Don Taylor's Real Estate Blog

This was sent to me by mortgage broker Jamie Brown with Golfside Lending, 800 Belcher Rd. N, Clearwater, FL 33765. Jamie can be reached on (727) 447-5140.

First-time Home Buyer Tax Credit Enacted

as Part of Housing Stimulus Package

NAHB has Resources to Help You Promote it to Consumers & Members

I am absolutely thrilled to announce that, after months of intensive lobbying by the entire NAHB federation and the tireless dedication of our staff in Washington, the President signed the housing stimulus package into law.

This milestone legislation will help provide an enormous boost to the housing industry in the form of a tax credit for first-time home buyers, as well as much-needed measure that will improve mortgage liquidity, foster refinancing of troubled loans and expand the supply of affordable rental housing.

The temporary first-time home buyer tax credit will help stimulate home buying, reduce excess supply in housing markets and shore up home prices, so it is critical to get the word out to consumers right away.

NAHB is immediately launching resources to help you understand the credit and promote it ro consumers, including:

• A new consumer Web site, www.federalhousingtaxcredit.com that includes details and a set of comprehensive questions and answers about how the credit works and how consumers can take advantage of it.
• A set of materials to help you learn about and promote the Web site to home buyers that can be downloaded onling at: www.nahb.org/mythbuster, including:
• Talking points
• Print ads
• A consumer handout that includes the credit in the "top reasons you shouldn't wait to buy a new home".
• A banner ad for the Web site that you can use on your own site.

To learn more abojut how the legislation will help the home building industry through FHA modernization, GSE reform, and expansion of the mortgage revenue bond and Low Income Housing Tax Credit programs, read the special edition of Nation's Building News (NBN) here.

NAHB staff is ready to help you get the maximum impact from these resources. If you have any questions, contact NAHB Public Affairs by email or telephone at ext. 8061.

Frequently Asked Questions About the

First-Time Home Buyer Tax Credit

1. Who is elibilbe to clain the $7,500 tax credit?

First time home buyers purchasing any kind of home - new or resale - are eligible for the tax credit.

2. What is the definition of a first-time home buyer?

The law defines "first-time home buyer" as a buyer who has not owne a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests homeownership history of both the home buyer and his/her spouse. For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer credit.

3. What types of homes will qualify for the tax credit?

Any home purchased by an eligible first-time home buyer will qualify for the credithy, provided that the home will be used as a principal residnece and the buyer has not owned a home in the privious 3 years. This includes singel-family detached homes, attached homes like townshouses, and condominiums.

4. Are there income limits to determine who is eligible to take the tax credit?

Yes. Home buyers who file their taxes as single or head-of-household taxpayers can clain the credit if their modified adjusted gross income (MAGI) is less than $75,000. For married taxpayers filing a joint tax return, the MAGI limit is $150,000. the limit is based on the buyer's modified adjusted gross income for the year that the house is purchased, except for certain purchases in 2009.

5. What is "modified adjusted gross income"?

Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine "adjusted gross income" or AGI. AGI is total income for a year munus certain deductions (known as "adjustments" or "above-the-line deductions"), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.

To determine modified adjustd gross income (MAGI), add to AGI certain amounts such as foreign income, foreign-housing deductions, student-loan deduction, IRA-contribution deductions and deductions for higher education costs.