Facts on the Energy-Efficiency Tax Credit

 

Take advantage of improved tax credits available for a number of energy-efficient home improvements. Find a professional remodeler in your neighborhood at www.nahb.org/remodel to get excellent advice – and your assurance of a project well done.

 

The Existing Home Retrofit Tax Credit (Tax Code Section 25C): Tax credits are available at 30 percent of the cost, up to a $1,500 lifetime limit, for installation in 2009 & 2010 (for existing homes only) of these products:

 

Building envelope components (Installation costs not included):

• Insulation material or system
• Exterior window, skylight, door, storm window or storm door with a U factor of .3 or below
• Metal or asphalt roofs that resist heat gain

Qualified energy products (Installation costs may be included):

• Electric heat pump water heaters that yield an energy factor of at least 2.0 in the standard Department of Energy test procedure.
• Electric heat pumps and central air conditioners that achieve the highest efficiency tier established by the Consortium for Energy Efficiency as of Jan. 1, 2009.
• Natural gas, propane or oil water heaters with an energy factor of at least .82 or thermal efficiency of at least 90 percent
• Biomass burning stoves with a thermal efficiency rating of at least 75 percent as measured using a lower heating value
• Natural gas and propane furnaces that achieve an annual fuel utilization efficiency rate of not less than 95
• Natural gas, propane, or oil water boilers and oil furnaces that achieve an annual fuel utilization rate of not less than 90
• Advanced main air conditioning fans with annual electricity use of no more than 2 percent of the total annual energy use of the furnace

The Wind, Solar, Geothermal and Fuel Cell Tax Credit (Tax Code Section 25D): Tax credits are available at 30 percent of the cost, with no cap through 2016, for existing homes and new construction, for:

• Geothermal Heat Pumps
• Solar Panels
• Solar Water Heaters
• Small Wind Energy Systems
• Fuel Cell

The energy-efficiency home products must be “placed in service” between Jan. 1, 2009 and Dec. 31, 2010. The credits are only valid for improvements made to the taxpayer's principal residence, except for qualified geothermal, solar, wind property, which can be installed on any home used as a residence by the taxpayer.

 

Home owners can claim the 25C and 25D credits on Form 5695 when they file their income tax returns. Check with your tax professional to ensure correct application of the energy-efficiency tax credit. Retain all receipts as well as records that include:

 

• Name and address of manufacturer
• Identification of the class of eligible building envelope component
• Make, model number and any other property identifiers
• A statement that the component is eligible for the credit (may include U factor, class of window or door, etc.)

For a short, one-page description of the energy efficiency tax credits, download this fact sheet.

 

IRS Clarifies What Qualifies for Home Owner Energy Tax Credit

 

The Internal Revenue Service has published new guidance on Internal Revenue Code Section 25C, which allows up to a $1,500 tax credit for home owners who install energy-efficient windows, insulation and other qualifying products. The tax credit is equal to 30 percent of the qualified energy efficiency expenses paid by the home owner, but it is limited to $1,500 for improvements made during 2009 and 2010.

 

Notice 2009-53 explains the requirements for home owners to claim the 25C credit and provides detailed technical information regarding what improvements can qualify. Home owners can claim the credit only for improvements made to an existing home. However, NAHB has learned from the IRS that tax credit-qualified improvements installed in an addition to an existing home also qualify for the 25C program.

 

Among the highlights:

 

• Tax credit eligible products must be reasonably expected to remain in use for at least five years. One method taxpayers can rely on to satisfy this requirement is to purchase products from a manufacturer who offers a warranty lasting at least two years at no additional cost.
• Not all Energy Star-rated products that are installed qualify for the tax credit. The Energy Star Web site includes a detailed listing of products that qualify for the section 25C program.
• The credit excludes installation costs for building envelope components — such as insulation and windows. In order for the home owner to claim the credit, the remodeler must provide an itemized breakout of the cost of these installed products, minus any labor or installation charges.

Also of importance, Notice 2009-53 provides the set of transition rules for qualified products installed before June 1, 2009. For these installations, taxpayers can claim for tax credit purposes the installation of property that meets less stringent energy efficiency requirements.

