.jpg)
As you probably know, the Federal Government has given “first-time” home buyers an $8,000.00 tax credit, but there are many things you probably don’t know about this incentive to buy a home. Here is a little guide to what is available and to who:
1) “First time home buyers” means any taxpayer who has not owned a home in the previous 3 years.
2) This is a tax credit not a deduction. In other words, real money you would otherwise pay to the government, you should use it if you can!
3) This credit expires on December 1, 2009. This means you must close on a house prior to Nov. 30, 2009. Since the average closing, from contract to recordation takes 30-45 days (add a few months for short sales), and since most people take a few weeks to prepare and month to shop, it is time to get moving!
4) You may not know you will receive the full benefit of the tax credit even if you don’t pay that amount in income taxes for 2009. For example, you might owe only $2,000 in income taxes, but in this case your entire tax bill could be eliminated, and you would receive a tax refund of $6,000.00
5) OK, here’s an important point: The Credit involves income limitations. Individuals with an adjusted gross income up to $75,000 can qualify for the full $8,000 credit, as can married couples earning up to $150,000. The Tax credit you can receive then declines as income increases. If you make $95,000 or above (or above $170,000 for couples) then this credit is not for you.
6) You do not have to repay this amount! An earlier version of the tax credit did have to be repaid, so it was sort of an interest-free loan. However, you must not sell the home within three years; otherwise you must repay the tax credit at sale.
7) I understand Congress is considering increasing and/or extending the tax credit and making it good for all home buyers, not just those purchasing their first home. However, no one should count on that. Right now this credit is the only bird in the hand.
8) To reiterate: Do you want to take advantage of record low interest rates (and they won’t last forever, believe me), and the great inventory and reduced housing prices (which also won’t last forever), and the government $8,000? If so you’d better get a house in escrow before September so you will have plenty of time to inspect, get repairs done if necessary, get your loan in place and close prior to the deadline.
For more information you might want to check out these sites:
You might also enjoy these:
Comments
An overlooked parameter in this program is that it also applies to owners who have not occupied their residence in over three years. Check it out at the IRS website; 'First-Time Homebuyer Credit: Scenarios (S3)'.
Got something to say?
Examiner.com is looking for writers, photographers, and videographers to join the fastest growing group of local insiders. If you are interested in growing your online rep apply to be an Examiner today!