I spent some time on Memorial Day on Boston Common, where 20,000 American flags had been placed on a gently sloping hill. It was a very moving experience and certainly got me thinking about my dad who, while stationed in India, was a Sargeant in, what was then, the Army Air Force during World War II. Thankfully, he made it home. I always think it’s a good thing when the government can provide special benefits to help members of the military and their families.
So, file this under “It’s the Least We Can Do for Those in the Military”: an extension of the $8,000 first-time homebuyer credit and the $6,500 credit for existing homeowners. Those in the military who serve outside the U.S. for at least 90 days between December 31, 2008 and May 1, 2010, have until June 30, 2011 to close on a new house. Normally, if homeowners don’t live in the new house for at least three years, they have to repay the tax credit. But, that’s not the case for members of the military who have to move because of government orders. I know there are many sacrifices for those in the armed services. I hope this extension of the homebuyer tax credit helps many of their families.
There’s also a possibility the credit thats set to expire on June 30 will be extended for everybody until September 30th. Legislation to that effect was introduced yesterday in the U.S. Senate. We’ll see if Congress can “get ‘er done”. Until next week, here’s to good planning!
I have to admit that I hadn’t heard the term “liar loans” until the U.S. Senate voted to prohibit them a couple of days ago. These mortgages got their name because (during the height of the most recent real estate boom…in the mid-2000’s) borrowers didn’t have to provide any documentation about their income or even disclose what their income was. So, it became pretty easy for someone to just…uh…fib about their financial situation (perhaps) knowing they’d never be able to keep up with the payments. Before the bottom dropped out of the housing market, a lot of people probably thought they’d never have a problem making their mortgage payments. But then, you lose your job, fall behind in your bills and your house goes into foreclosure. It’s happened to millions of Americans. The House has already approved a similar measure.
Also on the chopping block were those incentives to real estate brokers which had been designed to steer borrowers toward loans with higher interest rates and prepayment penalties. All of these provisions are part of the sweeping financial regulatory reform bill that’s moving through Congress like molasses. Ever watched molasses? Painful…especially when it goes around a corner. Until next time, when I expect to have posted new photos, here’s to good planning!
I’ve had a couple of questions recently about the First-Time Homebuyer Credit that was expanded and extended by Congress last fall. You may recall that first-time buyers can get a credit of up to $8,000 on their income taxes; existing homeowners can claim up to $6,500. But the details were a little sketchy, until the IRS came out with some regulations recently. As is often the case, the IRS may giveth with one hand and taketh away with the others, but:
* Anyone filing for the credit must attach a copy of the properly executed settlement statement (or similar documentation) used to complete the purchase. In most cases, it’s the HUD-1 Settlement Statement and must be signed by all parties. Existing homeowners must also prove ownership of their previous home with a mortgage interest statement, property tax bill or homeowner’s insurance records. Those taking the credit on their 2008 taxes only had to give the new home’s address and purchase date
* If you claimed the credit for a home bought in 2008 and occupied in 2009 and 2010, repayment of the credit will begin with your 2010 tax form (to be filed in April, 2011). The amount of the credit must be repaid over a 15-year period
* You’ll need a binding contract by May 1, 2010 in order to take the homebuyers credit. You’ll also need to attach Form 5405 to your income tax return. Filing Form 5405 also means you cannot file electronically
If you don’t attach Form 5405, you won’t be allowed to claim the tax credit. Have fun! Until next time, here’s to good planning!
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