 

In particular, taxpayers can claim the credit for installation of windows and skylights that meet Energy Star requirements, requirements listed under prior IRS Notice 2006-53 or manufacturers’ certifications for 25C made under IRS Notice 2006-53. For installations on or after June 1, the requirements listed in Notice 2009-53 and described above are binding.

 

NAHB Teleconference on Claiming Energy-Efficiency Tax Credits

 

Newly expanded federal tax credits for energy efficiency are providing consumers with added incentives for upgrading their homes. Homeowners now can claim up to $1,500 in tax credits for remodeling their principal residence to reduce energy consumption through the enhanced Existing Home Retrofit (25C) tax credit. During a media teleconference next week, NAHB’s Director of tax issues discussed how to take advantage of the credit, while three professional remodelers from around the country provided examples of the types of projects that may qualify, such as adding insulation, replacing doors and windows, and updating heating and cooling systems. The panelists also provided guidance on selecting a qualified remodeler and certifying home remodelers under the National Green Building Standard, which is the only national standard to certify green home remodeling and renovation projects.

To listen:

 

NAHB Energy Efficiency Tax Credit media call audio file

 

Learn more about how to plan a remodel and hire a professional remodeler

 

SUMMARY OF TAX CREDITS FOR HOMEOWNERS

  

This information comes from Energy Star, for more information visit the Energy Star Web site at www.energystar.gov/taxcredits.

FINANCIAL STRATEGIES FOR DIVORCE SITUATIONS

There are over 1.4 million divorces in the US every year. Here are some tips and strategies on how to maintain your lifestyle after a divorce and how to evaluate various financial settlement options prior to a divorce:


Certified Mortgage Planning Specialist professionals help you understand and evaluate the options related to disbursement of your real estate assets prior to the divorce settlement. This could include an evaluation of whether you should:

• Sell or refinance your home or other properties in order to buy-out an ex-spouse
• Accept or pay spousal support, child support or a higher cash flow payment versus a lump sum distribution involving real estate equity.

CMPS professionals help you evaluate the cash flow and home equity protection implications of various financial decisions before, during and after a divorce. This enables you to:

• Maintain your lifestyle
• Keep your children in the same school system as a single parent
• Live in the home that meets your needs without breaking your budget
• Stay on track to achieve financial freedom and become debt-free

CMPS professionals help you enhance your liquidity and protect your real estate equity from legal liability prior to going through a divorce by working together with your CPA, CFP, attorney and other advisors.

Don't settle for an undesirable financial strategy or short-term fix if you failed to plan properly during a divorce situation. CMPS professionals help you implement a step-by-step plan for how to re-establish your financial footing after going through a financial rough spot. This may involve:

• Financing in stages - a refinancing or debt restructuring plan that takes place over time
• Sale/Leaseback or Rent-to-Own strategy - a way to keep or purchase a home or when you can't qualify for traditional financing options.

Fast Facts:

• Understand and evaluate options related to disbursement of your real estate assets
• Evaluate the cash flow of home equity protection
• Enhance liquidity and protect real estate equity
• Don't settle for an undesirable financial strategy or short-term fix

Special Tax Break for Seniors Over Age 70 1/2

In 2009, many taxpayers over age 70 1/2 are allowed to skip one year of withdrawals from their retirement accounts without penalty! Typically, you must take minimum distributions from your retirement accounts after age 70 1/2 in order to avoid paying penalties. This is known in tax lingo as a "required minimum distribution", or "RMD." Under normal conditions, the RMD rules would not be that big of a problem for most taxpayers because they simply require you to start drawing income from retirement funds that you've accumulated over the years.

