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Posts Tagged ‘tax credit’

Understanding the Advantages of Being a Homeowner

It’s true – there are some major advantages that come from being a homeowner. For instance, you are investing in an asset with the potential to appreciate, not just paying a landlord. Also, there are a lot of government benefits for homeowners, beyond the $ 8,000 tax credit that’s currently offered. When tax season rolls around, you’ll also be able to deduct the interest on your mortgage, your property taxes and many other financial elements against your annual income.

However, homeownership isn’t for everyone. There are a lot of reasons why you aren’t ready to make that leap yet. Let’s look at a few:

How Big is Your Bank Account?

Buying a home isn’t just trading in your monthly rent for a mortgage check – there’s a lot more that goes into the price of buying a home. Before you step foot in your new home, you have home inspections, appraisals, and closing costs to come up with as part of the process. Oh, and the fun doesn’t stop after the deal is done.

Also, consider if you’re going to be able any repairs once you have settled in, because they may be waiting for you. If you rent, your landlord takes care of things like leaking faucets, appliances on the fritz, and serious repairs. As a home owner, the ball’s in your court to take care of these problems and they can get expensive. When you’re considering homeownership, take the time to determine whether or not you’d be able to cope with an extra $ 1,000 of repairs you weren’t expecting at any given time.

How Stable is Your Lifestyle?

Are you ready to settle down in one area? Is it possible your job might require you to relocate any time soon? The stability of your lifestyle is another important consideration to make before you start shopping for a home.

Most experts recommend not buying until you’re ready to spend three years in the home, as it will take that long to turn a profit on the sale after expenses like realtor commissions are taken into account. Some analysts are extending this recommendation to five years, given the recent turmoil in the financial and real estate and housing sectors. But regardless of which prediction is correct, the end result is the same – don’t buy a home until you’re ready and willing to commit to one place for several years.

So What Should You Do?

The decision to become a homeowner isn’t one to be made lightly. However, there’s no doubt that now is a great time to buy a home – prices are lower than ever, inventory is at an all-time high and the government is offering plenty of incentives for both first-time and repeat home buyers to make a move. If it’s something you’re looking at, make an appointment with a real estate agent and a mortgage lender to find out more about the process of buying a home.

2009 First Time Home Buyers Tax Credit

Most people are now well aware of the First Time Home Buyer Tax Credit issued in 2009. The National Association of Realtors (NAR) statistics indicated a consistent rise in pending home sales during the period in which first time home buyers could reap tax credits. NAR’s statistics showed pending home sales were, in fact, up.8% during October, 2009 when compared with October, 2008.

Representative Jim McDermott (D) from Washington State said, “The homebuyer’s credit has helped pave the way for stabilization in the housing market…. Its extension will continue to make homeownership more affordable and bring confidence to a housing market and economy that remain fragile.” There weren’t any tax credits for people who already own a home, or had owned a home within the last 5 years in the legislation. There was much grumbling on the part of homeowners who failed to qualify for tax credits under this program.

2010 Extended Home Buyers Tax Credit

On November 8, 2009, President Obama signed into law an extended version of the tax credit legislation as part of a larger economic stimulus package. The tax credit for qualified buyers who upgrade to newer or more expensive residences between November 7th, 2009, and April 30th, 2010, could qualify for up to $ 6,500 in tax credits. The benefits of the first time home buyer credit remained capped at $ 8,000.

Charles McMillan, President of the National Association of Realtors, states, “The substantial rise in home sales we’ve seen over the past few months proves that the tax credit is working and is being used by buyers who were waiting for the right opportunity to get into the market. This important incentive is helping to stabilize the housing market, stimulate the economy and create new jobs in communities all across our great nation. Extending and expanding the home buyer tax credit will enable even more families to take advantage of current low interest rates and affordable prices to invest in their future through homeownership.”

