Colorado Springs Vintage Homes Blog
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Tax credit Part II
Colorado Springs Vintage Homes is happy to feature a great article by
Bryan Yaninek with Castle & Cooke Mortgage, LLC
Here are some of the top questions complied and answered by the National Association of Mortgage Brokers, the National Association of Realtors and tax advisers!
Part II of Tax Stimulus Explanation
Is it a tax credit?
Part I of the article explained they called it a “tax credit” because you get the tax credit money upfront, but it really was an “interest-free” loan which is paid back for the next 15 years or upon the sale of the home (within 3 years of purchase). The “payback” is based upon the balance owed and not the entire tax credit received.
The next set of rules applies if a home is purchased between January 1 and December 1, 2009. It is a true tax credit and does not have to be repaid. However, if the home is sold within 3 years of the purchase date, the entire tax credit has to be paid back.
How the Dollar Amount of Tax Credit is Figured
Simply calculation here: 10% of the home’s purchase price or a maximum of $8000. A tax credit can be claimed regardless if they obtain a mortgage, a tax-revenue mortgage or the buyer paid cash when purchasing the home.
Potpourri
For home buyers who do not want to wait until the end of the year to claim their tax credit, they should consider filing a W-4 form with their employer, decreasing the amount withheld for federal taxes. They may not get a check at the end of the year, but it will increase the dollar amount of their paycheck.
Another option for FTHB’s is to borrower the dollar amount of the expected tax credit from a relative (usually a parent) and pay it back when the tax credit is received. It could be used towards down payment and closing costs and FHA and VA will allow it. Be sure to check with the lender and the documentation required.
This is more complicated than it seems on the surface. Always, always, always, refer to your tax advisor!
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Other posts by Bryan Yaninek:
- 5 things you need to know about FHA Mortgages
- What the current lending market means to you as a home buyer or a seller
- Tax Credit — Who is a first time home buyer?
Bryan Yaninek is affiliated with Castle & Cooke Mortgage, LLC, a Licensed Mortgage Broker in the state of CO Department of Real Estate.
For more information, please call 719-457-2200.
Kathy (719-287-1049) KTorline@msn.com
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