Real Estate Matters: Hunting Down Foreclosed Properties

By Ilyce Glink

Q: I am trying to help my daughter look for a home to purchase. What is the best way to search foreclosures in that area? Should I sign up and give a credit card to one of the foreclosure sites such as RealtyTrac?

I have been a little afraid to do that, but it seems you have to go to a site like that in order to get addresses of properties in foreclosure.

A: As far as foreclosure search sites go, RealtyTrac is one of the best. You get very good information, statistics and other details that are not commonly available on "free" foreclosure sites.

But the best thing you can do is to find a great real estate agent who can help your daughter search for a home the old fashioned way -- on the ground. She will need more than just the address and information on other foreclosures in the area. She will need the agent's advice, counsel and experience in navigating a foreclosure purchase.

Q: We closed on a construction loan on December 31, 2008. We filed our tax return this past spring, and got the $7,500 tax credit. But we didn't sign our mortgage loan until June 3, 2009. We were told that we need to refile an amended tax return to get the full $8,000 plus whatever added tax credit our state is offering.

We are first time home buyers but were not informed about what we needed to do to get these tax breaks. Could you please advise us what to do?

A: According to the IRS, to qualify for either last year's $7,500 tax credit or the 2009 $8,000 first time homebuyer tax credit, you have to have purchased and used your home as your primary resident. Last December, you were in the process of building a home and should not have received the first time homebuyer tax credit at that time.

I'm guessing that you filed your tax return to get the benefit of the first time homebuyer tax credit even though you did not have a home that was in a condition for you to live in. Now that the first time homebuyer tax credit was changed from $7,500 with a requirement to pay back the tax credit to $8,000 with no requirement to pay back the tax credit, you decided that the new deal was better for you.

You will need to chat with your accountant or tax preparer about amending your 2008 federal income tax return to remove the tax credit you received then. Then, when you file your 2009 federal income tax return, you will need to complete the proper forms on that tax return to take advantage of the newer federal income tax credit for first time homebuyers. That should allow you to collect the $8,000 tax credit, which does not have to be repaid (unlike 2008's $7,500 tax credit).

You can get more information on the $8,000 first time homebuyer tax credit at www.IRS.gov, but here are some general details:

--The tax credit is a maximum of $8,000 or less if the price of the home is under $80,000.

--You must purchase the home as a first time buyer on or after December 31, 2008 but before December 1, 2009.

--To qualify as a first time homebuyer you must not have owned a home during the prior three years.

--If you are building the home, you must move into the home and use it as your primary residence when the home is completed on or after December 31, 2008 but before December 1, 2009.

--You can claim the tax credit on your 2008 or 2009 federal income tax returns.

--You must keep the home as your primary residence for 36 months; and

--To receive the first time homebuyer credit, you cannot have a modified adjusted gross income of $170,000 for joint filers and $95,000 for individuals.

When you amend your federal return, you can decide whether to delete the old tax credit and include the information for the new tax credit on your 2008 federal income tax return. Your tax preparer can better advise you on this issue and whether you qualify for an additional tax credits in your state.

You will probably need to use IRS Form 5405 to obtain the new credit when you amend your 2008 federal income taxes. You can download Form 5405 relating to the first time homebuyer tax credit from the IRS Web site.

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Real Estate Matters: Hunting Down Foreclosed Properties