this special report was provided by al chapman a

8/14/2019 This Special Report Was Provided by Al Chapman A

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Al Chapman is an entrepreneur and real estate investor. He attended Colgate University where he started his first company using $2,500 of

summer earning. As CEO, the company grew to 250,000 members in 71countries.Mr. Chapman started REIC, a real estate investment company. Before selling the business, the company bought and sold over 150 houses. He was the founding Director of the Wealth Creation Program, a nonprofit initiative that was a partnership between SunTrust and the Urban League. He has bought and sold 3 franchise businesses. He now speaks and mentors real estate investors and entrepreneurs’.

WASHINGTON — In 2008, Congress enacted a $7500 tax credit designed to bean incentive for first time home buyers to purchase a home. The credit wasdesigned as a mechanism to decrease the over homes for sale. For 2009,Congress has increased the credit to $8000 and made several additionalImprovements. This revised $8000 tax credit applies to purchasesDecember 1, 2009.

1. What’s this new homebuyer tax incentive for 2009A home that is purchased for $80,000 or more will qualify for the full $8000. If

the price of the house costs less than $80,000, the credit will be 10%.If an individual purchased a home for $75,000, the credit would then be$7500. It is available for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009.

2. Who is eligible? Only first-time homebuyer

This Special Report was provided by Al Chapman a realestate investor based in Chattanooga, TN. He specializes inprivate investment property opportunities and quality housesto first time home buyers. He helps locate financing forhis home buyers and investors he mentors. He can help you

claim your $8000 tax credit so you can use the credit to buya remodeled house.Call (1-800-385-1665) to start the process of owning yourown home. It can take a little as 2 weeks to close.

Thank You.



A person is considered a first time buyer if he or she has not had any ownership interest in a home in the three years previous to the 2009Purchase date. This is based on the exact day of sale of the person’s prior homeand not the calendar year.

You are not eligible if any of the following: 1. Income exceeds the phase-outrange. Which means joint filers with Modified Adjusted Gross Income (MAGI) of $170,000 and above and other tax payers “such as single” with MAGI of $95,000 and above. 2. You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild and corporations orpartnerships in which you own either directly or indirectly more than 50%interest. 3. You stop using your home as your main home. 4. You sell your home before the end of three years. 5. You are a nonresident alien. 6.Your home is outside the United States 8.You acquire the home by gift orinheritance.

3. How does a tax credit work? Tax credits are so much better than Taxdeductions. Every dollar of a tax credit reduces income taxes by one dollar. Atax deduction reduces the amount of taxable income that is subject totaxation. Deductions and Credits are both claimed on an individual’s taxreturn. This incentive is a tax credit and not a tax deduction. A qualifiedpurchaser would figure out all the income items and exemptions and make allthe calculations required to figure out his or her total tax due. Then, once thetotal tax owed has been calculated, tax credits are applied to reduce the totaltax bill. Before taking any credits on a tax return a person has total tax liability of $9500, an $8000 credit would wipe out all but $1500 of the tax due. ($9,500- $8000 = $1500)

4. So what happens if the purchaser is eligible for an $8000 credit buttheir entire income tax liability for the year is only $6000? This tax creditis what’s called “refundable” credit. If the eligible purchaser’s total tax liability was $6000, the IRS would send the purchaser a check for $2000. Therefundable amount is the difference between $8000 credit amount and theamount of tax liability. ($8000 - $6000 = $2000) The majority of taxpayersdetermine their tax liability by referring to tables that the IRS prepares each year for individuals. So even if you don’t own any taxes whatsoever, the IRSwould send the home buyer a check.

5. How does withholding affect my tax credit and my refund? There aremany steps in these calculations, but most income tax software programs areequipped to help you determine.

6. Is there an income restriction? Yes. The restriction is based on the taxfiling status the purchaser claims when filing his or her income tax return.Individuals filing Form 1040 as Single (or Head of Household) are eligible for



the credit if their income is no more than $75,000. Married couples who file a Joint return may have income of no more than $150,000.

7. How is my “income” determined? For most individuals, income is definedand calculated in the same manner as their Adjusted Gross Income (AGI) on

their 1040 income tax return. AGI includes items like wages, salaries, interestand dividends, pension and retirement earnings, rental income and a host of other elements. AGI is the final number that appears on the bottom line of thefront page of an IRS Form 1040.

8. What if I worked abroad for part of the year? Some individuals haveearned income and/or receive housing allowances while working outside theUS. Their income will be adjusted to reflect those items to measure ModifiedAdjusted Gross Income (MAGI). Their eligibility for the credit will be based ontheir MAGI.

9. Do individuals with incomes higher than the $75,000 or $150,000limits lose all the benefit of the credit? Not always. The credit phases-outbetween $75,000 - $95,000 for singles and $150,000 - $170,000 for married filing jointly. The closer a buyer comes to the maximum phase-outamount, the smaller the credit is going to be. The law provides a formula togradually withdraw the credit. Thus, the credit will disappear after anindividual’s income reaches $95,000 (single return) or $170,000 (joint return).

For example: If a married couple had an income of $165,000, their creditwould be reduced by 75% as shown:Couple’s income $165,000

Income limit 150,000Excess income $15,000 The excess income amount ($15,000 in this example) is used to form a fraction. The numerator of the fraction is the excess income amount ($15,000). Thedenominator is $20,000 (specified by the statute.In this example, the disallowed portion of the credit is 75% of $8000, or $6000($15,000/$20,000 = 75% x $8000 = $6000)Stated another way, only 25% of the credit amount would be allowed.In this example, the allowable credit would be $2000 (25% x $8000 = $2000)

10. What’s the definition of “principal residence?” Generally, a principal

residence is the home where an individual spends most of his/her time(generally defined as more than 50%). It is also defined as “owner-occupied”housing. The term includes single-family detached housing, condos or co-ops,townhouses, house trailer, cooperative apartment or any similar type of new orexisting dwelling. Even some houseboats or manufactured homes count asprincipal residences.



11. Are there restrictions on the location of the property? Yes. The homemust be located in the UnitedStates. Property located outside the US is not eligible for the credit.

12. Are there restrictions related to the financing for the mortgage on the

property? In 2009, most financing arrangements are acceptable and will notaffect eligibility for the credit. Congress eliminated thefinancing restriction that applied in 2008. (In 2008, purchasers were ineligiblefor the $7500 credit if the financing was obtained by means of mortgagerevenue bonds.) Now, mortgage-revenue bond financing willnot disqualify an otherwise-eligible purchaser. (Mortgage revenue bonds aretax-exempt bonds issued by a state housing agency. Proceeds from the bondsmust be used for below market loans to qualified buyers.)

