For the latest changes in tax law for 2010, visit the IRS website. 

For helpful tax tips and updates, you can follow the Taxpayer Advocate Service on the following websites:

• www.youtube.com/tasnta
• www.facebook.com/YourVoiceAtIRS
• www.twitter.com/YourVoiceAtIRS

For information on your taxpayer rights go to the tax toolkit at http://www.taxpayeradvocate.irs.gov/

 As always, it’s wise to consult a tax professional.

And don’t forget, this year’s tax deadline is April 18th!

• If your adjusted gross income is no more than $100,000 you may be able to deduct 100% of mortgage insurance premiums you pay in 2011.
•  But if your income is more than $100,000 you may take a partial deduction.
• You must have purchased your home between January 1st, 2007 and December 31st, 2010.
• If you’ve just recently purchased your home and have pre-paid your insurance premium, you may deduct this entire amount.
• Second homes are not eligible for deductions; you can only deduct mortgage insurance premiums on a primary residence.

If you itemize on your tax return, don’t forget that you are eligible for other deductions related to home ownership, such as loan origination fees, property taxes, mortgage interest paid. As always, you want to consult with a tax professional.

I have lots of clients calling me and asking me when we will know about the terms of the extension for this credit and I keep telling them there will be no extension. There is no bill in Congress right now to extend the credit. So if you’ve got a home in mind, don’t delay. Time is really running out!

I’ve previously provided links to information about the credit, but here it is again in case you need a quick refresher: Homebuyer Tax Credit.

Meantime, if you already have a binding contract that will let you take advantage of the tax credit, you have until June 30th, 2010 to close. In this regard, a word to the wise: June 30th falls at month-end when attorney and title and mortgage lenders are typically at their busiest and with all the tax-credit contracts coming up for closing in May and June, they will be even busier this year. All the activities required to close a home take longer to complete in the last week of each month. And by June 30th we also see the start of summer vacations, which reduce staff in legal and banking offices. So try to schedule your closing as much before June 30th as possible to ensure you are closed before this deadline.

• $8,000 FIRST TIME HOME BUYER CREDIT DEADLINE:  You must be in contract by April 30th and close on your new home by June 30th, 2010. To be considered a first-time home buyer you can’t have owned a home in the past three years.
•  $6,500 MOVE-UP/REPEAT HOME BUYER CREDIT DEADLINE: You must be in contract by April 30th and close on your new home by June 30th, 2010. You must also have lived in your current home for 5 consecutive years out of the last 8 years.

$8,000 First-time Home Buyer Tax Credit at a Glance:

• The $8,000 tax credit is for first-time home buyers only. For the tax credit program, a first-time home buyer is someone who has not owned a principal residence during the three-year period prior to the purchase.
• The tax credit does not have to be repaid unless the home is sold or ceases to be used as the buyer’s principal residence within three years after the initial purchase.
• The tax credit is equal to 10% of the home’s purchase price up to a maximum of $8,000.
• The tax credit applies only to homes priced at $800,000 or less.
• For homes purchased after November 6, 2009 and on or before April 30, 2010, single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

The $6,500 Move-Up / Repeat Home Buyer Tax Credit at a Glance:

• To be eligible to claim the tax credit, buyers must have owned and lived in their previous home for five consecutive years out of the last eight years.
• The tax credit does not have to be repaid unless the home is sold or ceases to be used as the buyer’s principal residence within three years after the initial purchase.
• The tax credit is equal to 10% of the home’s purchase price up to a maximum of $6,500.
• The tax credit applies only to homes priced at $800,000 or less. Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

There’s no indication that the current home buyer tax credit programs will be extended again. April 30th is just around the corner! Don’t delay if you are looking to buy a home. Lots of great homes are for sale in the Charlotte metro area. Contact us today to help you find your dream home by April 30th!

The IRS has recently released the new form that eligible home buyers need to claim their tax credit this tax season and has announced that they will start processing these returns in mid-February. With the release of Form 5405 (“First Time Home Buyer Credit and Repayment of the Credit”) along with instructions on completing the form, you can now start filing for your tax credit. However, keep in mind that if you are claiming a home buyer credit, you MUST file a paper tax return because of the added documentation requirements. These documentation requirements include:

• A copy of the HUD-1 Settlement Statement you received at closing, which shows all the parties’ names, signatures, property address, sales price and date of purchase. If you purchased a mobile home, you will need to provide a copy of the executed retail sales contract showing all parties’ names, signatures, property address, purchase price and date of purchase.
• If you purchased a newly constructed home where a settlement statement is not available, IRS will accept a copy of the Certificate of Occupancy showing the owner’s name, property address, and date of the certificate.
• If you are claiming a “move-up buyer” credit for a new principal residence, you must be able to show thay you have lived in your old home for five consecutive years during the eight-year period ending on the purchase date of the new home. Proof of residency can include: Form 1098 (Mortgage Interest Statement) or substitute mortgage interest statements; property tax records; or homeowner insurance records.

