| HeraldNet - Snohomish County's online news source |
 TUESDAY, FEBRUARY 9, 2010 11:57 pm |
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Time is short to get $8,000 first-time homebuyer tax credit Just when the party is beginning to show signs of life, do you take away the only punch bowl?Even though first-time homebuyers are driving the housing market, there has been little energy in the nation’s capital to extend the $8,000 tax credit beyond the Nov. 30 deadline. That doesn’t mean that some of the more influential trade organizations in this country have stopped trying to convince legislators that the first-time incentive is key to sustaining any semblance of housing momentum. Representatives from the National Association of Homebuilders, along with the National Association of Realtors, believe the tax credit is critical to their members. October is already here. If a first-time homebuyer did find a home in time to beat the deadline, how much time would be needed to close the deal? Most lenders say they need a minimum of 30 days to close a loan and many will not guarantee that everything will be wrapped up by Nov. 30. Just to be safe, it’s best to get started as soon as possible with as much documentation as possible. The number of applicants will increase as the deadline for the first-time tax credit approaches. FHA loans can take longer, even with an in-house underwriter. If the lender must send the file to the investor to have it underwritten, the lender is at the mercy of the investor’s workload. Underwriting time frames should be shorter now because overall volume is lower, but everyone in the lending industry expects a late tax-credit rush. A crucial element in getting loans processed and closed in a timely matter is a complete file. If you have spent time only on shopping for a home and not on compiling your financial package, here is a top 5 list of things to immediately prepare for your lender: 1. Copy of driver’s license and Social Security card 2. Pay stubs (covering most recent 30 days) 3. W-2 and 1099 statements for 2008 and 2007 4. Copy of 2008 and 2007 federal tax returns with all schedules 5. Bank statements for checking, savings, money market, CDs and IRAs (covering past 2 months) including account number and bank. Often the initial underwriting loan review will trigger additional requirements needed from the borrower. With new rules now in play regarding appraisals and disclosures coupled with the overall tightening of underwriting guidelines, it will be key to start the loan process as soon as possible in case additional documentation or verification need to be met for final loan approval. There are income limits attached to the $8,000 first-time credit. A phase-out of the credit begins when the taxpayer’s modified adjusted gross income exceeds $75,000 or $150,000, if married and filing jointly. The credit is eliminated completely when the taxpayer’s income reaches $95,000 or $170,000, if married and filing jointly. Taxes owed or refunds due to the taxpayer are factored into the calculation. Modified adjusted gross income, or MAGI, is a calculation created by the Internal Revenue Service. To find it, a taxpayer must first determine “adjusted gross income” or AGI. AGI is the total income for a year minus certain deductions (known as “adjustments” or “above-the-line deductions”). AGI includes all forms of income, including wages, salaries, interest income, dividends and capital gains. While first-time buyers are often viewed as young people seeking their first home, a first-timer does not necessarily have to be “young.” The IRS defines a first-time buyer as anyone who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the homebuyer and his or her spouse. For example, if you have not owned a home in the past three years, but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time homebuyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time homebuyer. In addition, first-time homebuyers must purchase the property from a source unrelated to them. For example, they cannot purchase the house from a spouse, parent, grandparent or child, or acquire the property by gift or inheritance and obtain the tax credit. Now, let’s hope for an extension. Tom Kelly’ can be reached at www.tomkelly.com. |
- A revolutionary 747
- Fire breaks out at Everett car dealer
- Everett rethinks boutique wineries
- A tidy lawn could be law in Lynnwood
- Snohomish County's bargain housing won't last
- Boeing's 747-8 takes off after weather delay
- Plan for I-5 closures this week
- A new bowling alley for Monroe?
- Lake Stevens man homeless after fire
- I-5 bridge joint may give you a jolt, but it isn't damaged
- Vote on school levies by Tuesday
(11) - A tidy lawn could be law in Lynnwood (10)
- State Senate votes to toss I-960's tax-raising hurdle (9)
- Lynnwood sets height limit on grass: 8 inches (8)
- Everett rethinks boutique wineries (5)
- Everett police officers cleared in 2008 shooting death (5)
- 1949 travel aid shows how few places blacks were welcome in Washington (4)
- I-5 bridge joint may give you a jolt, but it isn't damaged (4)
- A new bowling alley for Monroe? (3)
- Toyota has powerful D.C. friends (3)
- Edmonds educator, famous announcer dies
- Mill Creek to appeal ruling on annexation
- Through the air, with the greatest of ease
- E-W thriving under new coach
- The path to citizenship
- EUUC puts on ‘Pants & Shoes’
- Wolfpack wins the ‘Battle'
- Lynnwood’s annexation plans OK’d
- Arlington's Cascade Valley Hospital celebrates expansion, national award and 100 years of service
- Business Licences Feb. 2010
- Technology tips for launching your own business
- Business Events Feb. 2010
- Tech Talk: No excuse today for going without a Web site
- State already raising fees and rates that restrict business growth
- Some legislators again targeting people’s initiative petition rights
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