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Our local CPA, Larry Harrison has offered an update to the Home-Buying Credit which was recently updated and passed through Congress.  See details below:

Tax Credit for First-time Homebuyers

Congress created a temporary new federal income tax credit for so-called first-time homebuyers. The maximum credit equals the lesser of: (1) 10% of the purchase price of a principal residence or (2) $8,000 (or $4,000 for those who use married filing separate status). The credit is refundable, which means it can be used to offset your entire federal income tax liability with any remaining credit refunded to you. However, you are only eligible if you have not owned a principal residence in the U.S. during the three-year period that ends on the purchase date. According to Congress, this makes you a first-time homebuyer.

The credit is generally available for principal residence purchases after 4/8/08 and before 12/1/09. For a newly constructed home, the purchase date is considered to be the date you move in. However, if you purchase a residence from your spouse, ancestor (parent, grandparent, and so on), lineal descendant (child, grandchild, and so on), or certain other related parties, you will be ineligible for the credit.

If you make a qualified home purchase in 2009 (before the 12/1/09 deadline), you can choose to treat the transaction as if it happened in 2008 and get your credit sooner by claiming it on your 2008 Form 1040.

Phased-out Rule Affects More-prosperous Individuals. The credit is phased-out or completely eliminated if your adjusted gross income (AGI) is too high. The phase-out range for unmarried individuals and married individuals who file separately is between AGI of $75,000 and $95,000. The phase-out range for married joint filers is between AGI of $150,000 and $170,000.

Purchases between 4/8/08 and 12/31/08 - Credit Must Be Repaid. Strangely enough, the new credit is really just a loan from the government. You must repay it (without interest) over 15 years starting with the second year after the year the credit is claimed on your Form 1040. Each year’s repayment will be added to the tax bill shown on your Form 1040 for that year.

In addition, if you sell the home or stop using it as your principal residence before the credit has been repaid, an accelerated repayment rule may apply. If so, the unpaid credit balance must be paid with your Form 1040 for the year when the triggering event occurs

Purchases between 1/1/09 and 12/1/09 – Credit Does Not have to be Repaid.

However, if you sell the home or stop using it as your principal residence within 36 months from the date of purchase, a repayment rule may apply. If so, the original credit must be paid with your Form 1040 for the year when the triggering event occurs.

For further Information please contact Larry Harrison at:

Larry N. Harrison & Co., CPAs
3101 Bee Caves Road, Suite 306
Austin, Texas 78746
"Our mission is helping clients identify and achieve their life goals"
Phone: 512-328-2046    Toll Free:  800-569-1527     Fax:  512-328-3927
www.harrisoncpa.com

On a personal note:  If buying a home is a goal of yours in the next 6 to 8 months, please contact me for further assistance.  Plus, ask your local CPA to see if you would qualify for this tax credit OR give Larry Harrison a call at the above number.  This could be a great opportunity to take advantage of - on your first home purchase!

Sincerely,

Darcie Shannon, REALTOR

Realm Real Estate Professionals

512-944-0485 (direct)

2009 ABOR Professional Development & Education Committee Member

A local Austin CPA, Larry N. Harrison wrote the following article for us regarding the Tax Credit for First-Time Homebuyers:

In 2008, Congress created a temporary new federal income tax credit for so-called first-time homebuyers. The maximum credit equals the lesser of: (1) 10% of the purchase price of a principal residence or (2) $7,500 (or $3,750 for those who use married filing separate status). The credit is refundable, which means it can be used to offset your entire federal income tax liability with any remaining credit refunded to you. However, you are only eligible if you have not owned a principal residence in the U.S. during the three-year period that ends on the purchase date. According to Congress, this makes you a first-time homebuyer.

The credit is generally available for principal residence purchases after 4/8/08 and before 7/1/09. For a newly constructed home, the purchase date is considered to be the date you move in. However, if you purchase a residence from your spouse, ancestor (parent, grandparent, and so on), lineal descendant (child, grandchild, and so on), or certain other related parties, you will be ineligible for the credit.

If you make a qualified home purchase in 2009 (before the 7/1/09 deadline), you can choose to treat the transaction as if it happened in 2008 and get your credit sooner by claiming it on your 2008 Form 1040.

Phased-out Rule Affects More-prosperous Individuals. The credit is phased-out or completely eliminated if your adjusted gross income (AGI) is too high. The phase-out range for unmarried individuals and married individuals who file separately is between AGI of $75,000 and $95,000. The phase-out range for married joint filers is between AGI of $150,000 and $170,000.

