In my last post I covered the Top 5 questions about the extended home buyer tax credit from San Mateo borrowers. Today I’m going to round out the top 5 individual questions and answer the most popular question… how you can claim the home buyer tax credit.
Are there Any Price Restrictions?
Yes. One major change from the 2009 credit is the purchase price limit, which is $800,000. This purchase price limit is in place for San Mateo first time home buyers and move up buyers.
Can You Claim your Credit in Advance?
No. Why? The IRS is trying to protect against fraud and has started to prosecute people who claimed the credit on their 2008 taxes and then never actually went through with a purchase.
There has been some discussion about allowing access to the home buyer tax credit in advance to use for a down payment, but there is nothing official. However, if this comes to fruition, I will be sure to post here on the SanMateo Mortgage Blog.
One Way to Get Access to the Money Earlier
One way for a San Mateo borrower to gain access to your expected home buyer tax credit earlier is to adjust you W-4 withholding in anticipation of your 2010 credit. This is adjusting how much your employer will take out of your paycheck for taxes. Caution! Before you do this, I would speak to a tax advisor to see how this will affect you at the end of the year. If you don’t have a tax advisor, I would be glad to refer one to you.
Can You Claim the Credit if the Seller is Financing Part of Your Purchase and Retains Title to the Property?
Seller financing is a loan provided by the seller of a property to the buyer to cover all or part of the sales price for the property. You would still be able to claim the credit in this scenario if you can demonstrate ownership of the property by:
- Right of possession
- Right to obtain legal title upon full payment of purchase price
- Right to construct improvements
- Obligation to pay property taxes
- Responsibility to insure the property
- Duty to maintain the property
Can You Purchase a Home from a Step Relative and Still be Eligible for the Credit?
Yes, as long as the person you purchaser from is not a direct blood relative. The reason for this is to protect against fraud. The IRS doesn’t want a father selling his home to his son just to receive the $8,000 home buyer tax credit.
Can You Claim the Home Buyer Tax Credit if You Purchase with a Non-Occupant Co-Borrower?
Some loan programs will allow you to have a non-occupant co-borrower on the loan to help qualify. A non-occupant co-borrower does not live at the property but is merely a co-signer to help you qualify for a purchase. You can claim the credit as long as the co-borrower is a parent and they do not live at the property.
Finally we get to number 10 and the most asked question……
How Do I Actually Claim my Credit?
For those who purchased a home in 2009, you may choose to either apply for the credit on your 2009 tax return or you may apply for the credit sooner by filing an amended 2008 return using Form 5405. You can access the 5405 form here.
For 2010 home purchases you can claim the credit on your 2010 return or you can apply for the credit sooner by amending your 2009 return with Form 5405. The 2009 5405 form will not be available until December and can only be used on purchases after November 6, 2009.
When you file your tax return make sure you include your HUD-1. Your HUD-1 Settlement Statement is the standard form which is used to itemize services and fees charge to the borrower by the lender or the broker. These are all the cost related in the purchase of your home.
Why is Now a Great Time to Be a San Mateo Home Buyer?
Now is a great time to be a San Mateo home buyer. We still have historically low interest rates and San Mateo home prices are still at reasonable levels. Having the tax credit extended into the first half of 2010 should be a great benefit for those who were waiting for the holidays to get serious about their San Mateo home search.
Have More Questions? Call or Email Me!
If you have additional questions about the home buyer tax credit, feel free to give me a call at (650) 520-0915 or email me at info@SanMateoMortgageBlog.com. However, I would suggest that you speak to a tax advisor to discuss how the tax credit can benefit you. If you need a recommendation, I would be glad to give you the names of some great tax professionals.
How Much Can You Afford?
Contact me at (650) 520-0915 or info@SanMateoMortgageBlog.com to schedule a no obligation consultation where I will take a look at your financing situation and help you understand how each aspect of your financial package (credit, income and assets) impact your ability to qualify for a San Mateo mortgage loan.
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Chris Williamson is a Mortgage Advisor with Mortgage California specializing in San Mateo Mortgage.
Related posts:
- Top 10 Questions about the Extended and Expanded Home Buyer Tax Credit Part 1
- Slide Show – Guide to the Extended and Expanded Home Buyer Tax Credit
- How to Claim the Home Buyer Tax Credit
- California’s New Home Buyer Tax Credit
- Webinar: Guide to the Home Buyer Tax Credit – Not Just for First Time Home Buyers Anymore
