The (Not Just) First-Time Homebuyer Tax Credit

The (Not Just) First-Time Homebuyer Tax Credit, Expanded & Explained


By Gino Blefari
President and CEO, Intero Real Estate Services

After much speculation by the general populace (and the real estate industry) and much consternation by Congress, the much-anticipated extension of the First-Time Homebuyer Tax Credit has been passed.

Passed, not to mention greatly expanded.

Whether you’re in favor of or opposed to the credit, it’s now been made available to a host of Americans not included in the initial offering, so how can you take advantage of it? Let’s break it down, shall we?



The original tax credit, which was a part of the economic stimulus package put into effect in February 2009, was made available to first-time homebuyers (people who hadn’t owned a home for three or more years) and applied to home purchases that closed on or before November 30, 2009. With the passage of the expansion bill into law, that credit has been extended to purchases made by May 1, 2010 and that are closed prior to July 1, 2010 (that means escrow is closed, all papers signed and keys are in-hand on or before June 30th).

For first-time homebuyers, the credit amount, as it was in the original plan, remains at 10% of the purchase price, up to a maximum credit of $8,000. Originally, to be eligible for the credit, single (not married) purchasers could have an adjusted gross income (AGI) of no more than $75,000/year; married couples with an AGI of $150,000 or less were eligible. Under the new plan, singles with an AGI of up to $125,000 and married couples with an AGI of up to $225,000 are eligible.

For those of you who had previously been ineligible to claim the credit at all because you already owned a home, there may be good news for you. Under the new plan, homeowners who have lived in their homes for 5 consecutive years of the past 8 years are eligible to receive a credit toward a new home purchase. Meant to give a boost to “move-up” buyers, this credit amount can be 10% of the purchase price, up to $6,500. The income caps referenced above are the same.

If you’re a member of the Armed Services and were/will be deployed outside the United States for at least 90 days between December 31, 2008 - May 1, 2010, you may claim the credit until May 1, 2011 (with settlement all wrapped up before July 1, 2011).

One peculiarity of which it’s important to take note: even if you purchase a new home in 2010, you can claim the credit on your 2009 tax return. If you file for an extension of time to file your income taxes, or if you amend your already-filed 2009 tax return, you may include the tax credit (this would put the cash in your pocket much sooner than if you were to claim the credit on your 2010 tax return). Be sure, however, to take heed of the income limitations, as they apply to the year in which you claim the credit.

Finally, it’s important that you understand that if the purchase price of the home exceeds $800,000, no tax credit may be claimed, regardless of your income levels. The credit only applies to primary residences. Investment properties or vacation homes don’t qualify.

Whether the expansion and extension of this credit is the shot in the arm that the US Economy needs remains to be seen, but it’s here, it’s ready and, if you’re planning on purchasing a new home, you should most certainly take advantage of it. Talk to your Intero agent or consult your financial advisor to discuss how this affects YOU.

Would you want your child to go into real estate?

By:Rick Soukoulis
Chairman and CEO
Intero Mortgage


Kind of an interesting question, isn’t it?

It reminds me of that Willie Nelson song, “Mothers, don’t let your babies grow up to be cowboys…”

So what is it? Do you or don’t you want your kids to follow your foot paths into real estate?

First, let’s look at the choices. Your child could be a Realtor, a mortgage broker, a bank lending officer , an appraiser, or a title or escrow officer.

The first thing is that yes, it can be a very lucrative field. This is especially true for Realtors and mortgage brokers.

It’s not unusual, at least in a good year, for a Realtor or mortgage loan officer to make $100,000-200,000 in a year.

The obvious downside is volatility. I know one person who was an account executive for the sub-prime mortgage arm of Lehman Brothers. She was making about $300,000 a year during the good times, but she’s now working as a bookkeeper at a plumbing supply company.

If your kids do go into real estate, teach them early to set aside money during the good times to help them ride out the bad times.

