A Complete Guide to the Expanded And Extended Homebuyer Tax Credit - 11/10/09

Where homeownership education takes flight!

A Complete Guide to the Extended and Expanded Homebuyer Tax Credit

Thank you for attending

We will begin in a momentClass Scheduled to begin at 6:00pm

Presented by

Scott SchangBranch Manager

Broadview Mortgage Corporation1-866-667-6724


Homebuyer Tax Credit Update

Topics We Will Cover In This Class

• What’s New with the Extended and Expanded Credit

• What Hasn’t Changed – Qualifying Guidelines

• Expectation management

• Wrap up and Take Aways



Answering all your Questions• You may type questions in at any time during the

presentation – Questions Box on your screen

• Home Buying experts are available to answer questions throughout presentation

• This is an interactive learning environment. You will get the most value by having your specific questions answered

• The only dumb question is the one you don’t ask

Write number down now in case you get disconnected

1-866-667-6724



Tax Credit Extension



• Changes apply to qualified buyers that complete the purchase between November 6th, 2009 and April 30th, 2010.

• Exception in Case of Binding Contract– In the case of any taxpayer who enters into a

written binding contract before May 1st, 2010 (in contract by April 30th), to close on the purchase of a principal residence July 1st, 2010 before (close on June 30th) will be eligible.

• Special Rules for Members of the Armed Forces– Individuals that serve on official duty outside U.S.

for 90 days during period after 12/21/08, and ending before May 1, 2010 – Extends 1 Year

– In contract May 1, 2011 / Close by June 1, 2011



Income Limitations



The Old Income Limitations

• Single filing status - $75,000 – Eligible for full credit– Phase out begins when MAGI exceeds limit – reduce credit

• Phase out at $95,000

• Married filing joint - $150,000 – Eligible for full credit– Phase out begins when MAGI exceeds limit – reduce credit

• Phase out at $195,000

• Occupying home as Joint Tenants– If you purchase home under joint tenancy and down

payment and ownership are not equal• Tax credit will be claimed in proportion to ownership in

residence



The New Income Limitations

• Single filing status - $150,000– MAGI – Marginal Adjusted Gross Income – What

you pay taxes on– No mention of a “phase out” as in previous

version

• Married filing joint - $225,000– MAGI – Marginal Adjusted Gross Income – What

you pay taxes on– No mention of a “phase out” as in previous

version



Maximum Purchase Price



• Limitation Based on Purchase Price– No credit shall be allowed for the purchase of

any residence if the purchase price of such residence exceeds $800,000



Previous Home Owner



Special Rule for Long-Time Residents of Same Principal Residence

• $6,500 for single and joint tax payers– $3,250 for married filing separate

• In the case of an individual (and, if married, such individual’s spouse) who has owned and used the same residence as such individual’s principal residence for any 5–consecutive-year period during the 8 year period ending on the date of the purchase of a subsequent principal residence, such individual shall be treated as a first-time homebuyer for purposes of this section with respect to the purchase of such subsequent residence



Special Rule for Long-Time Residents of Same Principal Residence

• Plain English Explanation – sort of….

• You must have lived in your home for at least the 5 consecutive years

• The 5 years will start counting 8 years back from the date of the close of escrow on your new home

• NOTE: The challenge here is the 5 consecutive years. If you have not owned a “main home” in the past 3 years – you qualify as a First Time Buyer



Fraud Prevention



• Age Limits – No credit shall be allowed for taxpayer under 18 years old– Exception If taxpayer is married and spouse is at least 18

• Documentation Requirements – Copy of the HUD-1 Settlement Statement must be attached



What Hasn’t Changed



Qualifying Guidelines

• 10% of the Purchase Price up to $8,000 for single and joint taxpayers

• Married filing separate may claim $4,000

• Not paid back – No recapture if home is lived in as main home for at least 3 years

• Purchase loans using Mortgage Revenue Bonds are eligible for Homebuyer Credit - CalHFA



Occupancy and Property Type• Must purchase a “main home” – Primary residence

– Main home - Your main home is the one you live in most of the time. It can be a house, houseboat, housetrailer, cooperative apartment, condominium, or other type of residence

– New construction – Purchase date treated as first date you occupy home

• Must be a First Time Homebuyer - $8,000– Can not have owned another primary home within 3 years

of the closing date of new home– May own other homes or properties as long as you have

never lived in it as your main home



Tax Credit Restrictions – Do Not Qualify if…

• You acquired your home through gift or inheritance

• You acquired your home from a related person:– Spouse, ancestors (parents, grandparents,etc.)– Lineal descendants (children, grandchildren, etc.)– A corporation in which you directly or indirectly

own more than 50% in value of the outstanding stock of the corporation.

– A partnership in which you directly or indirectly own more than 50% of the capital interest or profits interest

– NEW: Spouses parents or siblings



Claiming the First Time Homebuyer Credit• IRS Form 5405 – Attached to 1040

• A main home purchased in 2009 and is eligible for tax credit may be claimed on 2008 (or amended 2008) or 2009 tax return

• A home purchased in 2010 may be claimed on 2010 or amended 2009 tax return

• You may adjust your W4 withholdings in anticipation of claiming credit on 2010 tax return



Expectation Management & Speculation• Housing inventory remains low – No signs of “flood”

of foreclosures onto market

• Expect this level of competition and steady to rising home prices at least while credit is available

• Home prices inflated due to demand from tax credit

• Important timelines if you plan to purchase for 2009 tax year– Should be in escrow before Monday, November 23rd, 2009– Title companies, lenders closed 26th & 27th of Nov.– Title companies, lenders closed 24th & 25th of Dec.– Many appraisers, inspectors, professionals wind down

during holiday season prolonging turn times for services

Last shot at tax credit – No more extensions!



Wrap Up and Take Aways• We are a direct Lender that specializes in CalSTRS,

CalPERS, CalHFA, FHA, VA, USDA and Community based down payment assistance programs

• Our “turn times” are under 30 days to close

• We would love the opportunity to be your lender if you have not already chosen one

• We are more than happy to be your “second opinion” if you are already working with someone

• We can recommend a qualified Real Estate Agent in your area that shares our values and expertise

• We are committed to educating and empowering homeowners - Please join us for other classes


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For more information

1-866-667-6724Homeownership Educator

Scott SchangBranch Manager

Broadview Mortgage Corporation