Foreclosure Tax Credit

[Anonymous]

Is there really a credit for first-time homebuyers that purchase foreclosed property? If so how much is it? I understand that the $7500 first time homebuyer credit cannot be taken if you have a FHA loan, does the same apply for the foreclosure credit also?

[OneDay800]

Where did you read that you couldn't get the credit if you have an FHA loan?  I haven't read that anywhere.  I don't think the loan you took has any bearing on the tax credit "loan".  Also, I think for forclosure..it is a 7000 credit.  I've been googling this thing for a week now and even called the IRS directly and it seems there are alot of questions and no answers yet !!

[Anonymous]

I went to VHDA's website.

http://vhda.com/vhda_com/apps/DocumentLibrary/document_load.asp?docid=2672

I hope this helps....

[Donna1966]

http://www.irs.gov/newsroom/article/0,,id=186831,00.html

Directly from the IRS.

It does not say that having an FHA loan disqualifies you from the first time buyers credit.

[OneDay800]

I went to the website you posted and read it.  To my understanding that is not a regular FHA loan.  So that might fall under the caterogy on the IRS website as:

-Your home financing comes from tax-exempt mortgage revenue bonds

FHA loans are not from revenue bonds.  The website posted from the IRS should help you.

[Anonymous]

Sorry to say but an FHA loan is considereda  tax-exempt MRB.

. Who cannot take the credit?

A. If any of the following describe you, you cannot take the credit, even if you buy a main home:

• Your income exceeds the phase-out range. This means joint filers with MAGI of $170,000 and above and other taxpayers with MAGI of $95,000 and above.
• You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
• You stop using your home as your main home.
• 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. 
• Your home financing comes from tax-exempt mortgage revenue bonds.
• You owned another main home at any time during the three years prior to the date of purchase. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another main home at any time from July 2, 2005, through July 1, 2008.

[Anonymous]

I hope what OneDay800 is true wrote is true...

[OneDay800]

I'm sorry but I do not agree that FHA loans are the same as tax-exempt MRB's.  Here is the information I gathered on MRB's:

Mortgage Revenue Bonds

MRBs are tax-exempt bonds that finance mortgage loans targeted to moderate-income first-time homebuyers. Issued by state and local housing finance agencies (HFAs), MRB proceeds are used to purchase or originate mortgage loans at below market rates. To qualify for a mortgage financed by an MRB, the household’s income cannot exceed 115 percent of area median family income. [1] The price of a home purchased with an MRB-financed mortgage may not be greater than 90 percent of the average price of homes in that area. [2] The participant must not have owned a home in the previous three years. Exceptions to these rules are made for targeted low-income neighborhoods, households with many members, or households living in certain high cost areas.

MRBs are a type of private activity bond, as defined by the Internal Revenue Code. [3] The volume of private activity bonds that may be issued annually is limited by state volume caps, which have been adjusted for inflation since 2003. For 2006, each state’s volume cap is generally equal to $80 per capita. [4] For 2003, HFAs had approximately $6.7 billion in MRB authority out of a total private activity bond cap of $24.7 billion. [5] However, the total authority available for MRB issuance in 2003 was equal to $19.5 billion due to unused bond authority from previous years. [6]

Due to their tax-exempt status, MRBs allow states to borrow at lower interest rates. The savings can be passed onto homebuyers in the form of below market rate mortgages. The interest rate on mortgages financed by MRBs is typically greater than the interest rate on the MRBs themselves, with the difference used by HFAs to finance the costs of operating the program. These costs include education, outreach, administration, and legal and underwriting services associated with bond issuance. Under present law, the interest on mortgages financed by MRBs may not be greater than 1.125 percentage points above the interest rate on the MRBs.

Qualifying homebuyers in the MRB program thus have smaller monthly mortgage payments due to reduced interest costs. Furthermore, the reduced monthly housing cost increases the ability of the homebuyer to qualify for a mortgage, which in many cases is an obstacle to homeownership.

This is NOT the same as an FHA loan!!

Please any mortgage gurus out there chim in if I am wrong.

[Anonymous]

Lets be clear, FHA is not a loan.  It is the administration that guarantees the loan your funding institution, i.e. bank, is the one that provides the loan.

[Anonymous]

After all that do you still qualify for the credit if your loan is FHA backed????