First-Time Homebuyer Credit Explained

There Is a First Time For Everything

As every news station in the nation told you already, the “American Recovery and Reinvestment Act of 2009″ passed the House and the Senate on February 13th, 2009 and was signed into law by the President on February 17th, 2009. The $787 billion dollar (before interest) package among other things includes a revision of the 2008 stimulus package first-time home buyer credit. There have been a lot of proposals and changes while shaping the bill, so here is my interpretation as to what the final word on that is. Please note, that I am not a tax advisor, nor a CPA, so you should consult yours instead of going by what I say, this is just a reference. Also, as always, these opinions are that of my own and do not reflect any institution, organization or affiliation that I am a part of.

So out of the 1,071 pages of the stimulus package I found the excerpt about what changes were made to the original First-Time Homebuyer Credit, so here is the final verdict:

Sum It Up

Maximum Credit Amount: 10% of sale price or $8,000, which ever is less.

Definition of “First-time Homebuyer”: An individual (or if married, such individual’s spouse) had no ownership interest in a principal residence in the past 3 years. In laymen’s terms, someone, or a couple, in which neither partner have owned a primary residence home in the past 3 years.

Limitations:

1) Your adjusted gross income needs to be under $75,000 ($150,000 for couples filing jointly) in order to get the full credit. If you go over that limit, the amount of credit you get begins to decrease.

2) The property can not be acquired from a person related to the person buying the property.

3) You have to be a taxpaying resident.

4) You can not dispose of such residence, or have that residence seize being your primary residence, before the close of the taxable year. 

Dates: All revisions are effective as of January 1st, 2009 and end December 31st, 2009.

Recapture: If the home is sold within 3 years of purchase the entire credit amount is recaptured.

Eligible Properties: Include Single Family Homes, Condos, Co-Ops, and Townhomes. 

 

Extra Credit

Also a interesting note is that it is not a tax deduction but a tax credit. Meaning, for example if your total credit ends up being the whole $8,000 and your tax liability is $2,000 you will actually receive a $6,000 check from the government. It is also my understand that in order to receive the credit one would have to fill out a tax form or two, but you will have to talk to your tax advisor or CPA in order to find out exactly which one.

 

Will It Help?

I hope this helps to push the “one the fence” home buyers into purchasing a home, but in all honesty I do not see this alone turning the housing market around. It seems to me that we do need to make sure that every eligible person takes advantage of this, this way they can spend their credit or refund on purchasing things for that home, thus stimulating the economy some.

What do I think?

I was recently asked to state my opinion of the current administration and leaders in congress. This should sum it up nicely. Feel free to disagree. Please note, all of the people involved are still currently holding their positions in office, and as always, these views are that of my own, and do not represent the views of any institution, group and affiliation that I am a part of.

Stock Market Crash of 2008

Show Me The Money

$34,000: the amount of federal taxes that Secretary of the Treasury Timothy Geithner (D) failed to pay during his employment at the International Monetary Fund despite receiving extra compensation and explanatory brochures that described his tax liabilities.

$75,000: the amount of money that the head of the powerful tax-writing committee, Rep. Charlie Rangel (D-NY), was forced to report on his taxes after the discovery that he had not reported income from a Costa Rican rental property. His excuses for the failure started with blaming his wife, then his accountant and finally the fact that he didn’t speak Spanish.

$93,000: the amount of petty cash each Congressional representative voted to give themselves in January 2009 during the height of an economic meltdown.

$133,900: the amount Fannie Mae “invested” in Chris Dodd (D-CT), head of the powerful Senate Banking Committee, presumably to repel oversight of the GSE prior to its meltdown. Said meltdown helped touch off the current economic crisis. In only a few years time, Fannie also “invested” over $105,000 in then-Senator Barack Obama.

$140,000: the amount of back taxes and interest that Cabinet nominee Tom Daschle (D) was forced to cough up after the vetting process revealed significant, unexplained tax liabilities.

$356,000: the approximate amount of income and deductions that Daschle (D) was forced to report on his amended 2005 and 2007 tax returns after being caught cheating on his taxes. This includes $255,256 for the use of a car service, $83,333 in unreported income, and $14,963 in charitable contributions.

$800,000: the amount of “sweetheart” mortgages Senate Banking Chairman Chris Dodd (D-CT) received from Countrywide Financial, the details for which he has refused to release details despite months of promises to do so. Countrywide was once the nation’s largest mortgage lender and linked to Government-Sponsored Entities like Fannie Mae and Freddie Mac. Their meltdown precipitated the current financial crisis. Countrywide was forced to pay $150,000,000 in mortgage assistance following “a state investigation that concluded that Countrywide relaxed its underwriting standards to sell risky loans to consumers who did not understand them and could not afford them.”