However, in light of the most recent turmoil in the financial markets, now is really not a good time for most people to be selling investments at depressed market prices in order to draw income from their retirement accounts and meet the RMD rules. That is why Congress and the President agreed to waive the RMD rules for one year — 2009 — and allow many seniors age 70 1/2 and older to leave their money in their retirement accounts. If you meet the requirements for this new law and decide to leave your funds in your retirement accounts, you could potentially achieve two enormous benefits:

1. You could avoid depleting your investment accounts after they have declined in value due to adverse market conditions
2. Your retirement accounts could be better prepared to participate in potential investment gains if the financial markets recover in 2009

Interestingly, since 1926, we have had 13 bear markets total, 9 of which (including the current bear market) were combined with a recession. In the 8 prior bear market-recessions, the average decline on the S&P 500 was -39%. The average 1 year return on the S&P 500 after the lowest point of the bear market was +46%. In other words, if history is any guide, the markets could recover quite nicely once this bear market is over. If you keep your funds invested in 2009 instead of taking minimum distributions, this could pay off well for you.

Of course, it is important to note that I am providing this information to you as your mortgage planner, in order to make you aware of some of interesting ideas that may benefit you. I am not an investment, tax, or legal advisor, and this information does not constitute legal, tax or investment advice. I definitely recommend that you consult with properly licensed legal, tax and investment advisors for specific advice pertaining to your individual situation.

Whether or not you decide to take minimum distributions from your retirement accounts in 2009, another idea you may consider is to potentially take advantage of the historically low mortgage rates that are currently available. Mortgage proceeds could be used for any purpose including gifting or loaning funds to relatives and/or providing extra funds for your own situation. It is always advisable to consult with a Certified Mortgage Planning Specialist^TM (CMPS®) when navigating today's turbulent mortgage and real estate marketplace. As a CMPS® professional, I am committed, qualified and equipped to help you evaluate your mortgage options!

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used, by any person for the purpose of (i) avoiding tax-related penalties or (ii) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

IMPROVING YOUR CREDIT RATING

CMPS professionals are committed, qualified and equipped to help you improve your credit rating. Your credit scores usually determine the price you pay for your money (your mortgages, your auto loans and leases, your credit cards, business loans, etc.).

Perhaps the most significant part of your credit report is your credit score. Credit scores range from 350 to 850, with 850 being the best possible credit score that you could receive, and 350 being the worst possible credit score. There are five factors that determine your credit score:

Your Payment History - 35% impact on your credit score. Paying debt on time and in full has a positive impact. Late payments, judgments, charge-offs, collection accounts and bankruptcies have a negative impact. One of the most important issues as far as payment history is whether or not you have had any late mortgage payments in the last 12 months. Timely mortgage payments are weighted heavily by the scoring systems and are one of the most vital requirements that lenders look for when evaluating your credit history. Many times a single late mortgage payment within the last 12 months can hold up your file or spell the difference between the best interest rate and the next credit level. This is not to say that your mortgage is the only debt you should pay on time. Your payment history on other debts (car payments, credit cards, etc.) is also given a lot of weight.

 

The credit scoring systems evaluate how many late payments you have had and whether they were 30, 60 or 90 days late, or whether they are currently in default, with default being the worst situation. Additionally the systems look at whether the late payments were consecutive. If you only have one or two minor late payments on your report with no other derogatory marks, your score will not be terribly affected, but you will have a tough time getting over the critical 700 level.

 

Bankruptcies and judgments are another major area of importance. If you have had any bankruptcies within the last 7 years, it will seriously affect your ability to borrow or establish new credit accounts. Additionally, if you have had any judgments within the last several years, it is very important that you pay off the judgment and get a "satisfaction of judgment" from the court. Any unsatisfied or recent judgments will make a bad dent in your credit scores and adversely affect your ability to borrow. Usually, judgments and liens must be paid prior to the closing. However, in some cases, they can be paid out of the loan proceeds.

 

Here are four practical steps that you can implement to improve your credit score in the area of "Payments":

 

1. Make all your payments on time. 
2. Past dues on any account will destroy your score - bring your delinquent accounts current immediately. A 30 day late payment one month ago is worse than a 90 day late payment three years ago.
3. Pay your bills before they go to a collection agency.
4. Check your credit report for accuracy on a regular basis; and make sure that disputed bills are not negatively affecting your credit scores.

