The Key to the First Time Home Buyer Tax Credit
One of the benefits, perhaps the only real benefit, of the mortgage crisis mess, is a tax credit for people buying their first home. But be careful. What the government gives, the government takes and this is not totally a free and clear tax credit for you and not everyone in our area will qualify for this tax assistance. If you have never purchases a home before, or it’s been 3 years or more since you last owned a home, you may qualify for up to $7500 in tax credits. This is an interest free loan from Uncle Sam.
How Does this thing work?
You must buy your home between April 9, 2008 and July 1, 2009. This is a credit against your adjusted gross income. Your adjusted gross income must be below $75,000 if you are single, or $150,000 if you are married. There is a formula to determine exactly how much of this $7500 credit you are eligible for and if your income is above these amounts you may not see much, if any, of this credit.
I don’t file a long tax form
If you file the short form this credit might reduce your tax consequences for 2009/2010. For instance, if you owe $7500 in taxes, this credit might reduce your tax liability by the same amount. Then again, it might not. You might even get a refund because of this credit. This is definitely going to be the tax year you should seek help in filing your taxes so you don’t lose out.
Who’s Eligible?
Anyone who has purchased their first home since April 9, 2007, whether they are a US citizen or not, is eligible for this tax credit, assuming your income allows. The IRS has rules and regulations for “aliens” who are selling property in the US, so it is imperative that you seek professional assistance when it comes time to file your taxes.
Do I Have to Pay the credit back?
Of course! What the government gives, the government wants back, so yes. This is a 15 year interest free loan and you will have to reimburse Uncle Sam if you sell your house for a profit within the 15 year time frame. The good news is you get a 2 year grace period before you need to repay Uncle Sam but you still have to do it and then it’s prorated at $500 per year on your tax bill. Sell the home, and be prepared to repay the pro-rated amount in your taxes the following year. See what I mean about give and take? Since the average family moves about every 5 years, your pro-ration would be 10 years, or $5000 ($500 per year over 10 years that you did not use the loan).
Uncle Sam and Congress is loaning this money to first time buyers as an incentive to buy a home. It’s really a zero-interest loan and when you are stretching to buy that first home, any help you can get should be gratefully accepted. Just understand what this is going into it so you won’t have any surprises in a few years when you’re ready to move up to a larger home.
There are some great loan packages out there for first time buyers if you have the FICO scores. There are also some great houses priced for what you might have paid for a condo two years ago. We are here to help you. Call me at 650-867-2909 to get started.
http://www.sanmateorealestatenews.com/00441B
