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Is Painting your house on your TO DO list?

20. April 2012 by Angie Uttecht.

It looks like I will be painting a rental house so thought I would share what I found on HouseLogic.com!

Old wood siding, fast becoming a dinosaur in new construction, regularly needs the protection of a new coat of paint.

A professional will charge you between $4,000 and $6,000 to paint a 2,000-square foot, two-story house. But you can do it yourself in a few weekends for the cost of paint and supplies.

A good paint job can last 10 years. The key is proper preparation. Here are 10 steps to take to make sure your exterior paint job looks great, adds value to your home, and lasts a long time.

Step 1: Get the lead out

Do-it-yourselfers are not obligated to follow EPA regulations for lead-safe practices, as professional paint contractors must. But if your home was built before 1978, when lead paint was banned for residential use, you should protect yourself and your neighbors from airborne lead particles.

The first step is to test for lead paint: Kits are available for $10 to $35 online, and at paint and hardware stores. If tests prove positive for lead, keep paint dust to a minimum by taking the following precautions.

Lay plastic drop cloths and collect scrapings.

Clean area with a HEPA vacuum.

Wear masks and Tyvek suits.

Dispose of all materials at an approved hazardous materials site.

Step 2: Wash the exterior

Mildew thrives under fresh paint, which won’t adhere well to dirty, grimy, spore-sporting exterior walls. So wash your home’s exterior before painting.

Use a mix of water and a phosphate-free cleanser such as Jomax House Cleaner ($15 per gallon) and Mildew Killer Concentrate ($8.50 for 32 ounces).

You can hand-apply the solution with a sponge, which will take forever and many trips up and down the ladder. Or, hire a pro to pressure wash siding—not a task for an amateur, who can damage siding by pushing water under boards. (Cost varies by location: $150 to $750 for a professional to pressure wash the exterior of a 2,100-square-foot house.)

Step 3: Scrape off loose paint

Once clapboards are dry, remove loose, flaking paint.

A handheld scraper is usually the best tool for the job, though you can also use a hot-air gun or infrared paint stripper. Never use an open-flame torch, which can easily start a fire and is illegal in most states unless you have a permit.

To work lead-safe, wear a mask and Tyvek suit, spray water on the paint as you scrape, and collect the debris.

Step 4: Sand rough spots

A pad sander or random-orbit fitted with 80-grit sandpaper will smooth out any remaining rough spots. Take care not to push so hard that you leave sander marks in the wood.

To be lead safe, use sanders fitted with HEPA filters.

Step 5: Fill and repair

After washing, scraping, and sanding your wood siding, step back and inspect what you’ve uncovered—holes, dings, and chips.

Fill minor holes or dings in the siding with a patching putty or compound such as Zinsser’s Ready Patch ($20 per gallon).

If you’ve got a major rot problem, summon a carpenter to replace the bad wood. Also, fix drainage problems that cause water to pool and promote rot.

Step 6: Apply primer

Apply primer immediately after preparing wood siding.

White, gray, or tinted primer provides an even base for topcoats to adhere to, and a uniform canvas from which to survey your work. Small gaps in joints and around doors, windows, and other spots where horizontals meet verticals will all stand out in high relief, showing where you need to fill in with caulk.

If you’re painting over bare wood or existing latex paint, then latex primer is fine. But if you’re painting over multiple coats of oil-based paint, it’s best to stick with a new coat of oil-based primer.

Step 7: Caulk all joints

Siliconized or top-of-the line polyurethane acrylic caulks give paint jobs a smooth, pleasing look. But the benefits aren’t purely aesthetic. Tight joints also prevent air leaks and block water penetration.

Spring for the $7-a-tube polyurethane caulks with 55-year warranties, which will stand up to weather better than 35-year caulks that cost less than $3. The average house requires about seven tubes of caulk.

Step 8: Choose the right paint

Painting with water-based acrylic latex is so much easier than dealing with oil-based paints. Latex paint:

Applies easily

Dries quickly

Cleans up with soap and water

If your house already sports an oil-based paint, which is more durable than latex, you’ll have to stick with it.

Choose finishes carefully. As a rule, the higher the sheen, the better the paint is at blocking the sun’s damaging rays. Satin is fine for shingles or clapboards, but you’ll want gloss paint to protect high-traffic parts of a house, such as window casings, porches, and doorframes. A gallon of premium exterior latex costs $35 to $45.

