For Sale: 3BR/2BA Condo in Fairfax, VA, $279,000

For Sale: 3BR/2BA Condo in Fairfax, VA, $279,000

FIRST TIME HOME BUYER TAX CREDIT

Now that President signed the bill into a law, lets see who qualifies..

Who qualifies?

Here are four scenarios illustrating how the tax credit rules for existing homebuyers will apply:

• Alibaba owned a home in 2001 and 2002 but sold it to relocate for a job. He would qualify for the $8,000 first-time-buyer credit because he has not owned a home in the past three years.

• Nazli purchased a home in 2004 and has lived there since. If she decides to buy a new home, she would qualify for the $6,500 tax credit because she has lived in the same residence for five consecutive years in the past eight.

• Mary purchased her home in 2002, lived there for five consecutive years before she rented it out in 2007. She would qualify because she was an owner/occupier for at least five consecutive years in the past eight.

• Mark purchased a home in 2006 and lived there for the past three years. He would not qualify because he is neither a first-time homebuyer nor someone who lived in the same primary residence for five consecutive years out of the past eight.

If are not buying, owning a home for last 5 years does not qualify you for $6500.

Income Limitations

The $8,000 credit was scheduled to lapse on Dec. 1 but will now be in effect through the end of June. Homebuyers must sign a contract before April 30 and close by June 30. The income limits were also raised: Single buyers can now earn up to $125,000 and still get the full credit while a married couple can earn $225,000.

Am I First Time Home Buyer?

If you have not owned a property within the last 3 years, you become First Time Home buyer in the eyes of Uncle Sam.

Let me know if you have any questions!

Thank You

IRS Guidelines on First Time Home Buyers

First-Time Homebuyer Credit: Scenarios

S1. If a single person (Taxpayer A) qualifies as a first-time homebuyer at the time he/she purchases a home with someone (Taxpayer B) that is not a first-time homebuyer and then later that year they marry each other, is the credit still allowed? A. Eligibility for the first-time homebuyer credit is determined on the date of purchase. If Taxpayer A, a first-time homebuyer, buys a house and then later that year marries Taxpayer B, not a first-time homebuyer, the credit is allowable to Taxpayer A. Taxpayer A may take the maximum credit. S2. Taxpayer A is a single first-time home buyer. Taxpayer B (parent) cosigns for A and does not qualify. Both names are on the mortgage. Can Taxpayer A claim the credit and, if so, how much? A. Yes. Taxpayer B is not a first-time homebuyer and cannot claim any portion of the credit, but A may claim the entire credit ($7,500 for purchase in 2008; $8,000 for purchase in 2009), if the home was purchased as Taxpayer A's primary residence. S3. A taxpayer owned her principal residence. Several years ago, she decided to relocate to a rented apartment, but did not sell the former residence. Instead, she rented it out to tenants. Now the taxpayer plans to buy another house and make it her new principal residence. Does she qualify for the first-time homebuyer credit? A. A taxpayer who owned rental property within the past three years is still eligible for the credit. The taxpayer cannot have owned and used a home as his or her principal residence within the last three years. S4. If husband and wife wanted to sell the home that the wife owned when they got married, and the husband had not owned a home within the past three years, could he qualify as a first-time homebuyer for the credit even though the wife would not qualify? A. No. The purchase date determines whether a taxpayer is a first-time homebuyer. Since the wife had ownership interest in a principal residence within the prior three years, neither taxpayer may take the first-time homebuyer credit. Section 36(c)(1) of the Internal Revenue Code requires that the taxpayer and the taxpayer's spouse not have an ownership interest in a principal residence within the prior three years from the date of purchase. The husband may not take the credit even if he filed on a separate return. S5. Taxpayer purchased a home on April 24, 2008, while she was separated from her husband. Later in the year, they reconciled and were living together at the end of 2008. She has not owned a home since 2004 but he owned one which he sold in 2006. They remained married the entire time. Is the taxpayer eligible for the first-time homebuyer credit? A. No. The purchase date determines whether a taxpayer is a first-time homebuyer. Since the husband had ownership interest in a principal residence within the prior three years, and the taxpayers were legally married, neither taxpayer may take the first-time homebuyer credit. Section 36(c)(1) requires that the taxpayer and the taxpayer's spouse not have an ownership interest in a principal residence within the prior three years from the date of purchase. While individuals do not have to be married to get the credit, marriage (and legal separation) imputes ownership of a previous home upon the other spouse. The wife may not take the credit even if she filed on a separate return. S6. I have been estranged from my spouse for over three years and file married filing separate. I don’t know if my spouse has owned a main home in the last three years, but I have not. If I buy a house in 2009 that otherwise qualifies for the first-time homebuyer credit, can I claim the credit? A. Section 36(c)(1) requires that the taxpayer and the taxpayer's spouse not have an ownership interest in a principal residence within the three years prior to the date of purchase. While individuals do not have to be married to get the credit, marriage (and legal separation) imputes ownership of a previous home upon the other spouse. If your spouse has not owned a main home in the last three years, then you may claim the credit. S7. I am separated from my spouse and considered unmarried, and qualify for the unmarried head of household filing status. My spouse has owned a main home in the last three years, but I have not. If I buy a home on May 1, 2009, that otherwise qualifies, can I claim the first-time homebuyer credit? A. No. Section 36(c)(1) requires that the taxpayer and the taxpayer's spouse not have an ownership interest in a principal residence within the three years prior to the date of purchase. While individuals do not have to be married to get the credit, marriage (and legal separation) imputes ownership of a previous home upon the other spouse. The taxpayer may not take the credit even if filed on a separate return. S8. A qualifying taxpayer bought a home in August 2008 that needed a lot of work before occupying. They finished the renovations and moved in the home in January 2009. Can they claim the $8,000, since they did not occupy the home until 2009? A. No. Taxpayers who purchase an existing home and renovate the property before moving in are eligible for the first-time homebuyer credit based on the date of purchase, not the date of occupancy.

