Tax Credits: How you stand to save even more on a foreclosure

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Tax Credits

• How you stand to save even more on a foreclosure

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Tax Credits

• Tax credits are provided by the federal
  government to reduce the amount of money you pay
  on your income taxes. This can be worth anywhere
  from 10 to 50 percent of your adjusted gross
  income depending on how much you make.
• You may also qualify for a tax credit if you meet
  other certain criteria.

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Tax Credits

• You may be eligible to receive a tax credit if
• You are a low-income American citizen.
• You dont owe any taxes.
• You deducted more than it was necessary for you
  to deduct on your tax liabilities.
• You are a homebuyer and a member of the military
  or a federal employee who served official
  qualified extended duty service outside of the
  United States

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Tax Credits

• Low-income Americans stand to receive more in tax
  credits than middle- or upper-income citizens.
  Low-income Americans are generally expected to
  pay less in taxes.
• You may also receive a tax credit from the IRS if
  you dont owe any outstanding taxes. You may have
  spent more in taxes taken from your income than
  you owe to the government.

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Investment Tax Credit

• This is a voluntary tax credit common to
  individuals and companies.
• Investment tax credits are an incentive to deduct
  more on tax liability than the minimum
  depreciation allowances. This allows the
  individual and/or company to receive a credit
  back on the amount that they paid over their
  allowance.

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Housing Tax Credits

• The type of tax credit most relevant to
  foreclosed home buyers are housing tax credits
  which can be claimed on your tax return through
  the appropriate IRS form.
• This is especially relevant to first-time
  homebuyers. A first-time homebuyer is legally
  defined as someone who has not previously owned a
  home for at least three years.

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Foreclosure Crisis

• In 2008 the housing bubble burst.
• This foreclosure crisis was caused by the effect
  of several shaky subprime mortgages going into
  default. These defaults were the result of
  mortgage payments being raised beyond what many
  homeowners could afford to pay.
• The defaults exceeded what the Federal Reserve
  Bank deemed acceptable.

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Foreclosure Crisis

• Because these defaults were so well beyond an
  acceptable level of foreclosures as deemed by the
  Federal Reserve the U.S. Congress passed the
  Foreclosure Prevention Act of 2008.
• This act was passed as a measure to prevent the
  foreclosure rate from hitting record highs again.

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Foreclosure Prevention Act of 2008

• Also referred to as the Housing and Protection
  Act of 2008 the Act had many benefits. Among
  these benefits 
• Funding for Fannie Mae and Freddie Mac was
  increased.
• New regulations were included for the Federal
  Housing Administration (FHA) and the U.S.
  Department of Housing and Urban Development (HUD).

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Foreclosure Prevention Act of 2008

• The Foreclosure Prevention Act also provided a
  tax credit worth up to 7500 for first-time
  homebuyers.
• Homebuyers over the age of 18 who purchased their
  home between April 8 2008 and July 1 2009 and
  earned less than 75000 individually were
  eligible.
• For joint returns homebuyers who earned over
  150000 were eligible.

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Foreclosure Prevention Act of 2008

• Among the benefits that homebuyers who qualified
  for the Foreclosure Prevention Act of 2008 could
  receive
• They became eligible for a 7500 tax credit.
• They could receive a virtually interest-free
  government loan.
• They had the potential to appreciate the value of
  their home.
• They could receive additional funds for repairing
  and redeveloping a foreclosure.

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Foreclosure Prevention Act of 2008

• The first-time homebuyers who received the 7500
  tax credit under the Foreclosure Prevention Act
  of 2008 will have to repay this tax credit over
  the time span of 15 years.
• They must pay back the tax credit at equal
  installments of 6.67 p.a. via a surcharge on
  their annual income taxes.

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American Recovery and Reinvestment Act of 2009

• Among the modifications that the American
  Recovery and Reinvestment Act of 2009 made to the
  housing market 
• A new homebuyer tax credit for first-time
  homebuyers was created.
• A tax credit was added for repeat homebuyers.
• First-time and repeat homebuyers were eligible
  provided they were over the age of 18 and bought
  a home worth less than 800000.

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American Recovery and Reinvestment Act of 2009

• Unlike the first-time homebuyer credit in the
  Foreclosure Prevention Act of 2008 the credit
  received in the American Recovery and
  Reinvestment Act of 2009 does not have to be
  repaid.
• As long as the home remains the homeowners
  primary residence for at least three consecutive
  years the homeowner is under no obligation to
  pay it back.

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American Recovery and Reinvestment Act of 2009

• The 8000 tax credit was originally available
  only to first-time homebuyers who had purchased
  their first home between the dates of January 1
  2009 and December 1 2009.
• Later this deadline as stated in the American
  Recovery and Reinstatement Act of 2009 was
  extended from December 1 2009 to April 30 2010.

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American Recovery and Reinvestment Act of 2009

• Repeat homebuyers who purchased a home between
  November 6 2009 and April 30 2010 became
  eligible for a 6500 tax credit.
• To be eligible for the credit repeat homebuyers
  had to have lived in their previous primary
  residence for five consecutive years. This is out
  of the eight years prior to purchasing their new
  primary residence.

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American Recovery and Reinvestment Act of 2009

• First-time homebuyers earning less than 75000
  or 150000 for joint returns (after an
  additional 20000 was phased out) were eligible
  from January 1 2009 to November 30 2009.
• From November 7 2009 to April 30 2010
  first-time and repeat homebuyers earning less
  than 125000 or 225000 for joint returns
  (after phasing out an additional 20000) were
  eligible.

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American Recovery and Reinvestment Act of 2009

• Though these credits have expired for most
  Americans members of the military may still
  qualify for either tax credit. This includes
  certain federal employees serving qualified
  official extended duty service outside of the
  United States.
• Qualifying servicemen must purchase their home by
  April 30 2011 and close by June 30 2011.

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American Recovery and Reinvestment Act of 2009

• You may still qualify for a tax credit if you are
  a member of the uniformed services member of the
  Foreign Service employee of the intelligence
  community or the spouse of a serviceman.
• You must have served on qualified official
  extended duty outside the United States between
  December 31 2008 and May 1 2010.

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American Recovery and Reinvestment Act of 2009

• Qualified official extended duty is defined as a
  period of ordered service in excess of 90 days.
  This period must have been served at a minimum of
  50 miles from the servicemans principal
  residence as stated on their taxes.
• Members of the military who were ordered to serve
  in government quarters may also qualify for the
  tax credit.

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To Review...

• You may receive a tax credit if youre a
  low-income American dont owe taxes or deducted
  more than necessary. You may also receive an
  8000 or 6500 tax credit if youre a homebuyer
  who served official extended duty between
  December 31 2008 and May 1 2010.
• The Foreclosure Prevention Act of 2008 was passed
  to prevent another foreclosure crisis.

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To Review...

• First-time homebuyers who bought a home between
  April 8 2008 and July 1 2009 were eligible for
  a 7500 tax credit.
• First-time homebuyers who bought a home between
  January 1 2009 to April 30 2010 were eligible
  for an 8000 tax credit.
• Repeat homebuyers who bought a home between
  November 6 2009 and April 30 2010 were eligible
  for a 6500 tax credit.

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