Arizona Realty by Kyle

Posted By Kyle on June 30, 2009

A lot of first time buyers here in Phoenix that I work with are asking similar questions, so I thought that I might try to answer a few of the most commonly asked questions.

1. Can I use the Tax Credit as a Downpayment? There has been so much confusion over this. Yes, in theory you can monetize the tax credit early. However… in Arizona, there is currently no lender that is accepting these “bridge loans”. Read Steve Belt’s blog post to find some more details on what this means. Bottom line, as of the date this post is written, there is not a way to monetize and use your first time buyer tax credit early and put it towards the down payment, to my knowledge. I will gladly put up a new post whenever I find a lender that makes it work.
2. When do I have to close on my property to get the tax credit? This is a biggie, people really need to make sure that they have this one understood. You must have possession of the property by December 1st! That doesn’t mean you have an offer in on a house, a contract that is accepted, or a property closing escrow on December 2; it means that you are the owners of the property outright. Will this change? Maybe. Check out Jay Thompson’s blog post for several bills that are being debated in Congress regarding the tax credit.
3. Can I receive the tax credit early instead of using it for next years returns? Yes, you can amend last years returns and receive the refund check. Currently it is taking between 3-5 weeks after you have closed on the home and sent in the paperwork to the IRS before you will receive the check.

Here’s a little creative financing thought for you. Remember how the tax credit can’t be used (yet) in Arizona to be a part of the downpayment for a new home? Well, you ARE able to have downpayment assistance provided by a blood relative. So… If you can convince a blood relative to loan you some of the money for downpayment on your home, you can close on the house, amend your returns, and then give them their money back in around a month after closing. Just a thought…

Categories: 1st Time Buyers
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