Credit Must Be Repaid. Strangely enough, the new credit is really just a loan from the government. You must repay it (without interest) over 15 years starting with the second year after the year the credit is claimed on your Form 1040. Each year’s repayment will be added to the tax bill shown on your Form 1040 for that year.

In addition, if you sell the home or stop using it as your principal residence before the credit has been repaid, an accelerated repayment rule may apply. If so, the unpaid credit balance must be paid with your Form 1040 for the year when the triggering event occurs.

For further Information please contact Larry Harrison at:

Larry N. Harrison & Co., CPAs
3101 Bee Caves Road, Suite 306
Austin, Texas 78746
"Our mission is helping clients identify and achieve their life goals"
Phone: 512-328-2046    Toll Free:  800-569-1527     Fax:  512-328-3927
www.harrisoncpa.com

On a personal note:  I have clients who plan on staying in their newly purchased home and using this "credit" to pay-off high interest rate credit cards by taking advantage of the 0% interest offered by the government.  This tax credit can be a useful tool for your financial plan, if buying a new home in the next six months.  However, everyone's financial plan is different - I strongly suggest getting the advice of a local CPA to determine if this is strategy you should consider.  If you need a CPA, give Larry Harrison a call - he and his staff are very helpful.

Sincerely,

Darcie Shannon, REALTOR

REALM Real Estate Professionals

512.944.0485 (direct)

darcie@darcieshannon.com

Darcie Shannon has been chosen to serve on Austin Board of Realtors (ABOR) for Professional Development and Education Committee in 2009.

This is a wonderful opportunity to contribute to ABOR and the real estate community with Darcie's extensive background in Commercial and Residential Real Estate.

Note from Darcie:

I'm very excited to be chosen to serve our Austin real estate community.  I look forward to the opportunity.

Happy Holidays to you and your family and a safe and healthy New Year!

Austin voters Tuesday defeated a very controversial item on the local ballot.  Proposition 2 would have banned tax incentives for retail projects like the Domain in North Austin. 

City leaders say the defeat means the city will not have to terminate two existing commitments made with the developers of the Mueller neighborhood in Central East Austin and the Domain.

Update on the Development at the Domain:

Phase II of the Domain construction Continues

A 600,000-sf Phase II expansion of The Domain continues by Simon Property Group. The expansion will include Dillard's, a Village Road Show theater, Dick's Sporting Goods, 136,000 sf of small shops and restaurants and 78,000 sf of office space. Restaurant offerings at Domain II will include Maggiano's and BJ's Restaurant and Brewhouse. Simon owns 100 percent of the project, slated for an opening in November 2009. A Westin hotel is under construction at The Domain. The 340-room hotel is scheduled to open in March 2010. Simon owns a 50 percent interest in the project.

To find out more about the domain click here

Quick note from Darcie:

If you are in the mood to get some exercise and support a local nonprofit this holiday season - check out this website - http://www.maddjinglebell5k.com/.  Mother's Against Drunk Driving (MADD) is hosting its annual Jingle Bell 5K at the Domain this year. 

Okay, so we've determined it is a GOOD time to buy because it is a buyers market in the Austin Area.  However, everyone keeps asking "Can I still get a home loan?"  The answer is Yes.  Check out this blog for detailed information about current loans - Click Here

Obviously, the answer isn't always Yes for everyone.  Some people may not have enough money to buy right now OR maybe they need some credit repair first.  So, what is the next step?  I always suggest to my clients that they find a loan officer that can help them put a plan together so in 6 months, 12 months, etc - they can buy a home and be fully prepared!  Most loan officers will be able to quickly identify where the work needs to be done and put a plan together.  If you need a loan officer that you can trust - feel free to give me a call and I'd be happy to refer you to a few that I work with.

Feel free to contact me with any questions.

Darcie Shannon * 512.944.0485 (direct)

Everyone is asking this question now with the markets in flux.  Well, despite all of the national headlines, property values in The Austin and Central Texas market - continue to gain in value (though sales have slowed).  Click here for the full article

Plus, a third party entity called The PMI Group has recently ranked the four major Texas cities as the "least likely to decline in value in the coming year" with less than 1% chance of decline.  Click here for the full article

That being said, there are deals out there to be made - everyday, I get emails with price reductions from homes that were overpriced.  Plus, the interest rates are low, the 30-year FHA rate dropped below 6% last week.  If you are a first time home buyer - all the signs suggest it is a buyer's market today and would be a good time to purchase your first home! 

Darcie

512.944.0485 (direct)