Another Home Buyer Tax Credit Extension Granted? Not really, read the fine print …

June 18, 2010

Congress “extends” First Time Home Buyer Tax Credit deadline to September 30th – well not really. They extended the CLOSING DEADLINE to the end of September for buyers who went under contract before April 30 but this does not mean it is a true extension.

The National Association of Realtors beat their drums loudly enough on the steps of Capital Hill to get Congress to approve an extension of closing deadline to the First Time Homebuyer Tax Credit. So, don’t jump out of your seats ! The tax credit extension is only for those who were already under contract before the previous deadline of April 30th, they now have until September 30th to close and receive the $8000 first time buyer credit. This extension is from a close date of June 30th. The most compelling reason for this extension was do to the high volume of Short Sales that are currently under contract and are not on scheduled to close by the June 30th date. This is because Short Sales require bank approval on the Seller’s side, and most large banks that are being asked to approve Short Sales are simply over inundated with such requests that they are just backed up.

There is one group of buyers who can still take advantage of the tax credit and who did have a true extension and those are members of the military, foreign service and intelligence service. They have another year to take advantage of the credit. For more information about this, see my blog entry at:

Kerstin G. Brooks
Brooks & Heinze Team

Special one-year Homebuyer Tax Credit Extension for Members of the Military, Foreign Service and Intelligence Service

May 17, 2010

Home Buyer Tax Credits Have Expired BUT service members who were on official extended duty outside of the United States for at least 90 days between Jan.1, 2009 and May 1, 2010, may qualify for a one-year extension.)

Special rules for eligibility also apply for members of the foreign service and the intelligence community.

Military, Foreign Service, Intelligence Community

Congress has acknowledged the unique circumstances affecting members of the military, the foreign service and the intelligence community by making the following exceptions that apply to both the $8,000 tax credit for first-time home buyers and the $6,500 tax credit for repeat home buyers.

Exemption From Tax Credit Recapture Rules
•Typically, homes that are sold or that cease to be used as a principal residence within three years of the initial purchase are subject to recapture of the tax credit.
•However, qualified service members who sell or move from a tax credit home within three years of the initial purchase due to official extended duty are exempt from the recapture rule.
Extension of Tax Credit Deadlines
•The home buyer tax credit is available for qualified purchases with a binding sales contract in place on or before April 30, 2010 and closed by June 30, 2010.
•However, for qualified service members who are ordered on a period of official extended duty, these dates are extended for one year. For these home buyers, the tax credit applies to sales with a binding sales contract in place on or before April 30, 2011 and closed by June 30, 2011.
•A person who is forced to return to the U.S. for medical reasons before completing an assignment of at least 90 days of qualified official extended duty outside of the United States may qualify for the one-year extension.
•“Qualified service member” means a member of the uniformed services of the U.S military, a member of the Foreign Service of the U.S., or an employee of the intelligence community.
•“Official extended duty” means any period of extended duty outside of the United States for at least 90 days during the period beginning after December 31, 2008 and ending before May 1, 2010.

Kerstin G. Brooks
Brooks & Heinze Team

Mortgage Credit Certificate

May 12, 2010

The Mortgage Credit Certificate Program allows qualifying first-time homeowners to claim a federal tax credit of up to 20 percent of their annual mortgage interest paid. Pretty neat!

Following is the reprint of the information provided by the Washington State Housing Finance Commission:

Federal Income Tax Credit for Homebuyers

MCCs are not mortgages… they are tax credits that put extra cash in your pocket each month, so that you can more easily afford a house payment, which means fewer tax dollars will be withheld from your regular paycheck, increasing your take-home pay.

How do I apply?

Applications are accepted on a first-come, first-served basis by a statewide network of lenders.  Your lender will establish all underwriting criteria, including interest rate, down payment requirement, term, fees, points, and closing costs.  Your lender will submit your loan application and notify you as to whether your application is accepted.  It is strongly recommended that you contact a tax professional before applying for an MCC in order to determine the potential benefits an MCC may provide for your specific tax situation.

Who are the Participating Lenders?