13. Do I have to repay the 2009 tax credit? NO. There is no repayment for2009 tax credits.

14. Do 2008 purchasers still have to repay their tax credit? YES. The$7500 credit in 2008 was more likean interest-free loan. All eligible purchasers who claimed the 2008 credit willstill be required to repay itover 15 years, starting with their 2010 tax return.

15. How do I apply for the credit? There is no pre-purchase authorization,application or similar approvalprocess. All eligible purchasers simply claim the credit on their IRS Form 1040

tax return. The credit will bereflected on a new Form 5405 that will be attached to the 1040. Form 5405and instructions can be foundat the IRS site at:http://www.irs.gov/pub/irs-pdf/f5405.pdf

16. So I can’t use the credit amount as part of my down payment? No.Congress tried hard to devise amechanism that would make the funds available for closing costs, but foundthat pre-funding wouldrequire cumbersome processes that would, in effect, bring the IRS into the

purchase and settlement phaseof the transaction.

17. So there’s no way to get any cash flow benefits before I file my taxreturn? Yes, there is. Any first-timehomebuyers who believe they are eligible for all or part of the credit can modify their income tax withholding (through their employers) or adjust their quarterly



estimated tax payments. Individuals subject to income tax withholding wouldget an IRS Form W-4 from their employer, follow the instructions on theschedules provided and give the completed Form W-4 back to the employer. Inmany cases their withholding would decrease and their take-home pay wouldincrease. Those who make estimated tax payments would make similar

adjustments.

18. What if I purchase later this year but can’t get to settlement beforeDecember 1? The credit is available for purchases before December 1, 2009. Ahome is considered as “purchased” when all events have occurred that transferthe title from the seller to the new purchaser. Thus, closings must occur beforeDecember 1, 2009 for purchases to be eligible for the credit.

19. I haven’t even filed my 2008 tax return yet. If I buy in 2009, do I haveto wait until next year to get the benefit of the credit? You’ll have a helpfulchoice that might speed up the process. Eligible homebuyers who make their

purchase between January 1, 2009 and December 1, 2009 can treat thepurchase as if it had occurred on December 31, 2008. Thus, they can claim thecredit on their 2008 tax return that is due on April 15, 2009. They actually have three filing options.

(1) If they purchase between January 1, 2009 and April 15, 2009, they canclaim the $8000 credit on the2008 return due on April 15.(2) They can extend their 2008 income-tax filing until as late as October 15,2009.(The IRS grants automatic extensions, but the taxpayer must file for the

extension.See www.irs.gov for instructions on how to obtain an extension.)(3) If they have filed their 2008 return before they purchase the home, they may file an amended 2008 taxreturn on Form 1040X. (Form 1040X is available at www.irs.gov)Of course, 2009 purchasers will always have the option of claiming the creditfor the 2009 purchase ontheir 2009 return. Their 2009 tax return is due on April 15, 2010.

20. I purchased my home in early 2009 before the stimulus bill wasenacted. I claimed a $7500 tax credit

on my 2008 return as prior law had permitted. Am I restricted to just a$7500 credit? No, you wouldqualify for the $8000 credit. Eligible purchasers who have already claimed the$7500 credit on a 2008 return for a 2009 purchase may file an amended return(IRS Form 1040X) for the 2008 tax year. This amended return will enable themto obtain the additional $500 credit amount.



21. If I claim my 2009 $8000 credit on my 2008 tax return, will I have torepay the credit just as the 2008 credits are repaid? No. Congressanticipated this confusion and has made specific provision so that there wouldbe no repayment of 2009 credits that are claimed on 2008 returns.

22. I made an eligible purchase of a principal residence in May 2008 andclaimed the $7500 credit on my 2008 tax return. My brother, who hasnever owned a home, wishes to purchase a partial interest in thehome this spring and move in. Will he qualify for the $8000 credit, aswell? No. Any purchase of a principal residence (or interest in a principalresidence) from a related party such as a sibling, parent, grandparent, aunt oruncle is ineligible for the tax credit. Since you and your brother are related inthis way, he cannot qualify for the credit on any portion of the home that hepurchases from you, even if he is a first-time homebuyer.

23. I live in the District of Columbia. If I qualify as a first-timehomebuyer, can I use both the $5000 DC credit and the $8000 credit? No,double dipping is not allowed. You would be eligible for only the $8000 credit. This will be an advantage because of the higher credit amount, plus theeligibility requirements for the $8000 credit are somewhat more easily satisfiedthan the DC credit.

24. I know there is no repayment requirement for the $8000 credit. Will Iever have to repay any of the credit back to the government? Onesituation does require a recapture payment back to the government. If you claim the credit but then sell the property within 3 years of the date of

purchase, you are required topay back the full amount of any credit, including any refund you received fromit. A few exceptions apply.Note that this same 3-year recapture rule applies, as well, to the $7500 creditavailable for 2008. Thisprovision is designed as an anti-flipping rule.

25. What if I die or get divorced or my property is ruined in a naturaldisaster within the 3 years? The repayment rules are eased for many circumstances. If the homeowner who used the credit dies within thefirst three years of ownership, there is no recapture. Special rules make

adjustments for people who sell homes as part of a divorce settlement, as well.Similarly, adjustments are made in the case of a home thatis part of an involuntary conversion (property is destroyed in a natural disasteror subject to condemnation by eminent domain by an authorized agency)within the first three years

26. I have a home under construction. Am I eligible for the credit? Yes, solong as you actually occupy the home before December 1, 2009.



27. For the purpose of calculating the credit amount, what is consideredthe purchase price? The purchase price is the adjusted basis of your home onthe date you purchased it. This includes certain settlement or closing costs(such as legal fees and recording fees) and your down payment and debt (such

as a first or second mortgage or notes you gave to the seller in payment for thehome). If you build, or contract to build, a new home, your purchase price caninclude costs of construction.

***28. What is the definition of a first-time home buyer? The law defines "first-time home buyer" as a buyer who has not owned aprincipal residence during the three-year period prior to the purchase. Formarried taxpayers, the law tests the home-ownership history of both the homebuyer and his/her spouse.For example, if you have not owned a home in the past three years but yourspouse has owned a principal residence, neither you nor your spouse qualifies

for the first-time home buyer tax credit. However, unmarried joint purchasersmay allocate the credit amount to any buyer who qualifies as a first-timebuyer, such as may occur if a parent jointly purchases a home with a son ordaughter. Ownership of a vacation home or rental property not used as aprincipal residence does not disqualify a buyer as a first-time home buyer.

