Real Estate Information Archive

Blog

Displaying blog entries 1-2 of 2

Dealing With IRS Tax Credit Rejections

by Mark Brace

The IRS has been rejecting first-time home buyer claims from anyone who shows a Form 1098 Mortgage Interest Expense in their prior year files.

In many cases, the applicants are entitled to the credit because their previous mortgage interest deduction is for a timeshare, mobile home, boat, or other recreational property.

If you have a client who is in this unfortunate position, here is some advice from Enrolled Agent Eva Rosenberg, who authors the Web site TaxMama.com.

Respond to the IRS immediately and tell them why their rejection is wrong. Be prepared to prove that the mortgage the IRS is seeing isn’t on a personal residence. First-time home buyers are entitled to own other types of real estate and still get the home buyers credit, so provide proof that the previous mortgage was on something else.

Send a letter explaining the situation and providing proof of a previous rental or other non-ownership living situation, including copies of rental contracts for the last three years, an old driver's license showing that address, utility bills, etc.

Home buyers who believe the IRS may view their situation in this way should be proactive, providing proof that they are a first-time buyer when they initially file for the credit.

Anyone who is rejected after two attempts to explain the problem to the IRS should call the Taxpayers Advocate Service toll-free, (877) 777-4778, their Congressman, and their Senator, Rosenberg advises.

Source: TaxMama.com, Eva Rosenberg, EA (06/16/2010)

Homebuyer Tax Credit

by Mark Brace

Homebuyer Tax Credit

 

The government recently passed an incentive credit for people buying homes that have not had an ownership interest in a property for the past 3 years.  You don’t necessarily have to be a first time home buyer.  The way this works is that the year after you purchase your home, you will receive up to $7500 as a tax credit when filing your taxes.  This can result in a refund to you.  If you receive the full $7500 you will then start to repay the money at $500 increments for the next 15 years.  This is essentially an interest free loan from the government.  A lot of home buyers wonder how they will pay for improvements to the home.  This may be a great way to make some of those upgrades that you don’t have the money to initially do.  You can do whatever you want to with that money though.  You could put in the bank or invest it in some other account. 

 

In a new market when there are very few 0% down programs left, this may be a way repay yourself for the initial down payment requirement, or simply afford yourself a little cushion in the unique market.   

 

For more information or any questions, contact

 

Matt Smith – Countrywide Financial – 616-299-2951

Displaying blog entries 1-2 of 2

Contact Information

Mark Brace, Realtor, ABR, GRI, CRS, SRES, e-PRO, A
Berkshire Hathaway HomeServices Michigan Real Estate
3000 East Beltline NE
Grand Rapids MI 49525
Direct: (616) 447-7025
Cell: (616) 540-7705
Fax: (616) 447-7025

Berkshire Hathaway HomeServices - Michigan Real Estate is a full service, locally operated real estate brokerage company backed by the strength of a solid national and global brand. Our full service businesses include Residential, Commercial, Relocation, Mortgage, Insurance, Home Services and New Homes & Land. Our core values, service philosophy, cutting edge technology, and most importantly our people are what make us the leading real estate company in Michigan. We are committed to providing the highest quality real estate services possible and making each customer's experience one that surpasses their expectations.