Peggy Chirico ~ Hartford & Tolland County Real Estate Blog

The temperatures are very brisk today (low 20s), and spring can't come too soon for most of us.  But the reality is that if you are looking to take advantage of the first-time homebuyers' tax credit of $8000 or the move-up buyers' tax credit of $6500, you don't have much time to find your dream home.

Potential homebuyers have until 4/30/2010 to have a signed contract and they must close by 6/30/2010.

If you have not yet begun the process, there are several important steps that you must do before you can sign that contract, including:

1. Seeing if you qualify for a mortgage.  Speak with a top-notch mortgage expert to find out how much you can afford to spend on a house, what types of loans are available to you, how your credit impacts your ability to buy a house, etc.
2. Determining your requirements in a home.  Today's homebuyers are internet-savvy, and most begin their search on-line.  There is a wealth of information covering virtually all aspects of home-ownership, and the options are plentiful.  Thinking in advance about what you need in a home will help make your search more fruitful.
3. Finding a Realtor who will help you achieve your goals.  A Realtor acts in your best interests as your agent.  When you first meet with a Realtor, you should spend time discussing your wants and needs, how the process works, and what your roles and expectations will be.  Your Realtor should be someone you trust and want to work with.  A skilled Realtor is your resource for helping you sort through options, keeping you informed of all changes, monitoring all deadlines and details, protecting your assets, and make the decision-making process more streamlined for you.

This process takes some time, but fortunately you can still meet this deadline.  There are great houses on the market now, prices are very attractive, interest rates are still low, and the tax credit is a great incentive.  NOW IS A GREAT TIME TO BUY A HOME!  I will be more than happy to help you with your search.  Contact me and we can get started.

The new first-time homebuyer tax credit is getting a lot of press, and we can expect things to really heat up after the first of the year, as those who have taken a break for the holidays jump back into the market.

It's also a good time to clarify who is eligible for the credit, as well as some facts about the tax credit that people may not be familiar with.

THE BASICS:

Who is a first-time homebuyer:  Anyone who has not owned a home for the past three years.  If someone owned a home ten years ago, sold it four years ago, and has been renting since then, that person is considered a first-time homebuyer.

How much is the credit:  The credit is 10% of the purchase price of the home, up to a maximum of $8000.  If you purchase a home for $50,000, you will only receive $5,000.

How long is the first-time homebuyer credit in effect?  The new home must be purchased (under contract) by April 30, 2010 and the closing must take place by June 30, 2010 (before 7/1/2010).

Are there income restrictions:  Yes, in general, married people with a modified gross adjusted income of $225,000 will receive the entire credit (with a phase-out for higher incomes); single people with a modified gross adjusted income of $125,000 will receive the entire credit (again, with a phase-out for higher incomes).

What types of homes can be purchased:  Homes that will be used as principle residences only qualify, including single-family homes, condos, multi-family homes that will be owner-occupied, mobile homes (with and without land ownership).  The home must be in the United States.

For a detailed explanation of these and other points, read the IRS guidelines.

OTHER CONSIDERATIONS:

There are some fine points that people may not be aware of.  For example:

• If you are purchasing a multi-family and plan to live in it, you may only qualify for 10% of your portion of the building.  For example, if a 3-family home is purchased for $240,000 and if your unit is worth exactly one-third of the building, you will receive the full credit (10% of 80,000).  If you purchase the building for $210,000, you will only receive $7,000.
• If you owned a house outside of the U.S., you would be considered a first-time homebuyer if you purchased a home in the U.S.
• If you purchase a home from a spouse, parent, child, grandparent, or grandchild, you are not eligible for the tax credit.
• If a person buys a newly-constructed home, the purchase date is the date that the buyer occupies the home.
• If a person owns a rental property but has not lived in the property for three years, that person is eligible for the tax credit if he/she buys a new principle residence.

For special situations, read the IRS frequently-asked questions. 

If you have other questions that you would like to ask, please contact me.