spark sales, will they extend the current deal? Would you recommend homebuyers act now or wait a few months, or through the busy homebuying season, to see how this sorts out? If we've learned nothing else from the bank bailout, the government seems more than willing to offer a better deal if their original efforts fail to produce the intended reaction.

"Don 02.09.09 at 10:51 pm

I am looking at buying my first house in the next couple months for about $200k. With the way I understand it now the $15,000 can only be credited toward what I owe at the end of the year over and above on federal taxes. Should I claim 6 dependants to make sure I owe the maximum for the $15,000 to absorb, or will I get a refund of any federal taxes I have paid? I already pay close to 10k a year in federal taxes alone if not more. Will that be paid back to me?"

All-

There seems to be some confusion on tax liability/tax withholding. By increasing your allowances on your W-4 ("claiming 6 dependents"), you are not changing what you owe . You can not increase/decrease your tax liability by adjusting your withholding. Your tax bill is based on your income. All that adjusting your withholding does, is attempt to ration out what you will owe come tax time. You've done this most effectively when your refund at the end of the year is $0. A tax refund is not "free money" from the government. It was you giving the government an interest-free loan.

Now, provided some version of this tax credit passes, and an individual has already filed their 2008 return and doesn't want to A)file an amended return or B)wait until filing 2009 return, they can adjust their paycheck withholding by claiming more allowances to receive that cash sooner.

The tax credit was doubled after 8 months only. Shows the sorry state of the housing market. With median home price in the USA aroun $160K, the government is essentially paying the downpayment. Yet people don’t have the confidence to buy. On another note in a recent article on this topic, it was cleat the tax treatment is going to confuse a lot of people.

**Andy´s last blog post..US Automakers Bailout - A Bridge to Bankruptcy or a Road to Salvation</abbr></abbr>

Thought I would share this article from CNN:

http://www.cnn.com/2009/POLITICS/02/11/stimulus.p...

Here's the key point:

"A Democratic source also said a plan to offer tax credits to homebuyers that is in the Senate bill will be scaled back to make room for House priorities and a Senate proposal to offer tax incentives to buyers of American-built cars will be nixed."

Looks like the $15,000 will be scaled back - we don't know to what - but right now, it "seems" that $15,000 will be off the table -

Robert said: ". . . it is just a good sales job!" True, and sadly I think that's what most politics boils down to.

@rx - lowering your with holding seems like a viable option. Someone mentioned it here in a comment. Either on this post or another one on the subject. I'd definitely consult a tax professional. You can be penalized if you under-with hold.

@Gary - You are more than welcome! I'm glad you find it useful. There will definitely be more once the bill is finalized!

Thank you for this website. For the past two weeks I have been looking for current, relevant information on the tax credit and the only place I can find it is here. Thanks

Jay - You are correct, I am incorrect about the credit only applies to the down payment, I could have sworn I read that; I eat my words on that. Regardless, think about it, you are buying your first home, the median price according to US Census is $291,800 (in 2008). So how much do you have to make per year to pay the loan? According to Freddie Mac calculator (http://www.freddiemac.com/corporate/buyown/english/calcs_tools/) with 10% down at 6.5% 30 year fixed, you have to make $7K per month (with no student or car loans, oh and you have good credit for that rate). So you are making $84K year. As it turns out the $7500 credit phases out after you make $75K a year and I bet the new $15K will phase out too there too. SO:

- You don't get 10% of a house, if your price is $291,800 (which is the median price).

- You don't get the full $7.5K (or now $15K), because you make too much.

So what do you get? You get some help. Sure it is nice, but is far from really giving the majority of US citizen $7.5K or even $15K.

I think I ended up with $3K~$4K from $7.5K. And the one I bought into it is still a loan that has to be repaid.

So, why is it they don't say, most people will likely get $3K to 4K, because it is better to fool not too smart people (like me) into thinking, I get $7.5K. Sure it is not a scam if you read all of the fine print, it is just a good sales job!