Buyer Qualification for the Tax Credit Extension

Each qualifying home buyer who has not owned their own residence, nor has their spouse owned a residence, during the three years prior to buying a qualifying home during the period beginning November 7, 2009 and ending April 30, 2010 will receive a tax credit of $ 8,000. Qualifying homebuyers that purchase homes during the same period AND have owned the home being sold or left as their primary residence for five years consecutively of the past 8 will qualify for up to $ 6,500 credited off. The qualifying home must be in the binding contract phase of purchase no later than April 30, 2010 in order to qualify for the tax benefit. A copy of the HUD-1 Settlement Statement must be provided after closure of the sale; closing must occur no later than June 30, 2010. Obviously, you won’t be qualifying if you’re under 18.

Income Qualifications

Homebuyers who are not married must have income of less than $ 125,000 to qualify for the full tax credit. Married homebuyers must have combined incomes less than $ 225,000 to qualify fully. Single homebuyers earning between $ 125,000 and $ 145,000, or married couples filing joint income tax returns indicating income of between $ 225,000 and $ 245,000, will qualify for a portion of the tax credit. The amount of the tax credit is on a sliding scale, so the more you earn over the maximum, the less tax credit is available to you.

Tax Credits Versus Tax Deductions

The greatest part of this tax credit program is that it offers a CREDIT as opposed to a DEDUCTION. A tax deduction means that your taxable income is reduced by a specific amount. That said, a tax credit means the credit is the tax is assessed at the end, and subtracted from what’s owed, or added to refunds due. This maximizes benefits for people who take advantage of the 2010 Extended Home Buyers Tax Credit Program.

The first time home buyer tax credit is made available after the present Obama administration took a big leap in reviving the declining market of housing realty. This credit is part of the stimulus package approved by the federal government to resuscitate the ailing US economy. Some of the home buyers can have the $7,500 credit available for them if they are qualified in the mentioned qualifications.

So if you’re looking for a mobile home for sale you can take advantage of the credit the federal government offers to would be home buyers like you. But you need to be aware that you know all the details of the credit prior to applying for it.

First time home buyer tax credit is available only if you buy a mobile home as your principal residence. This means that your mobile home will be the home where you plan to reside almost all of the time. This credit is additionally available to the principal purchase of a condominium, town home houseboat or a separated home if it is your principal residence. Accordingly, your mobile home must be in the US. Remember to note that it is ineligible if you purchase your mobile home from your father and/or mother or siblings.

Although mobile homes fall under the category of qualified homes for availing tax credit, there are other requirements you should take into consideration to avoid waste of your time and effort in applying the credit. Here are the following qualifications necessary for your application:

1. The tax credit is available only 1st time home buyers. The rules provide that anyone will be a first-time buyer if he or she has not owned a principal residence for three after buying a house. If you owned a vacation house that is not your principal residence, you can apply for the credit. Married couples must fit to the definition. But the rules on married couples are vague because the rules did not provide if the situation occurs where only one is qualified and the other is not.

2. An Individual must have a $75000 modified gross income, or MAGI, entered in your Federal Tax Return if you list yourself as married head of a household or unmarried. If you are filing a joint tax return in conjunction with your spouse, your MAGI should $150,000.

3. If you have more than $75,000 MAGI and if you’re single or married head of household, you may get a partial credit subject as long as it is below $95,000. The same applies for the second category, where your joint tax return indicates a MAGI of more than $150,000 but less than $170,000. MAGI beyond the marked limits will be not qualified for a tax credit.

4. You cannot apply for a first time home buyer credit if you bought your home before April 9 2008. 2009 home buyers are likely to have the tax credit.

To further your knowledge about the first time home buyer credit that is currently being offered by the federal government, you should visit the nearest authorities in your state. You could also learn information related to this in the net. You can benefit much from this opportunity, but you must seek advice and make plans to avoid credit problems in the future.

First Time Home Buyer Tax Credit if You Buy a Mobile Home