***29. What is "modified adjusted gross income"?Modified adjusted gross income or MAGI is defined by the IRS. To find it, ataxpayer must first determine "adjusted gross income" or AGI. AGI is totalincome 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 thelast 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 certainamounts such as foreign income, foreign-housing deductions, student-loandeductions, IRA-contribution deductions and deductions for higher-educationcosts.

***30. 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 areavailable for some taxpayers whose MAGI exceeds the phase-out limits.

***31. How is this home buyer tax credit different from the tax credit thatCongress enacted in July of 2008? The most significant difference is that this tax credit does not have to berepaid. Because it had to be repaid, the previous "credit" was essentially an



will receive an income tax refund of $5800 ($8000 - $2200 = $5800). If they owed penalties and/or interest, that amount would reduce the refund.

(This is information is accurate to the best of our research and interpretationbased on information available as of February 25, 2009. As with any tax law

change, check with a tax advisor if there are any questions regarding using thisprovision)

Success Strategies To Maximize the Benefit With the First-TimeHomebuyers Credit

Success Strategy #1: Modify Withholding at Work. Any first-time homebuyerswho believe they are eligible for all or part of the credit can modify their incometax withholding (through their employers) or adjust their quarterly estimatedtax payments. Individuals subject to income tax withholding would get an IRS

Form W-4 from their employer, follow the instructions on the schedulesprovided and give the completed Form W-4 back to theemployer. In many cases their withholding would decrease and their take-homepay would increase. Those who make estimated tax payments would makesimilar adjustments.Success Strategy #2: File An Amended 2008 Tax Return. Eligible homebuyerswho make their purchase between January 1, 2009 and December 1, 2009 cantreat the purchase as if it had occurred on December 31, 2008. Thus, they canclaim the credit on their 2008 tax return that is due on April 15, 2009 or file anamended 2008 Tax Return.Success Strategy #3: Create a Short Term Note When Buying. When

negotiating the purchase, ask the seller to create a short term seller financednote to be repaid when the refund from the tax credit is paid to the newhomebuyer. Or just borrow the anticipated Tax Credit amount from a thirdparty or loan company.

FHA Loans Are For Everyone, Not Just First Time Homebuyers!I wanted to clarify some Misinformation out there about FHA Home Loans. Forsome reason many people think FHA Loans are only for first time home buyers.I don’t know where this comes from, but it is totally false. Sometimes the mediamakes a mistake and falsely writes that FHA Loans are only for first time home

buyers. FHA Loans can be used by ANYONE, Even if you have many otherproperties. On that note, here is a reminder of some of the highlights of theFHA Home Loan:• Only 3.5% down payment is required. And this can be a gift from a relative• FHA loans are not credit score driven. You can get the best 30 year fixed ratesavailable with an FHA Loan even if your credit score is not perfect.• You can only get an FHA Loan on your primary residence



• You can only have one FHA Loan at a time (unless under specialcircumstance you can have more than one)• FHA Loans allow non-occupying co-signers to help you qualify • Many places in California you can get an FHA Loan up to $625,000 (that willlikely go back up to $729,000 with the new Government stimulus bill)

• Interest rates on FHA Loans just as good as conventional interest ratesWith the combination of low rates and prices that have fallen by 50% in someareas of California, you can put 3.5% and get an FHA Loan to buy a house andhave the payment be very close or even less than rent:$200,000 house total payment:• Mortgage Payment:$1,052• Property taxes:$187• Homeowners insurance: $50• Mortgage insurance:$88 (drops off after 5 yrs and loan 80% of house value)• Total payment:$1,377$250,000 house total payment:

• Mortgage Payment: $1,315• Property taxes: $234• Homeowners insurance: $50• Mortgage insurance:$110 (drops off after 5 yrs and loan 80% of house value)• Total payment:$1,709$300,000 house total payment:• Mortgage Payment: $1,578• Property taxes: $281• Homeowners insurance: $50• Mortgage insurance:$132 (drops off after 5 yrs and loan 80% of house value)• Total payment:$2,041

Don’t forget to also factor in the tax advantages of home ownership. You areallowed to write off the mortgage interest, property taxes and mortgageinsurance. Those are write-offs you do not get whenrenting. That can amount to taking home a few hundred more per month with your paycheck that gets paid out in income tax when you rent.So once again, FHA loans are not just for first time home buyers, they are foreveryone.

Pay Your FHA Loan off Early & Save $100,000’s in InterestIt can be very, very financially intelligent to add a little extra every month to your minimum mortgage payment to pay off your FHA loan (or any othermortgage loan) early. Some benefits of adding extra payments:• You can look at it as investing that extra cash. If you have a 5.5% interestrate on your loan, every extra dollar you pay above your minimum monthly payment is earning you 5.5%.



• The earlier you pay off your mortgage, the less interest you pay over the life of the FHA loan• Once you pay off your mortgage, you will only have property taxes (and anHOA fee if you are in a condo) as your total housing expense. This can providegreat security to a homeowner who is retiring on a limited income. You will also

have the added security of having all the equity in your house as part of yourpersonal wealth. You can have great comfort knowing you can retire in a homethat is owned by you free and clear with a very small housing payment.

~The following are some examples of how quickly you would pay off your FHAmortgage if you add extra to the payment every month and what you wouldsave in interest over the life of the FHA loan.

Example 1: $200,000 loan balance with a 30 year fixed 5.5% interest rates andminimum payment of $1,135/mo

Extra Payment Loan balance after 5 yrs Loan balance after 10 yrs Loan balanceafter 15 yrs$0 $184,921 $165,081 $138,978$100 $178,032 $149,130 $111,104$200 $171,144 $133,180 $83,229$300 $164,256 $117,229 $55,355$500 $150,480 $85,327 $0

So if you added $500 extra payment to your mortgage you would pay it off totally in 15 years! Paying your loan off in 15 years would save you $114,000in interest vs. if you did not pay any extra and just made the minimum

payment and paid the loan off in 30 years.For all your FHA Financing needs Contact www.usahomeloansonline.com 18886198087

Example 2: $350,000 loan balance with a 30 year fixed 5.5% interest rates andminimum payment of $1,987/moExtra Payment Loan balance after 5 yrs Loan balance after 10 yrs Loan balanceafter 15 yrs$0 $323,611 $288,892 $243,211$100 $316,723 $272,941 $215,337$200 $309,835 $256,990 $187,462

$300 $302,947 $241,039 $159,587$500 $289,171 $209,138 $103,838If you added $500/mo to the payment you would save $152,000 interest andpay the loan off totally in 19 years vs. 30 years. I hope these examples open your mind to how much interest you can save, and how much faster you canhave your mortgage totally paid off, by making extra payments every month ontop of your minimum monthly mortgage payment. Please call me or email me if



you have any additional questions about purchasing a home or refinancingwith an FHA mortgage or any other type of home mortgage.

