photo courtesy of RogueSun Media
The hottest topic on Earth.
The First Time Home Buyer Tax Credit is perhaps one of the most talked about, blogged about, interpreted, and (unfortunately) misinterpreted topics in the real estate community of the last few months. And for good reason too. Allowing first time home buyers the opportunity for a little help from the IRS in the form of a refundable tax credit was thought of as a way to get buyers "on the fence" to move and start buying up some of the accumulated inventory available after the housing markets troubles.
I have written extensively on the topic over at RErockstar.com, so I thought I might post the "compendium" of posts here, so that you, my ActiveRain readers, might see just how intricate the topic has been. The posts appear in the order I have written them, so please be sure to read through them all the way up to the end, as with each post, some of the information has changed.
First Time Home Buyer Tax Credit
Questions About The First Time Home Buyer Tax Credit
More Answers To Your First Time Home Buyer Tax Credit Questions
First Time Home Buyer Tax Credit As A Down Payment?
Hope you find these posts useful.
There are also many great posts here at ActiveRain on the subject - check out Jeff Belonger and Ken Cook for two people I consider to be experts on the issue.
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Matt Stigliano, Realtor® | (210) 646-HOME | www.RErockstar.com
"Your all access pass to San Antonio real estate."
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Matt - Great summary of the entire issue. As someone who works with low-medium income buyers, coming up with the required down-payment can be a challenge for many. From the day that the first time buyers credit was issued earlier this year, I have advised my clients to speak with their tax specialists about adjusting their W4 withholdings so that they can take home more money and start putting away more for down payment and closing costs.
I had several clients who immediately started doing that and in just a couple of months had their down payment and closing costs. Granted, this is not advised for everyone and you must speak with your tax specialist before doing this so that they can run the numbers and advise you on exactly how much you can adjust your W4.
On another note, while FHA will not allow buyers to use the tax credit/bridge loan to satisfy the required down payment, some state housing agencies are developing programs that will allow the tax credit/bridge loan to cover the required down payment. California's housing agency (CalHFA) is developing just such a program. Will I be promoting this program to my clients once it's rolled out? ABSOLUTELY!
Hi Matt,
I'm cross eyed from reading all these types of blogs.. & I'm a freaking Realtor! Sadly, some are giving out misinformation.
Donne - It is a challenge for many and adjusting your W4 withholding can be a viable option, but I definitely agree with you - checking with a qualified and trusted tax advisor is a must. I've heard of some tax advisors that were telling their clients to just put an arbitrary date in the future on Form 5405, which is not allowed by the IRS (and it states as much on their site). I also thought that even if they did monetize the tax credit in the form of a bridge loan (whether it is as it stands now or if it was allowed as a down payment (ie, the 3.5% down payment), that people ought to really take a hard look at their taxes. The worst case scenario is that they would wind up owing tax, getting less than the $8,000 (or none at all) as a refund and then still owing the bridge loan with not enough cash on hand to pay it off - then you've opened up a new can of worms. I hope lenders that do use the bridge loan take that into consideration and don't wind up creating the next wave of people who wind up behind on their payments.
Greg - You and me both! As someone who has worked to stay on top of this, I find myself reading something about it almost daily. My hope with this post was to give a place for the consumer who comes across my ActiveRain blogs some links to everything I wrote about it over on RErockstar.com. Since I maintain two blogs, I'm going to try and start doing more of these cross-promotional blogs, so that no matter where a consumer lands, they have access to all of my posts.
Good idea to compile it all together. It definitely has been daunting to try & keep up with all the updates & changes.
Kristin - Every time I write something about it, it takes me longer than a normal post just because I have to cross reference and make sure I've got all the details correct. With as fast as the details seem to change, I don't want to give out the wrong info.
Certainly a great subject to talk about Matt as the 1st time buyers are what is driving the market at the moment.
Bill - Just looking through my Google Analytics proves the need to talk about it. I may sound like a broken record, but I'd rather that than let people be misinformed about it all.
Matt, I agree it's been talked about, blogged about hashed and rehashed but you have done a great job of simplifying it and the added links are excellent. The misinformation that is out there is mind boggling! I also appreciate the fact that you research and cross reference your posts. It is THE thing that sets your posts apart from the jillions of opinion driven posts that just nmake things up or "heard it somewhere"
Russell - The cross referencing is key to any post (and it's great for SEO as well). The more you can prove your facts, the more of an authority you can be on the topic. It is a little more labor intensive, but it pays off I think. It certainly pays off in the long tail searches. Google "first time home buyer tax credit" and good luck finding me. Google "when does the first time home buyer tax credit check arrive" and you'll find me right below the NAHB's site about the tax credit, google "first time home buyer tax credit documents" and I come up third. Not bad for a guy who is running his own website with no SEO companies or ad campaigns behind him.