• Home
  Home
• Market Conditions
  Summary Inland Homes Shore Homes Residential Condos Hotel Condos
• Condo Info
  Anchorage Cove Arbors Cottage Glen Crows Nest Eagle Harbor Eames Farm Edgewater Resort Fish Creek Condo Fox Point Half Mile Bridge Harbor Vista Heritage Harbor Hidden Blossom Hidden Harbor Horseshoe Bay Knudson House Liberty Park Maxwelton Braes Northbluff Northhaven Oaks Condo Pheasant Park Rocky Shores Sister Bluff Sunrise Ridge Woodcrest Village Yacht Club @ Sister Bay Yacht Harbor Shores
• Legal Resources
  DC Real Estate Forms WRA Legal Updates
• Local Info
  Jim's Door Highlights
• Contact
  Contact Jim

Legal Hottips -  April 20, 2009
This Legal Hottips article may be reprinted only if it is reprinted in its entirety, including the disclaimers above and below the Hotline questions and answers. The Wisconsin REALTORS® Association Best of the Legal Hotline Service is an educational resource intended to keep the Association abreast of legal developments and concerns involving real estate practice in Wisconsin. We look forward to your input regarding the service, especially regarding the types of topics you would like covered.

IRS Guidance for Filing for the First-Time Homebuyer Tax Credit

Under the American Recovery and Reinvestment Act of 2009, qualifying taxpayers who purchase a home before Dec. 1 receive up to $8,000 or $4,000 for married individuals filing separately. The IRS recently released additional information to help homebuyers understand the ways they can file to claim the $8,000 first-time homebuyer credit for 2009 home purchases.

For people who recently purchased a home (closed or took up residence in new construction) or are considering buying in the next few months, there are several different ways that they can get this tax credit even if they've already filed their tax return. The Treasury Department encourages taxpayers to explore these options to maximize their credit and get their money back as fast as possible. "The new credit can get money in the pockets of first-time homebuyers quickly," said IRS Commissioner Doug Shulman.

People can claim the credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year. The filing options to consider are:

1. File an extension. Taxpayers who haven't yet filed their 2008 returns but are buying a home soon can request a six-month extension to October 15.  This step would be faster than waiting until next year to claim it on the 2009 tax return.  Even with an extension, taxpayers could still file electronically, receiving their refund in as few as 10 days with direct deposit.
2. File now, amend later. Taxpayers due a sizable refund for their 2008 tax return but who also are considering buying a house in the next few months can file their return now and claim the credit later.  Taxpayers would file their 2008 tax forms as usual, and then follow up with an amended return later this year to claim the homebuyer credit.
3. Amend the 2008 tax return. Taxpayers buying a home in the near future who have already filed their 2008 tax return can consider filing an amended tax return. The amended tax return will allow them to claim the homebuyer credit on the 2008 return without waiting until next year to claim it on the 2009 return.
4. Claim the credit in 2009 rather than 2008. For some taxpayers, it may make more financial sense to wait and claim the homebuyer credit next year when they file the 2009 tax return rather than claiming it now on the 2008 tax return. This could benefit taxpayers who might qualify for a higher credit on the 2009 tax return. This could include people who have less income in 2009 than 2008 because of factors such as a job loss or drop in investment income.

The IRS reminds taxpayers the amount of the credit begins to phase out for taxpayers whose modified adjusted gross income is more than $75,000, or $150,000 for joint filers. Taxpayers can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately.

IRS.gov provides more information, including guidance for people who bought their first homes in 2008. To learn more about the overall implementation of the Recovery Act, visit www.Recovery.gov.
From the IRS news release IR-2009-27: http://www.irs.gov/newsroom/article/0,,id=205416,00.html

Potentially, yes. The following scenarios are provided by the IRS on their web site at http://www.irs.gov/newsroom/article/0,,id=206294,00.html:

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.

Finally, please note the above scenarios are for information purposes only and are not tax advice. The REALTOR® should inform clients that additional restrictions, such as income restrictions, may apply and that they should seek the advice of a tax attorney, CPA or other qualified tax professional to advise them on their specific situation.

READ MORE ABOUT IT:
For more information about the homebuyer tax credit visit the WRA's new Wisconsin Homebuyer Microsite at http://www.wisconsinhomebuyer.org/taxcredit.html and the resources page at http://www.wra.org/Resources/resource_pages/public_awareness_campaign_2009.htm. Be sure to spread the word about the $8,000 tax credit and share this Microsite with your clients and customers.