Anne -

Everything I've read says that those that bought in 2008, and qualified for the $7500 "credit" (which you correctly state is really a loan), will still have that available to them.

The new $15K credit, in it's current form, changes the ending date of the current $7500 credit from July 1, 2009 to the day of the enactment of the new bill.

So (unless it changes, which it could), the $7500 law doesn't go away, it just ends sooner (which makes sense. It's confusing enough as it is, can you imagine the confusion if BOTH the $7500 credit AND the $15K credit were active at the same time?)

Hey Jay~

OK- I know this blog has talked "kinda sorta" about our situation, but would REALLY appreicate a direct answer as this is so confusing...

We bought on April 22, 2008 and qualify for the full and current $7500 loan.

I know there are a bunch of "what if's" but I am worried about passing the opportunity if the bill goes through and only includes 09 purchases. Everything I read about the new bill either a. forgives the 7500 ONLY if purchased after 1/09 and b. gives the 15k non-refundable credit to buyers who purchase after the bill was signed.

Keeping all of that in mind, that would mean I should just quickly file to try and get anything because I bought in 08- right?

I would rather get something than nothing!

Also, if the above changes, can’t I just file a amended return?

Thanks so much for your help!

Anne

I'd like to thank everyone for their comments, it really enlightened me a lot on this situation. I am planning on claiming the $7500 tax credit on my 2008 taxes. I just hope that they could waive the pay back fee back to Jan. 1st, that will be an awesome thing to happen!

Thanks for the explanations, it is very much appreciated. I was looking at when i filed my taxes versus my closing date. As long as I am able to claim the $7500 tax credit (no interest loan) on my 2009 tax filing, that's really all I'm worried about. I know i won't qualify for the $15,000. But if they could waive the pay back fee on the $7500 tax credit in the new bill that is passed, that would be even better. Thanks!

The day it's signd will be last day for 7500, next day starts 15000

@Michael - as it's currently written the new $15K credit only replaces the $7500 "credit" as of the day the new bill becomes law. It's not (currently) written to replace anything that existed prior to it being signed into law.

But, as I've been harping over and over in these comments, the $15K credit isn't a law yet and it's likely some provisions will change before it becomes law.

This is my understanding from my CPA. Whatever law is in effect when you close on your home is what you get. If you have already closed or close on or before the day Obama signs this new bill then you will fall under 7500 law. All closings done on the day after he signs or later will fall under the 15000 law. When you file your taxes has nothing to do with this. The only thing the ones that fall under the 7500 rule need to find out is if this new law waives the repayment. If you qualify, this is FYI to you, you won't have to do anything. The ones that fall under the 7500 may or may not have to repay it, so check to see if that is indeed been waived & if so what home closing dates are eligible, was talk it would go back to 1/1/09. Again tax filings dates will not change that. Taxpayers can elect to treat 2009 closings on 2008 tax filing, or 2008 amended, or your 09 filing, your choice. And this will also be true if the bill isn't changed in it's current state, and the 2nd successive year on the 15000 the year after your choice. As far as any waiting or delaying should be in regards to closings, do you want the 15000, then don't go to closing, until it's law. Make sure you understand what you will or will not qualify for. I just delayed my 2/17 closing to 2/23. I want the new law. Could it have happened for me on the 2/17 closing, only if he signs it on or before2/16. Only time will tell, Good Luck all.

@Marie - again, I am not a tax professional and the $15,000 credit isn't even a law yet. It sounds like you're meeting on Feb 15 with a tax preparer? I'd ask them your very reasonable questions.

As it is currently written (which could change) the new law won't affect the existing $7500 credit -- and that's the law the would impact people buying between Jan 1, 2009 and the day the new law is signed by the President.

@Michael - My understanding is that you have an option of claiming the $7500 "credit" (which is really a zero interest loan) in either 2008 or 2009. As it is currently written the $15,000 credit becomes effective the day it's signed into law, so your Feb 2 would not be eligible.

