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COBB COUNTY SPECIAL PROGRAM:
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FEDERAL SPECIAL PROGRAM:
Expanded Tax Break Available for 2009 First-Time Homebuyers - Feb. 25, 2009
WASHINGTON — The Internal Revenue Service announced today that taxpayers who qualify for the first-time homebuyer credit and purchase a home this year before Dec. 1 have a special option available for claiming the tax credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year.
Qualifying taxpayers who buy a home this year before Dec. 1 can get up to $8,000, or $4,000 for married filing separately. “For first-time homebuyers this year, this special feature can put money in their pockets right now rather than waiting another year to claim the tax credit," said IRS Commissioner Doug Shulman. “This important change gives qualifying homebuyers cash they do not have to pay back.”
The IRS has posted a revised version of Form 5405, First-Time Homebuyer Credit, on IRS.gov. The revised form incorporates provisions from the American Recovery and Reinvestment Act of 2009. The instructions to the revised Form 5405 provide additional information on who can and cannot claim the credit, income limitations and repayment of the credit. This year, qualifying taxpayers who buy a home before Dec. 1, 2009, can claim the credit on either their 2008 or 2009 tax returns. They do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date. They can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately. The amount of the credit begins to phase out for taxpayers whose adjusted gross income is more than $75,000, or $150,000 for joint filers.
For purposes of the credit, you are considered to be a first-time homebuyer if you, and your spouse if you are married, did not own any other main home during the three-year period ending on the date of purchase.
The IRS also alerted taxpayers that the new law does not affect people who purchased a home after April 8, 2008, and on or before Dec. 31, 2008. For these taxpayers who are claiming the credit on their 2008 tax returns, the maximum credit remains 10 percent of the purchase price, up to $7,500, or $3,750 for married individuals filing separately. In addition, the credit for these 2008 purchases must be repaid in 15 equal installments over 15 years, beginning with the 2010 tax year.
“HOPE for Homeowners” Federal Mortgage Program.
There was a program passed into law this summer for homeowners trying to renegotiate their mortgages named “HOPE for Homeowners,” and nicknamed H4H. The intent is to keep owners from defaulting on their loans and going into foreclosure. If you are assisting with loan modification for a client, there are a few things you need to know about the H4H program.
Federal guidelines include:
· The law requires participating lenders to agree to refinance and reduce a loan to 90% of the current appraised value of the home. The new loan must be a 30 year fixed rate mortgage.
· The Federal Government (FHA) acts as an investment partner in the equity of the property for as long as the owner owns the home. When the house sells, the owner relinquishes or splits any equity in the home with FHA at closing, even if the H4H loan is no longer in force.
· Refinancing or even paying off the loan does not remove the requirement of the agreement to split the equity with FHA.
· There is a sliding scale of the percentage due to FHA at closing, based on the length of the period of ownership after refinance. Less than one year after the refinance, FHA gets 100% of the equity at closing if the home sells. The percentage goes down approximately 10% per year thereafter, with a bottom split of 50% of the home’s equity to FHA due at closing.
· The holder of a H4H loan will never pay less than 50% of the home’s equity at closing to FHA for as long as they own the home.
· If the property mortgaged with a H4H loan increases in value after the refinance, the percentage due to FHA remains the same, and applies to the full amount of equity at closing.
· Some costs will be considered a reduction of equity. The percentage split will not apply to closing costs or the cost of improvements made during ownership. However, costs of maintenance (new roof, etc.) will not be exempt.
· There is a much higher FHA Mortgage Insurance Premium (MIP) on this loan. There is a 3% upfront MIP payment to obtain the loan, and a 1.5% annual premium is added to the monthly payments. Typically, FHA loans have only a 2.125% upfront fee and a .5% annual MIP.