Step 9: Apply top coat(s)

Less is more when it comes to applying top coats. More layers can result in paint flaking off through the years; less paint bonds better to layers beneath.

If you’re going from a white house to yellow or cream, you might be able to get by with one coat. Going from a light to a dark house, and vice versa, usually requires two coats.

Step 10: Practice good maintenance

You can extend the life of a good paint job by:

Inspecting the caulk every year and replacing any that’s cracked or missing.

Removing mold or mildew.

Washing stains from nesting birds and pollen.

Touching up blisters and peels before they spread

Hmmm….maybe vinyl siding is the way to go! Ha!

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Mortgage Rates are ROCKING again!

31. May 2011 by Angie Uttecht.

What an awesome time to make your MOVE and buy that home you have always dreamed about!

Angie Uttecht, Ace Realty
Broker/Owner, 1718 Dakota Ave S, Huron, SD57350
605-350-2553

Daily Real Estate News | May 30, 2011 | Share

Buyers Better Hurry: Rates Reach New Lows
For the sixth straight week, fixed mortgage rates inched down, reaching new lows for 2011. The 30-year fixed-rate mortgage averaged 4.60 percent this week while the 15-year mortgage averaged 3.78 percent, Freddie Mac reports in its weekly mortgage market survey.

Meanwhile, the National Association of Home Builders reported this week that home affordability reached its highest level in 20 years, making the purchasing power for home buyers even better during this traditionally prime buying season.

Here’s a closer look at mortgage rates:

30-year, fixed-rate mortgage: Averaging 4.60 percent this week, it was down slightly from last week’s 4.61 percent average. Last year at this time, 30-year rates averaged 4.84 percent. The 30-year fixed rate mortgage hasn’t been under this week’s 4.60 percent average since early December 2010 when it fell to 4.46 percent.
15-year, fixed-rate mortgage: Averaging 3.78 percent this week, it also was down from last week’s 3.80 percent average. Last year at this time, the 15-year fixed-rate mortgage averaged 4.21 percent. It has not been under this week’s 3.78 percent average since late November 2010 when it fell to 3.77 percent.
5-year adjustable-rate mortgage: Averaging 3.41 percent this week, it was down from last week’s 3.48 percent average. A year ago at this time, the 5-year ARM averaged 3.97 percent.

Source: “Fixed Mortgage Rates Continue to Find New Lows,” Freddie Mac (May 26, 2011)

Browse all of today’s news

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DO Sweat the Small Stuff when Selling

5. February 2011 by Angie Uttecht.

Angie Uttecht, Broker/Owner
Ace Realty, 1718 Dakota Ave S
Huron, SD 57350 ~ 605-350-2553

You have heard the saying “Don’t Sweat the Small Stuff”….well when selling your house YOU do NEED to sweat the small stuff! If you want your home to sell for top dollar and quickly, it needs to be as close to perfect as you can get it. What does that mean??

It means you shouldn’t leave your purse on the counter next to the stove or worse yet on the stove like I have done once or twice. You shouldn’t ”throw” everything into one room and shut the door. Guilty again! Buyers will want to look in there.

You should not let family members dump their stuff by the back door so it’s a mini obstacle course to get in or out. If you have clothes hanging out of your dresser drawers, fold them nicely and close all drawers. Same goes for your closet, doors should be able to close and actually all closets should be neat and tidy. Because, yes buyers will look in there too.

Your front door and entry area should shine. You don’t get a 2nd chance to make a first impression so you don’t want to mess it up. Fix all the easy things, leaky faucets, chipped paint, loose hinges. Declutter, declutter, declutter. Pictures and virtual tours exaggerate clutter…kind of like how a camera adds 10 pounds so take away more than you should! Rent a storage shed if you have to or have a garage sale.

Once all the hard work is complete and your home is ready to list be sure to have it clean and ready for each and every showing. Nothing sells better than a clean (deep down, spotless clean), well maintained home. If cleaning is not your strong suit, hire a professional.

Once you are ready to list, that’s where I come in. I am a skilled and trained marketer with a degree in Broadcast Journalism and years of professional marketing experience. I will take your home and tell it’s story in print and in pictures and work hard to get it maximum exposure so we can find a buyer quickly.

It WILL be a lot of work no doubt will be worth it at the closing table!

