Unfortunately with all the So-Called Stimulus spending President Obama has been doing, both him and the reigning Democrats in congress shot down the Republican efforts to put a shot of stimulus directly into the Housing Market. The Republicans suggested changing this tax credit to one that does not have to be repaid and it should be raised to a more stimulating $15,000.
This suggestion was shot down but after the National Association of Realtors (NAR) launched their political action committee call to action from all Realtors to write their local politicians, the huge response led to the Dems approving a modified version of this stimulus suggestion ending in a lower $8,000 Tax Credit but also amending the provision to one that does not have to be repaid. I suppose it's better than nothing!
$7,500 First-Time Home Buyer Tax Credit
Credit Expires June 30, 2009
Bill Number H.R. 3221
Now is a Great Time to Buy a Home!
The tax credit is only temporary so now is not the time to dilly dally. With prices the lowest they've been in years, the interest rates are still low, the government offering all kinds of incentive to stimulate our economy why wouldn't you want to buy now?
Why now is the Best Time to Buy a Home?
- Low interest rates wont last forgever!
- First Time Home Buyer Tax Credit Expires July 1st 2009!
- Government investing Billions of Dollars to stimulate the economy!
- Programs like NJHMFA 1st Time Home Buyer Grant Program aka NJ Smart Start Grant
Yes now is a great time to be a home buyer, here is just one example of the benefits of home ownership and why it's a good thing.
Overview
The Housing and Economic Recovery Act of 2008 (H.R. 3221) signed into law by President Bush in July 2007 offers first-time homebuyers a tax credit equal to 10% of the cost of their home up to $7,500. This tax credit is available to first-time homebuyers who purchase a home in the United States as their principal residence on or after April 9, 2008, and before July 1, 2009.
To qualify as a first-time homebuyer, you cannot have owned an interest in a principal residence in the past three years from the date of the qualifying purchase.
To qualify for the full amount of the tax credit, you must not earn no more than $75,000 if filing as Single or Head of Household. If filing a joint return, the buyers may have a combined income of no more than $150,000. There is a phase out of the credit if reported income is more than $75,000.
The tax credit allows you to deduct the credit from your total tax liability for the year in which the credit is taken. Also, the tax credit is “refundable,” meaning that the taxpayer can receive a tax refund if the credit is greater than the estimated liability.
This tax credit must be repaid. However, the repayment period is 15 years unless the home is resold before the end of that period, and there is no interest on the amount of the credit that is received. Repayment of the credit begins two years after the credit is claimed and is repaid in increments of 6.67% per year of the credit amount.
Essentially, the tax credit is a 15-year interest free loan from the government. Money today is worth more than an equal amount of money in the future, making the tax credit a fantastic opportunity that any first-time homebuyer cannot afford to miss.
First-Time Home Buyer Tax Credit at a Glance
- The tax credit is available for first-time home buyers only.
- The maximum credit amount is $7,500.
- The credit is available for homes purchased on or after April 9, 2008 and beforeJuly 1, 2009.
- Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.
- The tax credit works like an interest-free loan and must be repaid over a 15-year period.
Home Buyer Resources
Buying a home can be complicated, but fortunately a lot of expert advice is available to help people navigate the experience. These online resources can help make the process smoother.
- Buying and Owning a Home Freddie Mac
- Buying a Home Department of Housing and Urban Development
- The Home Buying Process Federal Housing Administration
- FHA Loans Federal Housing Administration
- Homeownership Resources Fannie Mae
- Home Loan Learning Center Mortgage Bankers Association
- Move.com NAHB’s official new homes listing site
- Home Loan Guaranty Services Dept. of Veterans Affairs
- Consumer Information from NAHB NAHB.org
- Mortgage information from the Fed Federal Reserve Board
- Home Financing Information from the FTC Federal Trade Commission
FAQ - Frequently Asked Questions about the Program
Official Government for the First-Time Home Buyer Tax Credit Program
Download the Bill H.R. 3221 in PDF format
Visit the Library of Congress and search for Bill Number H.R. 3221.
Further information can be found at http://www.federalhousingtaxcredit.com/ or http://www.irs.gov/. This information is provided for general awareness only, and is not intended for the purpose of providing legal, accounting, tax advice or consulting of any kind. Please consult with your tax professional for complete details.
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