$8,000Tax Credit For 1st Time

Home Buyers

Congress Enacts Bigger & Better Home Buyer Tax Credit!

A tax credit of up to $8,000 is now available for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009. Unlike the tax credit enacted in 2008, the new credit does not have to be repaid. .

The first time home buyer tax credit that is part of the recently signed into law  American Recover & Reinvestment Act could be very beneficial to first time buyers.  But just what are the details and who is a first time buyer and do you really get this $8000 tax credit? Well, I had to do quite bit of digging because the specifics regarding the bill don’t seem to be readily available.  Here is the short version and I have also provided a link to a FAQ page that goes in depth….

The tax credit is for first time home buyers only, BUT a first time buyer is defined as someone who has not owned a principle residence for three years prior to the purchase!

The MAXIMUM credit is $8000….for home buyers purchasing a home less than $80,000 the credit will equal 10% of the purchase price.  However, there are income limits placed on the credit which may reduce the amount you can receive.  Single taxpayers with incomes up to  $75,000 and married couples with incomes up to $150,000 qualify for the FULL tax credit.

 Click here for the full First Time Buyer Tax Credit Frequently Asked Questions Page

 MSHDA's Property Improvement Program!

Have you heard about MSHDA's Property Improvement Program?  This program offers low interest home improvement loans to single family homeowners with low to moderate income.  Eligible home improvements include repairing or replacing a roof, installing new siding, adding insulation, replacing a furnace, installing a ramp, remodeling a kitchen, and other similar improvements.  Homeowners can borrow up to $50,000.  MSDHA does not require equity in the home for loans $25,000 and under, making it the ideal product for a new homeowner or existing homeowner with limited equity.  The loan can be ammoritized for up to 20 years making the monthly payments very affordable.  The interest rate for homeowners is 4%, 6% or 8% depending on income.

Principal Residence Exemption Forms Now Available

As a follow up to last week’s e-news alert regarding the Passage of Public Act 96 (see article) which enables home sellers to retain 2 principal resident exemptions for property still on the market after the seller has moved elsewhere in the state, the “Conditional Rescission of Principal Residence Exemption Form #4640 form from the Department of Treasury is now available.

Click Here to Download Form.

Public Act 96 enables a person who has established a new principal residence to retain a Principal Residence Exemption (PRE) on property previously exempt as the owner’s principal residence that is not occupied and for sale by submitting a Conditional Rescission of Principal Residence Exemption Form #4640. The conditional rescission allows an owner to receive a PRE on his or her new property and on previously exempted property simultaneously if certain criteria are met:

• the property is not occupied,

• the property is for sale

• the property is not leased or available for lease

• the property is not used for any business or commercial purpose

*The opportunity to apply and qualify for a conditional rescission begins for the 2008 tax year and is not retroactive to previous tax years.

Homeowners can still take advantage of Principal Residence Exemption

As you know, PA 96 of 2008 created a new tax break for people who have moved to a new principal residence but have been unable to sell their previous principal residence. Under the new law, the owner is allowed to maintain a Principal Residence Exemption (PRE) on their former home for up to 3 years if the home is vacant and for sale. This new law expands the Principal Residence Exemption to unsold homes, essentially allowing for two exemptions where homebuyers have their original property on the market but are now living in their new home elsewhere in the state.

To claim this tax break, the owner must file a Conditional Rescission of Principal Residence Exemption Form #4640 with their local assessor. Unfortunately, the bill was not signed until April of this year and that left a narrow window for taxpayers to file before the May 1 deadline in order to claim this benefit for 2008.

However, an amendment was inserted into Public Act 198 of 2008, allowing any homeowner who missed the May 1st deadline for the 2008 tax year to now file an appeal with their community's July or December 2008 Board of Review. This is a tremendous victory and offers property tax relief for homeowners in Michigan.

Individuals should contact local assessors for meeting dates and additional information. Traditionally, the July board of review has met the Tuesday following the third Monday in July (July 22 this year). A change in the law (PA 122 of 2008) allows communities to schedule their board of review any time that week. While most communities will meet on July 22, taxpayers should contact their local government to be sure they know when the board of review meets in order to submit Form #4640 to the board of review for consideration.

The ability to appeal to the board of review is for 2008 only. Homeowners will need to apply to keep their PRE by December 31 of the previous year. Homeowners can already file the form for 2009 with their local unit of government. For additional information, please check out www.michigan.gov/treasury .

The Department of Treasury is in the process of developing a Frequently Asked Question sheet to address various issues related to the new conditional rescission. They hope to have those questions posted on the web some time next week. Form #4640, which includes an instruction page, can also be found at www.michigan.gov/taxes.

If you have any questions regarding conditional rescissions, please feel free to contact the PRE Unit at (517) 373-1950 or email Patrick Huber, Manager of the Property Tax Exemption Section, at huberp@michigan.gov.