$8k first time home buyers...

[Jacklynn]

So I'm sure you have all heard about the 8 grand going to first time home buyers if they buy their house this year. Well the night before last on our local news they said that starting July 1st you can actually access the money now instead of in the spring when you file taxes, and use it as a downpayment.

I've tried finding some info about it online, but I am not finding anything solid. I have read some things that say it is only for FHA loans (well most things I read say this). Some say that you still have to pay 3.5% down outside of the 8 grand. Some say you can use the 8 grand towards closing and you don't have to pay anything for a down payment outside of the 8 grand.

I'm not sure if this is just a local thing or national thing (we live in Florida). We are looking to buy a house around September, and this would help a lot, because it would be lower monthly payments. BUT as first time buyers, we might need to take advantage of a loan that doesn't require any down payment. I'm not sure if we can come up with 3.5% that quickly. So if we would still have to pay down 3.5% we might just have to wait to get the 8k check in the spring.

Have any of you heard of this yet?

[Ninedays9]

I haven't heard anything about it, but that would be awesome. We have to move pretty quickly (again!!), and we really would like for it to be into our own house. I wonder if we could ask about it at the bank...

[flyerso6]

I could be wrong, but I believe the down payment amount etc. depends on the bank and the type of loan. I don't think the 8,000 credit has anything to do with the down payment percentage. Depending on the closeing cost amount you can roll it into your loan by paying the seller x amount more than the agreed house amount and having them pay x amount of closing cost. In reality you are paying the closing cost but its in your loan and you don't have to come up with that amount at closing (if the seller agrees to that).

That is what we did and it worked out pretty well. We also only had 1% down payment and had to pay a little extra closing cost since you won't know the exact amount until closer to closing. This was in 2007 though and in Ohio, with no 8,000 tax credit. :-(

[Jacklynn]

I found a link :) This is on the HUD website: http://www.hud.gov/news/release.cfm?content=pr09-072.cfm

Today's announcement details FHA's rules allowing state Housing Finance Agencies and certain non-profits to "monetize" up to the full amount of the tax credit (depending on the amount of the mortgage) so that borrowers can immediately apply the funds toward their down payments.

So there are of course stipulations. It does need to be an FHA loan

Currently, borrowers applying for an FHA-insured mortgage are required to make a minimum 3.5 percent downpayment on the purchase of their home. Current law does not permit approved lenders to monetize the tax credit to meet the required 3.5 percent minimum down payment, but, under the terms of today's announcement, lenders can now monetize the tax credit for use as additional down payment, or for other closing costs, which can help achieve a lower interest rate.

And you do still have to have 3.5% yourself it looks like. Depending on the price of home we look at we MAY be able to get 3.5% down, but only if we can get approved for a loan without putting that cash that we will have towards paying off some credit card debt.

So we will probably be going to our bank sometime in August and asking them if we can get approved without putting the cash we will have towards our credit cards. If we can't get approved without paying off some credit card debt then we won't be able to use the 8k as a down payment because we would then not have the 3.5% if that makes any sense at all :)

[Goin2thechapel]

Be careful with this tax 'credit'...It'a EXACTLY that, a CREDIT!!! Our accountant told us that the 8K will be paid back...He said it's VERY sneaky with what the white hosue is doing. They're not telling people that it will be garnished out of thier yearly income taxes.

[Ninedays9]

Be careful with this tax 'credit'...It'a EXACTLY that, a CREDIT!!! Our accountant told us that the 8K will be paid back...He said it's VERY sneaky with what the white hosue is doing. They're not telling people that it will be garnished out of thier yearly income taxes.

Ahh, I wondered how they could do it... I know pretty much nothing about all this, so it's good that FH is a quite a bit better informed than I am. I'm wondering if it could still be worth it if it could get us a house, even if we do get less back or have to pay some in taxes... Hmmm...

[Jacklynn]

Be careful with this tax 'credit'...It'a EXACTLY that, a CREDIT!!! Our accountant told us that the 8K will be paid back...He said it's VERY sneaky with what the white hosue is doing. They're not telling people that it will be garnished out of thier yearly income taxes.

http://www.irs.gov/newsroom/article/0,,id=204671,00.html this says that it doesn't have to be paid back.... so I'm confused by your accountant. He says that if you get the credit they will take it out of your paycheck?

For home purchased in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer's main residence within a three-year period following the purchase.

[~MrsTyson~]

I think what her accountant was trying to get across was that you do NOT just receive an extra $8,000 in cash. Since it is a tax credit it is simply reducing the amount of your taxes owed by this much..so it comes out of your yearly taxes in that way.

So lets say your a married taxpayer filing jointly and you make $100,000 a year. Your tax rate is $8,962.50 + (25% of the amout over $65,100). That gives you a total tax of approx. $17,687.50. The tax credit will reduce your tax amount by $8,000, leaving you with $9,687.50 in taxes owed.