But who knows, that could change in the final version of the bill.

@Bruce - as the Senate version is currently written there is no "first time home buyer" provision. It must be your primary residence, which it sounds like your new home would be.

But I have to keep saying this: there is no law yet, it could change, and I am not a tax professional.

@Nancy - first, are you sure you're closing on 2/15? That's a Sunday and it would be extremely unlikely to close on a Sunday.

"Closing" is commonly thought to be when documents are signed. But it's actually when the deed transferring ownership is recorded. (at least in Arizona, and my understanding almost everywhere else. Almost).

I would strongly suggest you consult a tax professional. Your income is too high to qualify for the existing $7500 credit for first time home buyers. There is no income limit in the PROPOSED $15,000 credit (but it isn't law yet, that could change).

There also isn't any current provision to make the $15K credit "retroactive". As written, it becomes effective the day of enactment. It could be enacted by 2/15. Obama has said he'd like it by 2/16, but it's going to a joint conference committee to work out differences between the House and Senate versions -- so there is no way to know what it will ultimately say or when it will actually be signed into law.

You're right on the edge, which is why I'd be talking to a tax professional.

"Also, this is a tax credit, not a claim against your tax liability. So it this passes as it stands, if you buy a $150,000 house, you’ll get $15000 back from the govt. at some point in time on your taxes. Most sources say it will be paid over two years."

As it's currently written (which could change in conference committee) the $15K tax credit is "non-refundable". This means you can only get UP TO your tax liability. It can be evenly split over two years.

So, if you pay say $4,000 in taxes in 2009, you can apply $4,000 of the credit (effectively reducing your 2009 tax liability to zero). You could then apply another $4,000 credit to your 2010 tax liability. In this case you would have used $8,000 of the $15,000 credit. You will NOT get refunded the remainder.

Unless you have a total of $15,000 in taxes owed (over 2 years) you will leave a portion of this credit "on the table".

Of course, it's all subject to change until it's actually signed into law.

Jason wrote: "Phoenix Real Estate Guy, I used the FHA loan for my purchase and only put 3% down, not 3.5%."

Jason - HR3221 (Housing and Economic Recovery Act of 2008) changed the FHA down payment requirements from 3 to 3.5% effective Jan 1, 2009. Maybe your loan was processed prior to that, or there was a different date for in-process loans. But new FHA loans require 3.5% (and congrats on your new home purchase!):

"SEC. 2113. CASH INVESTMENT REQUIREMENT AND PROHIBITION OF SELLER-FUNDED DOWN PAYMENT ASSISTANCE.

Paragraph (9) of section 203(b) of the National Housing Act (12 U.S.C. 1709(b)(9)) is amended to read as follows:

‘(9) CASH INVESTMENT REQUIREMENT-

‘(A) IN GENERAL- A mortgage insured under this section shall be executed by a mortgagor who shall have paid, in cash or its equivalent, on account of the property an amount equal to not less than 3.5 percent of the appraised value of the property or such larger amount as the Secretary may determine."

If I wait to claim my $7500 tax credit until next year's taxes (2009)...will the bill passed in the Senate today cancel out the current $7500 tax credit (no interest loan) that was currently in law? I just don't want to wait until this bill is passed, find out that it replaces the old bill, and get nothing out of the deal. Even the no interest loan would be nice right now.

Also, this is a tax credit, not a claim against your tax liability. So it this passes as it stands, if you buy a $150,000 house, you'll get $15000 back from the govt. at some point in time on your taxes. Most sources say it will be paid over two years.

Hello Speculators! I am one of those frazzled folks who just closed on my first home Feb. 2nd. There are no definite answers to the questions about how much will be given and what dates will be used to determine the amount UNTIL THE BILL HAS BEEN SIGNED BY THE PRESIDENT. It has to go through negotiations between the House and Senate, which will likely take 3-7 days. Only then, will we know the answers to who gets what and when. Believe me, I am very curious to know.