I’m a great believer in luck and I find the harder I work, the more I have of it. ~ THOMAS JEFFERSON

For tips on how to prepare your home for sale, click here:

http://www.soldbyangie.com/selling.asp

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2010 Huron, SD Real Estate Year in Review

24. January 2011 by Angie Uttecht.

www.soldbyangie.com
Angie Uttecht, Broker/Owner
Ace Realty, 1718 Dakota Ave S
Huron, SD 57350
605-350-2553

The Huron real estate market held it’s own in 2010. We were down just 9 residential sales for a slight 4.8% decrease. Our average sales price stayed nearly the same with $96,610 in 2009 compared to $96,262 in 2010. Homes were on the market an average of 114 days up slightly from 106 in 2009. Homes sold 94.68% of sales price to list price in 2010 compared to 94.45% sales price to list price in 2009. So, all in all the 2010 Huron real estate market was very much like 2009. I think that’s good news considering the sluggish economy.

Typically real estate is slow beginning around Thanksgiving time and through the Holidays. However, that wasn’t the case this year as many new listings have hit the market and sales have been very strong. EVEN with all the snow and cold! I am excited to see what 2011 will bring so BRING it on!

Angie Uttecht, Broker/Owner
Ace Realty
1718 Dakota Ave S, Huron, SD 57350
605-350-2553
www.soldbyangie.com

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What’s Happening Huron?

28. December 2010 by Angie Uttecht.

As 2010 comes to a close it’s a good time to think about where we have been and think about where we want to go in 2011. With just a few days left in 2010, we are only 10 sales behind last year. Our office will have a few closings before year-end and if the other offices have a few as well, we just might end up even or better from last year. Also, our home values continue to increase. Not too many communities can say this during these difficult economic times.

2010 was a GREAT year to buy a home in Huron, SD and I strongly believe 2011 will be another GREAT year to buy a home in Huron, SD. We are blessed with affordable home values that continue to appreciate in value. You combine that with historically low interest rates and it just makes sense to buy now!

I welcome your questions and comments! I would be happy to share with you what’s happening in the Huron Real Estate market. Just ask!

Angie Uttecht, Broker/Owner
Ace Realty
1718 Dakota Ave S ~ Huron, SD 57350
605-350-2553

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Home Ownership should STILL be a part of the American Dream!

21. November 2010 by Angie Uttecht.

There has been a lot of buzz lately about whether home ownership is a good thing in light of our current economy. What do you think? I can’t imagine NOT owning a home now. Did you know that interest rates are at historic lows?? We will probably never see mortgage interest rates this low again in our lifetime. Combine low rates with Huron’s strong housing market and it really makes sense to buy now! Ask a homeowner what they like most about owning and they will likely say “It’s mine!” They can move walls, paint and update as they please. Home is where we make memories, build a future and feel comfortable and secure. I would be happy to review the Huron market with you, answer your questions and guide you home!

Angie Uttecht, Broker/Owner
Ace Realty, 1718 Dakota Ave S
Huron, SD 57350 ~ 605.350.2553

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Buyer and Seller Do and Dont’s

17. October 2010 by Angie Uttecht.

Here are some GREAT tips for buyers and sellers to keep in mind to get to a WIN/WIN transaction!

RISMEDIA, October 13, 2010—It would be unrealistic to say that the real estate market is utterly rosy right now, but neither is it thorn-filled by any means. In fact, things are decidedly looking up: July got some good news, when the National Association of Realtors reported that pending home sales rose 5.2% from downwardly revised June levels, beating economists’ expectations. This is good news for both buyers and sellers.

While challenges still exist—for instance, getting the best price when selling, or securing financing when buying—there are some once-in-a-lifetime opportunities out there, and plenty of happy results can be had for both buyers and sellers. The key for both groups is to remain flexible, adaptable and diligent. To that end, here are some dos and don’ts for today’s buyers and sellers:

For Sellers:

DO’S
Be flexible. Often it’s the little things that push a buyer into the “yes” zone. If the buyer goes on and on about how much they love your icemaker, throw it in. If the closing has to be pushed ahead more than you expected, try to be as flexible as possible and pack the moving van a little quicker.

Clean up. One person’s prize doll collection is another person’s cluttered nightmare. Similarly, a living room filled with Beanie Babies could elicit a reaction of fear, rather than “Aw, how cute!” from a buyer. Put away any personal collections that not only cause clutter, but also make it hard for a buyer to see the home as his or hers, rather than yours.

