Expires April 30^th, 2010

 By Farhad Patny, M.S.B.A., Realtor & Loan Officer, Contributor.

 We just went though one deadline, that of submitting our annual tax returns to the IRS and there is another one looming up. This time it is for something good - the First Time Home Buyer Tax Credit. Whether you’re a first time home buyer or a move-up buyer, the tax credit is set to expire on April 30th and it is not likely that this will be extended once again. To be eligible for this credit you must have a contract by close of April 30th, 2010 and close escrow by June 30, 2010.

The federal income tax credit for homebuyers has been extended and expanded to now include homeowners who wish to "move on" after 5 years of living in their current property, as well as first-time homebuyers.

 Ø  If you’re a first time homebuyer, you could receive a federal tax credit of up to $8,000 when you buy your first home. Note that for the purposes of this credit First-time homebuyers include those who have not owned in the last three years. Homeowners who have lived in a current home consecutively for 5 of the past 8 years can receive up to a $6,500 tax credit  

Ø  Income limits are now $125,000 for singles, $225,000 for married couples with a $20,000 phase-out of the credit for both.

 Ø  There may be no future extensions, so all qualified homebuyers are urged to act and have a written, binding contract by April 30, 2010 (close by June 30, 2010)

 Though it is not recommended that you should rush out and buy a house just because of the first time home buyer tax credit, if you’re a home buyer looking to take advantage of the tax credit and you’re ready to buy a home, this may be a great time to buy a home. With home prices down 40%-60% in most areas and FHA loans available that most anybody with a reasonable credit score (620+) and as low as 1% of your own money as down payment, most anybody can get into a good home.

Two of my buyers recently have accepted contracts on homes in Peoria. These are 2004 and newer home in the 85345 zip code with great Peoria schools and neighborhoods. They have been approved eligible for the “Arizona Your Way Home” subsidy program for $22,000, which is a no interest, no payment 2^nd loan, which they do not have to repay if they live in this home for 10 years. They are putting app. $6000 towards down payment and closing cost. Can you guess what their monthly payments are? PITI payments are app. $400/mth and with escrow payments of $200/mth to cover property taxes, home owners insurance and HOA fees, the total payments are app. $600/mth – much less that the $700-$800 they are currently paying in rent. And they will be getting back $8000 from the IRS within a few weeks.

The great thing about this credit is that even though you have to file a tax return to get this credit, you need not wait until next year. You could amend your 2009 tax return and get the credit within 30 days app. So even after paying the down payment and closing costs of $6000, my buyers will have the $6000 plus an additional $2000 back from the IRS.

If you’re serious about buying a home before the tax credit expires, give me a call at 623 297 4448. I am a licensed Realtor and also a mortgage professional. I have access to all the available homes in the valley, be it in Peoria, Glendale, East valley, West valley, etc. You need some time to find a good home and for the negotiation (and even rejection). But this is very doable so if you are interested you need to get going now.

Sources: IRS.gov and Your Way Home, AZ. Farhad is a Realtor and Loan Officer, specializing in Short Sales and Loan Modifications. If you have any questions or would like any personal assistance in this regard, please call Farhad Patny  at 623 297 4448 or  email your questions to [email protected]. I strongly advice you to contact your CPA or tax professional before making any decision.