Bank of America | Cobalt Mortgage | Cornerstone Mortgage Company | Eagle Home Mortgage | Evergreen Home Loans  | First Rate Mortgage | Golf Savings Bank | Guild Mortgage | HomeStreet Bank | Integra Pacific Mortgage | Metlife Home Loans | Mortgage Advisory Group | Prime Lending | Seattle Metropolitan Credit Union | Sierra Pacific Mortgage | Wallick & Volk | Wells Fargo Home Mortgage

What are the loan types?

MCCs are available with fixed or adjustable rate conventional conforming (i.e., Fannie Mae or Freddie Mac saleable), FHA, VA, Rural Development mortgages.  The Commission’s House Key State Bond Program is not available for use with the MCC Program.

What are the fees?

The nonrefundable MCC fee is $650 and it is collected at the time of loan closing.

What are the program guidelines?

As with any program, there are qualifying rules and regulations.  MCC eligibility requirements include:

New Loans Only
The MCC is available with new purchase loans only. Refinances are not accepted, unless you are replacing some type of short-term bridge financing with a term of 24 months or less.

Income Limits
Borrowers must not exceed these Maximum Annual Income Limits:

County Non-Targeted
1-2 Persons
3+ Persons
1-2 Persons
3+ Persons
Island $75,000 $87,000 $90,000 $95,000
Pierce/San Juan $75,000 $87,000 $75,000 $87,000
King/Snohomish $90,000 $97,000 $90,000 $97,000
All other counties $65,000 $75,000 $75,000 $75,000

Acquisition Cost Limits
Borrowers must meet these property acquisition cost limits. Acquisition cost limits of a single-family residence must not exceed the following:

COUNTY Non-Targeted Targeted
Clark/Island $330,000 $360,000
Jefferson/Pierce/Snohomish $370,000 $395,000
King/San Juan $450,000 $475,000
Kitsap/Whatcom $300,000 $335,000
Skagit $285,000 n/a
All Other Counties $235,000 $285,000

Eligible Properties
Single-family existing homes, new construction, manufactured homes (permanently) affixed or on leased land), and homes located on Native American trust land, located in both Targeted Areas and Non-Targeted Areas.  Check the Commission’s website Targeted Areas page to see if the property is in a Targeted Area.  Note:  Not all counties have Targeted Areas.

Business Use Limits
No more than 15% of the residence may be used for trade or business purposes.

Owner Occupancy
The MCC is valid for the life of the loan, so long as you remain the owner-occupant of the residence.

Homebuyer Education
You must complete a Commission sponsored homebuyer education course providing you with the steps to buying your home.

Recapture Tax
A recapture tax may apply only in the event that –  you sell your home in the first nine years,
and – your income has increased significantly, and – you have a substantial gain on the sale.
IRS Form 8828 explains how the tax is calculated.

What happens if I refinance my loan?  What happens to my current MCC?

If you refinance your property, the MCC may be reissued if completed within one year of refinance and if you qualify under the program guidelines.  The amount on the reissued MCC cannot exceed the outstanding balance of the mortgage prior to refinancing and the certificate credit rate cannot exceed the certificate credit rate specified in the existing certificate.  Further restriction apply.

A $375.00 non-refundable application fee must be included in a reissuance request.

If you have questions about the  Mortgage Credit Certificate (MCC) Program, please email the Brooks & Heinze Team  at or email the Washington State Housing Finance Commission at

Kerstin G. Brooks
Brooks & Heinze Team
Cell: 206.276.5827

Federal Homebuyer Tax Credit effective through April 30, 2010

March 16, 2010

The Federal Homebuyer Tax Credit is effective now through April 30, 2010. Eligible buyers must have signed a purchase contract by April 30, 2010, and close the transaction on or before June 30, 2010. Restrictions apply.
Please consult your tax advisor for full details about this tax credit.

Amount of Tax Credit: First-time home buyers may qualify for up to $8000 (10% of the purchase price, up to a maximum of $8000). Repeat/move-up buyers qualify for up to $6500.

Eligibility: Qualifying first-time buyers must not have owned a principal residence during the three-year period prior to the purchase. Qualifying repeat buyers must have used the home sold or being sold as their primary residence consecutively for 5 of the previous 8 years.

Income Limits: $125,000 for single tax payers; $225,000 for joint taxpayers.

For a great visual summary, please view the following pdf file:
Federal Homebuyer Tax Credit Education Guide

Keep in mind that this is just a brief overview of the Federal Homebuyer Tax Credit.

