Texas Real Estate Blog

FIRST-TIME HOMEBUYER TAX CREDIT
Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser’s income tax liability. The one major difference is the fact that repayment of the credit will no longer be required. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser. Below are the principle pieces of the tax credit.

Amount of Credit - Maximum credit amount increased to $8000.

Eligible Property - Any single family residence that will be used as a principal residence.

Refundable - Reduces (or can eliminate) income tax liability for the year of purchase. Any unused amount of tax credit refunded to purchaser.

Income Limit - Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000).

First-time Homebuyer Only - Purchaser (and purchaser’s spouse) may not have owned a principal residence in 3 years previous to purchase.

Revenue Bond Financing - Purchasers who utilize revenue bond financing can also use this credit.

Repayment - No repayment for purchases on or after January 1, 2009 and before December 1, 2009.

Recapture - If home is sold within three years of purchase, entire amount of credit is recaptured on sale. Applies only to homes purchased in 2009.

Termination - December 1, 2009

Effective Date - All revisions are effective as of January 1, 2009

Neighborhood Stabilization
The bill provides $2 billion in additional funding for the Neighborhood Stabilization Program to provide grants to states and localities to address the problems created when entire neighborhoods are decimated by foreclosures.

Use of Funds - The funds can be used to purchase, manage, repair and resell foreclosed and abandoned properties. In addition, the funds can also be used by states and localities to establish financing methods for the purchase and redevelopment of foreclosed properties.

Who Qualifies - After purchase the homes must be used to assist individuals and families with incomes at or below 120% of area median income. Twenty-five percent of funds must be used for households with incomes at or below 50% of area median income. (HUD posts the D/FW area median income at $64,800)

FHA, Fannie Mae and Freddie Mac Loan Limits
The bill reinstates last year's 2008 loan limits for FHA, Freddie Mac, and Fannie Mae loans.

North Texas Loan Limits - In North Texas these limits are $271,050 for FHA and $417,000 for Fannie Mae and Freddie Mac.

Low Income Housing Grants

Use of Funds - Allow states to trade in a portion of their 2009 low-income housing tax credits for Treasury grants to finance the construction or acquisition and rehabilitation of low-income housing, including those with or without tax credit allocations.

Energy Efficient Housing Tax Credits & Grants

Use of Funds - The bill provides state and local governments with $6 billion in energy efficiency and conservation grants for energy audits, retrofits and financial incentives.

Through 2010, homeowners will be able to claim a 30% tax credit (up from 10%) for purchases of new furnaces, windows and insulation.

There is also $5 billion for weatherization assistance for low income households and $2 billion for federally assisted housing (section 8) efficiency efforts.