Archive for January, 2010
IRS publishes rules for $6,500 repeat home buyer tax credit | Valerie Fitzgerald | Beverly Hills & West L.A. Real Estate
January 25th, 2010 Categories: Real Estate Tools
If you’ve been holding back on the new $6,500 federal tax credit for repeat home purchases, you now have all the official IRS guidance you’ll need to buy a house, qualify for the credit and pocket the $6,500.
That’s because the Internal Revenue Service finally published the rules for the repeat purchase credit along with key details for taxpayers that had been missing since President Obama signed the legislation creating the program Nov. 6.
The IRS posted its revised Form 5405 on its website ( www.irs.gov) on Jan. 15, six weeks after the agency warned taxpayers not to file claims for the $6,500 credit without using the revised form and new instructions.
The repeat buyer credit — inelegantly dubbed the “long-time resident of the same main home” credit by the IRS — supplements the popular $8,000 credit for first-time buyers. Homeowners who have occupied the same property as a principal residence for any five consecutive years during the previous eight years may now be able to claim a tax credit on a purchase of another home they intend to use as a principal residence.
The credit is for as much as 10% of the price of the replacement home, capped at $6,500. The purchase contract must be dated from Nov. 7, 2009, to April 30, 2010, and the closing must occur no later than June 30. Members of the armed forces and federal diplomatic and intelligence personnel stationed overseas get an extra year to claim the credit.
The maximum purchase price on homes eligible for the credit is $800,000. Buyers are not required to sell their previous home, but they must be able to demonstrate that the replacement home they buy is or will be their principal residence.
The new IRS guidance answers key questions that had been uncertain from the legislative language alone. For example, they describe what documentation home buyers must submit along with their $6,500 credit claim. On 2009 and 2010 tax returns, buyers should attach:
* A copy of the signed HUD-1 settlement sheet, including contract sale price and date of closing. This is to document that the timing of the transaction meets the program’s requirements.
* Evidence of long-term ownership and occupancy of the previous home to meet the five consecutive years’ test. This can be property tax records, homeowners’ insurance records or IRS Form 1098 interest statements for the five-year period.
* For buyers claiming a credit on a newly constructed home, where a HUD-1 settlement sheet is not available, the IRS will accept a copy of the certificate of occupancy showing the buyers’ names, the property address and date.
* For buyers of mobile homes who are not able to get a settlement statement, the IRS will accept a copy of the executed retail sales contract showing the property’s address, purchase price and date of purchase.
All this extra documentation was required by Congress after reports that audits had uncovered widespread abuses by those seeking the $8,000 credit for first-time buyers. Among these were fictitious home purchases in which taxpayers or tax preparers sought — or obtained — credits on properties that never were sold or bought. This time around, the IRS says, it is going to rigorously investigate all claims filed, starting with a review of the documentation submitted.
The new IRS guidance also spells out the revised income limits for home buyers claiming credits: Your modified adjusted gross income must be $125,000 or less if you are single, or $225,000 or less if you are married filing jointly. Above these limits, the allowable credit amount begins to phase down in increments, and it is eliminated once incomes reach $145,000 for singles and $245,000 for married joint filers.
There are pitfalls as well: An advisory posted by the IRS this month spelled out situations in which recipients of tax credits may have to repay them to the government. These include taxpayers who sell their homes within a 36-month period after purchase. Recipients must also repay the credit if they convert their principal residence to a rental or business property, or if their lender forecloses on the home.
With all the rules now available, here’s the action message to potential tax-credit seekers: Speed up your search for the home you want to buy. There are only 14 weeks to sign a contract and five months to close.
Distributed by the Washington Post Writers Group. On L.A. Times
Valerie Fitzgerald specializes in luxury residential real estate in Beverly Hills, Bel Air, Brentwood, Santa Monica and Malibu. She’s the author of Simon & Schuster release Heart and Sold: How to Survive and Build a Recession-Proof Business.
Valerie has more than 20 years of real estate experience and is known for her solid reputation in the West Los Angeles brokerage community. Contact her to sell or purchase your home or property at 310-285-7515 or visit Valerie Fitzgerald Group.
| Currently 1 Comment »
This tax season, know the available deductions for homeowners
January 19th, 2010 Categories: Real Estate Tools
“Tax reform is taking the taxes off things that have been taxed in the past and putting taxes on things that haven’t been taxed before.”
– Art Buchwald
A mere 96 days remain before your federal income tax return must be sent to the Internal Revenue Service.
Now is the time to start preparing so you can take all of the deductions and credits authorized by law.
True, you can file IRS Form 4868 and receive a six-month filing extension, but you still have to pay the full amount of the tax you owe for last year, which means you at least have to prepare a careful estimate of your liability.
A good first step in determining your tax obligation is to go to the IRS Web site, where you will find a host of publications to download. Perhaps the most comprehensive publication is No. 17, a 280-page booklet titled “Your Federal Income Tax for Use in Preparing 2009 returns.”
