IRS Update First Time Homebuyers

IRS Updates

First Time Homebuyer Credit: Reminders & News From HUD
The Recovery Act extends the credit for purchases closing before December 1, 2009. For purchases in 2009 the credit amount increases to $8,000 and the credit does not have to be repaid provided the taxpayer resides in the home for three years. Full article here: http://www.irs.gov/newsroom/article/0,,id=204671,00.html

Also see First-Time Homebuyer Credit Questions and Answers: Homes Purchased in 2009. The following question has come up frequently:

Q. I am in the process of buying a home. I expect to close the deal before December 1, 2009. Can I claim the first-time homebuyer credit now? That would allow me to use the refund for a down payment.

A. No. You may not claim the credit in anticipation of a purchase that has yet to happen. Until you have finalized the purchase of your home, which for most purchasers occurs at the time of the closing, you do not qualify for the credit. IRS news release 2009-27, First-Time Homebuyers Have Several Options to Maximize New Tax Credit, contains details for filing options if the home is purchased after April 15, 2009.

NOTE: HUD recently announced details on new FHA rules allowing state Housing Finance Agencies and certain non-profits to 'monetize’ up to the full amount of the tax credit (depending on the amount of the mortgage) so that borrowers can immediately apply the funds toward their down payments. Home buyers using FHA-approved lenders can apply the tax credit to their down payment in excess of 3.5 percent of appraised value or their closing costs, which can help achieve a lower interest rate.
See the HUD news release here: http://portal.hud.gov/portal/page?_pageid=153,8026931&_dad=portal&_schema=PORTAL
To read the FHA's new mortgagee letter, visit HUD's website.