This week, the Senate passed a bill that would extend the first time home buyers incentive program, as well as offering a different tax credit for existing homeowners.
The bill that was passed on Wednesday may give the first time homebuyers tax credit a second life, as it is currently set to expire on on December 01, 2009.
The Current 2009 tax credit, which does not need to be repaid, is only available to those who have not owned a home for at least three years and offers up to $8000 to those who qualify.
Under the new law, these benefits would not only be maintained, but also extended to those who have owned a home for five years or more. However, for existing homeowners, only $6500 would be available. Those buying a home would have until June to close on the home, but would have to have singed a sales agreement by April 2010.
In addition to addressing the housing market, the bill also includes provisions to federally fund unemployment benefits for an additional 20 weeks.
Of course, this bill has a long way to go before it becomes law, as it must still pass the House and then it must be signed by President Obama. This is also not the first bill aimed at extending the homeowners stimulus program, with a $15,000 tax credit for homeowners never gaining much momentum.
Before its passage in the Senate, Republicans had wanted to include a provision requiring that those on unemployment be checked using E-Verify, which is a an online service that checks immigration status, before receiving unemployment benefits. They also wanted the stimulus bill to include an amendment prohibiting Acorn from receiving federal aid.
Both of these requests were refuted by the Democratically held senate, but the bill still needs to be passed by the House, so there may still be more changes made to it.
The First Time Home Buyers tax credit provides an excellent incentive for new homeowners to take advantage of the extremely low home prices and interest rates being offered. However, there are less than two months left for new homeowners to take advantage of this tax credit, with the incentive program expiring on December 01, 2009.
The first time home buyers tax credit is part of a number of incentive programs designed to stimulate the US economy. Often dubbed the Obama Tax Credit or Obamas First Time Homebuyers Credit, what makes this tax credit unique is that it does not need to be paid back. Instead, the homeowner is given a check for up to $8,000 that can be used for whatever they want, providing the homeowner remains in the home for at least 3 years.
This amount of this tax credit is based off of 10% of the homes value, with a limit of $8,000. This means that any home priced below $80,000 will qualify for 10% of the homes value, while any home priced at or above $80,000 will qualify for $8,000.
One of the great things about this tax incentive is not just that it does not need to be repaid, but that it can be applied for on the 2008 tax return or the 2009 tax return. By claiming it on the 2008 tax return, it is possible to get the money early, by filing for an amended tax return. This is rather simple and involves submitting another IRS form 1040, as well as the required information for the First Time Home Buyers tax credit, tax form 5405.
Another option to receive the money early is to simply adjust the number of deductions claimed on your paycheck. So, for instance, if you normally claim 0, you could claim 2, so less money is taken out of your paycheck each week. However, when going this route, it is very important to keep track of how much money is being taken out, because if you exceed the first time home buyers tax credit, you will end up owing money to the IRS. After you have taken enough money out, it is also essential to switch your deductions back to normal.
It is very important to note, however, that if you owe any money to the IRS, this money will be deducted from the tax credit, with the balance returned to the customer.
Requirements for the First Time Home Buyers Tax Credit
In today’s housing market, homes prices are at a historic low, as are mortgage rates. For those who have been saving money and waiting to buy a home, there are a number of really great deals available. This includes, of course foreclosures, of which there are literally thousands and thousands across the United States, but even new home builders have been feeling the crunch, so getting a great deal on a home is possible.
In addition to these incentives, the government is also offering an incentive of its own to help make buying a home easier and less expensive for new home buyers. This incentive comes in the form of a tax credit for first time home buyers, which can cover up to 10% of the homes cost, with a limit set at $8,000.
When figuring the amount of the tax credit, the lesser of the two values is used, so for a $60,000 home, only $6,000 would be received as part of the first time home buyers tax credit. For a $150,000 home, only $8,000 would be provided.
This is not the first time the government has offered an incentive to those who have purchased a home, as they have previously offered a no-interest loan. However, the current tax credit for new home owners is different in that it does not need to be paid back. Instead, the tax credit, with its $8,000 limit, comes in the form of a check that can be used by the homeowner to help cover the cost repairs, bills, or anything else that the homeowner needs.