Big Tax Advantages to Buying vs. Renting The U.S. Government wants to encourage Americans to be homeowners. A big

part of its encouragement is in the form of a very generous income tax write-off to Americans who own their own homes. Many people who are renters overlookthis big advantage of home ownership and don’t realize they would pay considerably less federal income taxes if they purchased a house vs. renting.When you buy a home with a FHA loan (or any other type of home loan) youare allowed to write-off the mortgage interest of the FHA loan and your property taxes. This can result in the largest income tax write off most people will havetheir entire lives. When you are renting, you do not have this income tax writeoff, and much more of your paycheck is not going to you, but going to theFederal Government in the form of income taxes.A very crude way to estimate how much you would save with the income tax

write-off you receive when you purchase a home is to estimate the yearly mortgage interest you pay with the FHA loan + property taxes and then multiple that by your federal income tax rate. So let’s say youhave a $300,000 mortgage at 5% and your property taxes are $4,000 per year.• $300,000 mortgage at 5% = $15,000 in mortgage interest per year• $4,000 property taxes per year• So you take $15,000 + $4,000 = $19,000 as your total income tax write-off • Multiply $19,000 X .30 (30%) Fed tax rate=$5,700 per year in income taxsavings ….so you are saving $5,700 a year buying vs. renting! Divide that by 12and that is $475/mo in income tax savings. You could look at it this way, a$1,525/mo rent payment would be equivalent to $2,000 house

payment. Because when you rent you have no income tax write-offs if you aresalaried, so you are paying $475/mo more in federal taxes than if you were ahomeowner. After you buy a house, if you are paid W-2, you can talk to yourHR Dept. and change your deductions on your W-4 and have less federal taxestaken out of your paycheck, so you will take more home every month. The tax advantage is a major reason over the long haul why homeowners buildmore wealth than renters.

Most people who are renters never have a big enough deduction to make it pastthe standard deduction and therefore pay the maximum in federal incometaxes. There are also additional items that you can write-off your income taxes

on the year the you purchase. The biggest incentive is the special $7,500 taxcredit that is being offered by the U.S. Government for buyers who haven’towner in the past 3 years and buy a house by June 2009. This is part of theGovernment stimulus package to revive the U.S. Economy. This tax creditallows you to 100% wipe away up to $7,500 in federal income taxes. And if youhave less than $7,500 in income taxes, the Government will refund you thedifference. So if you only owe $2,500 in income taxes, the Government willsend you a check for $5,000 for the difference! Additionally, in the year you



purchase you can write off points paid to buy down the mortgage interest rateand certain closing costs associated with buying. This is can be an additionalsubstantial income tax savings. You can also write-off the mortgage insuranceassociated with an FHA loan. So in summary, if you are renting, you shouldtake a look at what you are paying in rent and what you would be paying

monthly as your total housing cost if you were to buy with an FHA home loan. Then subtract the monthly tax savings from the housing payment and see howit stacks up against your rent payment. And don’t forget when you buy you arenot just paying mortgage interest, you are ALSO paying down the principle of the FHA loan, to where you will one day own the house free & clear with noloan on it! When you rent you are only paying your landlord so HIS house (not yours) will one day be free and clear.

FHA Loans For Self-Employed BorrowersPrior to 2008, many borrowers that were self-employed could obtain home

loans without having to provide documentation. With the tightening of mortgage credit that began about 18 months ago, lenders now require self employed borrowers to provide 2 years of tax returns to document theirincome. This article is going to discuss how to plan your 2008 and beyondtaxes to maximize your ability to qualify and what to know about gettingqualified for an FHA loan (or any loan) being self-employed.When you apply for a home loan, you will have to provide your tax returns inthe following scenarios (this is not an exhaustive list):• You are a self-employed sole proprietor or business owner (includes LLC’s, SCorps, partnerships, etc…)• More than 25% of your income is commission

• You own rental property that you derive income from• You receive income from dividends, royalties or capital gains that you areusing as income to qualify for a loan• You have income from partnerships or corporations (where you are less than25% owner) that you want touse to qualify for a loan• You receive 1099 income that you want to use to qualify The underwriter will examine your tax returns to determine your income.Generally they will average your netincome from the last 2 years to calculate your qualifying income. For example,if you get a home loan in 2009, the

underwriter will average your 2007 and 2008 income from your tax returnsand that will be the income used toqualify. One common problem here is that many business owners have many business expenses that they write-off bringing their taxable income down to a very small amount that will not qualify them for a home loan. And theunderwriter will only count your net income after most of your businessexpenses (there are some expenses that you



can add back to your income that I will discuss later). So since many businessowner write-off most of their income,they are having a lot of problems qualifying for home loans right now. There are expenses that underwriters will add back in when determining yourincome off of your tax returns. Here

are the most common:• depreciation• depletion (this is not a common write-off and most will not have this)• business use of home (such as a home office)• casualty losses dues to theft, fire or natural disasters• loss carryovers from prior years (since the loss was in a prior year, it will notbe counted against yourqualifying income)• business vehicle mileage• one-time extraordinary expensesSince these expenses can be added back, it is a good strategy to maximize

these deductions on your 2008 taxes if you plan to buy a home in 2009. Makesure before completing your 2008 tax returns you talk to your CPA or taxpreparerand explain that you would like to qualify for a home loan to buy a house and you would like to maximize your net income. Also, mention the above expensesthat can be added back in to your qualifying income to your CPA and seeif you can maximize these deductions.Additionally, FHA loans allow co-borrowers and even non-occupying co-borrowers. So another solution for self-employed borrowers to qualify for ahome loan is to find a co-borrower who can show the required income to help you qualify. If you have further questions or would like to be pre-approved for a

home loan, please contact me as I would bedelighted to help. And please browse the other articles onwww.socalfhahomeloans.com for more informationabout FHA loans.

FHA Streamline VS Traditional FHA LoanMortgage refinancing may be in the tune of a bailout that bankers are notreally piqued on doing. Since refinancing a rather poor mortgage is the next

best thing to financially starting anew, there can be good and bad indicationsof its notion. Good in a way that you are willing to face your mortgage duties,and bad means that there sticks the basic idea of payment defaults. Whilerefinancing can be a prickly exercise, FHA Refinance Mortgages give a breath of fresh air in rearranging mortgages closely suited to your waning mortgageconditions. With FHA Refinance Home Loans, it can give you the remedy of your mortgage turmoil to give you some monetary freedom. This FHA programwill help you secure your loans in better standing.