For more detailed information about the federal home buyer tax credit program, contact the Brooks & Heinze Real Estate Team in Seattle.

Kerstin G. Brooks
Brooks & Heinze Team
Phone: 206.276.5827

Tax Time – A joyful time for homeowners

January 22, 2010

It is tax time. Yes, I know most people dread this time but for home owners this can be a joyful time. There are some really nice deductions and credits homeowners can take advantage of. Have fun with your 2009 tax filing and save some dough!

– tax credit for first time home buyers
– tax credits for move up home buyers
– property tax deduction
– mortgage interest deduction
– energy and home improvement credit
– moving deduction
– mortgage point deduction

Tax credit for First Time Home Buyers & Move Up Buyers
Most first time home buyers qualify for this tax credit of up to 10% of the purchase price (up to $8000) on their primary residence (restrictions apply) if they purchased a home in 2009.
Qualified buyers of a second home, who owned and occupied a primary residence for five consecutive years may take advantage o f a tax credit of up to $6500 (or up to 10% of the purchase price). Restrictions apply.

Property Tax Deduction
You may be able to take advantage of qualifying property taxes. You used to have to itemize your taxes in order to receive this benefit. Under the new rule, homeowners who do not itemize can boost their standard-deduction amount by up to $500/$1000 (single/married) for property taxes paid during 2009. Include a Schedule L with your 2009 tax return. Consult with a CPA or other tax preparer.

Mortgage Interest Deduction
Mortgage interest deduction on your home is one of the best ways to trim your tax bill as a home owner. You can only take the mortgage interest rate deduction if you are using Schedule A to itemize your deductions. Consult with your tax professional.

Energy and Home Improvement Credit
You may be able to take advantage of a credit up to $1500 for qualifying energy-efficiency improvements to your existing home, such as insulation, energy efficient windows, energy efficient heating, etc. Ask your tax professional about specific requirements and qualifying factors for this credit.

Moving Deductions
If you were one of the unfortunate people in 2009 who lost their job and had to move to take advantage of a new job, moving expenses may be deductible if you had to move more than 50 miles. Consult with your tax professional about which expenses may be deducted.

Mortgage Point Deduction, Refinance Points
When you buy a home, you get to deduct (all at once) the points you paid to get your mortgage. Many people refinanced in 2009 to reduce their monthly payments and take advantage of lower rates. If you refinanced in 2009 and paid for points you can deduct the points of the life of the loan. It probably won’t add up to much but every penny counts these days. Consult with your tax professional.

The information provided in this blog is for informational purposes only and is not to be construed as tax advise. We are real estate agents and cannot give you tax advice. Please contact your accountant or CPA about how you may be able to benefit from these credits and deductions. If you are looking for a CPA in Seattle, please contact Eric Kauppila, CPA, MS Tax at Greenwood, Ohlund & Co., LLP at 206.782.1767.

Kerstin G. Brooks

Brooks & Heinze Team

Skyline Properties, Inc.


Smart Homebuyers are focusing on taking advantage of favorable rates along with the Tax Credit

January 11, 2010

Smart home buyers are focusing on taking advantage of the present, very favorable rate situation along with the still available tax credit.

Rates are likely to go up:

Please note that the main reason interest rates are so low is because the government is buying mortgage backed securities, or you may have heard the term “toxic assets”, which are basically sub-prime loans or loans that required no proof of income, allowed low credit scores and were generally 0% down.

After you get a loan through your bank or mortgage broker, the loans are sold to Fannie Mae and Freddie Mac and then those 2 entities package them up to sell them to investors. After the sub-prime meltdown no investors wanted them and so to keep Freddie Mac and Fannie Mae afloat, we, as taxpayers, bought them for essentially the “list price” even though they were not worth anything.

Even now, because interest rates are so low, private investors are not interested in mortgage backed securities (even though most of the loans now have a stringent qualification process) and so we, as taxpayers, are still buying them (and probably over-paying the banks).

In December (on the 24th, while most of the country was spending time at home with their family for the holidays) the Treasury announced there was to be no limit on what the government spent to bail out Freddie Mac and Fannie Mae. The prior limit was 400 Billion. This is a good article to explain what that means (besides we are all getting ripped off and our children, children’s children and so on will suffer). .