 

The Balance You Owe vs. Your Available Credit Lines - 30% impact on your credit score. Keeping your credit balances below 50% of your available limit is very important. Keeping your balances below 30% of your available credit is even better. This is perhaps the single most misunderstood part of credit scoring. There are a lot of misinformed people that don't understand how the credit scoring systems work, and yet they insist on pretending to be experts in this area. Here are just a few of the common myths:

 

1. You should close all your credit accounts if you are not using them. 
2. You should not have credit accounts appear on your report after they have been closed. 
3. You should not have any open credit card accounts at all.
4. You should not have high limits on your credit lines.

First of all, the credit scoring system looks at the percentage of debt that you owe compared to your overall credit lines - not the amount of credit that you have available to you. For this reason, most of the time it is better to leave your credit accounts open. By not using the credit that is available to you, the system regards you as having enough financial restraint and discipline not to overload on debt.

Remember, the credit scoring system looks at the percentage of debt you owe compared to your overall credit line.

 

For instance, if you owe $10,000, and you have $100,000 of credit available to you, you are only using 10% of your available credit line. On the other hand, if you owe $10,000 and you only have $20,000 of credit available to you, you are using 50% of your available credit line. This is negatively interpreted by the credit scoring system as being a strong dependence on credit. Furthermore, if you owe $10,000 and you only have $10,000 available to you, you have "maxed out" your available credit and your credit scores will be very negatively impacted. Therefore, it is not how much you owe, but how much you owe compared to what you are able to borrow.

 

Additionally, if you have no debt and no credit lines open or available to you, you will end up with a lower score than someone who has no debt and a few lines of credit available to them. Financing is a game of percentages and ratios. The credit scoring system does not look at the dollar amount of debt you have; only the balance you owe, compared to how much credit is available to you.

 

Here are three practical steps to improve your credit score in this area:

 

1. Do not close your credit accounts unless it is necessary to do so. It is better to have many open accounts with little or no balance than to have just one or two accounts regardless of the balance.
2. Do not concentrate large balances on just a few accounts. Pay outstanding debt down as close to zero as possible, and evenly distribute the remaining balance across all your open credit lines. The key is to keep the balances down below 30% or at the very least 50% of your available credit line(s).
3. Call your credit card companies and try to increase your available credit lines if they can do so without pulling a new credit report. 

Your Credit History, or how long your accounts have been opened - 15% impact on your credit score. The longer your accounts have been opened, the higher your score will be; newly opened accounts will bring your score down.


Here are three practical steps for you to improve your score in this area:

 

1. Do not close your credit accounts. If you have too many department store credit cards, close the newest ones - do not close the old accounts. If you keep your accounts open and use them every once in a while, your score will improve over time.
2. Think twice before jumping on that latest 0% credit card offer or opening a new card just to get a 10% discount at a department store.
3. If you dont have much of a credit history, and you are planning on taking out a mortgage in the future, it would probably be a good idea to establish a few open credit lines with little or no balance on them. Although newly opened accounts tend to lower your score initially, they will improve your score once they have been open for awhile, somewhat active and paid off with little or no balance.  

The type of credit that you have open - 10% impact on your score. A good mixture of auto loans and leases, credit cards and mortgages is always best. Too many credit cards is not a good thing, and having a mortgage does increase your score.

  

Practical steps to improve your score in this area are:

 

1. Having 3-5 revolving credit cards open is optimal.
2. Having a good mix of auto loans, credit cards and mortgages is positive for the score; rather than having a concentration in credit cards only.

The number of recent inquiries that have been made by creditors - 10% impact on your credit score. Inquiries affect the score for one year from the time the inquiry is made. Personal inquiries do not count toward your score. In other words, you can check your credit report as often as you like and that wont affect your score. The score is only affected if a potential creditor checks your credit. Potential creditors include credit card companies, auto finance companies, department stores and mortgage companies.

 

The reason that inquiries impact your credit score is because the scoring system assumes that if you have many recent inquiries, you must be strapped for money and in some type of "panic" mode, trying to get credit wherever you can find it. The system also assumes that all these inquiries will eventually result in new accounts being opened, and as stated before, the system doesnt like you to open new accounts and punishes you by giving you a lower credit score.

