Homestead Exemptions

On September 1st changes were made to the proof of residency requirements for homeowners applying for property tax homestead exemption. Under the new law all applicants must show a copy of their Texas Driver’s license or state ID card and vehicle registration receipt. All of the documents must show the same address as the property they are seeking exemption for.  

Applicants that do not own a vehicle can use a utility bill showing the matching address, but also must sign an affidavit stating that they do not own a vehicle.

The new law does not affect those who have already received tax exemption status. The new homestead requirements also apply to applications for the over-65, disability, disabled veterans, homeowner’s surviving spouse and manufactured (mobile) home exemptions.

The homestead exemption form must be filed between Jan 1, 2011 and April 30, 2011.   To qualify you must have owned your home by January 1, reside there as of that date and not claim an exemption on any other property.

Home Buyer Tax Credit Still Available for Military

Remind your friends and family in Austin, or anywhere in the United States that qualified veterans and other members of the military have until April 20, 2011 to take advantage of the tax credit incentive.  That’s right; members of the Foreign Service, uniformed service and other federal employees of the intelligence community serving outside of the United States have until April 30, 2011 to be under contract and will need to close by June 30, 2011. 

Individuals must have served outside of the United States on qualified official extended duty for at least 90 days between December 31, 2008 and May 1, 2010.  If married, only one spouse needed to serve during those dates to qualify.

There is an $8,000 tax credit for first time home buyers and a $6,500 tax credit for repeat home buyers.

“Qualified service member” is defined as a member of the uniformed services of the U.S military, a member of the Foreign Service of the United States, or an employee of the intelligence community.

“Official extended duty” is defined as any period of extended duty outside of the United States for duration of at least 90 days during the period beginning after December 31, 2008 and ending before May 1, 2010.

Contact your local lender for more details.

Playtime in Austin includes the Tax Credit Hustle

It was an amazing week to be in Austin last week. We started with the Zilker Park Kite Festival, then moved on to SXSW, and it was spring break.  All in all people were out and about exploring this wonderful city we live in.  Where was I?  A little bit of everywhere, buyers are hustling to meet the tax credit deadline, and I am moving them along.  My goal is to have everyone who cares about the tax credit to be under contract within the next week.  


Understand, we need our option period to decide whether to go forward with the house, and then there is of course, the financing hurdle.  I am advising my clients to keep the ball in someone else’s court while we shop.  If the Lender wants pay stubs, tax records, employer contact information…whatever it is, let’s get them the information they need, so we can get the file into underwriting as soon as possible.  


Lender qualifications change often, so it is important to keep in contact with them.  If for some reason, we fall out of contract and then need to find another house to purchase, we still have time to meet the deadline.

Tax Credit 411 – April 30th deadline

First Time Homebuyer Tax Credit Extended Into 2010!
Plus…A New Tax Credit for Certain Existing Home Owners!
It’s official. President Obama has signed a bill that extends the tax credit for first-time homebuyers (FTHBs) into the first half of 2010. This program had been scheduled to expire on November 30, 2009.

In addition to extending the tax credit of up to $8,000 through June 30, 2010, the extension measure also opens up opportunities for others who are not buying a home for the first time.

So Who Gets What?
The program that has existed for FTHBs remains intact with the one exception that more people are now eligible based on an increase in the amount of income someone may now earn.

Additionally, the program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

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

Higher Income Caps in Effect
The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible.

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

Maximum Purchase Price
Qualifying buyers may purchase a property with a maximum sales price of $800,000.

First-Time Homebuyer Tax Credit – Frequently Asked Questions
Here are answers to some commonly asked questions about the tax credit.

What is a tax credit?
A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual’s primary residence.

What is the tax credit for first-time homebuyers (FTHBs)?
An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000.

Who is eligible for the FTHB tax credit?
Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible. This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.

As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500.

How do I claim the credit?
For those taking advantage of the tax credit in 2009, you may choose to either apply for the credit with your 2009 tax return or you may apply for the credit sooner by filing an amended 2008 tax return with Form 5405 (

Can you claim the tax credit in advance of purchasing a property?
No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place.

Can a taxpayer claim a credit if the property is purchased from a seller with seller financing and the seller retains title to the property?
Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the taxpayer may file for the credit. Examples of this would include a land contract, contract for deed, etc. According to the IRS, factors that would demonstrate the ownership of the property would include: 1. the right of possession, 2. the right to obtain legal title upon full payment of the purchase price, 3. the right to construct improvements, 4. the obligation to pay property taxes, 5. the risk of loss, 6. the responsibility to insure the property and 7. the duty to maintain the property.

Are there other restrictions to taking the credit?
Yes. According to the IRS, if any of the following describe your situation, a credit would not be due.

•You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
•You do not use the home as your principal residence.
•You sell your home before the end of the year.
•You are a nonresident alien.
•You are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)
•Your home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
•You owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2009, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2006, through July 1, 2009.
Can you buy a home from a step-relative and be eligible for the credit?
Yes. Provided the person you are buying a home from is not a direct blood relative, the purchase would be allowed.

Can parent(s) who will not live in the property cosign for a mortgage for their child and the child that is a qualifying FTHB still be eligible for the credit?

Can a separated spouse who has not owned a home for four years qualify for the FTHB tax credit if the spouse has owned a property anytime in the last three years?
No. However, the spouse may be eligible for the repeat buyer credit.

The best path to take in any situation regarding income taxes is to speak with a professional tax preparer or CPA.

What’s the Rush?

The new year has been off to an interesting start.  Typically, January is a little slow, due to the cold weather and post-holiday stress.  What I am seeing this year, is more activity due to impending dates, that are really just around the corner.  I have already had 2 listing appointments this year, and my open house traffic has been averaging around 7 guests, which again, for January, is considered busy.


What’s the rush?

First, interest rates are on everybody’s mind, and everyone wants to know when they are going up.  The Federal Reserve Bank is supposed to stop purchasing mortgage-backed securities issued by Fannie Mae and Freddy Mac.  The program is set to end in March of 2010, and when it does, interest rates are likely to increase and rather quickly.  


Another reason for the early activity in 2010, is that the tax credit deadlines for first-time home buyers and move-up buyers are steadily approaching.  You have to be under contract by April 30, 2010 to qualify.  So, if you need to sell a home, in order to purchase, it should be listed now.  As a first time home buyer, you will have more of a selection and less stress, if we start looking now.  First time home buyers who wait until April are going to feel pressure to make a hasty choice. Remember, a home is the most expensive item you will ever purchase, so let it be an educated decision.


Lastly, FHA changes are coming!  The Upfront Mortgage Insurance Premium (UFMIP) will be increasing from 1.75% to 2.25% later this Spring. In addition, allowable seller contributions will decrease from 6% to 3% come Summer 2010. This means first time home buyers will need to have more money saved in order to purchase a home.