$1,000,000: the estimated amount of donations by Denise Rich, wife of fugitive Marc Rich, to Democrat interests and the William J. Clinton Foundation in an apparent quid pro quo deal that resulted in a pardon for Mr. Rich. The pardon was reviewed and blessed by Obamas Attorney General and then Deputy AG Eric Holder, despite numerous requests by government officials to turn it down.

$12,000,000: the amount of TARP money provided to community bank One United despite the fact that it did not qualify for funds, and was “under attack from its regulators for allegations of poor lending practices and executive-pay abuses.” It turns out that Rep. Maxine Waters (D-CA), a key contributor to the Fannie Mae meltdown, just happens to be married to one of the bank’s ex-directors.

$23,500,000: The upper range of net worth Rep. Allan Mollohan (D-WV) accumulated in four years time according to The Washington Post through earmarks of “tens of millions of dollars to groups associated with his own business partners.”

$2,000,000,000: ($2 billion) the approximate amount of money that House Appropriations Chairman David Obey (D-WI) is earmarking related to his son’s lobbying efforts. Craig Obey is “a top lobbyist for the nonprofit group” that would receive a roughly $2 billion component of the “Stimulus” package.

$3,700,000,000: ($3.7 billion) not to be outdone, this is the estimated value of various defense contracts awarded to a company controlled by the husband of Rep. Diane Feinstein (D-CA). Despite an obvious conflict-of-interest as “a member of the Military Construction Appropriations subcommittee, Sen. Feinstein voted for appropriations worth billions to her husband’s firms.”

$4,190,000,000: ($4.19 billion) the amount of money in the so-called “Stimulus” package devoted to fraudulent voter registration ACORN group under the auspices of “Community Stabilization Activities”. ACORN is currently the subject of a RICO suit in Ohio.

$1,646,000,000,000 ($1.646 trillion): the approximate amount of annual United States exports endangered by the “Stimulus” package, which provides a “Buy American” stricture. According to international trade experts, a “US-EU trade war looms”, which could result in a worldwide economic depression reminiscent of that touched off by the protectionist Smoot-Hawley Act.

Georgia On My Mind

But Why?

This might not be the most popular position, but I think the main problem with todays economy is that politicians, not economist run this country, and of course those people will do, and say, anything to get re-elected. As soon as they get chosen to be a representative, 2 weeks later they are running a re-election campaign. These people do not care what we really want, they know what people want to hear and how to play the numbers to get the majority of the vote. We have forgotten what was originally the idea of our government. It was supposed to be a group of people going up to Washington to represent the views of their respective communities and fight for their interest. It has become a group of elite lawyers trying to figure out how to stay in the office the longest and who to mingle with to get a promotion.
Now you decide, tell me what you think by leaving a comment or sending me a message via the contact pages, I would to hear more opinions.

Sales Soar at Chick-fil-A

Winner Winner Chicken Dinner

The privately held Atlanta corporation recorded a 12.17% increase in sales from 2007, making their total sales for the 2008 year $2.96 billion dollars. Dan T. Cathy, President and Chief Operating Officer, said that the company is by no means immune to the economic downturn, but that he believes that if they stay true to the principles that have guided the company for the past 6 decades: “providing exceptional customer service and unmatched product quality to every customer on every visit.”, they will continue to grow strong even in the toughest of times.

From SEC to M.B.A

This is wonderful news. This company does so much for the Metro Atlanta area, not only providing great food along with great service, but sponsoring everything from the SEC and the Chick-fil-A Bowl to local high school bands and programs. They are also really big on helping young people with education, which is arguably, the fundamental stone to economic development and stability in a community.

Will Work For Chicken

Another reason this is good to hear, is that because maybe the fact that Chick-fil-A plans on opening 76 new locations in 2009 and remodeling 65 others will help the struggling Georgia economy and unemployment. At the time of this post Georgia was tied for 10th place with Florida for the worst unemployment percentage at 8.1%. The unenvied number one spot is held by Michigan at 10.6% while the least amount of unemployed people reside in Wyoming, giving it an unemployment rate of 3.4%.

I have been a big Chick-fil-A supported for as long as I can remember, and this just goes to show that people value when a company does business the right way.