 

 

Here are three practical steps that you can take to improve your credit score in this area:

1. Multiple auto and mortgage inquiries are treated as only one inquiry if made within 45 days of each other. So, it is better to shop for a car or a mortgage over a two week time-frame, rather than to prolong it over a longer timeframe.
2. Don't apply for a lot of credit or open multiple credit cards at the same time.
3. If you are thinking of applying for a mortgage within the next 90 days or so, it would be good to wait until after your mortgage closes before you apply for any new credit. 

CMPS professionals help you implement these and other strategies that improve your credit rating.

What are the options if I owe more on my mortgage than the value of my home?

 

Option 1

Continue making your payments on time and ride out the storm

Your lender cannot take your home away as long as you make your payments on time. Therefore, if you want to keep your home and you can afford your payments, you should do whatever it takes to continue making your payments on time. Although it is a hard pill to swallow, this is likely to be your best option because it is the most responsible thing to do and it protects your credit rating.

Even if you are experiencing other financial difficulties and you are faced with declaring bankruptcy, you are not required to include your home in the bankruptcy. For more information, check with an attorney who is familiar with the laws of your state.

 

Option 2

Stop making your payments and go into foreclosure

• This is probably the worst decision you could make, but depending on your circumstances, you may have no other choice. Foreclosure laws vary from state to state, but here are a few things to keep in mind:
• Foreclosures reflect very negatively on your credit rating and could preclude you from borrowing money through credit cards and car loans. In fact, if you become delinquent on your mortgage, this will likely have an immediate negative impact on the interest rates and terms of all your credit cards. Credit card companies typically have the right to increase your interest rates, close your accounts and/or reduce your credit limit as soon as you default on any other debt (including your mortgage).
• Fannie Mae, which is very influential in setting the mortgage guidelines, has recently updated their lending rules to state that individuals who have gone through foreclosure need to wait anywhere from 3-5 years before qualifying for a new mortgage. This means that it will be very difficult, if not impossible, for you to buy a home and qualify for a new mortgage for at least 3-5 years.



 

Option 3


Try to modify the terms of your mortgage

• Nearly everything in life is negotiable — this includes the current status of your mortgage. You could either hire an attorney or try to call your lender yourself and renegotiate the terms of your loan. Keep in mind that your chances of success are always better if you get an attorney involved. In that case, make sure to get references from the law firm of clients they worked with resulting in successful modifications. Remember, lenders would rather not have you go all the way through foreclosure if it can be avoided. In fact, after regulators took over the failed IndyMac Bank, Sheila Bair who is the Chairman of the Federal Deposit Insurance Corporation (FDIC) said, "We will very aggressively pursue loan-modification strategies for unaffordable loans to make them affordable on a long-term, sustainable basis."



Option 4


Try to sell the home on the open market as part of a "Short Sale"


• A short sale is where a property owner sells property for less than what is owed on the mortgage. The mortgage lender is asked to approve the sale and forgive the difference between the sales price of the property and the remaining balance of the mortgage. Consider this example:
• $200,000 sales price
• $250,000 mortgage balance
• $50,000 difference that is forgiven by the mortgage lender
• Understand the impact on your credit rating — a short sale has virtually the same negative impact on your credit rating as a foreclosure. Both short sales and foreclosures are treated as "settled accounts." In other words, the lender is settling with you and agreeing to be paid less than what they are legally entitled to receive. Therefore, you are developing a reputation for paying back to your lenders less than what you originally agreed to pay them, and this reflects negatively on your credit rating.
• Understand the new Fannie Mae rules — depending on how your short sale is structured, beginning August 1, 2008, an individual who has sold a home as part of a short sale may not be able to qualify for a new mortgage for another 2 years!
• Understand the tax impact — depending on the type of mortgage and property you have, you may be subject to income taxes on the portion of the mortgage that is being forgiven by the mortgage lender! If the forgiven mortgage debt is attached to your primary home and the mortgage balance itself was originally used to buy, build or improve your home, income taxes would not apply. However, unless you are deemed to be "insolvent," forgiven mortgage debt on second homes and investment property is taxed, as well as all forgiven debt on your primary home where cash-out loan proceeds were not used for home improvement.