The Federal Housing Administration or the FHA is there to provide refinancingassistance on existing home mortgages. FHA programs such as this come inwith attractive benefits. Certified lenders are guaranteed by the FHA to provide the necessary funds that will allow you for whateverpurpose you deem it. Since FHA Refinance Mortgages will insure your loan of

the necessary repayment capability, lenders are keener tooffer good mortgage rates while being assured of getting paid in case borrowersdefault. FHA loans are usually given out to eligible borrowers with impressivecredit standing. However, people whodo not have good credit ratings can still enjoy an FHA loan on the conditionthat their records must not show any records of declaring bankruptcy in theprevious five years. Single parents with a limited source of income can alsoavail of an FHA loan. As long as an individual qualifies according to FHArequirements, FHAis there to extend you loans and give out refinancing programs. FHA loanapprovals depend on the assessment of the borrower’s eligibility to qualify.

Requirements of FHA loans cover renovations to be done in a cost and energy efficient manner. FHA is huge on the conservation of natural resources.So, you ask, "What makes FHA Streamline Refinance Mortgage different from aconventional mortgage?"FHA Refinance Home Loans offer options that are not available from othertraditional mortgages, which are stricter by any means to borrowers withtainted credit standings. With this FHA program, there is security in FHA loans since lenders are guaranteed repayments. Down payment is only 3% and other costs are carried within the mortgage already. FHA also takes theresponsibility in helping you find homes and lending schemes that do not havedown payments. FHA borrowings can be used for home repair costs, too.

Do not be misled. FHA is not a lender but a guarantor to your borrowings froma lender. Lenders who are certified by the FHA are under the FHA’s rules andregulations and they should strictly abide by them.

FHA Loans - Can You Still Buy a Home With Little Money Down and LessThan Perfect Credit? The simple answer is yes. There are still programs available that allow creditchallenged borrowers to buy homes with as little as three and half (3.5) percentdown payments. I know the media makes it sound like the banks have stoppedlending all together. This simply is not true! The program that I talked about inthis article is still closing mortgages every day. Plus it is one of the most secure

programs available. The program has been around for a very long time, but gotthrown by the wayside with sub-prime mortgagewhich caused the crisis our financial system is in right now. The first program and you probably have heard of it is FHA. FHA has beenaround since the 1930s. It was designed to increase home ownership, andreduce the required down payment. Today it still accomplishes



these goals plus some. FHA today is used for first time home buyer, creditchallenge borrowers, and borrowers with no credit scores. FHA is also avaluable program for borrowers who are looking to refinancetheir homes. FHA does have credit guidelines, but they do not look at creditscores. What is the difference you are asking, for example you can have a 540

FICO score which is a low score, but as long as you have not hadany collection, judgments, or bankruptcies in the last twenty four (24) monthsthere is a very good chance you will qualify for a mortgage with FHA.Bankruptcy, FHA does allow borrowers who have filled forbankruptcy. Generally the bankruptcy has to be discharge for twenty fourmonths, but under extenuating circumstances it is possible to get an FHAmortgage after only twelve months after the bankruptcy hasbeen discharge. But you will need to document the reason for the bankruptcy,and the reason you filled must be out of your control.Qualifying for an FHA mortgage is simple. First your debt to income ratiosshould be no more than 32/44. The first number is your housing ratio. The

percentage of your monthly income going out to the proposedhousing payment including, taxes, insurance, monthly mortgage insurancepremium (MIP), and any homeowner association dues (HAO) - the secondnumber is referred to as the total debt to income ratio. This is the total percentage of your income to total debt including the proposedhousing payment. FHA does allow a non-occupying co-borrower as long as thisperson is a family member by blood or marriage. For example if your debtratios are too high to qualify for the home you want to purchase you could usea non-occupying co-borrowers income to qualify for the home you want. Also, if your FICO score is in the low 500’s, adding a non-occupying co-borrower withgood credit scores will strengthen the over all loan.

Second are the credit requirements, and these are only general rules. FHAreally has no set credit guidelines and allows for exceptions with documentedextenuating circumstances. FHA is normally lookingfor no credit collection (medical collections are always overlooked), no judgments, and no bankruptcies in the last twenty four months (24). If youhave no credit this ok as well, but you will need to provide your loan officerwith nontraditional credit, acceptable nontraditional credit references includethe followingutility bills, phone cell or land line, cable, and auto insurance. You will need toprovide three accounts with a twelve month payment history for nontraditionalcredit trade lines.

Third is down payment. FHA does require a down payment of three and half (3.5) percent, conventionalmortgages require at least five (5) percent down with minimum credit scores of 640. However the down payment can come from a gift from a friend or family member. There are also local grants, or bond money that are acceptable forms of down payment. So it is possible to get your downpayment paid for. Plus the seller can pay up to six percent (6%) of the totalpurchase for closing cost , and pre-paid items such as



taxes, insurance and days of interest. FHA has very competitive rates.Mortgage rates change daily, but on most days FHA has the same rates asconventional loans, so FHA borrowers are getting the same rate on a thirty yearfixed mortgage as someone with excellent credit. FHA also has lower mortgageinsurance premiums than conventional loans.

Mortgage insurance is paid to the lender anytime a loan to value is greater thaneighty (80) percent it is to protect the lender in case of loan default.Conventional mortgage insurance is based off credit score and loan to value.Rates start at fifty basis points (.0005) of the loan with excellent credit, andgoes has high astwo points (.02) percent. FHA has a upfront premium that is financed into theloan of one and three quarter (1.75) percent, and a fixed monthly premiumregardless of credit at fifty five basis points (.00055). To calculate your monthly mortgage insurance premium take your base loanamount multiply by your mortgage insurance factor. For example base loanamount of $90,000 * .00055 = $49.50 a month.

FHA Loans & Bankruptcy - Can I Get Approved?With the rise of Bankruptcies in our nation as a result of the recent financialupheaval many are wondering if they will qualify for an FHA Home loan with arecent bankruptcy on their credit report and in county records. Others may be seeking other types of conventional financing. In eithercase they would like to know how a past bankruptcy will affect their ability toobtain a mortgage. The matter gets a little morecomplicated since a Chapter 7 and a Chapter 13 will bring to bear differentqualifying guidelines dependingon which loan program the borrower is seeking.