Short Sale vs Foreclosure

What is Short Sale? Is short Sale better than Foreclosure?

Short Sale is a transaction where mortgaged owed to bank is more than the sales price!

To Homeowners who is worried about if they should apply for short sale or should they just leave the property and go.. Please do not make this mistake. Talk to your bank and try to understand what options could be out there for you. Do not get discouraged by one phone call. Call them over and over.

In this section of my blog, I will explain you my past 3 years of experience with Short Sales and Foreclosures.

Here are the main differences between Short Sale & Foreclosure.

AVOID FORECLOSURE Foreclosure VS Short Sale You Need To Know The Difference

Issue Foreclosure Short Sale Future Fannie Mae Loan - Primary Residence A homeowner who loses a home to Foreclosure is ineligible for a Fannie Mae backed mortgage for a period of 5 years. A homeowner who successfully negotiates and closes a short sale will be eligible for a Fannie Mae backed mortgage only after 2 years. Future Fannie Mae Loan - Non Primary An Investor who allows a property to go to Foreclosure is ineligible for a Fannie Mae backed investment mortgage for a period of 7 years. An investor who successfully negotiates and closes a short sale will be eligible for a Fannie Mae backed investment mortgage after only 2 years. Credit Score Score may be lowered anywhere from 250 to over 300 points. Typically will affect score for over 3 years. Foreclosure will remain as a public record on a person’s credit history for 10 years or more. Only late payments on mortgage will show and after sale mortgage will be reported as paid or negotiated. This will lower the score as little as 50 points if all other payments are being made. A short sale’s affect can be a brief as 12 to 18 months. Security Clearances Foreclosure is the most challenging issue against a security clearance outside of a conviction of a serious misdemeanor or felony. A Short Sale on its own does not challenge most security clearances. Officers in the military may be adversely affected by a short sale. Current Employment Employers have the right and are actively checking the credit regularly of all employees who are in sensitive positions. A foreclosure in many cases is ground for immediate reassignment or termination. A short sale is not reported as such on a credit report and is therefore not a challenge to employment. Deficiency Judgment In 100% of foreclosures (except in those states where there is no deficiency) the bank has the right to pursue a deficiency judgment. In some successful short sales it is possible to convince the lender to give up the right to pursue a deficiency judgment against the homeowner. Deficiency Judgment (amount) In a foreclosure the home will have to go through an REO process if it does not sell at auction. In most cases this will result in a lower sales price and longer time to sale in a declining market. This will result in a higher possible deficiency judgment. In a properly managed short sale the home is sold at a price that should be closer to fair market value and in almost all cases will be better than an REO sale resulting in a lower deficiency.

Are you a payment - or more - behind? Have you received a Notice Of Default? You May qualify for a Short Sale! Time is Running Out! ACT NOW! I CAN HELP! Alasgar Farhadov-703-989-3344 or ali@solutionsrg.com * Please Note: We are not attorneys nor are we credit counselors. The information that we are presenting here is general information and should not be confused with legal advice. You MUST seek advice from an Attorney or CPA regarding your legal rights and tax implications for a Short Sale, a Deed In Lieu Of Foreclosure, Bankruptcy or a Foreclosure.

Here is a Sample Short Sale Approval Letter from Bank of America.

If I have done Short Sale-How Long Do I have to wait in order to be able to Purchase again!

