Saint Louis Blog

First Time Homebuyers can take a Federal $7500 tax credit (dollar for dollar offset against tax) for homes purchased between 4/8/08 and 7/1/09. If a married couple makes more than $150K, there is a phase out of the amount they will be eligible for. In addition, you can make a special election for a home bought in 2009, to take this credit in 2008.

There are some stipulations: you have to “pay back” the credit over 15 years on your Federal tax return beginning 2 years after your home purchase, and if you sell the home, you have to “pay back” the credit in the year you sell your home.

Please call Lisa Bushur, CPA, if you would like to discuss this credit in more detail. 636-386-1040.

Update # 1 - Mortgage Relief Passed by Congress & Signed Into Law by the President!

On Thursday, December 20th, President Bush signed into law a bill passed by Congress: HR 3648 –Mortgage Forgiveness Debt Relief Act of 2007.

The three major points are: · Elimination of the "phantom tax" on foreclosures, short sales or other discharges of debt on a primary residence. Consider this scenario: A property is worth $250,000, and the mortgage balance is $300,000. Under the old rules, if a lender forgave the $50k difference as part of a foreclosure, short sale, refinance or loan modification, the borrower had to claim the $50k as income and pay federal income taxes on that amount. The new law eliminates this "phantom tax", and the forgiven debt is no longer treated as taxable income to the borrower as long as certain requirements are met, such as the discharged mortgage balance must be on the taxpayer’s principal residence.

· The tax deduction for mortgage insurance premiums is now extended until December 31, 2010 instead of expiring at the end of 2007 . The same rules apply as before in terms of the income limitations etc., and these rules are covered in the taxation section. · The capital gains exclusion is now $500,000 instead of $250,000 for an unmarried individual who sells their primary residence within 2 years of the time their spouse has died . This new guideline applies to sales after December 31, 2007, and provides relief for widows and widowers by giving them a 2 year window from the time their spouse has died to sell their home and receive the $500,000 exclusion. Of course, the same rules apply as before, where the individual(s) need to have lived in the home as their primary residence for 2 out of the last 5 years. You can read the full version of the bill by visiting the Library of Congress THOMAS web site and searching for HR 3648. Version # 6 (the enrolled / ENR version) is the final version that was passed by both the House and Senate.

Update # 2 - AMT Relief Passed by Congress (FINALLY)! After much drama and a few rounds of chicken between the House and Senate, Congress FINALLY passed AMT relief on Wednesday, December 19. The President has indicated a strong willingness to sign this bill into law, and it is currently awaiting his signature. Under this one year patch, approx. 20 million taxpayers have escaped the clutches of the AMT. However, approx. 3.5 million taxpayers are still expected to be subject to the AMT. Have a joyous holiday season!

Christine Menker Senior Loan officer                                                                                                             

1714 Deer Tracks Trail, Suite 225                                                                                                              

St. Louis, MO 63131    Phone: 636-305-9248      Christine.Menker@CTXMortgage.com

The federal government’s Private Mortgage Insurance legislation is great news for the Real Estate Industry! Enacted on January 1st, 2007, the bill made Private Mortgage Insurance (PMI) tax deductible for new borrowers whose personal adjusted gross income is $100,000 or less. For millions of home buyers, the bill created a great opportunity to finance a more expensive home or to potentially obtain a lower payment for the same-priced home, while reducing annual income taxes by hundreds of dollars.

What to Do Now
Whether consumers are considering purchasing a new home or restructuring their finances, the first thing they should do is call a mortgage professional. There are a wide variety of options to consider, beyond those that have been presented here, and a mortgage professional will help them to determine which scenario best fits their needs.

(with Permission:Greg Gossard, Senior Mortgage Consultant      MailTo:gossard@firstcapcorp.com                                                              First Capitol Corporation    858-720-7744