Last week, the Homebuyer Tax Credit extension and expansion passed the U.S. House and Senate and was signed by the President. The newly enacted legislation is an important step toward boosting the housing market and economic recovery.
Below are frequently asked questions provided by the National Association of REALTORS® about the new Homebuyer Tax credit extension and expansion:
Question: Existing homeowner credit: Must the new house cost more than the old house?
Answer: No. Thus, for example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6500 credit.
Question: I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a new home. I have lived in my current home for more than 5 consecutive years and am within the new income limits. I will go to settlement on November 20. If President Obama has signed the bill by the time I go to settlement, will I qualify for the new $6500 tax credit?
Answer: Yes. The existing homeowner credit goes into effect for purchases after the date of enactment (when the bill is signed). There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.
Question: I am a first time homebuyer but was not within the prior income limits at the time I entered into my contract to purchase on October 30, 2009. I will be covered, however, by the new income limits. If the new rules have been signed into law by the time I go to settlement, will I be eligible for a credit?
Answer: Yes. The new income limitations go into effect as soon as the President has signed the bill. The income limit and other eligibility rules will look to your status as of the date of purchase, which is the settlement date. So if the new rules have been signed when you go to settlement, you should be eligible for the credit (or a portion of the credit if you're within the phase-out range).
Question: I am an eligible existing homeowner. I have a fair amount of equity in my home. I have found a home with a nonnegotiable price of $825,000. Will I be able to use any of the $6500 tax credit?
Answer: No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amount above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an absolute ceiling.
Question: I owned my home for 10 years, but sold it two years ago year and have been renting since. If I purchase a home, will I be eligible for the $6500 tax credit if I meet all the other eligibility tests?
Answer: Yes. Because you lived in the home for more than 5 consecutive years of the previous 8, you will qualify for the $6500 credit. For example, Say John and his wife bought a home in 2000 and lived there until 2008 when he got a divorce. Whether John has been renting or bought in the interim, he WOULD INDEED be eligible for the credit because he owned a home and occupied it as his principal residence for 5 consecutive years out of the last 8 years. The keyword here is "consecutive." As long as he lived in that house for 5 years straight what he did since 3 years doesn't impact eligibility.
Question: I am an eligible first-time homebuyer. I entered into a contract to purchase on November 1, 2009. Do I have to go to closing before December 1? How does the extension date affect me?
Answer: You do not have to close before December 1. Once the legislation has been signed, it will be as if the Nov 30 date had never existed. Therefore, so long as the contract settles before April 30 (or July 1, worst case), the purchaser will be eligible for the credit
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Mark your calendar today to attend Achieve, 2010. This event, created specifically for current and upcoming association leaders, takes place January 21-22 at the Westin Book Cadillac, where legendary design and glamour have returned to Detroit with the completion of an unprecedented $200 million hotel restoration. The impressive speaker line-up features Marcus Wally, Chris Newman, Greg McClelland and Gail Anderson, among others.
New this year – Achieve After Dark, a celebration of MAR 2010 President Bob Taylor and his leadership team. After Dark, included in your registration fee, offers you an opportunity to make valuable contacts with leading REALTORS who make a difference in Michigan’s real estate industry all the while enjoying scrumptious food and beverages.
During a special RPAC Awards Lunch, also included in your registration fee, you’ll celebrate local association and individual contributions to RPAC.
Get ahead of your peers in 2010, attend Achieve on Jan 21 – 22. The Westin Book Cadillac has reclaimed its position as Detroit’s premier lodging and social gathering destination – join us for this program and you will claim your position as one of real estate’s premier REALTORS and association leaders.
Registration for Achieve Opens Tuesday, November 17.
Additional information will be coming soon at the MAR
Web site.
With the help of McClelland & Anderson, we are taking the most commonly asked questions from our legal hotline and putting them in E-news. We will be featuring a different question each issue.
QUESTION: I am a REALTOR® representing two brothers who are selling property they own as joint tenants. They both have wives. Do their wives have to sign the deed?
ANSWER: NO. A wife has no dower right in lands owned by her husband and another person as joint tenants.
With a majority of home buyers looking at listings online, you would be wise to use top-quality photos in your listings. Don't make the mistake of taking pictures of rooms without enough light, failing to focus on the room itself, or snapping photos of rooms that have not been cleaned.
Dennis Huckaby, an architectural photographer in Blaine, Wash., says, "Real estate agents can't sell something to (consumers) who (don't contact) him because they didn't like the pictures."
To show homes in the best light, experts say you should spruce them up slightly: remove clutter and position some flowers or fruit bowls on bare countertops, for instance.
Avoid using cell-phone cameras, turn on the lights rather than use the flash, and be careful when photographing bathrooms to avoid glare from the mirror.
Other tips:
Skip photos of children's bedrooms because these are typically the most basic rooms with the least amount of interesting architectural features. This is particularly important if your MLS limits the number of photos you can include.
Go ahead and snap photos of foreclosed properties, even if they need a lot of work. It presents an honest view of the house, but just as importantly, it will still have unique and interesting characteristics that can be showcased.
"Even if it's got warts, there's a place to stand where you can make an interesting, attractive image," says Huckaby.
Source: Inman News, Mary Umberger (11/04/09)
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