On Nov. 6, the president signed the new Worker, Homeownership, and Business Assistance Act of 2009 into law. The centerpiece of this legislation is the extension and liberalization of what is now inaccurately called the first-time home buyer credit.
Here are the 10 most important things to know about the revamped credit.
1. New purchase deadline extends into 2010
The home buyer credit was previously scheduled to expire on Nov. 30, 2009. The new law extends the deal to cover purchases of U.S. principal residences that close by April 30, 2010. However, if a home is under contract on that date, the deadline for closing is extended to June 30, 2010.
2. Existing homeowners can now qualify
The new law allows a reduced credit for existing homeowners who buy a replacement U.S. principal residence after Nov. 6, 2009. The credit equals the lesser of: (1) $6,500, or (2) 10% of the price of the replacement home, or (3) $3,250 for a buyer who uses married filing separate status. The new existing-homeowner credit is only available for purchases that close after Nov. 6, 2009. To qualify, the buyer must have owned and used the same home as a principal residence for at least five consecutive years during the eight-year period ending on the purchase date for the replacement principal residence. If you’re married, your spouse must pass this test too (whether or not you file jointly).
3. Larger credits still allowed for first-time buyers
Before the new law, the home buyer credit was only available to so-called first-time buyers, which means someone who had not owned a U.S. principal residence during the three-year period ending on the purchase date for a home that will serve as the buyer’s new principal residence. If you’re married, both you and your spouse must pass the three-year test (whether or not you file jointly). These first-time home buyer rules still apply for purposes of claiming a larger credit of up to $8,000. Specifically, the credit for a first-time buyer still equals the lesser of: (1) $8,000, or (2) 10% of the home purchase price, or (3) $4,000 if you use married filing separate status.
4. Higher-income folks can now qualify
The home buyer credit is phased out (reduced or completely eliminated) as income goes up. However, the new law significantly raises the phase-out ranges so that many more higher-income buyers will now qualify.
* For purchases after Nov. 6, 2009, the phase-out range for unmarried individuals and married folks who file separately is between modified adjusted gross income (MAGI) of $125,000 and $145,000 (way up from the old-law range of $75,000-$95,000).
* The phase-out range for married joint filers is now between MAGI of $225,000 and $245,000 (way up from the previous range of $150,000-$170,000).
5. New $800,000 purchase price limit
For purchases after Nov. 6, 2009, the credit can only be claimed for a principal residence that costs $800,000 or less. So if your new home costs $800,001, the credit is completely off limits (but I doubt too many people will feel sorry for you).
6. No more credits for kids or dependents
For purchases after Nov. 6, 2009, the home buyer must be at least 18 years old on the purchase date to qualify for the credit. Also, no credit is allowed for a buyer who can be claimed as a dependent on someone else’s Form 1040 for the year of the purchase. These new rules are intended to shut down the practice of claiming the credit for youngish buyers who really don’t even have incomes of their own (like college students who use money from their parents to buy a pad near campus).
7. New anti-fraud rules
A recent government report said the IRS has already identified over 100,000 returns with potentially fraudulent home buyer credits. This is hardly surprising when the government is willing to give away up to $8,000 in free money to anyone who files a return, even when that person reports no income. Believe it or not, absolutely no documentation was required to claim the credit, until now. For credits claimed on 2009 and 2010 returns, buyers must attach a properly executed real estate settlement sheet to the return. Also, the IRS can now simply disallow credits in fishy circumstances (like when it appears the $8,000 credit is being claimed by someone who already owns a home).
8. Credits can still be claimed on prior-year returns
Under the revamped rules, you can still claim the credit for a 2009 purchase on your 2008 return (although you would now generally have to file an amended return to do so). You can also claim the credit for a 2010 purchase on your 2009 Form 1040. This allows you to cash in on the credit sooner rather than later, and it may also allow you to claim a larger credit if your income in the year of purchase is higher than in the preceding year.
9. Credits must still be repaid in some cases
Under old-law rules for homes purchased between April 9, 2008 and Dec. 31, 2008, buyers are generally required to repay the credit over 15 years. However, this repayment rule is generally eliminated for purchases after 2008. That said, you might still have to repay the credit if you sell your home within three years of the purchase date or stop using it as your principal residence during that period.