Along with the lack of predictability of income, there is one huge positive: It’s the ability to help people. This is especially true for Realtors who work so hard to help people find their piece of the American Dream.

Being a Realtor was once considered almost a hobby. The cliché was that bored housewives did it to have something to do. I don’t know if that was really the case, but today’s Realtor is highly trained and extremely professional.

A final benefit to being a Realtor or being in the mortgage business is that these careers present all sorts of interesting investment opportunities. If your son or daughter goes into these or related fields, they will learn about good buildings for sale way before an ad shows up in the Sunday paper.

So along with the potential for good compensation, there is the chance to make good money through smart investing.

All in all, would I want my kids to go into real estate?

The answer is, quite simply, yes. And I’d be proud of them for doing so.

Mortgage That Matters

Toxic Assets and Real Estate

BY: Rick Soukoulis
Chairman and CEO
Intero Mortgage


President Obama has proposed a bold plan to form private-public partnerships to buy the toxic assets off the books of the nations’ books.

This could be a huge boon for the real estate lending industry.

Let me explain.

First, what are these so-called toxic assets. They are obscure financial instruments the common man has only herd of. Derivatives, CMO’s Credit Default Swaps, sub-prime mortgaged backed securities, and on and on and on. A derivative, at its heart, is simply a mirror image of a security, kind of like the real thing but not quite the real thing.

In any case, most of these assets have dropped enormously in value. The banks are afraid to mark them down to their fire-sale value, as that big a hit to capital could leave them in a severely impaired situation.

So they keep them on the books, and as long as they’re there, they’re afraid to really start lending again.

Through a variety of accounting games, they can avoid taking the real mark down, so while they avoid taking a huge loss, they’re also uncertain enough about just how toxic these are that they don't want to go too far out on the lending limb.

The great thing about the Obama plan is that it gets private institutional money involved, an the assumption is that there will be a true market in these assets, and not just prices based on s fire-sale.

As these assets are moved off the balance sheets of our banks and into the hands of private investors, the banks will start lending again, and that will play a very big role in the economic recovery.

While it’s much harder these days to get a mortgage loan, it’s still very possible.

But if you apply for s loan to buy an apartment building or build an office building, it will be almost impossible. Construction loans are almost impossible to get, and subdivision builders, especially the smaller ones, just can't find financing.

I could go on end on about the areas that have been impacted by banks with toxic assets. All of these areas will again feel the free flow of cash and new loans.

It will be a part of regaining our economic health and getting people back to work.

But as Jay Leno said, if you’re going to be selling these things, don’t you think you could call them something other than toxic assets?


Rick Soukoulis
Chairman and CEO
Intero Mortgage
408.578.8700

Market Monday

The financial markets are back in full swing today after the long holiday weekend. Bonds continue to remain just beneath a tough resistance level, while Stocks are getting off to a sluggish start due to concerns for the overall global economic recovery.
In other news, the ISM Services Index, which gauges the health of the non-manufacturing or service industry, came in better than expectations. Overall, the report indicates continued contraction, but at a slower pace.
Many traders and investors may be taking the next few days off as an extension of the holiday weekend, which can increase volatility. There is no urgency to lock in rates. We will watch how Bonds and Stocks continue to react to important technical factors and the news of the day. The direction could change quickly. ~ as usual~
Enjoy your day!

Mortgage Update

The volatility continues as Mortgage Bonds opened lower this morning, but then erased their losses. Since May 21, the 4.5% coupon has shed 556 basis points, pushing home loan rates to the highest level since the Federal Reserve announced its Mortgage Backed Security purchase plan back in November.
Fears of future inflation and added supply have been the culprits behind the recent sell-off.
In other news, Retail Sales were inline with estimates and marked the biggest rebound for Retail Sales in 4 months. Also, while Initial Jobless Claims were below estimates, continuing claims rose to 6.82 million, which is another new record.
A day that we are not getting an "alert to lock."
Bonds look to be trying to improve this morning. I will let you know if this changes.