Lines 17 - 21 of the WB-11 Residential Offer to Purchase state, "ACCEPTANCE. Acceptance occurs when all Buyers and Sellers have signed an identical copy of the Offer, including signatures on separate but identical copies of the Offer. CAUTION: Deadlines in the Offer are commonly calculated from acceptance. Consider whether short term deadlines running from acceptance provide adequate time for both binding acceptance and performance."

In calculating dates and deadlines, Lines 140-144 of the WB-11 provide the answer: "Deadlines expressed as a number of 'days' from an event, such as acceptance, are calculated by excluding the day the event occurred and by counting subsequent calendar days. The deadline expires at midnight on the last day. Deadlines expressed as a number of 'business days' exclude Saturdays, Sundays, any legal public holiday under Wisconsin or Federal law, and any other day designated by the President such that the postal service does not receive registered mail or make regular deliveries on that day."

A party who has made an offer (or counter-offer) is, in all but a relatively few situations, able to withdraw the offer any time prior to its binding acceptance. The law requires the party withdrawing the offer to notify the person in receipt of the offer that the offer is withdrawn. If the notice of withdrawal arrives before a binding acceptance (per the terms of the contract) the offer becomes null and void. Any attempt at acceptance of the offer thereafter (even if prior to the stated time limit for acceptance) will have no legal effect. This is why licensees, in nearly every circumstance, must always deliver signed offers and counter-offers immediately (by mail or fax) rather than calling the other agent in the transaction and telling them there is a signed offer/counter waiting to be delivered/dropped off. Notice of withdrawal does not technically have to be in writing. However, the party attempting to withdraw the offer must make certain that proof is available that the offer has not already been accepted. If it can be verified (and hopefully documented) that the offer had not been accepted, then notice of withdrawal is less likely to be challenged.

The primary buyers have failed to provide a timely loan commitment and failed to respond at all to their agent (who has since moved out of the area). The listing broker has $1,000 in earnest money. The buyer's agent sent them a Cancellation Agreement and Mutual Release (CAMR) on March 30 providing for the money to be returned to them, but there has been no response. The offer failed to close March 23. There is a secondary offer.

Can the sellers provide a notice that quits this offer, and "separates" the offer from the earnest money? Can the sellers place a secondary offer into primary position after giving notice to the primary buyers, so that the sellers and the secondary buyers do not have to wait the 60 days+ for an attorney to review the offer and make a decision as to earnest money disbursement as well as offer status?

While it may appear that on the face of the contract that the offer is null and void, there are a variety of reasons (particularly equity issues) which may cause a court to enforce the contract. Therefore, to avoid the sellers being bound to two valid contracts to sell the property, the sellers should not elevate the secondary offer into primary position unless a signed CAMR has been submitted by the primary buyer or unless sellers' legal counsel has advised that the secondary offer may be made primary.

Fair Housing Conference in Milwaukee

The Wisconsin Fair Housing Network is holding its 2009 Fair Housing Conference April 23 & 24 at the Italian Conference Center in Milwaukee.

On Thursday, April 23rd from 6:00 - 7:00 pm there will be a Free Picnic Supper and from 7:00 - 8:30 pm there will be a "You Be the Judge" presentation. This is a free, open-to-the-public session presented by experienced investigators. This interactive workshop is based on real cases. The session will take participants through the fair housing investigation process as a way of learning about the law, how it works, what does and doesn't constitute discrimination and housing providers' and consumers' rights and responsibilities. Presenters include Margaret Bowitz, Director of Case Management & Training Services, Metropolitan Milwaukee Fair Housing Council and Johnny Kimble (retired) State of WI - Equal Rights Division

The main conference on April 24 will include speakers addressing topics such as Wisconsin's Neighborhood Stabilization Program, Mobility and Choice, Segregation and the Subprime Lending Crisis, and Implications of the Foreclosure Crisis on Credit Markets.

For further details and registration information, visit http://www.wra.org/Education/Events/fairhousing2009/fairhousing.htm

Debbi Conrad
Director of Legal Affairs
Wisconsin REALTORS® Association
4801 Forest Run Road Suite 201
Madison, WI 53704
Phone: 608-241-2047; 800-279-1972
Fax: 608-242-2279

Copyright 1998 - 2009  Wisconsin REALTORS® Association