 

Option 5

Consider a sale-leaseback or rent-to-own strategy


• A sale-leaseback is where you sell your property to an investor (as part of either a short sale or traditional sale), and then you lease it back from the investor. This allows you to remain in your home without the trauma of having to move away and find new housing. The thing to be cautious of is that some variations of the sale-leaseback strategy are centerpieces in some of the so-called "foreclosure rescue" scams that prey on unsuspecting home owners. Before engaging in sale-leasebacks, consider the laws of your state, and make sure the transaction is properly and ethically structured to protect the interests of all the parties involved.
• A rent-to-own strategy allows you to find a new home now and rent it from an investor with the option of buying the home at a pre-determined price at some point over the next two to three years. You would do the house shopping and find a home where you would like to live. The investor then buys the home, preferably getting a good deal by buying a home that is being sold short or through a foreclosure. You then sign two agreements with the investor:
• Lease agreement that spells out the terms of the rent payments
• Option agreement that spells out the predetermined price and terms under which you can buy the home from the investor at some point within two to three years

 Conclusion:

 
It is always advisable to consult with a Certified Mortgage Planning Specialist^TM (CMPS®) when navigating today's turbulent mortgage and real estate marketplace. As a CMPS® professional, I am committed, qualified and equipped to help you evaluate your options!

First-Time Homebuyer Tax Credit

One of the most exciting provisions of the American Recovery and Reinvestment Act of 2009 is the $8,000 tax credit available for first-time home buyers. Combine this tax credit with the fact that home prices and interest rates are at historical lows, and it is indeed an ideal time for many first-time homebuyers to purchase a home!


Here are some things to keep in mind:

• A first time home buyer is defined as someone who has not owned a home in the last three years
• The credit amounts to 10% of the purchase price of the home not to exceed $8,000
  
• The tax credit does not need to be paid back if you continue living in the home as your primary residence for three years without selling it
  
• The home must be purchased before December 1, 2009
  
• Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit
  
• You cannot purchase the home from a related party like a spouse, direct ancestor, or direct lineal descendent (child or grandchild); however, you can still qualify for the credit if you purchase a property from siblings, nephews, nieces, and others
  
• If you are married, both spouses must be first-time home buyers
  
• If more than one unmarried individual is buying the property, the credit can be split up among all the individuals who qualify. However, the total credit taken cannot exceed $8,000

How does the tax credit work?

A tax credit is kind of like a gift certificate that you can use to pay your taxes - it reduces your income tax bill on a dollar for dollar basis. Imagine paying your bill at IRS Restaurant, and then later getting an IRS Restaurant gift certificate. Normally, you would need to go back to IRS Restaurant and buy more food in order to use your new gift certificate. But what if IRS Restaurant allowed you to just turn in your gift certificate for cash? That's how this tax credit works. One of the greatest benefits of the $8,000 credit is that you can claim it on your 2008 tax returns, even if you buy a home in 2009. All you need to do is file an amended tax return with the IRS after you buy your new home and they will send you a refund check for $8,000. Just like the example of IRS Restaurant that allows you to exchange your gift certificate for cash! Remember though, you'll receive the $8,000 from the IRS AFTER you purchase the home, so you cannot use the funds to help with your down payment.
Standardizing the mortgage planning process through participation with the CMPS community of experts.


On May 29, 2009, the Federal Housing Administration (FHA) started allowing buyers to borrow against the credit or sell it to their lender or another 3rd party in order to use the funds to help with the down payment. Unfortunately, this is only available in certain areas, contact me for more details on how this could work in your situation.

For more information about the first-time home buyer tax credit or other recent updates to the mortgage and real estate markets, just give me a call. I would be happy to assist you with your mortgage in the purchase of your new home!