So, when the government decides to start stepping out of the big business welfare role, interest rates will go up and I presume that will happen in 2010 sometime. So, what happens when interest rates increase? Buyer’s qualify for less money and it impacts the housing market because buyers can afford less.

Tax Credit for First-time Buyers and Move-up Buyers scheduled to expire April 30, 2010.

In order to qualify for the credit, all home purchase contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

More about these tax credits can be learned in one of our prior posts from November 8, 2009 entitled “First Time Homebuyer Tax Credit Extended” and “A New Tax Credit for Certain Existing Home Owners”.

A great way to learn more about the above topics or decide if becoming a homeowner is right for you, please contact us or attend one of our home buyer workshops:


Date: Thursday, January 28, 2010
Time: 6:30pm – 7:30pm
Location: Northgate (Seattle) – 9709 3rd Ave NE #450, Seattle, WA 98115

Topics covered:
Loan Application Process, First-time Homebuyer Tax Credit, Market Conditions, Own vs. Rent Illustration, Home Buying Process, For Sale by Owner (FSBO), bank-owned, short-sale properties, Q & A. RSVP to Kerstin at 206.276.5827 or

Krisanne Heinze & Kerstin G. Brooks

Brooks & Heinze Team

Kerstin Brooks – Seattle – Real Estate Sales – Biznik

January 4, 2010

Kerstin Brooks – Seattle – Real Estate Sales – Biznik

First Time Homebuyer Workshop

Topics covered:

Loan Application Process
First-time Homebuyer Tax Credit
Market Conditions
Own vs. Rent Illustration
Home Buying Process
For Sale by Owner (FSBO), bank-owned, short-sale properties.
Q & A


Micah Cade of Choice Home Finance
Broker #510-MB-29714
Phone: 253.732.1432

Kerstin G. Brooks (Brooks & Heinze Team)
Skyline Properties, Inc.
Phone: 206.276.5827

RSVP to 206.276.5827 or


Housing Recovery? Not so fast?

October 4, 2009

I received some feedback and questions about one of our July blog entries regarding signs of a recovery in the housing market. The entry was entitled: Housing Market is Showing Signs of Recovery. Some of my clients wanted to know if this meant they will stop “losing money” and that their property prices would go back to what they were.

There has been a lot of talk about a housing recovery. We, the Brooks and Heinze Team, have also reported on promising developments such as more sales in recent months, and multiple offers in some neighborhoods and other promising news.

After a long time of little or no movement in the market, this development certainly was worthwhile reporting and very encouraging. Some of the ‘flurry’ can be attributed to lower interest rates, greater affordability and the first time homebuyer tax credit.

However, for a sound recovery to take place which will stabilize prices and offer some growth in the future, the economy has to improve and good jobs need to be available. Real estate agents and economists know that the housing market cannot truly improve or recover unless the economy and with it the job market improve.

According to the Bureau of Labor Statistics, unemployment rates were higher in August than a year earlier in all 372 metropolitan areas, the U.S. Bureau of Labor Statistics reported today. Sixteen areas recorded jobless rates of at least 15.0 percent, while 9 areas registered rates below 5.0 percent. The national unemployment rate in August was 9.6 percent, not seasonally adjusted, up from 6.1 percent a year earlier. Among the 369 metropolitan areas for which nonfarm payroll employment data were available, 356 areas reported over-the-year decreases in payroll employment, 11 reported increases, and 2 had no change.

The economic downtown was created to a great extent by an insane housing bubble made possible by the availability of easy and cheap money or “bad loans”. People who should not have qualified for a loan were able to buy homes and other people who should have been able to buy a home were put into higher loans than they should have qualified for or were made loans that were structured in a way that made them unaffordable.

To make matters worse now, the number of good loans that are now going into default are surging as a result of the economy, not just poor loan underwriting. So, although the housing crisis may have help in the economic downturn, at this point the economic downturn is putting additional pressure back on the housing market due to job losses, and losses in property values; so even the once “good” loans are now going “bad”.

This brings me back to why I wrote this article. I want to make sure that our clients understand that there is some good news about the housing market but I also want them to understand that only as the economy at large improves and more good jobs are created, will the market and prices stabilize; and then I will be able to report that there has been a true recovery of the housing market.