The first time home buyers tax credit, which is often referred to as Obamas Tax Credit or Obamas First Time Home Buyers Tax Credit, is available to those who have purchased a home during 2009, specifically between January 01, 2009 and December 01, 2009.
The home can be a traditional single family home, a modular home, a manufactured home, and even a house boat. Mobile homes and new construction are also covered by the Obama housing tax credit.
There are several other provisions to the First Time Buyers Tax Credit, most notably that the home owners must not have owned another primary residence over the last three years. For those that are married, this stipulation applies to both spouses.
An income cap is also set, with those who make more than $75,000, or $150,000 for married couples, not being able to receive the full $8,000, although a partial tax credit may be available.
The major difference between this and other stimulus plans, such as the 2008 First Time Hombuyer Credit, is that the tax credit will not need to be repaid by the home owner. Instead, it comes in the form of a check and can be applied for when you file your 2009 tax return in April. It is necessary to include a Form 5405, with your standard tax return.
However, it is not necessary to wait until April and it is also possible to file an amended tax return. Simply follow the instructions to amend your 2008 tax return, including the IRS Tax Form 5405, and it is possible to receive the Obama Housing Credit within 8 weeks.
It is also possible to change the number of dependents you claim at work, so that less money is taken from your paycheck every month. However, if you decide to go this route, make sure you are 100% certain you are eligible to receive the Obama Tax Credit, because otherwise you will end up owing the IRS money at the end of the year. It is also a good idea to calculate how much you have received, so you do not exceed the $8,000 first time home owners tax credit.
It is important to note, that the funds of Obamas Housing Credit will be applied to any money you owe the IRS first, with the balance returned to the homeowner. However, those who do not owe any taxes, even those who do not have any actual income, will receive the full $8,000 tax credit.
Today is the last day of the Cash for Clunkers Program, which is scheduled to end at 8pm tonight. At this time, all applications must be turned in by dealers and no new applications will be accepted.
This deadline, which was announced last week, has led dealers to scramble to finalize deals, submit applications, and sell new cars. It has also led to a number of consumers pushing up the purchase date of their new vehicle, so that they can take advantage of this rebate program.
The Cash for Clunkers program offers between $3,500 and $4,500 for trade-ins when a new car is purchased. Vehicles that have a 10mpg increase over the trade-in receive the full $4,500 and those with a 4mpg increase receive $3,500.
Originally, $1 Billion was allotted for the Cash for Clunkers Program, but due to higher than expected demand, this budget was expended in only a few weeks. Congress then approved an additional $2 Billion last week, but demand did not decrease and it is expected that by tonight, this budget will be met.
The short answer to this is NO. This is illegal for the dealer to do.
With only a few hours left to purchase a new car, many consumers are scrambling to take advantage of the program and dealers are continuing to use it as a selling point. So, it is important to note that under the program, car dealers are 100% prohibited from making you sign a contract saying you must repay the discount if the Cash for Clunkers application is not approved.
If the dealer suggests that you must sign this sort of contract, they are violating the terms of the Cash for Clunkers program and should be reported, as this is illegal.
Today, there are many incentives to purchase a new home, namely historically low interest rates and a surplus in empty homes, which has reduced the overall cost of a new home. Together, these incentives can make it much more affordable to own a new home and it is possible to end up paying much less than you would in rent. The government is also currently offering an incentive for first time home buyers in the form of a tax credit of up to $8,000 towards the purchase price of the home. While this tax credit can be applied to either your 2008 or 2009 tax return, it is probably in your best interest to file an amended 2008 tax return, so the first time home buyers credit can be received sooner rather than later.
The 2009 First Time Home Buyers Tax Credit is part of the American Recovery and Reinvestment Act, which is designed to help stimulate the economy. President Obama signed this bill into law in February and it includes a number of tax incentives for both consumers and corporations. All told, the American Recovery and Reinvestment Act includes $288 Billion in tax relief, which represents about a third of the American Recovery and Reinvestment Act’s budget.
