Home Buying in 07022>Question Details

John, Home Buyer in 07022

This is kind of a witching hour question, it being 4/30. My son has a fully executed contract as of 4/23. The inspection period ends 5/3. We

Asked by John, 07022 Fri Apr 30, 2010

already know of some things that we want the seller to fix or a reduction in price. If it's a reduction, this addendum would not be signed until early May. Do you think we still have a binding contract to qualify for the $8,000 tax credit. I could not find the answer on the IRS website. Thanks.

Help the community by answering this question:

Answers

8
James Gordon ABR PBD SFR SRS’s answer
John you say you have an executed contract so you would qualify there. As for fixing or giving a credit for needed repairs at this point the seller is in the catbird seat. They can refuse to agree to do any repairs and where is your 8000.00 tax credit at that point. You can buy it as it is and use the tax credit money for repairs or purchase another property and not get the tax credit money.
Web Reference: http://www.Find1Home.com
2 votes Thank Flag Link Fri Apr 30, 2010
Here is what the IRA Has TO SAY

First-Time Homebuyer Credit – Purchases Made In 2009 And 2010

The Housing and Economic Recovery Act of 2008 created a new refundable tax credit, beginning in 2008, for individuals who are qualified first-time homebuyers of a principle residence in the United States. Topic 611 explains the general rules that apply to this credit for 2008. The American Recovery and Reinvestment Act of 2009 made changes to the credit for qualified purchases made in 2009.


Original Rule Changes For 2009:

Qualifying taxpayers who buy a home after December 31, 2008, and before December 1, 2009, can claim a first-time homebuyer credit of 10% of the home's purchase price, up to $8,000 ($4,000 for married filing separately).
Qualified 2009 homebuyers do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date.
Taxpayers who qualify for the 2009 credit can elect to claim the credit either on their 2008 tax return or on their 2009 tax return.

The Worker, Homeownership, and Business Assistance Act of 2009 extended the First-time Homebuyer Credit deadline to include qualifying purchases made by taxpayers who enter into a written binding contract before May 1, 2010, to close on the purchase of a principal residence before July 1, 2010.


Rule Changes For Qualified Purchases Made After November 6, 2009:

Credit Limitation: The credit limit remains $8,000 for qualified first-time homebuyers, however, long-time residents who owned and used the same principal residence for any 5 consecutive years of the last 8 years prior to purchasing a subsequent new principal residence, may now qualify for a tax credit of up to $6,500.
Income Limitation Is Increased: The Modified Adjusted Gross Income Limitation at which the credit will begin to be phased-out is increased to $125,000 for single taxpayers and $225,000 for joint taxpayers.
Purchase Price Limitation: No credit shall be allowed for the purchase of any residence if the purchase price of such residence exceeds $800,000.
Restriction for Age and Dependents: No credit shall be allow for the purchase of any residence unless the homebuyer (or spouse if married) has attained age 18 as of the date of such purchase. In addition, no buyer may take a credit if he or she can be claimed as a dependent on someone else's return.
Documentation Requirement: Buyers will be required to submit a copy of their settlement statement to claim the tax credit.
Claiming the Credit: Under the new law, as under the old, 2009 homebuyers may claim the credit on either their 2008 or 2009 returns, and 2010 buyers may claim their credit on either their 2009 or 2010 returns.

For more information on the new rules for 2009 and 2010 you may refer to the following references on the IRS Website at http://www.irs.gov.: The Form 5405 Instructions, the 2009 IRS News Release (IR-2009-14, Feb. 25, 2009), the First-Time Homebuyer Credit Information Center article, and additional topics on this subject.

This come directly from the IRS
0 votes Thank Flag Link Fri Apr 30, 2010
Here's the biggest problem I have come across as to Attorney's they are Not the IRS they do not know all the details If someone has a contract before dated before Mid-night April 30, 2010 Make sure they have their Loan Doc's dated prior to that date so they have back up should they be audited by the IRS.

If and Attorney handles the transaction and represents the Buyer and they do not have all of the papers in order just in case I think they better get their E&O in line Agents don't let the attorney do everything Make sure you cover your Own Butt You take the lead and make sure your client has all papers dated properly before the dead line of Mid-Night Tonight. To many agents think that because there is an attorney involved that they are off the hook there is nothing further from the truth.

Remember this Attorney's are not know it all's even though they think they are Think about this When You went to Real Estate school and finished the class and took the test and passed You then had 45 hours more then any other attorney did in all his years in law school.

Don't think that You are to step aside and let your guard down CYOA
0 votes Thank Flag Link Fri Apr 30, 2010
John's Mom Hi

I just got a frantic call from a trulia member yesterday - he was just signing a contract, and wanted to know what happens since his attorney review would just be starting. I told him his attorney better work fast! Of course, I referred him back to his attorney, but broke the news that he might not qualify (I checked with an attorney I work with often). The attorney review has to be complete.

In your case, it seems as though you are out of attorney review..............so........your son should be fine. The contract is firm.....the contingencies do not have to be met to qualify for the credit. The home inspection is just another contingenc y like the mortgage is.

That being said, I would always suggest you verify this with a cpa, but that is the information I was given by a real estate attorney.

Best wishes to your son...and you!
0 votes Thank Flag Link Fri Apr 30, 2010
Good morning, John,
I am quite sure that the answer is yes. The contract was binding with contingencies that allowed foir inspection repairs; but it was still binding well before the tax credit deadline. Good Luck!
Jennifer
0 votes Thank Flag Link Fri Apr 30, 2010
John,

On 4/23, all parties signed the contract. Assuming both your son and the sellers hired an attorney, has attorney review concluded? Again, the IRS may have a different definition of under contract but a property is not deemed under contract in NJ until attorney review is concluded. If attorney review is concluded then the property should be under contract and any findings, credits, repairs, etc. should have no bearing on the tax credit and the credits, if any, would be an addendum to the original contract.

********************

Tim, I was unaware that if you were under contract on a property by 4/30 and that contract fell through after 4/30 due to inspection contingency or mortgage contingency that you were able to swap it for a contract on another house? What if the contract fell through prior to 4/30, like say last month? Can you next week go under contract on another property and still qualify?

Gina Chirico, Sales Associate
Prudential NJ Properties
973-715-1158 cell
973-992-6363 ext 116 office
Gina.Chirico@PrudentialNewJersey.com
0 votes Thank Flag Link Fri Apr 30, 2010
John as long as any changes are done through an addendum and teh contract doesnt need to be re-written. your son should be ok as far as the way the rules are set out.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Fri Apr 30, 2010
John

You will be ok as long as the original agreement has been signed by April 30 all addendums have nothing to do with the deadline. Also if for some reason the contract falls apart he will be able to subsitute for another property as long as it closes before June 30, 2010

Hope this helps

Tim Robbins

Buyers Broker

Better Homes Realty

800-610-3599
Web Reference: http://buyersonestop.com
0 votes Thank Flag Link Fri Apr 30, 2010
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer