Register Real Estate Advisors

Lately, many of my sellers want to know if it makes sense to move up right now. Answer these questions below to help you decide whether moving up makes sense for you.

1. Have you lived in your home for at least 5 years so you can qualify for the $6,500 move up tax credit?
2. How much equity do you have in your home? Look at your annual mortgage statement or call your lender to find out. Usually, you don’t build up much equity in the first few years of paying a mortgage, but if you’ve owned your home for a number of years, you may have significant unrealized gains.
3. Has your income increased enough to cover the extra mortgage costs and the costs of moving?
4. Does your neighborhood still meet your needs? For example, if you’ve had children, the quality of the schools may be more of a concern now than when you first purchased.
5. Can you add on or remodel? If you have a large yard, there might be room to expand your home. If not, your options may be limited. Also, do you want to undertake the headaches of remodeling?
6. How is the home market? If it’s good, you may get top dollar for your home.
7. How are interest rates? A low rate not only helps you buy more home, but also makes it easier to find a buyer.

Reprinted from REALTOR Magazine Online by permission of the National Association of Realtors, Copyriht 2005, All rights reserved.

• The $6500.00 Move Up Homebuyers Tax Credit is in NOW in effect (as of November 6, 2009.)
  • If you owned and resided in your current home for a consecutive five out of the past eight years, and your adjusted household income doesn’t exceed $125,000 if you file taxes singly, $225,000 if you are married filing jointly — you can claim the credit as soon as you close on a qualifying house.
  • There is no “move up” requirement in the new credit. In fact, homeowners who plan to downsize into a smaller dwelling may prove to be significant users of the credit, along with people who are relocating because of employment changes.

• Some other key features of the $6,500 credit you ought to know about:
  • Whatever you intend to purchase, the house cannot cost more than $800,000.
  • The replacement house must become your main home. There is no requirement in the legislation that you sell your current home. You could rent it out, turn it into a second home, or list it for sale later in 2010 when prices might be higher. If you plan to retain it, however, make sure you move into the new house on the day you close so that there is no question it was your principal residence at that time.
  • The revised rules require taxpayers to submit copies of their settlement statements (HUD-1 forms), along with their requests for credits using IRS Form 5405. Congress’ new rules also prohibit individuals under the age of 18 or who are counted as dependents on another taxpayer’s filings from claiming the credit.
  • Homebuyers in 2009 — those who go to closing after Nov. 6 but no later than Dec. 31 — can claim the $6,500 credit on their 2009 federal tax returns, or amend their 2008 returns. Similarly, eligible purchasers in 2010 will be able to file for the credit on their 2009 returns or 2010 returns.
  • If you aren’t sure if you can make the deadlines established for the new credit — a binding contract by next April 30 and a settlement by June 30.

If you are in the market for a home, contact Terry Traylor at 713.705.1244 for a great mortgage rate and excellent service.  Tell him Shannon sent you!  I highly recommend Terry at Network Funding for my buying clients mortgage needs.  Then you and I can go shopping for the home of your dreams!

7Published in The Houston Chronicle, Sunday, November 22, 2009

It’s official, President Obama has signed a bill that extends the tax credit for first-time home buyers (FTHBs) into the first half of 2010.  In addition to extending the tax credit of up to $8,000 through June 30, 2010, the extension measure opens up opportunities for others who are not buying a home for the first time.

The program gives those who own a residence some additional reasons to move to a new home.  This incentive is a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a Primary Residence for 5 consecutive years during the last 8 years.

Deadlines for all contracts need to be in effect no later than April 30, 2010 and close no later than June 20, 2010. 

Single tax filers who earn up to $125,000 are eligible for the total credit amount.  Those who earn up to $145,000 can receive a partial credit.  Joint filers who earn up to $225,000 are eligible for the total credit amount.  Those who earn up to $245,000 can receive a partial credit.  Maximum purchase price:  $800,000.

What is a tax credit?  A tax credit is a direct reduction in tax liability owed to the IRS.

What is the tax credit for  first-time home buyers?  An eligible buyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home.  If the amount of the home purchased is $75,000, the  maximum amount the credit can be is $7,500.

Who is eligible for  the tax credit?  Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible.  This applies both to single taxpayers and married couples.  If either spouse has owned a primary residence in the last 36 months, neither would qualify.  In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.  As mentioned, the tax credit has been expanded so existing homeowners who have owned and occupied a primary residence for a period of 5 consecutive years during the last 8 years are eligible for a tax credit of up to $6,500. 

How do I claim the credit?  For those taking advantages of the tax credit in 2009, you may choose to either apply for the credit with your 2009 tax return or you may apply for the credit sooner by filing an amended 2008 tax return with Form 5405.

Other Restrictions?

If any of these apply, a credit would not be due.

• You buy your home from a spouse, parent, grandparent, child, or grandchild.
• You do not use the home as your principal residence.
• You sell your home before the end of the year.
• You area nonresident alien.
• Your home financing comes from tax-exempt mortgage revenue bonds.
• You owned a principal residence at any time during the 3 years prior to the date of purchase of your new home.