Feb 28, 2009

2009 Home Buyer Incentive in a Nutshell

The rules and standards for home purchases and mortgages, and how they relate to taxes seem to be changing a lot lately. First there is lots of talk about changing them, then more talk, then the rules actually change, then they change again. As of today, these are the details of the tax credit for homebuyers in the new government incentive program.

  • This temporary tax credit is available only to first time homebuyers (or someone who hasn't owned a home in the last 3 years).
  • Must purchase a home between April 9, 2008 and December 1, 2009.
  • This credit will be taken with the buyer's 2009 tax return.
  • Single taxpayers cannot exceed $75,000 income and married taxpayer's income is limited to $150,000.
  • This program can be combined with the Mortgage Revenue Bond and MCC loans made in 2009.
As of today, mortgage interest is still a tax deduction.
Interestingly, people loosing their homes in a short sale actually show an income for the amount of loss the mortgage company took on the sale. For example, lets say you owed $210,000 on a property and selling it would end up costing a total of $230,000 (closing costs, costs to sell the property, plus what you owe on the loan, late fees, etc.). You can only get $200,000 for it. Your lender is 'short' $30,000 on the sale and you walk away collecting nothing and paying nothing at closing. You now have an income of $30,000 which the IRS is going to want you to pay taxes on. Never mind that you sold the house in a short sale because you didn't have the money.
I'm not an accountant, so I don't know how this will work out. Your lender might get stiffed, but I think the IRS will get theirs at some point. With interest and penalties.
[where: 75230]


Anonymous said...

Nice blog, Lydia.

We saw a listing of yours in Arlington and my wife and family are dreaming of moving to Texas.

If our dream comes closer to reality, we'll keep you in mind -

-Massachusetts Refugees.

Lydia Player said...

I hope you get to come on down to the land of opportunity. We've got a bit of something for everyone and our land prices are mostly a better deal than that high dollar Massachusetts dirt.