I have already filed my taxes, and claimed the $7500 credit (no interest loan). So, Marie, you can either wait to file your taxes until the bill has passed, or go ahead and get the $7500 now. I would wait though, unless you need the money right away. Whatever eventually passes will be available to anyone that meets the requirements.

Phoenix Real Estate Guy, I used the FHA loan for my purchase and only put 3% down, not 3.5%.

Okay, I've been watching the developments with this whole home buyer tax credit and I'm a little confused as to what I need to do. I closed escrow on my house last Jan. 28th. I still have yet to file my taxes, I have an appt. for this coming Sunday, February 15th. I qualify to get the $7500 tax credit that I have to pay back. Should I wait to file my taxes and see what bill passes or should I do it now? I have read somewhere that if the new bill that the Senate proposes passes then it would override the bill from last year if you buy your home from April to July 1, 2009. I understand that the new bill would take effect the day the President signs it, but what happens to those people who bought their house from Jan. 1st to the day the bill get s enacted? Do you see my dilemna here? I don't know if I should file right now or wait. I don't want to lose out on the tax credit and get screwed. I don't really care if I have to pay it back. I never thought that owning home was possible due to my credit, but Wells Fargo approved me because I had re-established my credit. I pay my bills on time and to me, the $7500 tax credit is an opportunity for me to pay some bills and put me on the right track as far as my finances is concerned. I think that it's a great incentive.

I closed on a house on February 2, 2009. I just e-filed my taxes a couple days ago, but did not put in for the $7500 tax “credit” that you would pay back. I was under the impression I would have to wait until next years’ taxes because my house was purchased after January 1, 2009. What are my options with this new tax credit since I have not claimed anything yet? Am i eligible for this 150000 credit or would I be stuck with the $7500 interest free loan you have to pay back? Any answers/advice would help. Thanks!

I closed on a house on February 2, 2009. I just e-filed my taxes a couple days ago, but did not put in for the $7500 tax "credit" that you would pay back. I was under the impression I would have to wait until next years' taxes because my house was purchased after January 1, 2009. What are my options with this new tax credit, since i have not claimed the tax "credit" that needs to be repaid? Any answers/advice would help. Thanks!

I think this is great and all, but what about for those of us who want to refinance? I think it's great to entice new home buyers, but I feel like those of us who have owned homes and made the payments on time are getting the shaft. The market where I live, like most places, is soft and I would have a hard time selling my condo so that I could purchase a new home(units identical to mine ahve been for sale longer than 6mos). I was able to refinance in July before the credit market hit the skids, and saved ~1% on my interest rate and am now debt free besides the mortgage. So that was good, but still, I feel like those of us who bought what we could afford and kept up teh payments are getting left out in the cold in this housing mess.

Ok, rant over :)

My question is that I own a home in another state, it was a primary residence till i moved last summer to my current state where i am renting an apartment and am looking at buying a home here, I have chose to keep my first home as a vacation home I dont rent it out or any thing, under the current plan i dont qualify because i have owned a primary residence in the past 3 years, will that be the same with the new plan? Or will i qualify? Please advise.

and another question....

when is the official sale date of a house? Is it when it gets recorded or something else?

just to add to the drama, my locked rate expires on the 2/15/09 and my realtor and loan officer said we must close by the 15th or else i have to pay $500 to extend my awesome locked rate of 5% for another week till 2/22/09. Does closing escrow include recording the sale???

This is major suspense.... lol

You guys are awesome, I read all of the above smart posts, never done this before on a blog (I think)...

here is my situation, "taking a deep breath"

I am single no dependents and made 165 K in 2008, didnt file taxes yet. I am closing on 2/15/09 on my first home. What should I do? delay closing? or go for it?

I am getting that feeling that I am the one getting screwed in this bill....

Please advice, so I know what to tell my realtor today!