DON’TS
Don’t be greedy. The market—not your emotions—dictates your home’s price. If comparables in the area, and several trusted real estate agents tell you your home is worth $400,000, you’re not fooling anyone by pricing it at $500,000—and you’re only doing yourself a disservice. Pricing it at market, even a little below, could generate a bidding war, and ultimately get you more money.

Don’t get personal. If you’re selling your house for a certain amount, and someone offers something much lower, don’t take this as a personal affront and refuse to counteroffer. Letting your emotions get in the way can potentially ruin the deal. What’s the harm in making a counteroffer?

Don’t procrastinate. In the current climate, you might be scared to try to sell your home, as you may have to face a lower selling price than you may have gotten before the recession. But remember, the house you buy might be even lower, commensurately. It’s all relative. So if you’re serious about selling, consider doing it now. Also, acting before the cold months come is a good idea, as the winter months are historically harder for home sales.

For Buyers:

DO’S
Get a home inspection. It’s important to hire a trusted home inspector to check out the house’s potential issues and problems. Don’t skip a home inspection because you’re afraid of what you might hear—many issues sound more serious than they actually are, and can be fixed easily. And if something deal-breakingly serious is turned up, as disappointing as that is, it can save years of heartache and financial outlay. Better to walk away from a clunker.

List your place before you look for another. If you’re truly serious about looking for a home, list your place first. In the current economy, banks want to make sales as uncomplicated as possible—and contingency sales, which can be very complicated, are often rejected.

Talk before you act. Don’t ever start a home search without a firm budget not only in mind, but literally written down. Mutually agree with yourself—or with your partner, if you’re buying with someone else—long before you start seriously searching. Going out of that zone because of a place you just “gotta have,” or are emotional about, could put you in dire financial straits later. You don’t want to buy a house that isn’t affordable for you, and then be worried about paying for dinner and a movie on Saturday night.

DON’TS
Don’t be a design snob. If someone’s enormous bathroom has wallpaper border containing frolicking kittens and pastel flowers, or a wall that’s a nuclear shade of green, we understand this can send you into style shock. But stand fast and ignore bad décor. Instead, try to envision the space raw. Besides, you can always redecorate once the home is yours.

Don’t make a silly offer. There’s nothing wrong with making an offer below asking price—it’s no secret that today, many homes are selling for under the asking price. But going 40% below the asking price may anger the seller. Some sellers, especially more emotional ones, won’t even bother counter offering an outrageously low offer. Feel free to make a deal—just don’t make an offer so low that you’ll be kicked off the table.

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Tax Planning

5. August 2010 by Angie Uttecht.

Great info from www.houselogic.com

Tax planning for homeowners should start well in advance of the April 15 filing deadline each year. If you delay until the last minute, it might be too late to maximize tax credits and tax deductions. These tax tips for homeowners looking ahead to 2010 returns explain some of the things you can do now that’ll pay off later on your 1040.

Take a day to formulate a tax plan for the year. Depending on your circumstances, you might want to take advantage of energy tax credits or max out your vacation home deductions. The “What’s New in 2010” section of IRS Publication 17 offers a sneak peek at tax changes that might affect homeowners.

Claim remaining energy tax credits

It’s time to get cracking if you didn’t exhaust your full allotment of residential energy tax credits during 2009. Although tax credits for big projects like residential wind turbines and solar energy systems have no upper limit and are good through 2016, energy tax credits capped at $1,500 expire at the end of 2010. Eligible capped projects include new windows and doors, insulation, roofing, water heaters, HVAC, and biomass stoves.

Here’s how it works with capped federal credits: You can earn energy tax credits worth 30% of the cost of qualifying improvements, but the total tax credits can’t exceed $1,500 combined for 2009 and 2010. So if you only took, say, $700 worth of capped energy credits on your 2009 tax return, you’re still due for another $800 in credits in 2010. Some projects include the cost of installation—a furnace, for example—while others, such as insulation, are limited to the cost of materials.

Max out tax benefits of a vacation home

Use a vacation home wisely, and it’ll provide a break from taxes as well as the hustle and bustle of everyday life. The rules on tax deductions for vacation homes can get a bit tricky, but understanding and adhering to them can yield many happy tax returns.

If your vacation home is truly a vacation home meant for your personal enjoyment, as opposed to a rental-only income property, you can usually deduct mortgage interest and real estate taxes, just as you would on your main home. You can even rent out the home for up to 14 days during the year without getting taxed on the rental income. Not bad.