The IRS has significantly stepped up its compliance checks for those filing for the home owner tax credit, so it makes sense to have all your documents together before filing. And, again, don’t forget, you can’t file for the tax credit electronically. You may still use IRS Free File to prepare your returns, but the returns must be printed out and sent to the IRS together with all the supporting documents providing proof of purchase and/or residence. Click here for more informaton about the Free File program.

Keep in mind it could take four to eight weeks for a refund claimed on a paper return (where all necessary documents are included on the first go-around). If you file early, IRS has indicated that the first refunds for home buyer tax credits will be issued in late March 2010.

KEEP IN MIND:  if you sell your home within 3 years/36 months, you may have to pay back the tax credit you receive in 2010.

For more information, visit www.IRS.gov. 

For more information about the First Time Home Buyer Tax Credit and to see if you qualify click here.

Would you like $23,900 in FREE MONEY from the US Government and the State of North Carolina to purchase a home in the Charlotte metro area in North Carolina?

Carolinas Realty Partners can introduce you to a program that provides $14,900 in FREE downpayment funds to purchase a foreclosure home anywhere in Mecklenburg, Union, Cabarrus, Gaston, and Iredell Counties in North Carolina’s Charlotte metro area with a sales price up to $210,000. This downpayment assistance program PLUS the $8,000 First-Time Home Buyer Credit provides a total of $23,900 in downpayment, closing costs, and tax credit incentives!

If you are interested, you need to meet the following qualification criteria:

• You must be under contract for ahome by April 30th, 2010 and close by June 30th, 2010 to qualify for the $8,000 first-time tax buyer credit.
• You must be a first-time home buyer wishing to purchase a home in Mecklenburg, Union, Cabarrus, Gaston, or Iredell Counties.
• As an individual your income must be no more than $55,850.
• As a two-person household, your income must be no more than $63,850.
• As a three-persn household, your income must be no more than $71,800.
• As a four-person household, your income must be no more than $75,000.
• You want to purchase a foreclosure home built after 1978 at a price of no more than $210,000.
• You need to have $1,000 to put down.

Each year that you live in the home, 20% of the $14,900 from the State of  North Carolina will be forgiven. After 5 years, you will owe the state nothing and have enjoyed the $14,900 for FREE!

For more information about this program contact us at Carolinas Realty Partners and we’ll quickly get you on your way to getting qualified.

• An increase in the mortgage insurance premium by 50 basis points from 1.75% to 2.25%. This change will be effective in the spring of 2010.
• Implementation of a new down payment system where borrows can qualify for the 3.5% minimum down payment only if their credit score is at least 580. Borrowers with credit scores less than 580 will be required to put down at least 10%.
• Starting this summer, sellers will not be able to offer as much help to buyers to pay their closing costs. The maximum amount of assistance will drop to 3% of the value of the property from the current 6%.  That represents thousands of extra dollars buyers will need to have on hand to purchase and close on a home.

Aside from these issues, please don’t forget that the current tax credit of up to $8,000 for first-time buyers and up to $6,500 for move-up buyers expires on April 30th, 2010. You must be in contract by April 30th, 2010 and closed by June 2010. I keep reminding people that this tax credit does not appear slated for renewal in Congress so this may be your last chance to take advantage of it.

If you are thinking about buying a home in 2010, here are a few good reasons to do so sooner rather than later!

First of all, the current first-time and move-up home buyer tax credit expires on April 30th, 2010… so you’ve got less than five months to get into contract for a home.  All sources indicate that the tax credit will not be extended again.

Second, the FHA has proposed significant changes to their loan program (and with well over 75% of first-time buyers loans these days being FHA loans you need to know about these changes), which will impact borrowers. The proposed changes include:

• Increasing the minimum down payment required on FHA loans from 3.5% to 5%. That means more money down required on your part.
• Increasing the upfront and monthly mortgage insurance premiums on FHA loans.
• Reducing the total closing costs allowed for seller to pay from 3% to 6%. Again, this means more money out of pocket at closing on your part.
• Requiring minimum FICO credit scores (which FHA has not required to-date).
• Requiring more control of FHA appraisals.
• Requiring FHA lenders to demonstrte higher minimum net worth to ensure ability to repurchase bad loans. This could reduce the number of lenders out there who can offer FHA loans.

Speak with your lender and your Realtor about these proposed changes and work on a game plan to ensure you can buy a home sooner rather than later.