New Tax Credit Rules by Edith Lank on Creators.com

Recently

Title and Deed Dear Edith: My husband and I recently paid off our home mortgage. Only my name is on the deed. I would like both of our names to appear on the title to the house, so that in the event of my death, my husband would clearly have ownership of the …Read more. Making Lots on the Sale Dear Mrs. Lank: I've lived in my house for 32 years and want to sell this year. I am widowed and understand that I will have $250,000 that will not be taxed from the proceeds. Am I required to pay capital gains on a portion of the remaining monies? …Read more. Can't Kick Tenants Out Mrs. Lank: I am interested in buying a condo that is currently rented out. The seller says that the lease isn't up until for seven months and therefore I couldn't move in until then. If I bought this condo, would I be forced to become a landlord? Or …Read more. Did He Overpay? Dear Edith: I bought a house this summer, and in light of the National Association of Realtors' admission that they've been overstating home sales since 2007, I'm wondering if that faulty data may have made me overpay for my house. — L. Answer:…Read more.

New Tax Credit Rules

Ms. Lank: There was an article discussing the extension of the first-time buyer tax credit until April 30, 2010. I read somewhere that "repeat buyers" who have previously owned a home for five years would also be eligible? If so, does this tax break apply to someone purchasing a second home (as a repeat buyer)? In other words, can you take this credit and still own two homes? — P.K.

Answer: Yes and no. The repeat-buyer tax credit, like the first-time buyer's, is intended for the purchase of a principal residence. And in fact, if you didn't use the new house at your main home at least three years after you bought, you'd have to return the money.

So no, you wouldn't qualify for the tax credit if you were buying a vacation home or rental property. But there's no requirement that you sell your current house. You could keep it and rent it out, for example. So, yes, you could own two houses.

The credit is available for an actual purchase, or the signing of a firm contract to buy, between Nov. 6, 2009 and the end of next April. Another two months are allowed if needed to close the deal, as long as the purchase is completed before the end of June.

The tax credit begins to phase out for single taxpayers with income over $125,000 and disappears entirely at $145,000. The figures for married couples are $225,000 to $245,000. Those new higher limits apply also for the first-time home-buyer's credit, for any purchase after the new rules went into effect on Nov. 6.

And to tidy up a few more details: The repeat-buyer requirement is that you have owned a main home for at least five consecutive years out of the eight years before you buy the new home. You can't buy from a close family member or in-law. And while the first-time buyer's tax credit is for up to $8,000, the repeat buyer's is for no more than $6,500.

A tax credit, of course, represents dollar-for-dollar off your federal income tax bill and is much more valuable than a tax deduction. If you didn't owe that much to the IRS, they'd even send you a check for the difference.

BORROW MORE OR LESS

Ms. Lank: Does it benefit a homeowner to put down more than 20 percent in purchasing a home or keep extra money in the bank? We have two small children and I am currently unemployed.

Is it better to have a mortgage on the property or own it outright? — D.S.

Answer: There's no one right answer. Everyone's financial situation is different. But if you're unemployed and can't prove sufficient dependable income, you won't qualify for a mortgage loan right now, anyhow.

WRONG PROPERTY DISCHARGED

Dear Edith: I read your recent article concerning the registering of ones' last mortgage payment. I received a letter of "recorded discharge," but a discharge for a completely different property was attached to the letter. I have telephoned my lender on several occasions without any success in getting this for my property. Please advise what action I can take now. — C.P.

Answer: First off, check with your county's public records office. Perhaps your debt was indeed listed as satisfied, and after that someone in the office simply mailed you the wrong document by mistake. If that's the case, you have nothing to worry about.

But if your own discharge is not on record, contact the agency that supervises mortgages in your state. A librarian can help you get the right phone, mail and e-mail addresses. Another option is to have a lawyer write to your lender. That might bring more attention.

Don't stop until this is straightened out. Otherwise, you'll have problems some time in the future.

CAN'T SELL THE HOUSE

Dear Edith: I am in a pretty bad situation. I need to sell my house so I can move in with my fiancee. I put it on the market months ago and have only had one family view it. I'm getting worried that my realtor is just waiting, and the house won't sell. I plan on leaving the state, so I don't think renting is an option. — e-mail

Answer: You're right — being an absentee landlord is asking for trouble.

Anything will sell if the price is right. If you offered your house for $2, it would sell today. Somewhere between $2 and what you're asking is a price that will attract buyers. You need to drop your price till you find out that amount.

By the way, I'm curious as to what you think your broker is "waiting" for. I expect the agent won't be paid until and unless the place is sold, so I hardly think you're being sabotaged.

Edith Lank will respond personally to any questions sent to her at 240 Hemingway Drive, Rochester, NY 14620 (please include a stamped return envelope), or readers may e-mail her at ehlank@aol.com.