September 20, 2010
Well it looks as if nearly half of all Americans who claimed the first-time homebuyer tax credit on their 2009 tax returns will have to repay the government.
According to a report from the Inspector General for Tax Administration, released to the public Thursday, about 53% of Americans who claimed the tax credit on their 2009 tax returns will have to return the money.
The confusion originates from when homebuyers purchased their homes; at the time there were two different types of credits that buyers were eligible to apply for.
According to the way these credits were structured, those who bought properties during 2008 were eligible to deduct, dollar for dollar, up to 10% of the home’s purchase price or $7,500, whichever was less.
The issue causing the confusion was that the money was a no-interest loan that had to be repaid within 15 years.
Had these same buyers simply waited until 2009, they would have gotten a much better deal. Congress extended the credit and made it a refund instead of a loan.
Now, the IRS is working on a plan to separate the 2009 taxpayers who are required to repay the credit from those who are not.
An analysis done by the Inspector General earlier this year found that the IRS could not easily distinguish between home purchases made in 2008 and 2009. As a result, this heightened concerns that some claims could be erroneous or even fraudulent, and that buyers could, for example, claim that their purchase had come later than it actually occurred.
Thursday’s announcement reported that 73,000 claims, more than 4% of the 1.8 million homebuyers who received the credit, had incorrect purchase dates recorded by the IRS.
Some of the inaccuracies counted against the taxpayers. Nearly 60,000 of the 73,000 claims were listed as purchasing in 2008 (meaning they had to repay the credit) or had no purchase dates at all, rather than their correct 2009 purchase dates, which would free them of the obligation to pay it back.
In a rather bizarre twist, the IRS is also taking a look at all those deceased taxpayers who received credits.
The inspector general reported that 1,326 single people listed as dead by the Social Security Administration claimed more than $10 million in credits. The IRS threw out 528 of those 1,326 claims, saving $4 million.
I can be reached at www.charlieabrahams.com with any additional questions or if you would like to view any Boston real estate.
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September 16, 2010
One of the first questions I always ask first-time home buyers is whether or not they’ve gone through the process of obtaining a mortgage pre-approval. Here are a few reasons to do this before going out to visit properties:
1) Efficiency - Once you’ve obtained a pre-approval letter you’ll know what you can realistically spend on a property. As such, if your real estate agent is currently sending you properties in a price-point you previously thought you might be able to obtain, this will narrow things down considerably.
2) Looking at Limes rather than Lemons – By adjusting the parameters of your search through the Multiple Listing Service (search for Massachusetts real estate here), you can focus on things beyond just the price point. You can focus on the specifics of the various properties being sent to you.
3) Increased Negotiating Power – As a buyer having that pre-approval letter puts sellers at ease knowing that your financial status has been reviewed an approved; note that not all lenders are viewed by real estate agents as a solid form of approval. It will help with your overall positioning when it comes time to submit an offer.
I have worked with numerous mortgage brokers since I’ve been in real estate. I continually go back to one in particular:
WILLIAM RAVEIS MORTGAGE
Direct: 508-240-4418 or 617-848-2955
NMLS Mortgage Loan Originator ID #12344
2009 NATIONS TOP 200 ORIGINATOR AWARD-Scotsman Guide
2009 & 2008 WILLIAM RAVEIS TOP PRODUCER AWARD