I get asked questions every day about the $8,000 First Time Home Buyer Tax Credit. Who qualifies, what’s the income limit, when do I get the money, what can I use it for.
The following article excerpt explains most of the details pretty well.
According to Keystone Custom Homes, first-time buyers need to be aware that the tax credit is only available now until Dec. 1, 2009 on a closed home purchase. There are other aspects of the tax credit that are important to first-time home buyers, including:
– The tax credit is not a deduction. “It’s much better than that,” says Wisdom. With a deduction, you can only write off the deduction against your total income. So if you make $60,000, you can only reduce your total income by the amount of the deduction, which really isn’t that much savings. For instance, if you have an $8,000 deduction and earn $60,000, you still have pay taxes on $52,000. That’s not much of a savings. But the $8,000 First-Time home buyer tax credit is dollar for dollar. “So you actually reduce your tax payment by the amount of the credit. For instance, if next year, you go to file your taxes and learn that you owe nothing to the IRS, you will receive a check back for $8,000!” says Wisdom.
– First-time home buyers can receive a short-term loan to use the tax credit toward a down payment. In late May 2009, the Federal Housing Administration announced that it will allow eligible first-time home buyers to apply the $8,000 first-time home buyer tax credit to a down payment on a home. This can be done through no-interest loans now available through FHA-approved lenders in the Commonwealth. The loans must be paid back using the tax credit, which is applied to a home buyer’s 2009 tax return. First time home buyers can learn more about this opportunity by talking to their FHA-approved lender or mortgage broker.
Every state is treating the upfront use of the tax credit differently. It appears as if the tax credit will be administered through the Florida SHIP program. The program is supposed to take effect July 1st.
– The first-time home buyer tax credit is available even if you make good money. The tax credit is available to single first-time home buyers who make less than $75,000 a year or couples who make less than $150,000 a year. “That income covers a lot of Americans,” says Wisdom. “And it’s also based on adjusted gross income. So if you make more than those limits, but deductions reduce your income to those limits, you still might be eligible for the tax credit or a good portion of it.”
– There are ways to receive your tax credit now without applying for a loan. First-time home buyers in essence can gain the benefit of the up to $8,000 tax credit this year by reducing their income withholdings to the amount of the credit. This will allow you to see more cash in your take home pay. And that’s money can then be used toward a down payment or for moving and other costs related to owning a brand new home.
“Obviously, a first-time home buyer should check with their accountant before making any assumptions,” says Wisdom. “But right now, we are seeing record traffic at many of our 24 communities, and much of their interest is due to exceptionally low prices coupled with the Federal Tax credit. Add that to the fact that interest rates, while beginning to rise, are still at near-historic lows, and the combination of these factors makes it the best time in generations to buy a first home.”
Source: Market Watch
Palm Beach County and surrounding counties have seen many buyers who may have waited to buy now taking advantage of the current market conditions, coupled with the tax credit, to get into an affordable home of their own.
If you are interested in buying or selling a home in the Palm Beach County area, specifically Palm Beach Gardens, Jupiter and West Palm Beach, please visit my Forbes Realty website. For frequently updated information on foreclosures, short sales, real estate news and market conditions visit my South Florida Real Estate Report blog. There are many free reports as well as free access to MLS listed properties. You can also call 561-337-4810.
Rodney Forbes is a licensed Realtor®, certified short sale/REO specialist and broker for Forbes Realty of South Florida Inc. Rodney has co-authored the book “Should I Short Sale My Home?”. Get your FREE copy at www.SouthFloridaRealEstateReport.com