Preforeclosure Sales
· A preforeclosure sale involves the sale of the property by the borrower to a third party for less than the amount owed to satisfy the delinquent mortgage, as agreed to by lender.
· On a TCS credit report:
· The Narrative Codes will indicate 158 (Closed or Paid Account/Zero Balance) and 098 (Settlement Accepted on This Account).
· Note: When preforeclosure is begun the status is reported as M-8 at that time; should the loan be redeemed it is not uncommon for the M-8 to remain.
· Conventional
· Effective for applications dated on or after August 1, 2008 but before November 5, 2008:
· 2-years · elapsed time after completion of preforeclosure sale and re-established credit after completion of preforeclosure sale.
· Effective for applications, locks, re-locks, and extensions on or after November 5, 2008:
· 4-years · elapsed time after completion of preforeclosure sale and re-established credit after completion of preforeclosure sale.
· Extenuating circumstances: 2-years · elapsed time after completion of preforeclosure sale and re-established credit after completion of preforeclosure sale if due to · extenuating circumstances.
· FHA
· 3-years since completion of pre-foreclosure and re-established credit after completion of pre-foreclosure sale or borrower has choose not to incur new credit obligations.
· Extenuating circumstances: Less than 3-years acceptable if primary residence and if due to · extenuating circumstances and re-established credit after completion of pre-foreclosure sale or borrower has chosen not to incur new credit obligations.
· Borrower must have clear CAIVRS # regardless of pre-foreclosure
· VA:
· The Department of Veteran's Affairs does not consider a Short Sale a preforeclosure. See · Short Sale/Short Payoff (Preforeclosure Sales) (7-707) for additional information.
· See also · Short Sale/Short Payoff (Preforeclosure Sales) (7-707)

Foreclosure

· Conventional:
· Applications dated prior to June 1, 2008 (must close on or before September 19, 2008):
· 4-years · elapsed time after completion of foreclosure and re-established credit after completion of foreclosure.
· Extenuating circumstances: 2-years · elapsed time after completion of foreclosure and re-established credit after completion if resulted from · extenuating circumstances.
· Applications dated on or after June 1, 2008: (Amended for applications dated on or after August 1, 2008)
· Purchase - Primary Residence
AND
Rate/Term Refinance - Primary Residence, Second Home, Investment Property
· 5-years · elapsed time after completion of foreclosure and re-established credit after completion of foreclosure.
· After 5-years up to 7-years following completion date:
· Purchase requires:
· Down payment equal to the greater of 10% or as per the loan product description, and
· Minimum credit score of 680.
· Extenuating circumstances: 3-years · elapsed time after completion of foreclosure and re-established credit after completion if resulted from · extenuating circumstances.
· Extenuating circumstances: After 3-years up to 7-years following completion date:
· Purchase requires down payment equal to the greater of 10% or as per the loan product description.
· Purchase - Second Home, Investment Property
AND
Cash Out Refinance - Primary Residence, Second Home, Investment Property
· 7-years · elapsed time after completion of foreclosure and re-established credit after completion of foreclosure.
· Extenuating circumstances not considered.
· If AUS is utilized, refer to findings.
· FHA:
· 3-years since since completion of foreclosure and re-established credit or borrower has chosen not to incur new credit obligations.
· Extenuating circumstances: Less than 3-years acceptable if primary residence and if due to
· extenuating circumstances and re-established credit or borrower has chosen not to incur new credit obligations.

Extenuating Circumstances
Extenuating circumstances are nonrecurring events that are beyond the applicant’s control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations.
Extenuating circumstances cannot be solely defined by the event itself; all circumstances must be taken into consideration.


· Borrower must have clear CAIVRS # regardless of foreclosure
· VA:
· 2-years since completion and re-established credit.
· Extenuating circumstances: 1 to 2-years since completion and re-established credit with satisfactory pay history if due to
· Borrower must have clear CAIVRS # regardless of foreclosure

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What Happens to the difference owed?

In Uncle Sam's language we call it Forgiven Debt. Whenever a financial institution forgives a Debt, it has to inform Uncle Sam(IRS) in the form of 1099C(cancellation of Debt) about the loss. Since Uncle Sam never looses, it has to be shown as an Income to somebody. ..I am sure you have guessed by now that you are the Lucky one...The Difference that bank forgave you, will be reported to IRS as an Income under your SSN in the form of 1099C. But wait there is a solutions to this..According to Debt forgiveness act of 2007, you might be forgiven by uncle Sam as well...Talk to your CPA. Make sure you get that 1099C from your bank and file it on your tax return, as long as the property was your Principal Residency you should be fine..

Refer to this link for more detailed info..

http://www.irs.gov/individuals/article/0,,id=179414,00.html

New Short Sale Rules:

Here are the new short sales guidelines that are going to go into effect on April 5^th, 2010. Not all banks are participating in the program so check with your lender to see if you qualify.

New Short Sale Rules

• Sellers must be unqualified for a loan modification under the Home Affordable Mortgage Program or be unable to afford the modification.
• The bank will set an acceptable value of the home upfront, based on an appraisal or broker’s price opinion.
• Lenders must approve or deny a purchase offer within 10 days of it being submitted.
• Once the bank approves a home for short sale, sellers may stop paying all related mortgage payments, and unpaid mortgage debt will be forgiven.
• These mortgage payments will not be shown as late on credit reports.
• At closing, sellers are entitled to as much as $1,500 from the government to cover relocation expenses.