10. Special rules for military service members
For military service members on extended duty outside the U.S., the new law lengthens the deadline for closing on home purchases for an extra year, to April 30, 2011 (or June 30, 2011 for homes under contract on April 30, 2011). The new law also waives the credit repayment rules for service members who are forced to move due to receiving new orders. The same special rules apply to members of the foreign service and intelligence communities
By JANICE PODSADA
The Hartford Courant
September 6, 2009
Is your water heater or oil furnace an energy glutton? There's hope — even better than hope, federal tax credits — if you replace it with an energy-efficient product.The American Recovery and Reinvestment Act of 2009, the same federal stimulus program that produced Cash for Clunkers, provides tax credits to consumers who purchase qualifying energy-efficient products, including insulation, storm windows and metal and reflective asphalt shingles.Buying new windows and doors? Replacing an old water heater with a solar-powered water heater? Putting a new roof over your head? You may be eligible for a tax credit equal to 30 percent of the cost of materials, up to $1,500 for qualifying products placed into service between Jan. 1, 2009, and Dec. 31, 2010.And the best part about this "clunker" program is that you don't have to physically trade in your old drafty windows or central air conditioning unit. Just save your purchase receipts and the Manufacturer Certification Statement.Here's how it works:A tax credit reduces the amount of taxes you owe. For example: If you owe $2,000 in federal taxes, a $1,500 refundable tax credit would lower your bill to $500.In most cases, qualifying home improvements must be made to your primary residence. In some cases, you may receive tax credits for improvements to a second home.So what's on the list?In some cases, not only is the product eligible for a tax credit, but the installation costs also are covered by the program. If they meet the criteria, the installation of heating, ventilation and air conditioning systems, biomass stoves, water heaters, solar panels, geothermal heat pumps, wind energy systems or fuel cells are covered by the tax-credit program. The tax credit is 30 percent of the total cost (the product plus installation), up to $1,500.Installation costs are not covered by the tax credit for roofs, insulation, windows or doors.And if you can't make the improvement this year or next, remember that some tax credits are available until 2016 — at 30 percent of the cost, with no upper limit — for geothermal heat pumps, solar panels, solar water heaters, small wind-energy systems and fuel cells.For a complete list of restrictions and requirements, go to www.energystar.gov/taxcredits.
For 2009, Congress has increased the credit to $8000, removed the repayment feature for some buyers, and made several additional improvements. This revised $8000 tax credit applies to purchases on or after January 1, 2009 and before December 1, 2009.For home purchasesbetween Jan 1, 2009 and Dec 31, 2009...You may be eligible for a $8,000 tax credit. Please review detailed information on this page to determine eligibility.Frequently Asked Questions:
What's this new homebuyer tax incentive for 2009?
Who is eligible?
How does a tax credit work?
So what happens if the purchaser is eligible for an $8000 credit but their entire income tax liability for the year is only $6000?
How does withholding affect my tax credit and my refund?
What are the filing options to consider?
Is there an income restriction?
How is my "income" determined?
What if I worked abroad for part of the year?
How do I apply for the credit? ?
Sales of existing homes perked up in February, according to data from the National Association of Realtors. The number of sales grew to a seasonally adjusted annual pace of 4.72 million units, up from 4.49 million in January. The current pace is still down however; over February 2008, figures when sales reached a seasonally adjusted 5.03 million units.
The national median home price actually increased in February for the first time in seven months. The price rose to $165,400 from $164,800 in January, led by strong gains in the Northeast. One year ago, the national median price was higher at $195,600.
The NAR defines existing homes as all previously owned single-family homes, townhouses, condominiums, and co-ops. The group “seasonally adjusts” the sales numbers to factor in things like inclement weather, school sessions, winter holidays, etc to smooth out the trends. The NAR also describes its sales data based on an annual pace. The monthly figure represents the total number of housing units sold in one year if the current rate were to continue unchanged.
Home sales were up across the board in February for an average 5.1 percent nationwide, with the Northeast leading the way. Sales there increased by 15.6 percent to 740,000 units, up from 640,000 the previous month. From the February 2008 sales, however, the numbers are still down 14.9 percent.
