First Time Homebuyer Tax Credit UPDATE!

Congress passed the stimulus bill late Friday night. What does this mean for the housing market?

It means we're about to see an influx of buyers. One major item of note is a revision to the First Time Homebuyer tax credit. This is GREAT news for the housing market and will really be enticing for first time buyers. Here's how it will work:

To qualify for the credit, you must be a first time homebuyer or have not owned a home in the past 3 years. If your income is over $75,000 ($150,000 for married couples filing taxes jointly), the credit starts to phase out and is completely phased out after $95,000 of income ($170,000 married filing jointly).

If you purchase a home after Dec. 31, 2008 and before Dec. 1, 2009, then when you file your taxes, you'll be entitled to claim the credit. The credit is now $8,000 (or 10% of the purchase price of the home, whichever is lower), up from the previous $7,500 credit. The best part is - YOU NO LONGER HAVE TO REPAY IT! The previous law required the $7500 tax credit to be repaid, interest free, over a 15 year period. With the new law, you won't have to repay the credit unless the home ceases to be your main residence within 3 years. This is FREE MONEY, people.

This means: if you make less than $75,000 as an individual, and purchase a home for $80,000 or more, and you continue to live in the home as your main residence for 3 years, you're entitled to the full $8,000 credit and do not have to repay it!

You can use this money any way you like - buy new furniture, pay down your mortgage, fix up your house, buy a car, start a business, go on a trip, invest it... the possibilities are endless!It's money for YOU, no strings attached!

How you claim the credit:

When you file your taxes after buying the home, you'll fill out a worksheet which you'll attach to your 1040 (tax return). If, say, you otherwise would have been getting a $1000 federal tax refund, you'll now be getting a $9000 refund (assuming you qualify for the full credit)! Or, on the flip side - if you would have owed $1000 in taxes, you now will actually be getting a $7000 refund!

Once the IRS posts guidelines, I will provide a link to the tax credit worksheet that you can use to claim the credit, so keep checking back! And as always... contact me if you have any questions at all!

Changes to First Time Buyer Tax Credit - FREE MONEY!!

Great news for First Time Home Buyers in 2009!! The government proposed on Friday that the $7500 tax credit for first time home buyers will not have to be repaid for homes purchased after January 1, 2009! Originally this credit was essentially an interest-free loan given by the government and repaid over the course of 15 years.

Potential new tax law changes allow for NO REPAYMENT of this loan. It would apply to purchases of homes through July 1, 2009.

Think about it... on a $200,000 mortgage, that means the government will actually be GIVING you more than enough enough to cover a 3.5% down payment on a home (FHA loans still only require 3.5% down). Of course you'll have to front the money at the closing table, but if you file your taxes the next day, you won't have long to wait until that money is refunded to you by the IRS.