To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used, by any person for the purpose of (i) avoiding tax-related penalties or (ii) promoting, marketing or recommending to another person any transaction or matter addressed in this communication. I recommend that you consult with properly licensed legal, tax and investment advisors for specific advice pertaining to your individual situation.

Four Ways the 2009 Economic Stimulus Plan Benefits Home Owners and Buyers
___________________________________________________

There are four primary sections of the 2009 economic stimulus plan that could be very beneficial if you own or are buying a home.

Benefit #1 — Expansion of Home Improvement Tax Credit

The tax credit for making energy efficient home improvements is now 30% of the cost of the improvements up to a maximum of $1,500. This means that if the improvements cost you $5,000, you would receive a tax refund of $1,500 when you file your tax returns. Eligible improvements include energy efficient exterior doors and windows, insulation, heat pumps, furnaces, central air conditioners and water heaters. Generally, your home improvement contractor and/or the manufacturer selling the improvements issues a certification that clarifies whether the improvements meet the necessary standards for energy efficiency. Most modern windows, furnaces, and air conditioners meet these requirements. If you've been holding off on making some of these improvements, now is a great time to get a move on it - especially with all the great deals that are being offered!

Benefit #2 — Expansion of First-time Home Buyer Tax Credit

The tax credit available to first time home buyers was increased from $7,500 to $8,000 for homes purchased between January 1, 2009, and December 1, 2009. Also, the credit no longer needs to be paid back as long as you live in the home without selling it for at least 3 years. The previous version of the credit expired on July 1, 2009, and required home buyers to pay the funds back over a 15 year time frame.

The income limitations remain the same ($75,000 for single tax payers claiming the full credit and $150,000 for married tax payers), as do most other qualification requirements. Also, the credit remains refundable. This means that first-time home buyers who owe less than $8,000 in taxes for the year are still eligible for the full $8,000 credit when they file their tax returns. In that case, the IRS will write you a check for the difference between $8,000 and your actual tax bill. In fact, the credit can be claimed on your 2008 tax returns that you file by April 15, 2009, even if you buy the home in 2009.

There is one catch, however: if you bought the home in 2008, the credit remains $7,500, and it still needs to be paid back over a 15 year timeframe beginning in 2011 when you file your 2010 returns.

Benefit #3 — Higher Reverse Mortgage Loan Limits

The loan limits for FHA-insured reverse mortgages have been increased to $625,500 across the entire country - not just the higher cost areas. The previous limit was $417,000 across the country. This is especially important because the FHA program is virtually the only game in town as private and jumbo reverse mortgage programs have nearly all evaporated.
Standardizing the mortgage planning process through participation with the CMPS community of experts.

This coincides with another little-known change in the reverse mortgage arena: the availability of reverse mortgages on home purchase transactions. This is a fantastic opportunity for senior citizens to buy a new home and live mortgage payment-free without having to wait for their old home to sell. Seniors could also use this strategy to buy a new home and turn the old home into a rental or otherwise wait for market conditions to improve before trying to sell the old home.
Benefit #4 — $729,750 FHA and Conforming Loan Limits Restored in High Cost Areas
The $729,750 maximum loan limit had been in force throughout 2008, but was reduced to $625,500 in 2009. The economic stimulus plan restores the $729,750 maximum. This makes higher cost homes more affordable — especially in the coastal housing markets that tend to have higher than average home values.

It is always advisable to consult with a Certified Mortgage Planning SpecialistTM (CMPS®) when navigating today's turbulent mortgage and real estate marketplace. As a CMPS® professional, I am committed, qualified and equipped to help you evaluate your mortgage options!

To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used, by any person for the purpose of (i) avoiding tax-related penalties or (ii) promoting, marketing or recommending to another person any transaction or matter addressed in this communication. Also, it is important to note that I am providing this information to you as your mortgage planner, in order to make you aware of some of interesting ideas that may benefit you. I am not an investment, tax, or legal advisor, and this information does not constitute legal, tax or investment advice. I definitely recommend that you consult with properly licensed legal, tax and investment advisors for specific advice pertaining to your individual situation.