Friday, October 31, 2008

First Time Homebuyer Tax Credit

Now is the time to buy a home if you are a first time home buyer...Why??? Here's why...

  1. Congress has created a $7500 tax credit for first time home buyers (which includes those who have not owned a home in the last 3 years). The credit is eligible for homes purchased before July 1, 2009.

  2. The tax credit (essentially an interest free loan) is 10% of the home's sales price with a maximum value of $7500.

  3. The income restrictions are for a single person the income can be no more than $75,000 and for individuals who file jointly, no more than $150,000.

  4. The home must be your principal residence.

  5. Only property bought within the United States is eligible.

  6. The purchaser who claims the credit will be required to pay it back over 15 years. The tax credit is a so called "refundable" credit and must be claimed on the individual's income tax return. The credit amount is repaid in increments of 6.67% of the credit amount over 15 years. There is no interest charge applied to outstanding balances.

  7. If you sell the home before the 15 year period of repayment is complete any profits will go towards paying back the loan. If you sell at a loss, the repayment is forgiven by the IRS.

  8. Ultimately, it's a good deal that any first time homebuyer in a position to buy a home should consider.