Sound Mortgage Planning Blog

…it’s not all bad news though…

According to the summary of the compromise bill released by lawmakers Thursday, the tax credit will still be available only to first-time homebuyers—those who have not owned a primary residence within the last three years.

Refundable First-time Home Buyer Credit. The bill eliminates the repayment obligation for taxpayers that purchase homes after January 1, 2009, increases the maximum value of the credit to $8,000, and removes the prohibition on financing by mortgage revenue bonds, and extends the availability of the credit for homes purchased before December 1, 2009. The provision would retain the credit recapture if the house is sold within three years of purchase. The full credit is available to those making $75,000 or less ($150,000 for joint filers).

It is Saturday and I was just going through my past emails and I was reminded of an item of interest that was discussed late last week.

One of the greatest gifts a first-time homebuyer can receive is the gift of funds from a family member to assist with purchasing their new home. Every time I come across a client that is receiving gift funds I feel very happy for them knowing that they have family members that are there to help. As great as this is, both the person gifting the funds and the person receiving the gift must be aware of potential tax exposure.

It's tax season once again and April 15th will be here before you know it. An item that bears reminding is the Gift Tax. Here's why:

According to a local CPA firm here in Lacey, you must file Form 709, U.S. Gift (and Generation-Skipping Transfer) Tax Return, if:

• Gifts you give to another person (other than your spouse) exceed the annual gift tax exclusion of $13,000 during 2009 or $12,000 during 2008
• The maximum tax is 45 percent

One item that stuck out during our email conversation was the fact that if the person giving the gift fails to file Form 709, the tax payer receiving the gift will then be responsible for the tax on the gift received.

This is not to discourage people from giving or asking for gift funds, but it should serve as a reminder to include this when filing this year.

As always, I am available 7-days a week! Call me if you want to become pre-approved or you just need to ask a question.

Have a great weekend!

Shawn

For more information regarding this topic please see IRS Instructions Page for Form 709.

Shawn Anderson is a mortgage loan officer and does not provide tax-related or legal counseling. Because information provided in this blog entry is in summary form, it should only be relied upon for tax planning decisions after obtaining appropriate accounting, tax and/or legal advice. You are encouraged to submit inquiries to the professional staff at Strader-Hallett & Co., P.S., Certified Public Accountants.

It may be hard to digest all of the news around Senator Isakson’s amendment to the pending economic stimulus package. I’m here to help!

Here are the highlights of the $15,000 Home Buying Tax Credit

· Homeowners that recently purchased their new home may be wondering if they will be able to take advantage of the tax credit that is now before the Senate. The short answer is no. The effective date of the amendment is the date of the enactment. So if they have already completed the purchase of their new home, they will not be qualified for the new program.

· Once the new amendment is enacted, the current $7,500 credit will no longer be given because it will be replaced with the $15,000 tax incentive.

· While the $7,500 first-time home buyer credit was to be paid back, the new $15,000 tax credit does not need to be paid back!

· The tax credit is limited to primary residences and does not come with an income restriction. It applies to any home, meaning a condo, a house, foreclosed, new, or previously owned.

· You CAN take the credit during tax year 2008! Even if you buy a home in 2009, the provision would enable you to file your taxes as if you purchased your home on December 31 of 2008.

· The credit is based on 10% of the purchase price of the home and the credit is spread over two years. So if you bought a home for $300,000, you would qualify for the maximum credit of $15,000. The first year you claim the credit, you receive $7,500, and you would receive the remaining $7.500 the next year.

The President wants a finished product by February 16, 2009! So expect to see this happen quickly!