CENTRAL KENTUCKY HOMES AND FARMS - KENTUCKY Homes, Farms and Real Estate For Sale

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There's No Place Like Home -- When You Live In Kentucky!

You should buy a home! That is what your family and friends have been telling you forever. Why spend so much money on rent when you could be putting that money on something you own. You may wonder if this is the right decision for you. Weigh the benefits and then relax, home buying is one the most encouraging actions you can take in your lifetime. It creates pride of ownership, mortgage interest deductions, and property tax deductions. All these things will be a benefit to your future. Owning your own home is better than money in the bank!

Buying or selling a home without representation can be a very scary situation. Hiring a professional takes the pressure off and gives you piece of mind that an educated professional is looking out for your best interest. We all need more time to take care of everyday issues, and your Realtor will take care of all the ins-and-outs of buying and selling. They also act as a buffer between the buyer, seller, lender, homes inspectors, appraisers and the list could go on. Taking care of all the paper work and negotiations are what agents are trained to take care of. Keeping within the code of ethics and legal guidelines in paramount in a smooth real estate transaction. Agents possess intimate knowledge or know where to find information about your neighborhood. They compare sales and create reports that will help you with the market values in your chosen neighborhood.

It is essential to get preapproved, not prequalified, for your mortgage loan! When the lender hands you a preapproval letter it means you can: Save time looking at the right homes; spend more time examining the right homes; gain confidence and avoid disillusionment; increase bargaining and negotiating power; enjoy a faster closing period. Mortgage approval is usually the longest contingency to satisfy a purchase agreement, it is to your advantage to have a preapproval letter. Lenders will render a decision based on your complete loan application, employment verification and data from all three credit reports.

Just because you feel restricted by your financial boundaries doesn't mean you can't be choosy in the home you select. You are unique. You have hopes, dreams and desires that are different from your relatives, friends and co-workers. So let's find your parameters and begin writing them down! First what area type do you want to live--in the country, city or suburb? Do you want acreage, to live in a cul-de-sac or corner lot? Single-family, condo or townhome? One-story, two-story, split level? How many bedrooms, baths, square-footage, bonus rooms, attached or detached garage or out-buildings? If you have children you may want to consider the school district. Other considerations may be special amenities such as fireplaces, pools or spas. Is there a homeowner association and if so, what are the annual fees? Is the plumbing, electrical, heating and air, roof in good condition or does it need repair? All of this and more needs to be on your list of things you want, need and what to look for when viewing homes.

Homebuyer Tax Credit

In its efforts to stimulate the economy and revive the housing market, Congress has enacted legislation providing a tax credit of up to $8,000 for first-time home buyers.

But time is of the essence for buyers who want to take advantage of this opportunity. Only homes purchased on or after January 1, 2009 and before December 1, 2009 are eligible.

Am I Eligible?

First-time homebuyers who purchase a principle residence on January 1, 2009 and before December 1, 2009 are eligible. If you (and your spouse, if married) have not owned your principle residence for a 3-year period before your purchase.

How does it work?

Like all tax credits, it will directly reduce the total amount of taxes you owe. When you file your taxes, for the year you purchased your home (2008 or 2009), you will be able to subtract the amount of the credit from your Federal income tax liability, increasing the size of your refund or reducing the amount you owe. For example, you file your 'normal' tax return and find that you owe $2,000 in taxes. With this credit, your tax liability could be lowered by $8,000--which means, you instead get a $6,00000 tax REFUND check from IRS.

How big is the tax credit?

The tax credit is equal to 10% of the purchase price of your home up to $8,000. The full credit is available for single individuals whose adjusted gross income is less than $75,000. If your adjusted gross income is greater than $75,000 and your home purchase qualifies you for the full credit, the credit phases out according to the dollar amount (or percentage if less than $8,000) in the chart below. For married couples filing jointly, the credit begins to phase out at an adjusted gross income of $150,000. The dollar amounts in the chart below correspond to a phase out of the full tax credit (percentages are for credits less than $8,000).

What about Repayment?

There is no repayment unless you sell the house during the first three years.  Even then there are some circumstances, such as divorce or death that would be exempt.

Refundable--What does that mean?

The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.

For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).

Are there other conditions I should know about?

* You cannot claim both the DC and the national First-time Homebuyer tax credit.

* Purchases by non-resident aliens and purchases financed by proceeds from a qualified mortgage issue are not eligible.

* Any single family residence located in the United States that will be used as a principal residence is eligible. Generally, this is the place where an individual spends most of his/her time.

* This  includes single-family detached housing, condos or coops, townhouses or any similar type of new or existing dwelling.

* The credit will not result in an individual owing additional federal taxes under the Alternative Minimum Tax.

*Home purchases between relatives and other gifts of residences are not eligible for the credit.

* Other tax benefits of homeownership are still in place. Mortgage interest deduction, capital gains tax exclusion, and property tax deduction are some well-known examples.

For more specific questions about the tax implications of the credit, please consult a tax professional. Buying a first home is a big step!

Buying a first home is a big step.

Fortunately, trained professionals like your Realtor® are willing and able to help you through the process. In addition to the many benefits of homeownership, the homebuyer tax credit and more affordable prices make now an especially opportune time to purchase. Still, the commitment is a substantial one, and the National Association of Realtors® encourages you to ask questions and be informed about the decision you are making so that the home you buy is a home you can enjoy for years to come.

Other Resources for First-time Homebuyers:

http://www.realtor.org/home_buyers_and_sellers/preparing_for_homeownership http://finance.realtor.com/homefinance/guides/buyers/ http://www.hud.gov/buying/ http://www.freddiemac.com/corporate/buying_and_owning.html