Kerstin G. Brooks
Brooks & Heinze Real Estate Team

Phone: 206.276.5827

Get "moving" first time home buyers, time is running out!!!

August 1, 2009

Time is running out for first time home buyers to take advantage of the $8,000 tax credit.

We are in the month of August now, and time is slipping away to take advantage of the $8000 first time home buyer’s tax credit.

There is a deadline looming for this opportunity. Your home purchase must be CLOSED by November 30, 2009 to qualify for the tax credit.

Most properties take up to a month or two months to close (longer for most short sales). A buyer should try to purchase a home before October 1, so that he/she can close before November 30th.

This means there are only a couple of months left to find a suitable property and get an accepted offer!

So, get “moving” first time home buyers.

There are a lot of great properties for sale here in Seattle, and interest rates are low! Don’t delay, buy a house TODAY!

For questions regarding homeownership and the first-time homebuyer credit please contact The Brooks & Heinze Real Estate Team in Seattle.

Kerstin G. Brooks
Brooks & Heinze Team at Skyline Properties, Inc.
Phone: 206.276.5827

What is the Homebuyer Tax Credit and who qualifies for it

February 28, 2009

The stimulus plan that President Obama has signed into law as part of the American Recovery and Reinvestment Act of 2009 contains an important tax credit for first-time home buyers: a tax credit of 10% of the purchase price, up to $8,000 for first-time home buyers only.

First-time buyers, for the purpose of this credit, are those who have not owned a home in three years. This new tax credit does not replace the 10% of purchase price, up to $7,500 tax credit passed as part of last year’s Housing and Economic Recovery Act of 2008.

So, there are two breaks for first-time homeowners in the tax code now. Which credit you can take depends on when you purchased your home.

If you’re a first-time home buyer and you purchased your home on or after April 8, 2008, and by Dec. 31, 2008, you may qualify for 10% of the purchase price, up to $7500 tax credit but you have to pay that back because it’s not really a credit, it’s more like a 15-year, interest-free loan from the IRS.

Visit the IRS website or consult your tax advisor for the details if you qualify for this credit (loan). The credit is 10 percent of the purchase of the home, with a maximum available credit of $7,500 for either a single taxpayer or a married couple filing a joint return; $3,750 for married persons filing separate returns.

The full credit is available for homes costing $75,000 or more. Only purchases of a main home located in the United States qualify, and the home must have been purchased after April 8, 2008, and before December 31, 2008. For a home you construct, the purchase date is the date you first occupy the home.

The up to $8,000 tax credit is available for qualifying home purchases made from Jan. 1, 2009, until Dec. 1, 2009 (yes, Dec. 1 not Dec. 31). At least the credit is a true credit and does not need to be repaid, that is, if you don’t plan on moving within three years. The home must remain the buyer’s “main home” for at least 36 months after the purchase date, which means no selling or renting the home. This won’t work for an investment property. If the buyer sells or moves before 3 years have passed, they will need to pay back the credit.

There is also an income limitation and the credit starts phasing out if you have over $75,000 in gross adjusted income for single filers and up to $150,000 in adjusted gross income for joint (married) filers.

A tax credit is much more valuable than a deduction. A credit reduces dollar for dollar the amount of tax you owe. A deduction merely reduces the amount of your income that is taxable.

Please click on the following links to see a side by side comparison of the two tax-credits, repayment requirements, recapture requirements, income limits to qualify, property eligibility, amount of credit, etc.

Tax Credit Chart (Source: National Association of Realtors),,id=204671,00.html ( Website)

If you are still not sure which and if you qualify for the first-time homebuyer credit and if you qualify for the maximum amount of credit, contact the IRS or your tax advisor.

If you are a first-time homebuyer and still on the fence whether to buy this year or not, perhaps this new credit will get you to jump off the fence and dive into homeownership. When you combine the tax credit with historically low interest rates, a great selection of homes, desperate sellers and low home prices, shopping for a home gets exciting.

NOTE: This blog is not meant as tax advice. Please consult your tax advisor for details about your particular situation. We are real estate agents, not tax advisors.

Kerstin G. Brooks
Brooks & Heinze Team
“Where People Come First”
Skyline Properties, Inc.

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