Homebuyer Tax Credit Extended!

Great news for homebuyers! Congress voted to extend the $8,000 tax credit for first-time homebuyers, which was initially slated to expire on November 30, 2009. Not only that, Congress expanded the credit to existing homeowners -- if you are an existing homeowner, you can qualify for a credit of up to $6,500 if you buy a new home.

In order to qualify for the first-time buyers credit, you must not have owned a home in the last three years. For the existing homebuyer credit, you must have owned your home for at least the last five years. To qualify for either credit, you must sign a purchase contract by April 30, 2010, and close by June 30, 2010. Furthermore, the home must be your principal residence, and must cost less than $800,000. Vacation homes are ineligible for the credit.

If you are single and earn less than $125,000, you are eligible for the full credit of $8,000 (for first-time buyers) or $6,500 (for current homeowners). The credit starts to phase out above an income level of $125,000. If you are married, the credit starts to phase out over $225,000 in joint income. Note that the value of the home must be at least $80,000 for you to receive the $8,000 tax first-time homebuyer tax credit, and the value of the home must be at least $65,000 for you to receive the $6,500 existing homeowner tax credit. If the value of the home is less than that, you can get up to ten percent of the value of the home. I.e. if you buy a home for $43,000, you are only eligible for a credit of up to $4,300.

If you qualify and have already filed your 2008 tax return, you can amend it and receive an immediate credit. If not, you can file the credit with your 2009 tax return, or, if you close after 2009 taxes are due, you can amend your 2009 tax return. The credit is a straight credit -- i.e. if you file your taxes and don't owe any money, the goverment will actually send you a check for $8,000 (if you are a first-time buyer and otherwise qualify).

Will these credits stimulate real estate sales? Maybe, maybe not. Some say they do, some say they don't -- what really happens remains to be seen!

Illinois Condominium Property Act and FHA Financing

The Department of Housing and Urban Development (HUD) did not allow FHA financing for condominiums which were part of an association that had a "right of first refusal" in their condominium declaration. Effective November 2, 2009, however, HUD will allow FHA financing for condominiums in associations that have a right of first refusal on their books, so long as the association otherwise meets HUD's eligibility requirements.

In order to assist potential buyers of such condominiums, the Illinois legislature has amended the Illinois Condominium Property Act to clearly state that no association may exercise its right of first refusal just because the buyer is obtaining FHA financing. These new laws are, of course, good news for many condominium buyers who seek to take advantage of the FHA's low down payment requirements!