New Tax Credit Bill

The new housing bill was signed into law on 7-30-2008. It's 694 pages long and most of it will not directly affect agents or our buyers. The information that follows was provided by Chris Thomas of Mortgage Support Services, located in Westminster, Colorado and Chris can be reached at: 303-345-3683.



The biggest immediate impact will result from the new tax credit that is available for first-time home buyers. First-time home buyers who have purchased a primary residence on or after April 9, 2008 and before July 1, 2009, will get up to a $7500 tax credit when they file their income taxes. It has to be paid back over the next 15 years, but there will be no interest accruing. It's basically a $7500 interest-free loan. Here are the details:

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  It only applies to first-time home buyers, who are defined as people (including their spouses) who have not held title to a property in the 3 years preceding the purchase date.
  


• The tax credit is a maximum of $7500, which is credited to the buyer when they file their tax return. Depending on their income, the credit may be less. The credit starts getting phased out when the buyer's modified adjusted gross income exceeds $75,000 ($150,000 if a joint return). They should consult an accountant on this issue.
  


• They owe the money back over the next 15 years in equal installments, provided they still own the house. There is no interest on the credit, so if they get the full $7500 credit and keep the house for the 15 years, they would owe an extra $500 each of those 15 years on their taxes.
  


• If they sell the house before the end of the year in which they purchased it, then they do not get the credit.
  


• If they sell the house after they get the credit, but before the 15 year repayment period is up, they owe the rest of the credit back to the IRS, but only to the extent that they show a profit on the property. For example, if they buy a house for 100K and sell it for 105K, they only owe 5K - not the entire $7500.


• This is only for primary residences.
  


• The buyer cannot buy the property from a relative and get the credit.
  
  
• If the property ceases to be their primary residence (or the primary residence of the spouse) before all the money is paid back to the IRS, they owe the IRS for the outstanding balance in that tax year.
  
  
• If the buyer dies before the credit is paid back, their estate does not owe the money back to the IRS.
  
  
• If someone buys a property next year before July 1, 2009, they can treat it as if they bought it on December 31, 2008 and claim the credit on their 2008 tax return.
  
  
• The effective dates for the purchase are on or after April 9, 2008 and before July 1, 2009. This is not a permanent tax credit.
  
  
• This does not apply to non-resident aliens. Resident aliens (green card holders) can get the credit.
  

This applies to all houses, not just to houses that are in foreclosure, bank owned or HUD homes.There are other things in the act that will affect your business directly besides the tax credit (especially if your buyers use FHA financing), but this covers the tax credit.

Free Prescription Drug Card for Arapahoe County

A new "free prescription drug" card for residents of Arapahoe County allows way to save on prescription drugs. With the rising costs of health care and medications, this card should be of help at the pharmacy.

To use the NACo (National Association of Counties) prescription card, simply present it at a participating pharmacy. That's it! No enrollment, no memberhsip fee OR limits on frequency of use. The card can be used by cardholders and family members anytime their prescriptions are not covered by insurance.

The card offers an average savings of 20% off the retail price for commonly prescribed drugs. And is accepted at more than 90% of the county's pharmacies according, according to information from the commissioners. The card also covers discounts on pet medications!

For more information and where to get your card, please the above link to Arapahoe County or call: 1-877-321-2652.

New FHA Rules

Effective today (7-14-08), FHA will be changing the way it calculates the mortgage insurance premium (PMI). It used to be the same formula (percentage wise) for everyone. Not anymore! Now the mortgage insurance (MIP) rates will vary depending on the borrower's credit score and the loan-to-value ratio. So, knowing your credit score and maintaining good credit will become even more important, when looking to purchase a home with an FHA mortgage. Visit my recent articles on our activerain blog to read more about credit scores (FICO), how to obtain your credit report, where to get your FICO scores, and how to increase your credit score.