Chapter 7 bankruptcyChapter 7 bankruptcies should be discharged for at least 2 years in order toqualify for a loan. If the discharge date was more than 12 months but less than24 months then extenuating circumstances must bedocumented. Not being able to sell a home due to a job loss or transfer wouldnot qualify as an extenuating circumstance. The borrower must re-establishedcredit and show a payment history to the new creditors. It will also require thelender to document that the situation that led to the bankruptcy nolonger exists. The reason for this is simply that the lender does not want to seethe borrower get into financial trouble again. Document what led to the

bankruptcy and how habits of the borrower have beencorrected. Also, the probability of filing again sometime in the future has beengreatly diminished due to proof of financial responsibility. Mainly itdemonstrates the ability to handle the overall household financesespecially in regards to being able to make a mortgage payment on a timely basis each month.Chapter 13 bankruptcy



Chapter 13 requires that 12 months of payout have occurred and that thepayments have been made on time. Also, the court would have to givepermission to enter into a mortgage transaction. What this meansis that a person could be in a Chapter 13 currently and be able to obtainfinancing if all other underwriting guidelines are met. No sub prime lenders

allow a current chapter 13 to be underwritten. That’s why thistype of mortgage is so helpful to many people and you get market interest ratesrather than sub prime rates with pre-payment penalties. There are no prepay penalties on an FHA loan. So, in essence a Chapter13 is treated kind of like a consumer debt. Borrowers must show 12 months of payments made on time. Many home buyers need this information. They’vebeen told by their local bank or by conforming lendersthat they don’ t qualify and so their hopes and dreams are dashed thinkingthey can’t purchase a home for several more years. This information shouldcause them to contact a lender who specializes in FHA homeloans and see about getting approved.

Similar to a Chapter 13 Bankruptcy would be a Consumer Credit Counselingscenario. People who have elected this route to pay down their debts should berelieved to know that they also can apply for a mortgage as long as they meetsimilar guidelines. They must show that they have made payments for 12months in a timely fashion and get permission from the counseling agency topurchase a home and incur new debt.In all 3 scenarios listed above it is important to not incur any derogatory credit.- Absolutely none whatsoever. Just put yourself in the underwriters’ shoes. There is a BK7 or BK13 or CCC and derogatory credit after thedischarge or during the repayment period - how do you think that will look? Itwill look like

the person has complete disregard for paying their bills on time. We all knowthat situations arise that prevent bills to be paid on time, however, most of these are not extenuating circumstances from a lender’s perspective.For those of you who meet these basic guidelines set forth above take the timeto contact a mortgage professional who is an expert in FHA loans and see if youcurrently qualify to purchase a home.

Typical Lender Required Repairs For FHA LoansIf you are interested in using the FHA 203K Loan program to fund repairs on your home or a home you are interested in purchasing, there are some repairsthat are required. The lender and the FHA want to know that their investment

will be protected, and as such you will have to add these repairs to your workwrite up in order to get approval for the loan.

Standards for Energy Efficiency The Department of Housing and Urban Development (HUD) wants all homesthat are renovated under theFHA loan program to be as energy efficient as possible. For this reason, thereare several required repairs



that contribute to better energy efficiency in the building. Doors and windowsmust be weather stripped if the weather stripping is old and worn. The outside of the building must beinspected for openings or cracks, and these must be sealed or caulked.If you are opening any walls on the exterior of the home, such as to replace the

drywall, you will need to re-insulate behind the wall. You do not have to removewalls for the purpose of insulation, however. It simply must be done if the wallsor ceilings are opened. Also, attic and crawl spaces must be ventilatedadequately.If you are replacing any HVAC systems, you will need to insulate around thesupply and return pipes and the ducts in any parts of the home that are notheated or cooled by the system. You also must notpurchase a unit that is too large. The unit cannot be more than 15 percentlarger than the house needs, unless the manufacturer does not make a unitthat fits better than the one you have chosen.

Renovations Required for Safety The FHA does not have many safety requirements. Of course, all repairs mustkeep the home up to the city’s coding standards. The only safety requirementthat the FHA gives applies to smoke detectors. All sleeping areas must have atleast one smoke detector located adjacent to the room.

Requirements for the First $5,000. The first $5,000 of the loan amount must be used for major repairs to theexisting structure. Cosmeticrepairs can be included in the loan, but they may not make up the first $5,000 you are given. Repairs that qualify for the first $5,000 include the following:

* Repairing structural damage* Repairing termite damage* Making the home handicapped accessible* Installing new HVAC systems* Septic or well installation or connection to city sewer* Fixing the roof, flooring, or gutters* Major changes to landscaping* Major projects that increase aesthetics, such as adding new siding or acovered porch.Once you have $5,000 of major repairs in your work write up, you can beginincluding minor cosmetic items like new paint or trim.

In addition to these requirements, each individual lender may have repairs thatthey want to see done to the home. Remember, the lender wants the home tobe sellable in the event that you do not repay what you owe, thus the reasonfor required repairs. This is not a problem, however, because the money will bemade available in the FHA 203K Loan for these items.



Keys to Buying a Condo With an FHA Loan In This Market There are great bargains to be had for FHA Loan borrowers on condos andtown homes in today’s market,as long as you are educated and make the right choice on which condo or townhome to purchase.

Here are some advantages of condos vs. single-family-homes for FHAHome Loan borrowers:• Condos usually have lower overall prices than single-family-homes• Affordable condos can often be found in prime neighborhoods and primeareas with good schooldistricts. Areas where prices of single-family-homes are out of reach• I think this is an important point. You can often find a condo that you couldafford in the really primeneighborhoods, beach areas, and great school districts. Where a single-family home in that same area

would sometimes be completely out-of-reach. Owning a condo in these types of neighborhoodsallows you to enjoy living close to amenities, great schools, beaches etc…Where if you bought asingle-family-home for the same price or more you would be in a below averageneighborhood withpoor schools and less parks, beaches and amenities.• Condo owners are responsible for less upkeep and less maintenance thanowners of single family homes• With a condo, generally the owner is only responsible for the interior of the

condo and thehomeowners-association is responsible for all the exterior areas• This means you don’t have to worry about mowing the lawn, roof leaks,exterior painting, etc…

Here are some dis-advantages of condos vs. single-family homes for FHALoan borrowers:• Single-family homes can hold their value more Although not true in every case, generally single-family homesgo up first in value and go down last• Condos and Town homes have homeowners association dues

• Condos and Town homes have to be approved by FHA in order to use a FHAHome Loan to Purchase

Below is some important research for FHA Home Loan borrowers toconduct prior to purchasing a condo:• Make sure the condo is approved by FHA. You can find this out by contactingus.



• Find out the percentage of owners vs. renters in the complex by contactingthe homeowners association• Make sure the homeowner association (HOA) is financially sound and hasadequate reserves to cover repairs so there are no special assessments. A ruleof thumb is 25%-30% of the HOA gross annual income should be in reserves.