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You don’t get a 2nd chance to make a FIRST impression!

7. July 2010 by Angie Uttecht.

Here’s some affordable tips on fixing up your house from MSN Real Estate:

IThere are lots of relatively simple and affordable things you can do to give your home a face lift. Your house will look better and your family will feel happier in it. As a bonus, you will also boost your home’s value.

1. Add the perfect touch with paint

“A fresh coat of light paint on the interior walls can work wonders,” says Kelly O’Ryan of Coldwell Banker in Lexington, Mass. “Paint will always clean up dirty walls and give a room a better image.”

Although dark colors can be stylish, O’Ryan advises going for lighter shades to brighten things up in warmer seasons. Karol Nickell, editor-in-chief of Fresh Home magazine, offers this advice: “Smart color selections can make a small or cramped room appear dramatically larger. In the foyer, make a good first impression with similar tones mixed at different strengths. In the living room, a bold color paired with a white ceiling makes the room seem taller than it really is.”

. Focus on the flooring

Good, well-maintained flooring can set a positive tone for the entire interior of your home.

“Like paint, flooring can help create an impression of spaciousness and airiness,” Nickell says. “Whether it’s a floating laminate floor, tile or a natural ‘green’ alternative, lighter-tone flooring can make formerly drab areas appear modern and streamlined.”

3. Lighten up the accents

“Spring (or summer) is a great time to change your window treatments and area rugs,” O’Ryan says. “Once again, dark colors are associated with winter months; a lighter, airy curtain will give any room a brighter and more pleasant appearance. If your floors are in great shape, you may want to remove the area rugs and leave the floors bare. Eliminating the rugs will open up the room and make it appear larger.”

4. Update the windows

Old windows aren’t just ugly — they can also let your heat and air conditioning escape, costing you big bucks.

“While window treatments are typically a focus in many home makeovers, the actual windows themselves are often overlooked,” says Victor Gonzales Maertens, an energy efficiency expert with Lennox Industries. “However, upgrading old single-pane windows with new Energy Star-qualified windows can save an average of between $126 and $465 per year on energy bills, and some new windows qualify for the federal tax credit.”

5. Weed out bad landscaping

Neglected bushes and overgrown lawns can kill a home’s curb appeal. Don’t worry – you don’t need a green thumb to spruce up your yard.

“Clean up the site by removing any dead or dying plants, branches and flowers,” suggests Jennifer Hoxsie, landscape designer with Greenhaven Landscapes in Lake Bluff, Ill. “Prune overgrown shrubs along the home’s foundation so they are below the windowsills and off walkways and driveways. Fill empty holes with site-appropriate plants. Have all the planting beds weeded, edged and mulched for a clean, crisp look. Finally, weed and fertilize the lawn and provide supplemental watering if necessary to maintain a lush green carpet.”

6. Add decorative touches to the yard

We’re not talking about plastic pink flamingos or creepy garden gnomes. Taylor Graves of CertainTeed building products says, “Adding benches, steppingstones, fountains or other garden accents could go a long way in making your outdoors a visually appealing and welcoming environment.”

7. A few final exterior touches

While you’re outside, a few other quick moves can make a big difference.

“Add color with paint to outdoor features such as window frames, decorative beams and porches,” says Kurt Gleeson, national vice president of sales for RealEstate.com. Stick with calm colors that complement the home’s exterior color scheme, avoiding shocking shades and drastic contrasts.

“Clean external brickwork or concrete slabs with a liquid masonry cleaner to make them look new and neat. Power washing can give external stonework, walkways and front stoops a quick makeover.”

Spruce things up
By investing a few bucks and some elbow grease, you can boost your home’s image – and value.

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TIME IS RUNNING OUT ON HOUSING TAX CREDITS!!

7. April 2010 by Angie Uttecht.

The clock is ticking - loudly. If you plan to claim the federal housing tax credit, remember that you need to have a contract signed
by the end of this month.

Frequently Asked Questions
About the First-Time Home Buyer Tax Credit

The Worker, Homeownership, and Business Assistance Act of 2009 has extended the tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence. The tax credit now applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.

For sales occurring after November 6, 2009, the Act establishes income limits of $125,000 for single taxpayers and $225,000 for married couples filing joint returns.

The income limits for sales occurring on or after January 1, 2009 and on or before November 6, 2009, are $75,000 for single taxpayers and $150,000 for married taxpayers filing joint returns.

