12 September 2007
Foreclosure doesn't just happen to people who don't make their mortgage payments. Your homeowner's association (HOA) can take your house or condo if you're not careful. In one case, a disabled California man lost his home in a foreclosure sale because he was $123 behind on his homeowner's dues. The house was worth $280,000. Unfair? Abusive? You bet!Read More »
Mortgage Perks for First-Time Homebuyers
By Kelly WingardNFNS Columnist
What is the definition of a first-time homebuyer?
a. An individual that has never owned a home
b. An individual that has not owned a home in the past year
c. An individual that has not owned a home in the past two years
d. An individual that has not owned a home in the past three years
e. All of the above
Homebuyer Perks
One of the Federal Housing Administration's (FHA's) highest
priorities is helping first-time homeowners, including assistance with down
payments and mortgage closing costs. Among other eligibility criteria, the FHA
defines a first-time homebuyer as an individual who has not owned a principal
residence for three years preceding
the new home's purchase date. Only one spouse is required to meet this test when
married couples are financing a mortgage together.
IRS Requirements
The IRS offers a couple perks to first-time homebuyers in
the form of penalty exclusions and tax credits. The penalty exclusion allows
first-time homebuyers, i.e. those who have not had a present interest in a main
home for two years preceding the new home's acquisition date, to escape the 10
percent early withdrawal penalty on up to $10,000 in IRA funds. However, the
IRS requires both spouses to meet this non-ownership test to qualify for
penalty exclusion.
The IRS also offers a credit for qualified first-time
homebuyers in the
About the Author
Kelly Wingard is a
freelance writer and a 25-year veteran tax preparer. She is a regular
contributor to the
About the Author
Kelly Wingard is a freelance writer and a 25-year veteran tax preparer. She contributes regularly to the University of Illinois Tax School training manual for tax professionals.