• Check with the HOA to find out if there are any pending special assessments.A special assessment is afee the condo HOA will ask you to pay above and beyond your monthly HOAdues to pay for condorepairs the HOA does not have enough cash for.• Get a copy of the CC&R’s from the HOA and read them• Get the latest copy of the HOA’s meeting minutes to review• Check to see that there is no pending litigation against the HOA or againstthe builder• Check to see how HOA dues compare to nearby condors• How long has the complex been managed by the same company? The longer

the better.• Ask other condo owners what the like most and least about living there• Check the soundproofing the of the common wallIf you do your research up front you can often buy a condo with a 3.5% downFHA Loan that will be atremendous investment for you and that you will enjoy for years to come.Please contact us to get preapprovedfor a FHA Home Loan to be ready to purchase your dream condo today.

Credit Score Tips For FHA Home LoansKeeping a close watch on your credit score is essential for getting a FHA Loan.

Although FHA Loans and notcredit score driven and can be fairly lenient when it comes to credit scores, it isstill very important to becareful and watchful of your credit at all times. In this article I will discusssome tips to keep your creditoutstanding and also tips to raise your credit score if you currently have alower score then you would like.

Basics of how credit scoring worksMortgage companies and FHA lenders use a FHA borrowers numerical creditscore as part of the process in making the decision whether to extend credit

through a FHA Loan to that borrower. There are 3 differentcredit bureaus that your creditors report to; Equifax, Trans Union andExperian. Each of these credit bureaus have a scoring model where they analyze your total credit history and produce a score from 300 to 850. 300being the worst possible score a borrower could have and 850 being the bestpossible score a



borrower could have. When FHA loan companies like ours do a credit checkduring the pre-approval process, we pull what is called a “tri-merge 3 bureaureport”. This credit report merges information fromall 3 credit bureaus into one report and produces 3 different credit scores. FHAlenders throw or the high score and low score and go off your middle score in

assessing your credit worthiness. It is very important that you find out what your scores are. You can contact me and I can access your full 3 bureaumortgageoriented credit report for the best picture of your credit. Or you can also go tothe individual bureau web sites to check for yourself. This won’t be a mergedreport though and it may be score differently than amortgage report that we would pull for you. But it would still give you an goodidea where you stand.

Factors That Increase Scores forSome of the factors that increase your score are:

• On-time payments, no late payments on any accounts• Keeping your revolving debt (credit card) balances at 30% or less than yourcredit limits with that creditor• No collections or judgments• Having enough credit lines - it can hurt your score if you don’t have any orenough lines of credit• Time since first opened line-of-credit. If you cancel credit cards, cancel thenewer ones first, try to keep the older ones that you have had for a while.• Time since derogatory items first occurred. The saying “time heals allwounds” also applies to dings on your credit, the more time that lapses since alate payment.

Factors That Hurt Scores These are of course the opposite of the above.• Late payments are the #1 thing that can really hurt your credit score. Youhave to be a maniac about making every payment on time and never having alate payment on your credit. Set your credit cards, car payments, student loansand other obligations on automatic payments so you never miss a payment• Try not to “max-out” your credit cards - keep them at 30% or less of yourcredit limit• Don’t let unpaid items go to collections, try to negotiate with creditors. If youhave a collection on your report, it will not improve your score to pay it off. This

is counterintuitive, but it is how the credit scoring system works. If you have acollection it is better to wait until right before you close on yourhouse with your FHA Loan before paying off. VA lenders may or may not ask you to pay off collections prior to close• It is good to keep at least 4 credit lines open. A credit line can be a car loan,student loan, home loan,or another type of loan. You can open up a credit card and just use it forrequired life expenses such



as groceries, but pay it off every month.• And of course bankruptcies, foreclosures, short sales hurt your credit.However 2 yrs after a Chapter 7 bankruptcy you are eligible for a FHA Loan(less than that if you can document extenuating circumstances), 3 years after aforeclosure and 2 years after a short sale. I have seen borrowers with

terrific credit scores only 2 yrs after a bankruptcy, so all is not lost.

How To Quickly Raise Your ScoreIf you currently have a credit score too low to obtain a FHA Loan, don’t give up,there may be a way to quickly raise your credit score to qualify for a FHA Loan.At www.socalvaloans.com we have available to us a way to work with the creditbureaus to do a “rapid re-score” and sharply increase your credit score in 2-5days. We also have a software tool to analyze different things you could changeon your credit and how much that change would raise your score. OK, so nowon to some quick tips to raise your score:• First make sure you get a merged credit report from all 3 bureaus (we can

obtain for you) and gothrough every detail and make sure there are no mistakes. If you find mistakescontact that creditorimmediately and have them remove the mistake from your report• If you have credit card balances that are 30% or more than your credit limits,try to either pay those cards down to 30% or transfer the balances to othercards where you spread out you credit card debt to more than one card whereno balances are above 30% of your credit limits.• If you have collections or judgments on your credit report, call the creditorsand ask them if they would be willing to delete the item from your report if youpaid some or all of collection. It’s important to get in writing that they will NOT

just mark the item paid on your credit, that they actually DELETE the itementirely from all 3 credit bureaus.• If you do not have “enough” credit, open a store card or something like that toget more lines of credit. But be careful with applying too many places at once,as too many inquiries can hurt your credit. Once your complete some of theseactivities to raise your credit, we can do a “rapid re-score” and havenew credit score for you in 2-5 days! So these are some items to keep in mindwhen you are getting ready to buy or refinance with a FHA Loan. Please call ustoday for a free evaluation and counseling regarding your current creditsituation.

FHA Streamline Refinance - Dramatically Drop Your PaymentsFHA Home Loan Refinance Options1. FHA Streamline RefinanceOne of the great features of FHA home loans is the ability for borrowers toeasily reduce their FHA mortgage interest rates by refinancing to a lower rate30 year fixed FHA home loan. If you currently have a FHA loan you can takeadvantage of this program to refinance your FHA mortgage into a lower interest



rate. This special refinance does NOT require an appraisal, incomedocumentation or credit report! This makes it a super easy, painless process torealize huge savings. Current mortgage interest rates are closeto 40 year lows, so there is an opportunity to lower your payment substantially.You must already have a VA loan to take advantage of this VA rate reduction

refinance. The table below shows the savings of refinance from a 6.75% rate toa 5.75% rate.