The following questions and answers provide basic information about the tax credit. If you have more specific questions, we strongly encourage you to consult a qualified tax advisor or legal professional about your unique situation.

Who is eligible to claim the $8,000 tax credit?
First-time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and on or before April 30, 2010. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner. A limited exception exists for certain contract for deed purchases and installment sale purchases. See the IRS website for more detail.However, the law also allows home sales occurring by June 30, 2010 to qualify, provided they are due to a binding sales contract in force on or before April 30, 2010.Persons who are claimed as dependents by other taxpayers or who are under age 18 are not qualified for the tax credit program.
What is the definition of a first-time home buyer?
The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, IRS Notice 2009-12 allows unmarried joint purchasers to allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.
How is the amount of the tax credit determined?
The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
Are there any income limits for claiming the tax credit?
Yes. For sales occuring after November 6, 2009, the income limit for single taxpayers is $125,000; the limit is $225,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $125,000 for single taxpayers and $225,000 for married taxpayers filing a joint return. The phaseout range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $145,000 (single) or $245,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.
The income limits for claiming the tax credit were raised when the tax credit was extended. Are the higher limits retroactive?
No. The new income limits are only applicable to purchases occurring after November 6, 2009.The income limits for sales occuring on or after January 1, 2009 and on or before November 6, 2009 are $75,000 for single taxpayers and $150,000 for married couples filing jointly.
What is “modified adjusted gross income”?
Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine “adjusted gross income” or AGI. AGI is total income for a year minus certain deductions (known as “adjustments” or “above-the-line deductions”), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.To determine modified adjusted gross income (MAGI), add to AGI certain amounts of foreign-earned income. See IRS Form 5405 for more details.
If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
Possibly. It depends on your income. Partial credits of less than $8,000 are available for some taxpayers whose MAGI exceeds the phaseout limits.
Can you give me an example of how the partial tax credit is determined?
Just as an example, assume that a married couple has a modified adjusted gross income of $235,000. The applicable phaseout to qualify for the tax credit is $225,000, and the couple is $10,000 over this amount. Dividing $10,000 by the phaseout range of $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $138,000. The buyer’s income exceeds $125,000 by $13,000. Dividing $13,000 by the phaseout range of $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.
How is this home buyer tax credit different from the tax credit that Congress enacted in early 2009?
The tax credit’s income limits were increased, the documentation requirements were tightened, and the program’s deadlines were extended.
How do I claim the tax credit? Do I need to complete a form or application? Are there documentation requirements?
You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on line 67 of the 1040 income tax form for 2009 returns (line 69 of the 1040 income tax form for 2008 returns). Please note that although the Form is titled “First-Time Homebuyer Credit,” this is the correct form for claiming both the $8,000 first-time homebuyer tax credit and $6,500 repeat buyer tax credit.No other applications are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests. Note that you cannot claim the credit on Form 5405 for an intended purchase for some future date; it must be a completed purchase. Home buyers must attach a copy of their HUD-1 settlement form (closing statement) to Form 5405 as proof of the completed home purchase. In cases where a HUD-1 form is not used, such as for construction of some new homes, you should attach a copy of the certificate of occupancy in lieu of the HUD-1. Homebuyers should be sure to read the instructions for the revised IRS Form 5405 to be sure they meet the new program requirements.
What types of homes will qualify for the tax credit?
Any home that will be used as a principal residence will qualify for the credit, provided the home is purchased for a price less than or equal to $800,000. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.It is important to note that you cannot purchase a home from, among other family members, your ancestors (parents, grandparents, etc.), your lineal descendants (children, grandchildren, etc.) or your spouse or your spouse’s family members. Please consult with your tax advisor for more information. Also see IRS Form 5405.
I read that the tax credit is “refundable.” What does that mean?
The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).
Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?
Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been “purchased” on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after January 1, 2009 and on or before April 30, 2010 (or by June 30, 2010, provided a binding sales contract was in force by April, 30, 2010).In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date. To provide proof of purchase, homebuyers must attach a copy of the HUD-1 Form or certificate of occupancy to IRS Form 5405.
Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?