The South also showed a significant increase in sales, with numbers growing to 1.74 million units, up 6.1 percent from 1.64 million in January. In year-over-year comparisons, sales in the South are still down 11.2 percent though.
The West had a slower monthly growth rate, with sales rising 2.6 percent to 1.2 million from 1.17 million the previous month. Compared with last year, however, sales are up an incredible 30.4 percent!
The Midwest saw a slight increase in sales in February, with a 1.0 percent up-tick to 1.04 million homes, from 1.03 million in January. Sales in that region are still down 14.0 percent over February 2008 figures.
The median home price, the point at which half of all homes sold for more and half sold for less, rose in February in the Northeast and South, stayed constant in the Midwest, and fell in the West.
The median price in the Northeast jumped up to $251,200 from 227,000 in January, but it is down 4.8 percent from a year ago when the price was $264,000.
The South experienced a median price growth to 146,700 from 143,300, although the price is down 10.0 percent over the previous year.
In the Midwest, the median price remained $131,000 for the second month, but it is still down 4.8 percent from February 2008.
The median price took a deep plunge in the West in February, falling to $204,600 from $215,500 the month before. The current price is down 30.3 percent over last year, a sign of how over-inflated Western home prices grew during the housing boom.
The number of existing homes for sale rose 5.2 percent to 3.8 million units from 3.6 million in January. However, at the current higher sales pace, the homes on the market represent a 9.7-month supply, the same amount as the previous month. Total housing inventory has still fallen 5.5 percent in the last year.
Data for March existing home sales, prices, and inventory will be available at the end of April.
Complete Self-Moving The two essential ingredients of a successful move are "personpower" and hauling capacity. Whether you rely on friends and borrowed vehicles or hire local college students and rent a truck to do the job, you need not only enough strong helpers but also the right hauling capacity. If you lack either of these, it's best not to self-move. Consider whether moving yourself actually makes economic sense. If you are moving a long distance, calculate the cost of travel: gas, tolls, meals, lodging, and so on. Add in the costs of renting a truck large enough to handle all your belongings, insuring valuable possessions, hiring additional help, and even the cost of pizza at the post-move party. Then get some estimates from professional moving companies and decide how costs compare with a self-move. Following is a guideline for estimating how much truck you'll need:
Storage
Green living is catching on. Home builders are building energy efficient homes and green communities, and individuals across the nation are taking steps to make their homes conserve more. Knowing your energy and water conservation options is half the battle, below are five things you can do to make your home greener in 2009.
1. CFL Light Bulbs – Compact florescent light bulbs. Probably the most popular (and easy) thing to do in your home TODAY. By replacing five of the most frequently used incandescent bulbs with CFL bulbs you could save about $100 a year on your electric bill. And going for Energy Star qualified CFL bulbs can last up to 10 times longer than regular bulbs and use 75% less energy. This means that just one bulb can save you $30 or more in electricity costs in its lifetime.
2. High Efficiency Toilets – Toilets make up about 30% of your home’s indoor water usage. Advancements in technology have helped produce toilets using 20% less water than standard and past models. Models like those found at Kohler and TOTO offer both high water efficiency and high performance.
3. Water Efficient Faucets – Using water efficient faucets throughout your home can save about 3-5% of your indoor water usage. Doesn’t sound like much, but energy savings though reduced hot-water use will repay the cost of the faucet within the year. According to the EPA, if every American home used a WaterSense faucet, we would save 60 billion Gallons of water annually.
4. Energy Star Appliances – From the water heater and fridge to the DVD player and computer you use every day, even the smallest plug-in appliances waste energy and electricity. Using Energy Star certified appliances guarantees the appliance is as energy efficient as possible. Energy Star certified computers can use 70% less energy than one that is not certified. Certified televisions can use about 25% less. When making a new purchase, check for the Energy Star label/certification.
5. Efficient Washing Machines – Washing machines can be big water wasters. Replacing your old washer with a newer, more efficient model can decrease your water usage by up to 60%, saving your family about 7,000 gallons of water each year. You will also save on detergent and energy. In addition to saving water, the newer front load washers get clothes cleaner than the standard washers.
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