Daily Real Estate News | November 6, 2009 |
Obama Signs Extended Tax Credit into Law
UPDATE
1. Upfront MIP increasing from 1.75% to 2.25% - currently monthly MIP will
remain the same BUT there is legislation in
process to increase the monthly which would allow the upfront to come back
down a little - effective Spring 2010
2.
FICO score will determine required down payment percentage: (effective early
Summer 2010)
3.5% down payment will require minimum credit score of 580
10% down payment required for 579 or less FICO score
3. Seller concession reduced to 3% - effective early Summer 2010
Expected to contribute approximately $22 billion to the economy, Congress overwhelmingly passed a bipartisan measure this week extending the $8,000 home buyer tax credit to April 30, 2010.
The legislation, which is part of a larger bill that also extends unemployment benefits, was signed into law by President Obama today.
More people are now eligible to take advantage of the law, which includes a $6,500 tax credit for buyers who are current home owners and have lived in their home for five of the past eight years.
Income limits for eligible home buyers were also expanded to $125,000 for single buyers and $225,000 for couples, up from $75,000 for individuals and $150,000 for couples. Qualifying home prices are capped at $800,000.
NAR's Government Affairs Division has compiled facts on the changes made to the current tax credit. NAR members sent more than 500,000 letters to leaders in Congress and made nearly 13,000 telephone calls to Senate offices last weekend to encourage support. So far this year, REALTORS® have spent nearly $14 million lobbying Congress, according to federal campaign finance records compiled by the Center for Responsive Politics.
Sen. Johnny Isakson, a Georgia Republican and a former member of NAR, was key in extending the credit, as well as pushing it through initially. Other prominent boosters include the National Association of Homebuilders and the Mortgage Bankers Association.
Listen to NAR President Charles McMillan's podcast announcement.
NAR economists estimate that approximately 2 million people will take advantage of the tax credit this year.
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First Time Homebuyers Credit NAR Issue Brief Homebuyer Tax Credit Changes National Association of REALTORS ® Government Affairs Division 500 New Jersey Avenue, NW, Washington DC, 20001Congress has extended and expanded the homebuyer tax credit. The modifications in the column labeled “December 1 – April 30, 2010” become effective when President Obama signs the bill. All changes made to the current credit become effective on that date, as well. |
| FEATURE | Jan 1 – November 30, 2009 Rules as enacted
February 2009 | December 1 – April 30,2010 Rules as enacted November 2009 |
First time
Buyer –Amount of Credit | $8000 ($4000 married filing separate) | $8000 ($4000 married filing separate) |
First time Buyer –
Definition for Eligibility | May not have had an interest in a principal residence for 3 years prior to purchase | Same |
Current Homeowner –Amount of Credit | No Provision | $6500 ($3250 married filing separate) |
Effective Date –Current Owner | No Provision | Date of Enactment |
Current Homeowner –
Definition for Eligibility | No Provision | Must have used the home sold or being sold as a
principal residence consecutively for 5 of the previous 8 years |
| Termination of Credit | Purchases after November 30, 2009.(Becomes April 30, 2010 on Date of Enactment.) | Purchases after April 30, 2010 |
| Binding Contract Rule | None | So long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until
July 1, 2010 to close. |
Income Limits
(Note: Increased income limits are effective as of date of enactment of bill) | $75,000 – single $150,000 – married
Additional $20,000 phase out | $125,000 – single $225,000 – married
Additional $20,000 phase out |
Limitation on Cost of Purchased Home | None | $800,000 Effective Date of Enactment |
| Purchase by a Dependent | No Provision | Ineligible Effective Date of Enactment |
Antifraud Rule | None | Purchaser must attach documentation of purchase to tax return |
