Questions about the New Home Owner Tax Credit…

Here are some of the most frequently asked questions on the changes to the Homebuyer Tax Credit

1: Existing homeowner credit: Must the new house cost more than the old house?

Answer: No. Thus, for example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6500 credit.

2: I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a new home. I have lived in my current home for more than 5 consecutive years and am within the new income limits. I will go to settlement on November 20. If President Obama has signed the bill by the time I go to settlement, will I qualify for the new $6500 tax credit?

Answer: Yes. The existing homeowner credit goes into effect for purchases after the date of enactment (when the bill is signed). There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.

3: I am a first time homebuyer but was not within the prior income limits at the time I entered into my contract to purchase on October 30, 2009. I will be covered,however, by the new income limits. If the new rules have been signed into law by the time I go to settlement, will I be eligible for a credit?

Answer: Yes. The new income limitations go into effect as soon as the President has signed the bill. The income limit and other eligibility rules will look to your status as of the date of purchase, which is the settlement date. So if the new rules have been signed when you go to settlement, you should be eligible for the credit (or a portion of the credit if you’re within the phaseout range).

4: I am an eligible existing homeowner. I have a fair amount of equity in my home. I have found a home with a non-negotiable price of $825,000. Will I be able to use any of the $6500 tax credit?

Answer: No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amount above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an absolute ceiling.

5: I owned my home for 10 years, but sold it two years ago year and have been renting since. If I purchase a home, will I be eligible for the $6500 tax credit if I meet all the other eligibility tests?

Answer: Yes. Because you lived in the home for more than 5 consecutive years of the previous 8, you will qualify for the $6500 credit. For example, Say John and his wife bought a home in 2000 and lived there until 2008 when he got a divorce. Whether John has been renting or bought in the interim, he WOULD INDEED be eligible for the credit because he owned a home and occupied it as his principal residence for 5 consecutive years out of the last 8 years. The keyword here is “consecutive.” As long as he lived in that house for 5 years straight what he did since 3 years doesn’t impact eligibility.

6: I am an eligible first time home buyer. I entered into a contract to purchase on November 1, 2009. Do I have to go to closing before December 1? How does the extension date affect me?

Answer: You do not have to close before December 1. Once the legislation has been signed, it will be as oif the Nov 30 date had never existed. Therefore, so long as the contract settles before April 30 (or July 1, worst case), the purchaser will be eligible for the credit.

These are just a few of the possible questions. If you have others, feel free to write… olneyremax@gmail.com

Your question will be researched and answered.

Buying a home…part four of a series.

With your pre-approval and your Realtor® chosen, it’s time to hit the Internet and then the streets in search of your new place.

There are many web sites out there that allow you to browse through lists of homes and condos that are for sale.  Some are sites like Trulia.com or Zillow.com where many, but not all, agents post their listings.  Or you can find about a zillion real estate sites that, in return for your name, phone number and email address, will allow you to use their link to the local MLS.  You might, however, find yourself bombarded with email from the agent or company after you sign onto their site.

I suggest than my clients do two things.

• I enter their search criterea into my MRIS contacts page and arrange for two updates to be sent to them by email each day, one in the morning and one in the afternoon.  This alerts them both to new listings and to older listings that have had some change in the price or terms.  The format includes much more information than you could get using any other search mechanism.
• I have them use homesdatabase.com to do their own searches.  You may, but do not have to, register to use this site.  It allows you to search adding or subtracting criteria as you choose.

When you are looking at the listings, you’ll find that most include a birdseye views of the surroundings on the map that is included.  So if the place backs up to a major highway or a junk yard, you’ll be able to know this before you venture out for a real look.

In the DC area, you may find your possibilites are, by numbers alone, pretty daunting.There will usually be some photos of the listing that can help you narrow things down.  But as you look over the on-line tours, keep in mind:

• Some listing agents are terrible photographers and can make a fabulous place look awful.  Others have good cameras and know what they are doing, or they hire someone who can get a good tour.  I wouldn’t rule out a place solely on no or bad tour photos.
• If the photos are taken with a wide-angle lens, the rooms may appear to be a lot bigger than they really are.
• If pictures of the kitchen are omitted, it probably needs to be redone.

Then you let your agent know which ones you want to get into, you’ll have a good possibility list.  As you go through each one, remember:

• Some will be beautifully staged while others will be a little cluttered and maybe even smell like the dog.  Try to look beyond the mere cosmetics.  Good staging can foment a bidding war.  With dog smells and clutter, you’re not likely to have a lot of competition.
• There will be some things you can fix, like carnivorous wall paper, a dated kitchen or green shag wall-to-wall.  Other things you can’t really fix, like view, location and room arrangement (at least not easily).
• Higher condo fees usually mean lower prices and vice-versa.
  
• If the only thing standing between you and a place you love is the price, it may be negotiable, especially if it’s been on the market for a while.

In no time at all, one or more of the places you see could be totally perfect!  Then it’s on to Part 5!

This is a reblog from a blog shared by a good friend Patricia Kennedy. Feel free to contact us for more information about Patricia.

Buying a home…part three of a series

Now you know how much you can spend for your new place, and it’s time for your agent to show you where homes in your range are located.

Buying in the DC Metro area can leave you numb with the sheer number of choices.  In DC, many first time buyers favor condos, especially if they want to be near downtown where a lot of the fun and action is.

Once you cross the border into Maryland or Virginia, you usually get more space for the money, but then there might be the dreaded rush hour commute.

What makes some neighborhoods more desirable than others?

• A Metro stop:  even though the DC Metro system rarely goes where you want to go, it can be good for the morning commute (assuming your office is anywhere close to a Metro station)
• Schools:  if they are a factor for you, greatschools.net is a site than many of my buyers swear by.   It rates public and many public charter schools.
• Fun:  if you can walk to restaurants, movies and other fun activities, it tends to push an area onto buyers’ favorite neighborhoods list.
• Chic:  some neighborhoods are fashionable.  Others are not.  Others still are on the brink of reinventing themselves.

There is a lot of demographic information that your agent can’t give you without running afoul of the Fair Housing laws.  She can’t discuss the age, race, sex, religion or even political affiliation (at least not in DC) of your potential neighbors.  Of course, you can always ask friends and colleagues who are not Realtors®, or just walk or drive through the various neighborhood and look at the neighbors – even talk to them.

A lot of condo buildings and neighborhood associations even have their own web sites, and you can learn a lot about the character of a place by checking them out – at least if they allow public access.

This is a reblog from a blog shared by a good friend Patricia Kennedy. Feel free to contact us for more information about Patricia.