These rates are examples Loan Amount Payment at 6.75% Payment at 5.5%Yearly Savings $150,000 $972 $851 $1,452$200,000 $1,297 $1,135 $1,944$300,000 $1,945 $1,703 $2,904$400,000 $2,594 $2,271 $3,876

2. Refinancing from a NON FHA Home Loan to a FHA Home LoanIf you currently have a mortgage that is NOT a FHA home loan, you can alsorefinance into a 30 year fixed (or 15 year fixed) VA home loan. This may beparticularly attractive to you if you are currently in a adjustable rate loan. Inorder to complete this FHA loan refinance, you would need to have yourproperty appraised and provide your credit and income documentation. Another greatattribute of FHA mortgages is that you can have a loan up to 97% of yourproperties value. This makes many people eligible for arefinance even if your property value has fallen.

3. Cash Out FHA Refinance LoanWhether you currently have a FHA home loan or NON FHA home loan, you canrefinance into a new FHA loan and get cash back. This loan allows you to go upto 95% of the property’s value. In order to complete this FHA loan refinance, you would need to have your property appraised and provide your credit andincome documentation. This FHA refinance can be a great way to get cash todo home improvement projects. Perhaps you want to redo your kitchen,bathrooms, floors or landscaping. Or, you may want to pay off higher interestrate autoloans or credit cards and thus “roll them” into a low rate 30 year fixed VA loan.A big advantage to using a cash-out FHA home loan to complete home

improvement projects or to pay off higher interest rate debt is that once thatthis expenses are not tax deductible since they are part of your FHA mortgage.Additionally, you have the security of a 30 year fixed rate.So as you can see there are some really great options to refinance into a FHAloans to change your situation for the better. If you have any questions, pleasegive me a call and we can analyze your situation and discuss all the optionsavailable to you. We are a fully FHA approved mortgage company andspecialists with FHA lending.



Using FHA Home Loans to Buy 2-4 Unit PropertiesA terrific way for home buyer to utilize FHA home loans is to purchase a 2-4unit property where the FHA borrower occupies one of the units as theirprimary residence. FHA home loans are very unique in that they allow a FHA

borrower to buy a 2 unit property with only 3% down payment and a 3-4 unitproperty with 15% down payment if they plan to occupy one of the units as theirprimary residence! This is extraordinary. Yes you heard it correctly; you couldbuy a 2 unit building and put only 3% down.Benefits of purchasing 2-4 units as a primary residence There can be some really great benefits to using FHA home loans to purchase a2-4 unit property vs. a single-family home. The most obvious benefit is that youwill receive the rent from the other units to help offset your own housingpayment. In fact over time, you could get to the point where the rent fromthe other units pay the ENTIRE housing payment and you live without a

housing payment! Imagine what it could do for your budget if you did not havea house payment. And even better, the rents from the otherunits could not only one day pay the entire housing payment on the property,but they could also give you additional income on top of that. Now if you wereto buy a condo or single-family home, you have to make the entire housingpayment yourself. You would not have rents from other units.In addition, you could one day move out of your 2-4 unit property to move upto a nice primary residence and retain the 2-4 unit property as an investmentfor life. Over time this property would appreciate in value and also provide youwith cash flow for your retirement.Using the rents from the other units to help you qualify

A wonderful aspect of using FHA home loans to buy a 2-4 unit property is that you can use the rental income from the other units to help you qualify for theFHA loan. For example, if you were to buy a 4 unit property where the 3 units you would be renting would bring in $1,000/mo income each, you coulduse 90% of that $3,000 in rental income to help you qualify for the loan. Thiscan enable a FHA loan borrower to qualify to buy when if they were to buy acondo or home without rental income they wouldnot qualify.So as you can see, using your FHA home loan benefits can be an outstandingway to buy your primary residence and also provide you with a tremendousinvestment for your entire life.

WASHINGTON — As part of the Treasury Department’s consumer outreacheffort and with the April 15 individual tax filing deadline approaching, theInternal Revenue Service today began a concerted effort to educate taxpayersabout additional options at their disposal to claim the new $8,000 first-time



homebuyer credit for 2009 home purchases. For people who recently purchased a home or are considering buying in the next few months, there areseveral different ways that they can get this tax credit even if they’ve already filed their tax return.

The Treasury Department encourages taxpayers to explore these options tomaximize their credit and get their money back as fast as possible.

“The new credit can get money in the pockets of first-time homebuyersquickly,” said IRS Commissioner Doug Shulman. “For people who recently purchased a home or are considering buying in the next few months, there areseveral different ways that they can get this tax credit even if they’ve already filed their tax return.”

First-time homebuyers represent a significant portion of existing single-family home sales. The expansion in the first-time homebuyer credit will make it

easier for first-time homebuyers to enter the housing market this year.

Under the American Recovery and Reinvestment Act of 2009, qualifyingtaxpayers who purchase a home before Dec. 1 receive up to $8,000, or $4,000for married individuals filing separately. People can claim the credit either ontheir 2008 tax returns due April 15 or on their 2009 tax returns next year.

The filing options to consider are:

• File an extension. Taxpayers who haven’t yet filed their 2008 returnsbut are buying a home soon can request a six-month extension to

October 15. This step would be faster than waiting until next year toclaim it on the 2009 tax return. Even with an extension, taxpayerscould still file electronically, receiving their refund in as few as 10 dayswith direct deposit.

• File now, amend later. Taxpayers due a sizable refund for their 2008tax return but who also are considering buying a house in the next fewmonths can file their return now and claim the credit later. Taxpayerswould file their 2008 tax forms as usual, then follow up with anamended return later this year to claim the homebuyer credit.

• Amend the 2008 tax return. Taxpayers buying a home in the nearfuture who have already filed their 2008 tax return can consider filingan amended tax return. The amended tax return will allow them toclaim the homebuyer credit on the 2008 return without waiting untilnext year to claim it on the 2009 return.

• Claim the credit in 2009 rather than 2008. For some taxpayers, itmay make more financial sense to wait and claim the homebuyer credit



next year when they file the 2009 tax return rather than claiming it nowon the 2008 tax return. This could benefit taxpayers who might qualify for a higher credit on the 2009 tax return. This could include peoplewho have less income in 2009 than 2008 because of factors such as a job loss or drop in investment income.

The IRS reminds taxpayers the amount of the credit begins to phase out fortaxpayers whose modified adjusted gross income is more than $75,000, or$150,000 for joint filers. Taxpayers can claim 10 percent of the purchase priceup to $8,000, or $4,000 for married individuals filing separately.

IRS.gov provides more information, including guidance for people who boughttheir first homes in 2008. To learn more about the overall implementation of the Recovery Act, visit www.Recovery.gov.

Download from IRS Site http://www.irs.gov/pub/irs-pdf/f5405.pdf

this special report was provided by al chapman a

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