Of the $288 Billion in tax relief, $6.6 Billion has been set aside for first time home buyers. There are several requirements to receive the first time home buyers credit, including that the individual has not owned a home in the last three years and that their income is less than $75,000. For those that meet the requirements up to $8,000 is offered in the form of a tax credit that does not need to be repaid.
Obama’s First Time Homebuyers tax credit can be claimed on either ones 2008 or 2009 tax return, but rather than waiting, it is generally in your best interest to file an amended tax return, so that the funds can be received right away. Filing an amended tax return is very easy and it is only necessary to resubmit a 1040X IRS Form and include a form 5405, which is required as part of the First Time Home Buyers Tax Credit. After the amended tax return has been submitted and received by the IRS, it usually takes between 8 and 12 weeks to process.
By filing an amended tax return, it is possible to get your stimulus check much quicker than if you were to wait until 2009. This means you get the money right away and can reinvest it in your home, simultaneously increasing equity and reducing mortgage rates. It can also be spent on home improvements or to help with bills.
Those that decide to file for the 2009 First Time Homebuyers tax credit return on their 2009 taxes will have to wait much longer to receive their stimulus check. It also could mean that the budget could be expended, which has already happened with the Cash for Clunkers incentive program. However, in order for the first time Homebuyers tax credit’s budget to be expended, 825,000 people would have to submit an application.
While it is possible to file an amended tax return to receive your funds right away, it is also possible to change your number of deductions, so that you pay less, or even nothing, towards your federal taxes in your paychecks. At the end of the year, the First Time Home Buyers Tax Credit will be applied to what you owe to the IRS and the difference will be refunded.
**Update November 6, 2009: President Obama has just signed a new law extending this tax credit until April 2010. Under the new law, most of the requirements remain the same, but the income cap has been raised to $125,000 or $225,000 for couples and the home must be priced under $800,000 to qualify. An additional $6,500 tax credit was also added for existing home owners, providing they have owned the home for at least five years. **
Today, there are many incentives for new home buyers. It is possible to get some great deals on homes, as home values are at a historic low. There are many foreclosures as well, which can be a great way to save money, and mortgage interest rates are also the lowest they have been for many years. There is also an $8,000 first time home buyer tax credit available to Americans, which does not have to be repaid.
The First Time Home Buyers Tax Credit is part of Obama’s American Recovery and Reinvestment Act, which was passed in 2009. This tax incentive is designed to help jump start the economy and help make homes more affordable for first time home owners. This is not the first time a tax incentive has been offered to new home owners, however the Obama housing tax credit is different because it will not need to be repaid.
*Under the extension, as long as you have a binding sales contract in place before April 30, 2010, you have until June 30, 2010 to actually close on the home.
The Obama First Time Buyers Tax Incentive can be applied towards many types of homes, including mobile homes, manufactured homes, single family homes, condominiums, house boats, multi-family homes, and even new constructions.
The Federal housing tax credit for first time home buyers provides for 10% of the value of the home, up to $8,000.
The $8,000 stimulus check does not need to repaid, providing you live in the home for at least three years. If the home is sold or is no longer used as your primary residence in the first three years, the $8,000 will need to be repaid.
The 2009 First Time Home Buyers Tax Credit can be claimed on either your 2008 or 2009 tax return. It is necessary to complete an IRS Form 5405 and submit it with your regular tax return.
If you have already submitted your 2008 tax return to the IRS, it is possible to file an amended tax return, to receive your money early. An amended tax return usually takes between 6 to 8 weeks for the IRS to process and will mean you can receive your stimulus check early, without having to wait.
If you owe the IRS money, then the stimulus check will be used towards this balance, with the remaining funds returned to the first time home owner.
Those that do not owe the IRS any money will receive the full balance of the stimulus check. This is true even of those who do not pay any income tax.
You would not qualify for Obama’s First Time Home Buyers Tax Credit, but there is a different tax credit available.
For those who purchase a home between April 8, 2008, and Dec. 1, 2009, an $8,000 no interest loan is available. This loan is provided as part of the Housing and Economic Recovery Act of 2008 and will need to be repaid starting in 2010.
The First Time Homebuyers Credit has most of the same requirements as Obama’s Tax Incentive.