How to Understand Tax Credits & Loan Modifications

So much information is out there about tax credits, loan modifications, etc., that it is tough to keep up. If you feel you can take advantage of any of these programs, contact your tax adviser, lender or real estate agent on your personal situation. But following are some simple answers to help you make sense of it:


Q. What is the $8,000 tax credit for first-time homebuyers under the new law?

A. If you are a first-time homebuyer (defined as any individual with no present ownership interest in a principal residence during the three-year period prior to the purchase) you may receive a refundable tax credit up to $8,000 for purchasing a principal residence from January 1, 2009, to November 30, 2009. No repayment is required if the buyer owns and occupies the property for 36 months.

Q. What other restrictions are there?

A. The maximum tax credit is 10 percent of purchase price, not to exceed $8,000. There is an income restriction and the tax credit begins to phase out for an individual taxpayers starting at $75,000 or $150,000 for joint filers. Please seek the advice of a tax adviser to see if you qualify.


Q. What is the $10,000 new home tax credit?

A. For the period from March 1, 2009, to February 28, 2010, inclusive, a taxpayer who purchases a qualified principal residence that has never been occupied may receive a tax credit of 5 percent of the purchase price or $10,000, whichever is less. The total new home tax credit for all taxpayers is $100 million.

Q. Is there an income restriction to be eligible for the new home credit?

A. No. The new home credit is available to qualified buyers regardless of income.

Q. Can a first-time homebuyer take advantage of the $8,000 federal credit mentioned above AND the $10,000 credit under California law?

A. Yes. A first-time homebuyer can potentially qualify for both.

Q. Are there more restrictions?

A. Yes, a lot of details go into whether one may receive this credit (detailed forms, available funds, certification that property has not been previously occupied and many more) so seek the advice of a real estate agent and/or tax adviser to see if you can take advantage of this program.


Q. What is “Home Affordable Refinance”?

A. This program is intended to help owner-occupied borrowers with conforming Fannie Mae or Freddie Mac loans to refinance up to 105 percent of the current market value of their properties.

Q. How do homeowners determine whether they qualify for a Home Affordable Refinance?

A. Contact your lender for more information on your loan and if you qualify. Additionally, click here for a self-assessment tool.

Q. What is “Home Affordable Modification”?

A. This program aims to help homeowners who are at risk of foreclosure modify their loans. It provides financial incentives for lenders and borrowers to modify existing first trust deeds.

Q. How do I know if I qualify for this program?

A. Once again, contact your lender for more information on your loan and if you qualify. Additionally, click here for a self-assessment tool.

Please be aware that these are general guidelines. To see if you personally qualify for any of these programs, please contact the appropriate professionals.

And please pass along the word to any first-time homebuyers you know: Rates are low, prices are low and the government may give you back money to buy a house (and even more to buy a brand new home!). What a great time to buy!

Lara Wells Osborn is a Redding native. After traveling and working around the world she has returned to Redding with her husband and three children. She is a real estate agent with Coldwell Banker Westside. She can be reached at 530-276-3026 or by email at laraosborn@ccproperties.com.

Lara Wells Osborn

is a Redding Realtor for Coldwell Banker C&C Properties - Westside, 1801 Buenaventura Blvd., Redding, CA 96001. Reach her at 530-276-3026 or laraosborn@ccproperties.com or larawellsosborn.com.

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