$8000 First-Time Home Buyer Tax Credit – Explained
July 2, 2009
This is one part of the Stimulus Plan that actually affects you and me. But since this is the Federal government we’re talking about we may have to define what “is” is. Here’s the breakdown:
- This credit is for “first time homebuyers. While that is true in the traditional sense, the Federal Government’s definition of “first time homebuyer” is “a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the home ownership history of both the home buyer and his/her spouse.” So for many people in here in Southern Louisiana, specifically those who have not yet been able to return since Katrina in ’05, this means you can come home!
- There is an income mit. It’s pretty simple. The single person’s mit is $75,000 and the couple’s mit is $150,000. Of course, there are exceptions. Please refer to the website included below (this is supposed to be a simple version!)
- All types of homes are included – as long as it’s the principle residence. This means that you must occupy the home for at least three years. This is different from the last credit that was available, which was essentially a 0% interest loan that had to be repaid if you slid it. With this, as long as you play by the rules for three years, you have no obligation to repay. You don’t have to simply stick to existing homes either. Why not build new?
- Some people get confused when it comes to taxes and the tax jargon (no surprise here!) Most things having to do with taxes are tax “write-offs” which, simply stated, is a qualifying purchase that you subtract from the total amount of money you earned in a year. So let’s say you make $50,000 per year before taxes. Let’s say you purchase something that can be classified as a write off for $1,000. Instead of being taxed on the full $50,000, you would only be taxed on $49,000 instead! Pretty exciting, huh? What’s even more exciting is a tax credit, which is this program. Now let me take this opportunity to state that I am not a CPA and I am not qualified to give out tax advice. You should consult a CPA before and after deciding to use this program. You could receive and actual check from the Federal government up to the entire $8,000! Way better than a write-off, wouldn’t you say?
- Some people may even be able to use this credit up front in the form of a loan for down payment assistance. This does not apply for all lenders. If you are obtaining FHA financing, for example, you may qualify for a 3% down loan, in which case you may be able to use this tax credit to pay the 3% down AND closing costs. What does this mean? It means that it may cost you nothing out-of-pocket to get into a new home.
I hope that we have been able to shed some light on this for you. This is really is a great program, but there is a very limited time to use it. It only pertains to those who buy a home between January 1, 2009 and December 1, 2009. That’s not much time left! If you need assistance, please feel free to visit the official website. You can also contact us. We would be more than happy to refer you to a lender qualified to help you with this credit.