Yes. The tax credit can be combined with an MRB home buyer program. Note that first-time home buyers who purchased a home in 2008 may not claim the tax credit if they are participating in an MRB program.
I live in the District of Columbia. Can I claim both the Washington, D.C. first-time home buyer credit and this new credit?
No. You can claim only one.
I am not a U.S. citizen. Can I claim the tax credit?
Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of “nonresident alien” in IRS Publication 519.
Is a tax credit the same as a tax deduction?
No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS.A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes. If the taxpayer receives an $8,000 deduction, the taxpayer’s tax liability would be reduced by $1,200 (15 percent of $8,000), or lowered from $8,000 to $6,800.
I bought a home in 2008. Do I qualify for this credit?
No, but if you purchased your first home between April 9, 2008 and January 1, 2009, you may qualify for a different tax credit. Please consult with your tax advisor for more information.
Is there a way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2009 or 2010 tax return?
Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the downpayment.Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.In addition, rule changes made as part of the economic stimulus legislation allow home buyers to claim the tax credit and participate in a program financed by tax-exempt bonds. As a result, some state housing finance agencies have introduced programs that provide short-term second mortgage loans that may be used to fund a downpayment. Prospective home buyers should check with their state housing finance agency to see if such a program is available in their community. To date, 18 state agencies have announced tax credit assistance programs, and more are expected to follow suit. The National Council of State Housing Agencies (NCSHA) has compiled a list of such programs, which can be found here.
HUD is now allowing “monetization” of the tax credit. What does that mean?
It means that HUD allows buyers using FHA-insured mortgages to apply their anticipated tax credit toward their home purchase immediately rather than waiting until they file their 2009 or 2010 income taxes to receive a refund. These funds may be used for certain downpayment and closing cost expenses.Under HUD’s guidelines, non-profits and FHA-approved lenders are allowed to give home buyers short-term loans of up to $8,000. The guidelines also allow government agencies, such as state housing finance agencies, to facilitate home sales by providing longer term loans secured by second mortgages.Housing finance agencies and other government entities may also issue tax credit loans, which home buyers may use to satisfy the FHA 3.5 percent downpayment requirement. In addition, approved FHA lenders can purchase a home buyer’s anticipated tax credit to pay closing costs and downpayment costs above the 3.5 percent downpayment that is required for FHA-insured homes.More information about the guidelines is available on the NAHB web site. Read the HUD mortgagee letter (pdf) and an explanation of the FHA Mortgagee Letter on Tax Credit Monetization (pdf). An FAQ about monetization (pdf) is available at the NAHB web site.
If I’m qualified for the tax credit and buy a home in 2009 (or 2010), can I apply the tax credit against my 2008 (or 2009) tax return?
Yes. The law allows taxpayers to choose (“elect”) to treat qualified home purchases in 2009 (or 2010) as if the purchase occurred on December 31, 2008 (or if in 2010, December 31, 2009). This means that the previous year’s income limit (MAGI) applies and the election accelerates when the credit can be claimed. A benefit of this election is that a home buyer in 2009 or 2010 will know their prior year MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.Taxpayers buying a home who wish to claim it on their prior year tax return, but who have already submitted their tax return to the IRS, may file an amended return claiming the tax credit using Form 1040X. You should consult with a tax professional to determine how to arrange this.
For a home purchase in 2009 or 2010, can I choose whether to treat the purchase as occurring in the prior or present year, depending on in which year my credit amount is the largest?
Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in the present year and a larger credit would be available using the prior year MAGI amounts, then you can choose the year that yields the largest credit amount.
How can two unmarried buyers allocate the tax credit if one qualifies for the $8,000 first-time home buyer tax credit and the other qualifies for the $6,500 repeat home buyer credit?
The buyers can allocate the tax credit in any reasonable manner, provided neither claims a tax credit higher than the one they qualify for and the home purchase does not yield a total of more than $8,000 in tax credits. For example, the repeat home buyer could claim $6,500 and the first-time home buyer could claim $1,500. Alternatively, both buyers could claim a $4,000 tax credit.
Does a married couple qualify for any home buyer tax credit in the following situation? Spouse A has lived in and owned the same principal residence for at least five years. Spouse B has lived in and owned the same principal residence for less than five years.
In this situation, the couple does not qualify for any home buyer tax credit. Because the couple is married, the law tests the ownership history of both spouses. Spouse A clearly does not qualify for the $8,000 first-time home buyer tax credit, so neither does Spouse B.Spouse A does appear to qualify for the $6,500 repeat buyer credit, but because Spouse B has not owned and lived in the same principal residence for at least five years, neither of them can claim the repeat home buyer tax credit.

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