[Jacklynn]

So then I wonder why they wouldn't call it a deduction? I guess I am just mixing up the terms deduction and credit.

[~MrsTyson~]

A tax credit is a direct reduction of the income tax liability, in such that they are treated as "prepayments". A tax credit is more valuable, in most cases, than a deduction of an equal amount, because the credit is a dollar for dollar reduction. A deduction on the other will be reduced by your tax rate, then deducted.

So like my example above, if you received an $8,000 deduction and your marginal tax rate is 25%, then you really only get a ($8,000 x 25%) $2,000 deduction of your taxable income.

BTW..I tried to add to my last post, that I have not read up on this particular topic, but the above is generally true.

[~MrsTyson~]

just found this.

Here's a great website with a lot of answers about the housing credit. I hope it helps.

http://www.federalhousingtaxcredit.com/2009/faq.php#17

[~MrsTyson~]

[quote=~MrsTyson~;414384]

So like my example above, if you received an $8,000 deduction and your marginal tax rate is 25%, then you really only get a ($8,000 x 25%) $2,000 deduction of your taxable income.quote]

Sorry what I meant was the deduction will be reduced by $2,000. so a deduction would be $6,000.

[MrsDM]

Well I'm not sure about all the tax stuff and the rates(I'm horrible with that stuff), but I took the credit this year (FH and I bought in March). He already owned, but I didn't, so I received $4000. Now, had we been married, in the same situation I wouldn't have gotten anything because his old house would have been considered marital property.

I can tell you this. I amended my tax returns early April and added on the credit. About 8 weeks later, I received a check in the mail for $4,000. It worked out great for us because we were able to put it towards the wedding. Although, it also would have been great to use it as a down payment for the house!

[lilmsjess]

TMK it's supposed to be up to 10% of the selling price....idk about the 8k thing...but it was up to 15k(actually 10% 6 to 15k)....and it only applies to persons with total income less than something like 150k....i could be wrong.....

also, from what our old loan processor says, it's deducted starting the 2nd year after you buy the house, at $500/yr, for however many years it takes to pay back what you got....

either way, our returns are not less than $10k anyways, so 500 a year, or even a grand or 2, wouldn't worry us, b/c we're used to $1800-2200 returns...at first, he kept asking whats the point, they take 500! and i made him see that 500 a year, isn't really that bad, when you took into consideration of our return amount.....

i need to read the links you ladies posted...we're going to start buying in december, so that we can use our tax return for the DP, and also get the credit as well(but i'm assuming we'd have to amend 2009 return, who knows lol)....

good luck!

[~MrsTyson~]

TMK it's supposed to be up to 10% of the selling price....idk about the 8k thing...but it was up to 15k(actually 10% 6 to 15k)....and it only applies to persons with total income less than something like 150k....i could be wrong.....

also, from what our old loan processor says, it's deducted starting the 2nd year after you buy the house, at $500/yr, for however many years it takes to pay back what you got....

!

Yes, it is 10% of the homes purchase price. I did hear that they were going to raise it to up to 15k, but I never heard that it was finalized yet. ??

Also, I think your lender has this credit confused with the 2008 stimulus, which is here: http://ezinearticles.com/?2008-Housing-Stimulus-Legislation---First-Time-Home-Buyer-Tax-Credit&id=1385468

....and who the heck is your tax guy, cuz I could so use a 10k return! lol :)

[lilmsjess]

....and who the heck is your tax guy, cuz I could so use a 10k return! lol :)


*your's truly* :chimp:

up until last year, we got the savers credit, but fh now makes more than 50k or 60k(somewhere in there, it prohibits us from deducting his 401k deductions).....

soooo, he usually makes right at 81k a year, so he pays in about 16k in fed, so we get back about half of that, plus i deduct our previous years income tax preparation fees, vehicle registration fees, we get the child credit, hhhmmmm....pm me if you want more info...there's SO much out there, that big name companies don't tell you....i worked for liberty tax, and we got paid per form used, and so my boss taught us every single page that can be used(legally of course:winktongue:).....

seriously, if anyone needs help finding forms for things to deduct pm me....deductions people don't normally itemize:
tolls
hospital parking fees
vehicle registration/taxes paid when a used car is purchased for cash
meals that you pay for, on behalf of your company that you don't get reimbursed for.....



another thing(and i SO coulda smacked the sh*t outta H&R block for this)BUT, if your state recognizes "common law marriages" and you're comfortable with your partner enough to do this, you CAN file "married filing joint".....H&R block told us that we CANNOT, and put me as a DEPENDANT, which they are NOT allowed to do! SO, one day, i need to redo our 2007 taxes and amend them to MFJ...they put me as a dependant, but i am not a student, fh does not provide paid for care for me, etc.....