Read the rest of the story at Valerie Fitzgerald Group.
| Currently 1 Comment »
First-Time Homebuyer Credit Questions and Answers: Basic Information
January 11th, 2010 Categories: Real Estate Tools
Updated Nov. 6, 2009, to note new legislation. The new legislation extends and expands the first-time homebuyer credit allowed by previous Acts.
The new law:
- Extends deadlines for purchasing and closing on a home
- Authorizes the credit for long-time homeowners buying a replacement principal residence
- Raises the income limitations for homeowners claiming the credit
Q. What is the credit?
A. The first-time homebuyer credit is a new tax credit included in the Housing and Economic Recovery Act of 2008. For homes purchased in 2008, the credit operates like an interest-free loan because it must be repaid over a 15-year period.
The credit was expanded in 2009 for homes purchased in 2009, increasing the amount of the credit and eliminating the requirement to repay the credit, unless the home ceases to be your principal residence within the 36-month period beginning on the purchase date. It was further expanded in late 2009 to extend deadlines and to allow long-time homeowners buying replacement homes and people with higher incomes to qualify for the credit. (11/12/09)
Q. How much is the credit?
A. The credit is 10 percent of the purchase price of the home, with a maximum available credit of $7,500 ($8,000 if you purchased your home in 2009 or early 2010) for either a single taxpayer or a married couple filing a joint return, but only half of that amount for married persons filing separate returns. The full credit is available for homes costing $75,000 or more ($80,000 in 2009 or early 2010). Long-time homeowners who buy a replacement home after Nov. 6, 2009, or in early 2010 may qualify for a credit of up to $6,500, or $3,250 for a married person filing a separate return. (11/19/09)
Q. Which home purchases qualify for the first-time homebuyer credit?
A. Any home purchased as your principal residence and located in the United States qualifies. You must buy the home after April 8, 2008, and before May. 1, 2010 (with closing to take place before July 1), to qualify for the credit. For a home that you construct, the purchase date is considered to be the first date you occupy the home.
Normally, taxpayers (including spouse, if married) who owned a principal residence at any time during the three years prior to the date of purchase are not eligible for the credit. This means that you can qualify for the credit if you (and your spouse, if married) have not owned a home in the three years prior to a purchase. However, a long-time homeowner can also get the credit for a qualifying replacement home purchased after Nov. 6, 2009. To qualify, you must have owned and used the same home as your principal residence for at least five consecutive years of the eight-year period ending on the date you by your new principal residence.
If you make an eligible purchase in 2008, you claim the first-time homebuyer credit on your 2008 tax return. For an eligible purchase in 2009, you can choose to claim the credit on either your 2008 or 2009 income tax return. For an eligible purchase in 2010, you can choose to claim the credit on either your 2009 or 2010 return. (11/19/09)
Read the rest of the story at http://budurl.com/1stTimeBuyerCredit.
Valerie Fitzgerald has been in West Los Angeles real estate for 20 years and specializes in luxury markets and developments in neighborhoods like Beverly Hills, Bel Air, Brentwood, Santa Monica and Malibu.
Learn more about Valerie at http://thevaleriefitzgeraldgroup.com/valerie-fitzgerald.
| Currently No Comments »
Best Real Estate Agents in Los Angeles
January 7th, 2010 Categories: Real Estate Tools
L.A. 10: The Best In Los Angeles…
From luxurious estates in Beverly Hills to fun-filled beach homes in Santa Monica, Los Angeles has distinguished itself as a leader in the US when it comes to real estate.
And with miles upon miles of homes cascading the LA hills, you will be happy to have an experienced Realtor to assist you in your home buying or selling process. Below are the ten best real estate agents in Los Angeles:
1. Valerie Fitzgerald – Coldwell Banker Real Estate
Website http://thevaleriefitzgeraldgroup.com
Phone 310-285-7515
Address 301 N Canyon Dr Suite #21 Beverly Hills, CA 90210
2. Todd Michaud – Keller Williams Realty
3. Bob Hurwitz – Hurwitz James Company
4. Bill Chin – Re/Max Tri-City Realty
5. Your LA Properties Real Estate
6. Century 21 Excellence
7. Fran and Rowena Los Angeles Real Estate – Dilbeck Realtors GMAC
8. ABM Realty Group
9. Accord Interests
10. Bragg Ron Realty
Source: http://la10.cityspur.com/2009/02/28/best-real-estate-agents-in-los-angeles
Valerie Fitzgerald has been in West Los Angeles real estate for 20 years and specializes in luxury markets and developments in neighborhoods like Beverly Hills, Bel Air, Brentwood, Santa Monica and Malibu.
Learn more about Valerie at http://thevaleriefitzgeraldgroup.com/valerie-fitzgerald.
| Currently No Comments »
